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CALI > SEC Filings for CALI > Form 8-K on 5-Dec-2013All Recent SEC Filings

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Entry into a Material Definitive Agreement, Unregistered Sale of Equity

Item 1.01. Entry into a Material Definitive Agreement.

On November 30, 2013, Tianjin Binhai Shisheng Trading Group Co., Ltd. ("Shisheng"), a wholly-owned subsidiary of China Auto Logistics Inc. (the "Company"), signed an Equity Transfer Agreement (the "Automall Acquisition Agreement") with Hezhong (Tianjin) International Development Co., Ltd. ("Hezhong") to purchase 100% of the equity of Tianjin Zhonghe Auto Sales Service Co., Ltd. ("Zhonghe"), which owns and operates the Airport International Automall located in the Tianjin Airport Economic Area (the "Automall Acquisition").

Under the terms of the Automall Acquisition Agreement, Shisheng will pay RMB 559,768,000 (approximately $91,891,514 as of December 4, 2013) to Hezhong, in four annual installments with an annualized rate of interest of 6%. The initial payment of RMB 240,000,000 (approximately $39,398,400 as of December 4, 2013) is to be paid within 5 business days after the signing of the Agreement. Upon the payment by Shisheng of this first installment, Hezhong will transfer control of Zhonghe to Shisheng. Failure by Shisheng to pay the remaining installments may result in the termination of the Automall Acquisition Agreement, as well as a penalty of 10% of the total transfer price.

The information disclosed in Item 3.02 is incorporated herein by reference.

Item 3.02. Unregistered Sales of Equity Securities

Under the terms of a Consultation Services Contract (the "Consulting Agreement") among the Company and Pegasus Evolution Co., Ltd. and Miao Jing (collectively, the "Consultants"), dated May 30, 2013, the Consultants agreed to render services to the Company in connection with the Automall Acquisition, and the Company agreed to compensate the Consultants in the event that a formal acquisition agreement was signed. Upon execution of the Automall Acquisition Agreement, the Consultants are to receive a fee equal to 1% of the final purchase price of RMB 559,768,000 (approximately $91,891,514 as of December 4, 2013). The Company, as permitted by the terms of the Consulting Agreement, has agreed to provide this compensation in the form of restricted shares of common stock of the Company. As soon as reasonably practicable, the Company will issue 180,000 shares to Pegasus Evolution Co., Ltd. and 160,000 shares to Miao Jing (collectively, the "Shares"). Both Pegasus Evolution Co., Ltd. and Miao Jing are non-U.S. persons, and the sale of the Shares is being made in reliance upon the exemptions from securities registration of Section 4(a)(2) and Regulation S of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Item 9.01. Financial Statements and Exhibits

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

Number Description

10.1 Equity Transfer Agreement, by and between Tianjin Binhai Shisheng Trading Group Co., Ltd. and Hezhong (Tianjin) International Development Co., Ltd., dated November 30, 2013

10.2 Consulting Services Contract, by and between China Auto Logistics, Inc., and Pegasus Evolution Co., Ltd. and Miao Jing, dated May 30, 2013

99.1 Press Release dated December 5, 2013

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