Exhibit 10.1

 

CANCELLATION AGREEMENT

 

THIS CANCELLATION AGREEMENT (this “Agreement”), is entered into effective as of
October 14, 2019, by and between CBAK Energy Technology, Inc., a Nevada
corporation (the “Company”) and each of the persons listed on the Schedule of
Creditors attached hereto as Exhibit A(individually, a “Creditor” and
collectively, the “Creditors”).

 

RECITALS

 

WHEREAS, from time to time, the Creditors have provided financing to the Company
or its subsidiaries, and, as of the date hereof, each of the Creditors holds
outstanding debt in the Company, including both principals and accrued
interests, as is set forth opposite such Creditor’s name on the Schedule of
Creditors (collectively, the “Debts”);

 

WHEREAS, the Company desires to reduce its debt load in order to improve its
balance sheet and to enhance its ability to secure additional financing; and

 

WHEREAS, each of the Creditors agrees to cancel all of its respective amount of
the Debts in exchange for certain amount of shares of common stock of the
Company, calculated at the price of $0.60 per share (the “Exchange Price”), on
the terms set forth herein, and the Company is willing and able to issue shares
of common stock to the Creditors on the terms described herein.

 

NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants, and agreements set forth herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby covenant and agree as follows:

 

1. Cancellation of the Debts; Issuance of the Shares. At the Closing (as defined
in Section2 hereof) and subject to the terms and conditions of this Agreement,
all of the Debts shall be cancelled and the Company shall issue an aggregate of
8,599,717 shares of common stock, par value $0.001 per share (the “Shares”),
calculated at the Exchange Price, to the Creditors as is set forth opposite such
Creditor’s name on the Schedule of Creditors.

 

2. Closing; Delivery of Shares.

 

(a). The closing of the cancellation of Debts and the issuance of the Shares
shall occur as soon as practicable after the execution of this Agreement, but in
no event later than thirty (30) calendar days from the execution of this
Agreement (the “Outside Date”), at the offices of the Company, or such other
place, date and time as set forth in this Agreement or as the parties hereto may
otherwise agree (the “Closing”).

 

(b). At the Closing, the Company shall use its best efforts to cause the
Company’s transfer agent to deliver to each of the Creditors, by courier or
FedEx, stock certificate, or certificates, registered in the name of such
Creditor and representing the amount of Shares as is set forth opposite such
Creditor’s name on the Schedule of Creditors.

 

 

 

 

3. Representations and Warranties of Creditor. Each Creditor, severally and not
jointly, represents and warrants to the Company with respect to only itself
that, as of the date hereof and as of the date of Closing:

 

(a). Qualification, Authorization and Enforcement. This Agreement has been duly
executed by such Creditor, and when delivered by such Creditor in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Creditor, enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 

(b). No Conflict. The execution, delivery, and performance of this Agreement do
not and will not: (i) conflict with or violate any law or governmental order
applicable to the Creditor; or (ii) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time
or both would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any encumbrance on
any of the assets or properties of the Creditor pursuant to, any contract to
which the Creditor is a party or by which any of such assets or properties is
bound or affected.

 

(c). Governmental Consents and Approvals. The execution, delivery, and
performance of this Agreement by the Creditor do not and will not require any
consent, approval, authorization, or other order of, action by, filing with, or
notification to, any governmental authority.

 

(d). Purchase Entirely for Own Account. Creditor is acquiring the Shares for
Creditor’s own account for investment purposes only, not as nominee or agent,
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”), and Creditor has no present intention of selling, granting
any participation in, or otherwise distributing the same in violation of the
Securities Act without prejudice; however, Creditor has a right at all times to
sell or otherwise dispose of all or any part of such Shares in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by Creditor to hold Shares for any period of
time.

 

(e). Investor Status. Creditor is not a registered broker-dealer under Section
15 of the Securities Exchange Act of 1934 (the “Exchange Act”) or an entity
engaged in a business that would require it to be so registered. Creditor has
such experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Shares. Creditor
acknowledges that an investment in the Shares is speculative and involves a high
degree of risk. If such Creditor is a U.S. Person (as such term is defined in
Rule 902(k) of Regulation S), at the time such Creditor was offered the Shares,
it was, and at the date hereof it is, an “accredited investor” as defined in
Rule 501(a) under the Securities Act, and such Creditor has completed and
executed the Creditor Questionnaire attached as Exhibit B to this Agreement.

 

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(f). Regulation S. If such Creditor is not a U.S. Person, such Creditor (i)
acknowledges that the certificate(s) representing or evidencing the Shares
contain a customary restrictive legend restricting the offer, sale or transfer
of any Shares except in accordance with the provisions of Regulation S, pursuant
to registration under the Securities Act, or pursuant to an available exemption
from registration, (ii) agrees that all offers and sales by such Creditor of
Shares shall be made pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from, or a transaction not subject to
the registration requirements of, the Securities Act, (iii) represents that the
offer to purchase the Shares was made to such Creditor outside of the United
States, and such Creditor was, at the time of the offer and will be, at the time
of the sale and is now, outside the United States, (iv) has not engaged in or
directed any unsolicited offers to purchase Shares in the United States, (v) is
neither a U.S. Person nor a Distributor (as such terms are defined in Rule
902(k) and 902(d), respectively, of Regulation S), (vi) has purchased the Shares
for its own account and not for the account or benefit of any U.S. Person, (vii)
is the sole beneficial owner of the Shares specified on signature pages hereto
opposite its name and has not pre-arranged any sale with an investor in the
United States, and (ix) is familiar with and understands the terms and
conditions and requirements contained in Regulation S, specifically, without
limitation, each Creditor understands that the statutory basis for the exemption
claimed for the sale of the Shares would not be present if the sale, although in
technical compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the Securities Act. Such Creditor has completed and
executed the Creditor Questionnaire attached as Exhibit B to this Agreement.

 

(g). Access to Information. Creditor has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment.

 

(h). Independent Investment Decision. Creditor has independently evaluated the
merits of its decision to purchase the Shares pursuant to the this Agreement,
and such Creditor confirms that it has not relied on the advice of any other
Creditor’s business and/or legal counsel in making such decision. Creditor
understands that nothing in the Agreement or any other materials presented to
Creditor in connection with the purchase and sale of the Shares constitutes
legal, tax or investment advice. Creditor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares.

 

(i). Restricted Securities. Creditor understands and acknowledges that:

 

i. the Shares are characterized as “restricted securities” under the U.S.
federal securities laws and will bear a customary restrictive legend inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act only in certain limited
circumstances;

 

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ii. the Shares have not been registered under the Securities Act or any state
securities laws and are being offered and sold in reliance upon specific
exemptions from the registration requirements of the Securities Act and state
securities laws, and the Company is relying upon the truth and accuracy of, and
Creditor’s compliance with, the representations, warranties, covenants,
agreements, acknowledgments and understandings of Creditor contained in this
Agreement in order to determine the availability of such exemptions and the
eligibility of Creditor to acquire the Shares; and

 

iii. the Shares must be held indefinitely unless such Shares are registered
under the Securities Act or applicable state securities laws, or an exemption
from registration is available.

 

(j). No Registration Rights. Creditor further understands that there are no
registration rights associated with the Shares being acquired pursuant to this
Agreement.

 

4. Representations and Warranties of the Company. The Company hereby represents
and warrants to each of the Creditors that, as of the date hereof and as of the
date of Closing:

 

(a). Qualification, Authorization and Enforcement. The Company is duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations there under. The execution
and delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company in connection therewith. This Agreement has been duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

 

(b). No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s articles of incorporation, bylaws or other
organizational or charter documents as in effect on the date hereof, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not, individually or in the aggregate, have or reasonably
be expected to result in a material adverse effect.

 

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(c). Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any United States or People’s Republic of China
court or other federal, state, local or other governmental authority or other
person in connection with the execution, delivery and performance by the Company
of this Agreement, other than (i) filings if required by state securities laws,
(ii) if required, the filing with NASDAQ of an applicable additional shares
listing application or notification relating to the Shares issuable hereunder,
(iii) if required, the filing of a Notice of Sale of Securities on Form D with
the Securities and Exchange Commission under Regulation D of the Securities Act,
(iv) the filings required in accordance with the Exchange Act and (v) those that
have been made or obtained prior to the date of this Agreement.

 

(d). Issuance of Shares. The Shares are duly authorized and, when issued and
paid for in accordance with the terms and conditions of this Agreement, will be
validly issued, fully paid and non assessable, free and clear of all liens
imposed by the Company. There are no subscriptions, warrants, rights of first
refusal or other restrictions on transfer relative to, or options exercisable
with respect to, the Shares. The Shares are not the subject of any present or,
to the Company’s knowledge, threatened suit, action, arbitration, administrative
or other proceeding, and the Company knows of no reasonable grounds for the
institution of any such proceedings.

 

5. Amounts Repaid in Full. For and in consideration of the issuance of the
Shares to the Creditors, the Debts shall be deemed to be repaid in full, and the
Company shall have no further obligations in connection with the Debts.

 

6. Release by the Creditors. Upon receipt of the Shares, each Creditor releases
and discharges the Company, the Company’s subsidiaries, Company’s and each of
its subsidiaries’ officers, directors, principals, control persons, past and
present employees, insurers, successors, and assigns (“Company Parties”) from
all actions, cause of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against Company Parties such Creditor ever had, now have or hereafter can, shall
or may, have for, upon, or by reason of any matter, cause or thing whatsoever,
whether or not known or unknown, from the beginning of the world to the day of
the date of this release relating to the Debts. Each of the Creditors represents
and warrants that no other person or entity has any interest in the matters
released herein, and that it has not assigned or transferred, or purported to
assign or transfer, to any person or entity all or any portion of the matters
released herein.

 

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7. Fees, Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all transfer agent fees
(including, without limitation, any fees required for same-day processing of any
instruction letter delivered by the Company), stamp taxes and other taxes and
duties levied in connection with the delivery of any Shares to the Creditors.

 

8. General Provisions.

 

(a). Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by and construed under the laws of the State of New York without regard
to the choice of law principles thereof. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
State of New York located in The City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or therewith or
with any transaction contemplated hereby or thereby, and hereby irrevocably
waives any objection that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b). Termination. This Agreement may be terminated prior to Closing:

 

i. by written agreement of the Creditors and the Company; or

 

ii. by either the Company or an Creditor (as to itself but no other Creditor)
upon written notice to the other, if the Closing shall not have taken place by
6:30 p.m. Eastern time on the Outside Date; provided, that the right to
terminate this Agreement under this Section 8(b) shall not be available to any
person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time.

 

Upon a termination in accordance with this Section 8(b), the Company and
terminating Creditor(s) shall not have any further obligation or liability
(including as arising from such termination) to the other and no Creditor will
have any liability to any other Creditor under this Agreement as a result here
from and there from.

 

(c). Notices. All notices or other communications required or permitted by this
Agreement shall be writing and shall be deemed to have been duly received:

 

i. if given by facsimile or electronic version, when transmitted and the
appropriate telephonic or electronic confirmation received if transmitted on a
business day and during normal business hours of the recipient, and otherwise on
the next business day following transmission;

 

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ii. if given by certified or registered mail, return receipt requested, postage
prepaid, three business days after being deposited in the U.S. mails; and

 

iii. if given by courier or other means, when received or personally delivered,
and, in any such case, addressed as indicated herein, or to such other addresses
as may be specified by any such party to the other party pursuant to notice
given by such party in accordance with the provisions of this Section.

 

(d). Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

(e). Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.

 

 

(f). No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person, except as otherwise set forth in Section 6.

 

(g). Modification and Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the Creditor(s)
holding a majority of the Shares. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

(h). Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

(i). Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings, discussions and representations, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

 

(j). Headings. The headings used in this Agreement are for convenience of
reference only and shall not be deemed to limit, characterize or in any way
affect the interpretation of any provision of this Agreement.

 

(k). Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Shares, until
the second anniversary of the date hereof.

 

(l). Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement. A facsimile or PDF copy of this Agreement
shall be deemed an original.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  COMPANY:         CBAK ENERGY TECHNOLOGY, INC.         By:

/s/ Xiangyu Pei

    Name: Xiangyu Pei     Title: Interim Chief Financial Officer

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR CREDITORS FOLLOWS]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  CREDITORS       /s/ Jiping Zhou   Name: Jiping Zhou       /s/ Shibin Mao  
Name: Shibin Mao       /s/ Shangdong Liu   Name: Shangdong Liu       /s/ Lijuan
Wang   Name: Lijuan Wang       /s/ Ping Shen   Name: Ping Shen

 

 

 

 

Exhibit A

Schedule of Creditors

 

Name  Debt Amount ($)   Number of Shares  JIPING ZHOU   2,087,694.48  
 3,479,491  SHIBIN MAO   2,121,640.74    3,536,068  SHANGDONG LIU   316,831.68  
 528,053  LIJUAN WANG   316,831.68    528,053  PING SHEN   316,831.68  
 528,053  Total   5,159,830.27    8,599,717 

 

 

 

 

EXHIBIT B

Regulation S Representation Letter

 

Date: ______________

 

Re:Company Name: CBAK Energy Technology, Inc. (the “Company”)

Number of Shares of Common Stock of the Company: __________ (collectively, the
“Shares”)

 

Ladies and Gentlemen:

 

Pursuant to certain Cancellation Agreement between the undersigned and the
Company, dated as of ______, 2019, the undersigned hereby represents, warrants
and covenants to the Company as follows:

 

1.The undersigned is not a “U.S. Person,” as such term is defined in Regulation
S (“Regulation S”) promulgated under the Securities Act of 1933, as amended (the
“Securities Act”).

 

2.No offer or sale of the Shares was made to the undersigned in the United
States.

 

3.The undersigned is not acquiring the Shares for the account or on behalf of
any U.S. Person.

 

4.The undersigned has not made any prearrangement to transfer the Shares to a
U.S. Person or to return the Shares to the United States securities markets
(which includes short sales in the United States within the applicable
“distribution compliance period,” as defined in Regulation S (hereinafter
referred to as the “restricted period”) to be covered by delivery of the
Company’s Shares) and is not acquiring the Shares as part of any plan or scheme
to evade the registration requirements of the Securities Act.

 

5.All offers and sales of the Shares by the undersigned in the United States or
to U.S. Persons or otherwise whether prior to the expiration or after the
expiration of the applicable restricted period shall be made only pursuant to a
registration of the Shares under the Securities Act or an exemption from
registration, and in compliance with Regulation S.

 

6.The undersigned is not a “distributor,” as defined in Regulation S. However,
if the undersigned should be deemed to be a distributor prior to reselling the
Shares to a non-U.S. Person during the restricted period, the undersigned will
send a notice to each new purchaser of Shares that such new purchaser is subject
to the restrictions of Regulation S during the restricted period.

  

7.The undersigned is not an “underwriter” or “dealer” (as such terms are defined
in the Securities Act), and the acquisition of the Shares by the undersigned is
not a transaction (or part of a series of transactions) that is part of any plan
or scheme to evade the registration provisions of the Securities Act.

 

8.The undersigned does not have a short position in any securities of the
Company and will not have a short position in such securities at any time prior
to the expiration of the restricted period.

 

9.If at any time after the expiration of the restricted period, the undersigned
wishes to transfer or attempts to transfer the Shares to a U.S. Person, the
undersigned agrees to notify the Company if at such time it is an “affiliate” of
the Company or is then acting as an “underwriter,” “dealer,” or “distributor” as
to such securities (as such terms are defined in the Securities Act or the
regulations promulgated thereunder, including but not limited to, Regulation S),
or if such transfer is being made as part of a plan or scheme to evade the
registration provisions of the Securities Act.

 

10.The undersigned acknowledges that the undersigned may only be able to resell
the Shares pursuant to the provisions of Regulation S and otherwise pursuant to
the Securities Act, and that it may not be possible for the undersigned to
liquidate its investment in the Shares. The undersigned is prepared, therefore,
to hold its, his or her Shares in the Company indefinitely.

 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Regulation S
Representation Letter as of the date first set forth above.

 

  CREDITORS           Name: