Capital and Share Increase Agreement
Exhibit
99.2
Capital and Share Increase Agreement
Party
A:
Jiaxing Li Ou Electromechanical Equipment Co. Ltd
Party
B:
Sinoenergy Holding Limited Co
Party
C:
Qingdao Sinogas General Machinery Co. Ltd.
With
respect that:
(1)
Party
C is an “exclusively foreign-owned limited liability company” established in
accordance with relevant laws of the People’s Republic of China with registered
capital of USD Eleven Million and Eight Hundred Thousand
($11,800,000).
Party
C
is a professional company manufacturing and selling special equipments for
compressed natural gas. In order to expand scale of manufacture and improve
output and sales volume, Party A and Party B increase capital and adjust the
structure of shares to expand the scale of manufacture and increase the market
share basing on the principle of mutual benefits and using own
advantages.
(2)
Party
B, which is a company registered in British Virgin Islands, holds 100% of shares
of Party C before signing this agreement.
(3)
Party
A, which is a limited liability company established in accordance with relevant
laws of the People’s Republic of China, plans to increase capital to Party
C.
Therefore,
the three parties come to the following agreement in Beijing on capital increase
and collective management of Party C.
1.
Party
A shall increase capital to Party C in April 2008 with CNY 8 million
(hereinafter referred to as “increased capital”), which shall be converted into
USD according to the medium price of exchange between CNY and USD publicized
by
the People’s Bank of China. USD 621,800 shall be increased registered capital of
Party C, and the remained amount shall be counted into the capital surplus
of
Party C. Then, the registered capital of Party C shall be increased to USD
Twelve Million Four Hundred Twenty One Thousand and Eight Hundred
($12,421,800).
2.
After
increasing capital, Party A shall hold 5% of total shares of Party C, and Party
B shall hold 95% of total shares of Party C. Party C shall become a joint
venture enterprise.
3.
Before
increasing capital, Party B shall hold a meeting of directors of Party C to
approve this agreement.
4.
After
increasing registered capital, alteration of registration documents and
reorganization of board of directors of Party C shall be completed immediately
in accordance with the Company Law. The new board of directors shall be composed
of 5 members. Party A shall assign one director, and Party B shall assign 4
directors and the president. The general manager and the CFO shall be
recommended by Party B and appointed by the board of directors.
5.
The
increased capital shall be fully transferred to the account appointed by Party
C
within one month after this agreement comes into force.
6.
Party
A and Party B shall consign the person appointed by the board of directors
of
Party C within 15 days after this agreement comes into force to transact
registration for alteration of registered capital and shareholders, which shall
be completed within 30 days after this agreement comes into force.
7.
After
the alteration of shareholders is completed, Party A shall hold 5% of total
shares of Party C and take corresponding rights and benefits, and Party B shall
hold 95% of total shares of Party C and take corresponding rights and
benefits.
8.
Each
party of this agreement shall insure necessary rights, powers and authorizations
to sign this agreement and fulfill the following obligations. The
representatives shall be legally authorized to sign this agreement and accept
the obligations of this agreement.
9.
Before
the completion of increasing capital, Party A and Party B shall keep
confidentiality of the capital increase and all related contents.
10.
Force
Majeure
10.1
No
party shall be deemed as breaching this agreement for failing to fulfill the
obligations of this agreement in part or in all caused by force majeure, but
necessary compensations shall be made to reduce the loss caused by force
majeure.
10.2
The
party suffering force majeure shall give notice in writing to the other party
within 3 workdays after force majeure happens, and provide details of force
majeure and valid certificates for failing or delaying to fulfill the
obligations within 15 workdays after force majeure happens. Parties of this
agreement shall make consultation to decide cancelling this agreement, partly
releasing the obligations or delaying to fulfill this agreement.
10.3
The
above mentioned force majeure refers to the unpredictable and unconquerable
objective circumstances, including but not limited to war, blockage, embargo,
turbulence, fire, flood, storm, earthquake, explosion, pestilence, epidemic
and
other matters caused by natural factors directly influencing fulfillment of
this
agreement.
11.
Applicable Laws and Settlement of Disputes
Fulfillment
of this agreement and settlement of disputes shall be in accordance with
relevant laws of the People’s Republic of China. Any dispute arising from
fulfillment of this agreement shall be settled through friendly consultation.
If
no settlement can be reached within 30 days, any party can apply litigation
from
the local court of Qingdao City.
12.
Breaching Liabilities
After
signing this agreement, failing to fulfill this agreement in part or in all
shall be deemed as breaching this agreement. The party breaching this agreement
shall be responsible for compensating all the direct economic loss of the other
party, who shall have the right to require the party breaching this agreement
to
continue fulfilling this agreement.
13.
Alteration and Cancellation of this Agreement
The
alteration of this agreement shall be consulted by the parties of this
agreement, and the alteration agreement in writing shall be made. If no
unanimous consultation can be reached, this agreement shall be still valid.
14.
This
agreement shall come into force after being signed and sealed by the legal
representative or authorized agent of each party and approved by the commercial
administration authority. This agreement is in 6 original copies with the same
force. Both Party A and Party B shall keep two copies, and the authority shall
keep two copies.
(Signing
Page)
Party
A:
Legal
Representative (Authorized Agent):
Party
B:
Legal
Representative (Authorized Agent):
Party
C:
Legal
Representative (Authorized Agent):
Date: