Item 1.01. Entry into a Material Definitive Agreement.
On December 12, 2018, Cooper Tire & Rubber Company Vietnam Holding, LLC (“
Cooper Vietnam
”), a wholly owned subsidiary of Cooper Tire & Rubber Company (“
CTB
”),
and Sailun (Vietnam) Co., Ltd. (“
Sailun
”) entered into an equity joint venture contract (the “
Equity Joint Venture Contract
”), to establish a joint venture (the “
Company
”), which will produce and sell truck and bus radial (“
TBR
”) tires. In connection with the Equity Joint Venture Contract, each of CTB and Sailun, or an affiliated party of them, will also enter into an offtake agreement, governing certain obligations between the parties and the Company, including, among other things, the obligation of each party to purchase certain volumes of TBR tires from the Company.
The Equity Joint Venture Contract governs the joint venture relationship between Sailun and Cooper Vietnam, including the parties’ respective governance rights and certain transfer restrictions. Once established, the Company will invest in, design, develop, construct, own and operate a TBR production facility in the Phuoc Dong Industrial Park, Tay Ninh Province, Vietnam. The establishment of the Company and construction of the TBR production facility is subject to customary conditions and regulatory approvals.
The Equity Joint Venture Contract contains customary representations, warranties, covenants, and minority equity holder protection, including a mutual right of first refusal and certain ‘tag-along’ rights if either party wishes to sell its ownership interest in the Company. The Equity Joint Venture Contract may be terminated by either Sailun or Cooper Vietnam if, among other things, (i) there is a failure by the other party to perform any of its material obligations under the Equity Joint Venture Contract and such breach is not cured within 60 days, (ii) the Company or either party becomes bankrupt or otherwise unable to pay its debts, (iii) any material business license is revoked, suspended or amended, or in any other situation such that the Company is unable to carry out its business, and which is not cured within six months, or (iv) the Company has failed to comply with its obligations with respect to anti-corruption, anti-bribery or other applicable laws. The Equity Joint Venture Contract may be terminated by Cooper Vietnam if, among other things, Sailun or certain of its representatives have taken or failed to take certain actions relating to anti-corruption, anti-bribery or other applicable laws. Cooper Vietnam will own 35 percent of the Company.