China Oil & Gas Pipeline Network Corporation AND China Petroleum & Chemical Corporation

Table of contents

1.

Target Assets

2

2.

Transaction Consideration and payment method

2

3.

Profit and loss during the Transition Period

2

4.

Conditions precedent to closing

3

5.

Closing and handover

4

6.

Arrangement on handover

7

7.

The shareholder rights of the seller

8

8.

Representations and warranties of the Seller

8

9.

Representations and warranties of the Purchaser

10

10.

Liabilities for breach of the Agreement

11

11.

Third-party claims and administrative penalties

11

12.

Announcement

12

13.

Confidentiality

12

14.

No assignment

13

15.

Further assurance

13

16.

Taxes and expenses

14

17.

Notice

15

18.

Conflict with other agreements

15

19.

Waiver, rights and remedies

15

20.

Texts

15

21.

Effective date and amendment

15

22.

Invalidity

16

23.

Jurisdiction and arbitration

16

24.

Force majeure

17

(A)

As of the date hereof, the registered capital of the Purchaser is RMB20 billion, and its scope of business includes pipeline transportation; storage services; equipment import; technology import and export; technology research; informatization research and application; technology consulting, technology services, technology transfer, technology promotion. 100% of registered capital in Purchaser is held by the State Council.

(B)

The Seller proposes to sell to the Purchaser Target Assets owned by the Seller as set forth in Appendix 2 to the Agreement, i.e., the equity interest the Seller owns in the Target Companies, (which Target Companies own and operate oil and gas pipelines, gas storages and LNG terminals and its ancillary facilities, pipeline inventory and other related assets). The Purchaser wishes to purchase and receive such Target Assets pursuant to the terms and conditions set forth hereof (the “Transaction”).

(C)

As of the date hereof, the Purchaser is negotiating and finalizing certain transactions with (i) certain Relevant Investors, to which the Purchaser proposes to issue additional equity and/or make cash payment as considerations for the purchase of oil and gas pipeline assets owned by such Relevant Investors, and (ii) certain other Relevant Investors, which propose to subscribe for new equity in the Purchaser for cash. As a result, all above-mentioned Relevant Investors will essentially subscribe for additional equity to be issued by the Purchaser at the same price (i.e., RMB1.00 per RMB1.00 registered capital of the Purchaser) (such capital increase and the Transaction is collectively known as the “Reorganization”). Assuming the closing of all the above-mentioned transactions, the post-Reorganization registered capital of the Purchaser shall be RMB500 billion, with a post-Reorganization shareholder structure as set forth in Appendix 3 hereto.

1.

Target Assets

1.1

The Seller shall, subject to the terms and conditions herein, sell to the Purchaser the Target Assets set forth in Appendix 2, i.e., the equity interests in the Target Companies owned by the Seller, the specific scope of which shall be subject to the scope of Appraised Asset as set forth in the corresponding Valuation Report.

2.

Transaction consideration and payment method

2.1

According to the Valuation Report, the appraised value of the Target Assets with respect to the Transaction is RMB47,112,516,300, which is set forth in the Appendix 2.

2.2

After negotiation, the Parties agreed that the Transaction Consideration to be paid by Purchaser for the purchase of the Target Assets of the Transaction is RMB47,112,516,300, provided, that the final consideration to be paid for the Target Assets shall be subject to the appraised value with the approval/filing procedures performed in accordance with PRC laws and regulations.

2.3

The paid-in registered capital of PipeChina shall be RMB500 billion after the Reorganization. The Parties agree that the Purchaser will pay the Transaction Consideration to the Seller through issuance of additional equity (the “Equity Consideration”) based on the appraised value of the Target Assets, and the Seller shall subscribe, in way of transferring Target Assets to the Seller, for RMB47,112,516,300 of PipeChina’s registered capital upon the Reorganization.

2.4

The Parties hereby agree that, with respect to the Equity Consideration, the Purchaser shall issue capital contribution certificates to the Seller on the Closing Date, and register the Seller in Purchaser’s internal register of members. The Parties further agree that, from the date the Seller has been registered on the register of members of the Purchaser, the Seller shall enjoy all equity interests in, and assume the responsibilities and obligations corresponding to, the Equity Consideration.

3.

Profit and loss during the Transition Period

3.1

The Transition Period shall refer to the period from the Valuation Date (exclusive) to the Closing Date (inclusive) under this Agreement.

3.2

The Parties hereby agree that, within 60 Days from the Closing Date, the Parties shall perform an audit on the Target Assets and have an auditor’s report issued (“Closing Audit”) to determine the profit and loss of the Target Assets during the Transition Period. Such Closing Audit shall be completed by an accounting firm with securities and futures business qualifications jointly appointed by the Parties, the audit fees for which shall be borne by the Parties at a 50-50 split.

3.3

The Purchaser shall pay to the Seller, in cash, the profit generated by the Target Assets or the corresponding portion of the net assets increased due to other reasons during the Transition Period, and the Seller shall pay to the Purchaser, in cash, the loss incurred by the Target Assets or the corresponding portion of the net assets decreased during the Transition Period, each amount to be determined by the Closing Audit report. The Parties hereby agree that such payment shall be made within 10 Business Days after the issuance of the Closing Audit report pursuant to Article 3.2 of this Agreement.

4.

Conditions precedent to closing

4.1

The Closing is conditioned upon the following Conditions Precedent being satisfied or waived by applicable parties/governmental authorities (if applicable):

(1)

The representations, covenants and warranties made by the Parties on the Execution Date shall have remained true, accurate and complete, without misleading statements, misrepresentations and omissions in all material respects as of the Closing Date;

(2)

The Seller shall have approved the Transaction in accordance with its constitutional document;

(3)

The Purchaser shall have approved the Transaction in accordance with its constitutional document;

(4)

Declaration of concentration of business operators in respect of the Transaction shall have been filled and approved;

(5)

All other Relevant Investors participating in the Reorganization shall have approved the Reorganization, and confirmed the articles of association to be adopted by the Purchaser after the Reorganization;

(6)

The Purchaser shall have issued capital contribution certificates to the Seller and registered the Seller on the internal register of members of the Purchaser. The Purchaser shall have had extensive communication with the Administration for Market Regulation in relation to the necessary changes of company registrations to be filed with the Administration for Market Regulation upon completion of the Reorganization (including but not limited to registering the Seller as the Purchaser’s shareholder and filing the director designated by the Seller with Administration for Market Regulation), and obtained the administration’s informal confirmation.

(7)

The Valuation Report on the Target Assets under this Agreement shall have been approved or filed in accordance with the PRC laws and regulations;

(8)

All other applicable approvals, permits, filings and registrations from or with the relevant authorities with respect to the Transaction shall have been obtained or completed;

(9)

The Parties or their subsidiaries shall have entered into relevant oil and gas pipeline facility service contracts in accordance with Article 5.6 (4) of this Agreement;

(10)

Each of the Relevant Investors with respect to the Reorganization shall have respectively executed transaction agreements, the core conditions and terms of which are substantially the same as this Agreement, and conditions precedent to a closing and cash capital contribution (if applicable) thereunder on the same date as the Closing of the Transaction have been satisfied.

4.2

The Parties hereby agree to cause all the Conditions Precedent as set forth under Article 4.1 to be satisfied as soon as practicable prior to the Closing Date. If the satisfaction of any condition precedent applicable to one Party needs the assistance from the other Party, the other Party shall provide such assistance. The Parties shall remain in communication on the related matters in relation to each Condition Precedent, and coordinate and solve the problems encountered during this process in a timely manner. After the Execution Date, neither Party shall engage in any conduct with the purpose to prevent or restrict the satisfaction of each condition precedent set forth under Article 4.1.

5.

Closing and handover

5.1

The Parties hereby confirm and agree that, the ownership of, and the obligations, responsibilities and risks in relation to, the Target Asset shall be transferred from the Seller to the Purchaser at 24:00 on September 30, 2020 (the “Closing Date”).

5.2

Transfer of Target Assets and relevant responsibilities on the Closing Date. Upon 24:00 on the Closing Date, the Target Assets and the businesses and employees in relation thereto shall be deemed received and lawfully owned by the Purchaser on an “as-is” basis, and the obligations, responsibilities and risks in relation to the Target Assets shall be assumed by the Purchaser. Unless otherwise stipulated hereunder, after the Closing Date (excluding the Closing Date), the obligations, responsibilities and risks in relation to the Target Assets shall no longer be assumed by the Seller.

5.3

The Parties hereby agree to work together to streamline the preparation for the handover of the Target Assets, and jointly complete the handover of the Target Assets starting from 24:00 on the Closing Date. The Purchaser shall ensure compliance with safety production systems of the Seller during the preparation for the handover of the Target Assets, and shall assume responsibility for any safety production accidents caused by faults of the Purchaser.

5.4

The Parties hereby agree that they shall work together to procure the completion of the change of the registration with Administration of Market Regulation with respect to all Target Companies under the Target Assets within 60 Days from the Closing Date, including but not limited to the registration for change of shareholders, filing of amendment to articles of association, registration for change of directors, supervisors and senior management, registration for change of company’s name (removing words like “Sinopec Corp” and “Sinopec”) (the “Handover”). If the Handover has not been completed before the expiry of the period mentioned above, the Parties agree to work together to complete the Handover as soon as possible in accordance with an alternative arrangements.

5.5

The Parties hereby agree that, the Purchaser shall convene a general meeting for all shareholders and complete the change of registration with the Administration of Market Regulation with respect to the Reorganisation within no later than 15 Business Days from the Closing Date, including but not limited to the registration for the change of registered capital and change of shareholders, filing of amendment to articles of association, and filing of change of directors, supervisors and senior management. The Seller shall cooperate with the Purchaser in relation thereto.

5.6

Special provisions

(1)

If the Seller needs to obtain consent from, or deliver notice to, any Third Party with respect to the disposal, sale or transfer of the Target Assets pursuant to the agreements entered therewith, the Seller shall identify all such relevant agreements before the Closing Date. If any Third Party does not consent to the transfer of the Target Assets to the Purchaser, as a result of which such Third Party is entitled to any indemnification under applicable agreement(s), the Parties shall negotiate for a solution.

(2)

The Parties hereby agree that the transfer of the relevant employees and other personnel in relation to the Target Assets shall be completed following the general principle of “personnel go with assets (business),” and in accordance with the management memorandum with respect to the transfer of organization and personnel to be entered into as appropriate.

(3)

The Parties hereby agree that, for the commercial loans set forth in Appendix 6, the Seller shall transfer the loans #1 through #4 under Part 1 to the Target Companies before the Closing Date, and the relevant Target Companies shall assume obligations and responsibilities pursuant to the terms of such commercial loan agreements, provided that if the transfer is not completed due to the internal reorganization of the Seller, the Seller shall use reasonable efforts to complete the transfer as soon as possible, and the Parties agree that the rights and obligations under such loan agreement shall be assigned to, and assumed by, the Target Companies since the Closing Date. After the Closing Date, the Purchaser will cause relevant companies to fulfil their obligations and responsibilities of such commercial loan agreements pursuant to the terms thereunder, for which the Seller shall not be deemed responsible. If, due to other reasons, the Seller makes any advanced payment, suffers any losses or assumes any other reasonable expenses (which shall be agreed upon by the Parties or determined by judicial authorities or other government authorities) with respect to loan #9 under Part 1 as set forth in Appendix 6 after the Closing Date, the Purchaser shall indemnify the Seller in full.

(4)

The Parties hereby agree that, upon 24:00 on the Closing Date, the Seller shall have the right to continue to use the oil and gas pipelines, gas storages, LNG terminals and its ancillary facilities, pipeline inventory and other related assets under the Target Assets as per the agreement between the Parties. The Purchaser shall undertake to duly perform the relevant oil and gas pipeline network service contracts to be entered into by the Parties or their respective subsidiaries after the Closing Date, so as to ensure after the Closing Date: (1) the proper operation of the business in relation to the Target Assets; (2) that the pipeline transportation services and other services to be provided by the Purchaser to the Seller shall meet the existing standards implemented by, and the need of business operations of, the Seller so as to avoid potential adverse impacts to the Seller’s future operations; and (3) with the current governmental pricing unchanged, the service price applicable to the natural gas pipelines, crude oil pipelines and LNG terminals shall remain unchanged, the service price applicable to refined oil pipeline transportation shall be determined by reference to the pricing principle applicable to natural gas transportation, and the royalties for other storage and transportation facilities shall be determined by the Parties in accordance with the market-oriented principles. The specific arrangements for the above-mentioned matters shall be agreed upon by and between the Parties under a separate agreement.

(5)

If the Target Assets have the trademark or logo of the Seller, the use of such Target Assets by the Purchaser after receiving the Target Assets and before such trademark or logo is removed shall not be deemed as infringement to the Seller’s relevant Intellectual Property Rights or goodwill. The Purchaser shall remove any and all related trademark and logo within six months after the Closing Date. Starting from the Closing Date, any and all legal liabilities arising from the Target Assets (including but not limited to any liability for tort and breach of contract) shall be borne by the Purchaser even if the Target Assets have the trademark or logo of the Seller.

(6)

The Parties hereby agree to otherwise amicably negotiate on the use of the Seller’s patents, copyrights and other Intellectual Property Rights by the Purchaser and the Target Company for fees.

(7)

The Parties hereby agree that, the pipeline inventory assets that the Purchaser proposes to purchase from the Seller in addition to the Target Assets shall be otherwise agreed upon by the Parties under separate agreements.

6.

Arrangement on handover

6.1

The Parties hereby agree to cooperate with each other and use their reasonable efforts to prepare, provide and submit all the necessary documents in a timely manner so as to complete all necessary applications, notices, requests, filings and other documents, and to obtain as soon as practicable all licenses, consents, approvals and authorizations necessary or applicable to the Closing of this Transaction from all the Third Parties and governmental authorities. For the avoidance of doubt, the Purchaser shall lead and take responsibility for organizing the declaration of concentration of business operators for this Transaction, and the Seller shall cooperate as necessary.

6.2

The Seller shall provide the Purchaser with all the necessary assistance for the inventory and handover of the Target Assets and personnel, allow the Purchaser’s Representatives, upon reasonable notice, to enter into the entities (and its premises) that manage or operate the Target Assets, and provide necessary information, materials and assistance to the Purchaser.

6.3

In order to secure the smooth handover and operations of the Target Assets and personnel, the proper operations of the business dependent on the Target Assets, and to maintain the quality of the service, so as to avoid Material Adverse Effects on the orderly operation of the Parties’ business, the Seller hereby agrees that, prior to the completion of the Handover of the Target Assets, the Target Assets shall be operated in a manner following the Seller’s ordinary course of business, and the Seller shall use commercially reasonable efforts to secure the proper operation of all key assets and prevent any Material Adverse Effects on the Target Assets. If the Seller has knowledge of any incident that may lead to any Material Adverse Effects on the Target Assets, it shall promptly notify the Purchaser and negotiate with the Purchaser within 10 Days upon the occurrence of such incident.

6.4

As of the Execution Date, the Seller is under necessary internal reorganization with respect to certain assets, Liabilities and personnel as a part of the Target Assets. The Parties hereby agree and acknowledge that, the Seller shall use reasonable best efforts to complete such internal reorganization prior to the Closing Date and handover the Target Assets to the Purchaser pursuant to the terms hereof. If, due to reasons beyond control of the Parties, the Seller fails to complete the above mentioned internal reorganization prior to the Closing Date, the Parties shall separately negotiate a plan to complete the internal reorganization as soon as possible by a practicable date after the Closing Date. If the Seller is unable to handover any part of the Target Assets due to the failure to complete its internal reorganization, the Parties shall negotiate a solution separately.

6.5

According to the terms of the Transaction, two blocks of land of one Target Company, Sinopec Xinjiang Coal-based SNG Transmission Pipeline Co., Ltd. (“Xinjiang Coal-based SNG”), are not included in the assets valuation scope of the Target Assets. At the execution of this Agreement, Xinjiang Coal-based SNG has entered into relevant agreements with the Seller’s subsidiaries on disposal of such lands in accordance with the Seller’s internal reorganization plan, and is in the corresponding process of changing the ownership of such lands. The Parties hereby agree that, if the aforementioned changing process has not been completed before the Closing Date, the Purchaser shall cooperate to cause Xinjiang Coal-based SNG to provide necessary assistance to the Seller and its subsidiaries.

6.6

In order to secure the smooth operation and transition of the Target Assets and personnel in relation thereto, the Parties hereby agree to perform their responsibilities respectively, take responsibility for the handover of the Target Assets within their respective scopes, and actively facilitate the smooth handover of the Target Assets.

7.

The shareholder rights of the seller

7.1

Upon the completion of the Transaction and the Reorganization, as a shareholder of the Purchaser, the Seller shall enjoy and bear all shareholder right and obligations in accordance with the Company Law of People’s Republic of China and relevant legal documents as well as separate arrangement reached between the Parties. The Purchaser will, in accordance with the “same-share, same-rights” principle, afford equal treatment with respect to shareholders’ rights and obligations to the investors participating the Reorganization, the details of which shall be set forth in the Purchaser’s articles of association to be adopted upon the completion of the Reorganization.

7.2

The board of directors of the Purchaser shall consist of eleven directors, of which the Seller shall have one board seat.

7.3

Each shareholder of the Purchaser shall be entitled to distributions of the Purchaser’s profit and residual property after liquidation in proportion to its respective paid-in capital contribution. Subject to the feasibility of profits distribution, the proportion of cash dividends to be distributed by the Purchaser shall in principle be no less than 30% of the annual distributable profit, with the detailed distribution plan and the distribution proportion for each year determined by the Purchaser’s board of directors and its shareholders’ general meeting following internal approval procedures in accordance with the Purchaser’s articles of association, giving consideration of the Purchaser’s capital status and requirements for business developments.

8.

Representations and warranties of the Seller

8.1

As of the Execution Date and the Closing Date, and immediately prior to the Handover of the Target Assets, the Seller makes the following representations and warranties to the Purchaser that, subject to the disclosure otherwise made hereunder:

(1)

it is a company limited by shares with full civil capacity in accordance with PRC law, with right, power and legal capacity to enter into this Agreement and perform all the obligations and responsibilities under this Agreement. The execution and performance of this Agreement by the Seller will not conflict with, or violate:

i.

the provisions of its internal constitutional documents and other relevant documents, or any applicable laws, regulations or rules;

ii.

orders, judgment and decrees issued by any court, government authorities and regulatory authorities prior to the execution of this Agreement;

iii.

any necessary procedures required by applicable laws and/or binding agreements and documents prior to the Closing Date, except those not having a Material Adverse Effect on the Purchaser’s operation of the Target Assets.

(2)

it has obtained the necessary license, authorizations and approvals for the execution and performance of this Agreement in accordance with the current laws and regulations, and will take all practicable measures to obtain such licenses, authorizations and approvals essential for the performance of the Agreement but not yet obtained.

(3)

all the representations and warranties set forth in Appendix 5.

(4)

the Seller will complete the Closing and Handover as soon as possible in accordance with the terms and conditions hereunder.

(5)

if certain unforeseeable condition occurs to the Seller after the Execution Date but prior to the Closing Date, which will cause any aspect of any representations, warranties and covenants that is material to the financial or operational condition of the Target Assets to become untrue, inaccurate or misleading, the Seller shall give a written notice to the Purchaser within 15 Days after it becomes aware of the above-mentioned changes.

(6)

prior to the completion of the Handover, except for the internal reorganization to be made by the Seller pursuant to Article 6.4 of this Agreement within the scope of Target Assets, or the normal provision of depreciation and amortization, depletion, abandonment, recovery of accounts receivable, settlement of due liabilities, Transferring Construction in Progress into Fixed Assets and other ordinary disposal situations in the process of production and operation, the Seller undertakes that it will not make decisions to implement the following conducts: making material adjustment to the Target Assets, setting up external guarantees on Target Assets, making material business change in relation to Target Assets or adjusting principal business, making material adjustment to accounting principles related to the Target Assets (except as required by laws and regulations) and other conducts that will cause Material Adverse Change to the ordinary operation of the Target Assets.

9.

Representations and warranties of the Purchaser

9.1

As of the Execution Date and the Closing Date, and immediately prior to the Handover of the Target Assets, the Purchaser makes the following representations and warranties that:

(1)

it is a limited liability company with full civil capacity in accordance with PRC law, with right, power and ability to enter into this Agreement and perform all the obligations and responsibilities under this Agreement. The execution and performance of this Agreement will not conflict with, or violate:

i.

the provisions of its internal constitutional documents and other relevant documents, or any applicable laws, regulations or rules;

ii.

orders, judgment and decrees issued by courts, government authorities and regulatory authorities before the execution of the Agreement;

iii.

any necessary procedures required by applicable laws and/or binding agreements and documents prior to the Closing Date.

(2)

it has obtained the necessary licenses, authorizations and approvals for the execution and performance of this Agreement in accordance with the current laws and regulations, and will take all practicable measure to obtain licenses, authorizations and approvals essential to the performance of the Agreement but not yet obtained.

(3)

the Purchaser will pay Transaction Consideration subject to the terms and conditions of this Agreement and complete the Closing and Handover as soon as possible.

(4)

at the same time as the Transaction, Relevant Investors will be introduced by the Purchaser and will make capital contributions in cash and in kind, respectively. Upon the completion of the Reorganization, the registered capital and shareholding structure of the Purchaser shall be as set forth in Appendix 3.

(5)

the Purchaser will operate in the ordinary course of business, enter into business contracts following general commercial principles and on the basis of fair and reasonable commercial terms, and make commercially reasonable efforts to ensure the smooth operation of all key assets, to ensure (i) there will be no Material Adverse Effects on the Purchaser’s operation, (ii) the service quality will not be lower than the existing standards, and (iii) there will be no significant adverse acts or omission affecting the continuous normal use of the Target Assets by the Seller for its production and operation, provided that for any Purchaser’s failure to fulfil the representation and warranties under this paragraph due to the facts or circumstances existing before the Closing Date (subject to the decisions of the judicial authorities or government authorities), the Parties shall amicably negotiate a solution in good faith.

(6)

if certain unforeseeable condition occurs to the Purchaser after the Execution Date but prior to the Closing Date, which will cause any material aspect of any representations, warranties and undertakings to become untrue, inaccurate or misleading, the Purchaser shall give a written notice to the Seller within 15 Days after it becomes aware of the above-mentioned changes.

10.

Liabilities for breach of the Agreement

10.1

If any representations and/or warranties made by any Party hereunder contains, in any material aspects, intentional misrepresentations, omission or misleading statements, or if any Party is in breach of any covenants made therein, or if such Party is in breach of any agreements or other terms hereunder, such Party shall be deemed to have breached this Agreement, and be responsible to indemnify direct damages incurred by the observant Party.

10.2

If the Seller refuses to complete the change of the registration with the Administration for Market Regulation in relation to the Target Assets or hand over the Target Assets and relevant businesses and employees thereunder within the agreed time limit pursuant to the terms of this Agreement, the Seller shall pay an overdue penalty amounting to 0.05% of the consideration for the assets failed to be handed over as agreed per day, except for the cases where the delayed handover of the Target Assets is not due to the Seller’s faults (including but not limited to Force Majeure or any reasons due to the Purchaser), provided, that the liabilities to be borne by the Seller as a result of failure to complete the change of the registration with Administration for Market Regulation for any given Target Assets under this article shall not, in aggregate, exceed 1% of the valuation of such Target Assets.

10.3

If the Purchaser fails to pay the consideration pursuant to the terms of this Agreement, the Purchaser shall pay an overdue penalty amounting to 0.05% of the overdue consideration to the Seller per day, except for the cases where such failure are due to the Seller’s faults.

10.4

Unless there is an existing breach on the Seller’s side or a Force Majeure event, the Seller has the right to hold the Purchaser liable for the actual loss incurred in connection with the failure of the Purchaser to fulfil the condition precedent (6) in accordance with Article 4.1 of this Agreement.

11.

Third-party claims and administrative penalties

11.1

Any controversy, dispute and administrative penalties (if any) occurs after the Closing Date that arises from the reasons and facts in relation to the Target Assets/ Target Companies before the Closing Date shall be resolved in accordance with the principles under Article 5.2 of the Agreement. If a Party is aware of any litigation, arbitration or controversy raised by a Third Party, it shall promptly notify the other Party and make all reasonable efforts to avoid and mitigate losses.

12.

Announcement

12.1

Without the prior consent of the other Party (which shall not be unreasonably withheld or delayed), neither Party (and any of their respective Affiliates) shall publish any announcement or issue any circular regarding the existence of the Agreement (or any other transaction document) or its subject matters.

12.2

If the laws or a stock exchange with appropriate jurisdiction or any regulatory or other supervisory institutions or authorities require (regardless of the validity of such requirement) the issuance of any notice, announcement or circular, then the restrictions under Article 12.1, Article 13.1 and Article 13.5 shall not be applied.

13.

Confidentiality

13.1

The information provided by the Party of the Agreement who owns the information (the “Provider”) to the other Party (the “Recipient”) in accordance with this Agreement, including but not limited to any material related to the Target Assets or terms and relevant negotiations under this Agreement and other transaction agreements (hereinafter collectively as “Confidential Information”), shall only be used by the Recipient and its personnel for the purpose of this Agreement. Except as otherwise provided in this Agreement, for any Confidential Information provided by the Provider, the Recipient and its personnel who are aware of the Confidential Information shall not directly or indirectly provide, disclose or otherwise transfer to any Third Party, or permit any Third Party to use, or provide any opinion or suggestion to any Third Party using, the Confidential Information without written consent of the Provider. In this Article, the “Third Party” refers to any natural person, legal person or other organizations other than the Parties to the Agreement, other than the Affiliates of the Parties.

13.2

Confidential Information provided or disclosed by the Provider to the Recipient shall only be disclosed by the Recipient to certain of its designated employees for the purpose of the performance of this Agreement, and such disclosure shall be made only within the scope required for such performance, provided, that the Recipient shall not disclose any Confidential Information to such employees without taking all reasonable precautions, which includes but not limited to notifying the confidential nature of the information to be disclosed to such employees and have such employees make confidential commitments as at least strict as the confidential obligations of the Agreement, so as to prevent such employees from using Confidential Information for personal interests or making any unauthorized disclosures to any Third Parties. Any violation of the confidentiality obligations by the Recipient’s employees shall be deemed as the violation of the confidential obligations by the Recipient.

13.3

Where the Recipient’s lawyers, accountants, contractors and consultants need to know the Confidential Information to provide professional assistance, the Recipient may disclose Confidential Information to such parties, provided that it shall require the above-mentioned parties to enter into confidential agreements or to perform confidential obligations in accordance with relevant professional ethical standards.

13.4

If the securities regulatory rules of the place(s) where the Company’s shares are listed, or relevant governmental or regulatory authorities require the Recipient to disclose any Confidential Information, the Recipient may disclose within the scope required by such securities regulatory rules or governmental or regulatory authorities without being subject to liabilities hereunder, provided that the Recipient shall immediately notify the information to be disclosed to the Provider in writing so that the Provider may take necessary protective measures, and such notification shall be made to the extent possible before the information is disclosed. The Provider shall cooperate to provide to the Recipient the materials and information needed for the purpose of publishing announcements or circulars.

13.5

The term of the confidential obligations under this Article is three years.

13.6

The confidential obligations under this Article do not apply to the following information:

(1)

Information that was publicly available when disclosed by one Party, or becomes publicly available after the disclosure (other than due to the negligence of the Recipient or its employees, lawyers, accountants, contractors, consultants or other personnel);

(2)

Information was, as proved by written evidence, already known by the Recipient upon the disclosure by the Provider, which did not come directly or indirectly from the Provider;

(3)

Information was, as proved by written evidence, already disclosed by a Third Party to the Recipient, which does not have confidential obligations and is entitled to make the disclosure.

13.7

When the Agreement is rescinded or terminated, the Recipient shall immediately cease using and shall not permit any Third Party to use the Confidential Information provided by the Provider, and, upon the Provider’s written request, shall delete or destroy the Confidential Information provided by the Provider or return to the Provider, without retaining any information in any form.

14.

No assignment

14.1

Except as contemplated hereunder or with written consent by the Parties, no one shall transfer, assign or otherwise dispose all or part of its rights under this Agreement, nor shall it grant, establish or dispose any rights, interests or obligations therein. Any transfer in conflict with Article 14 is invalid.

15.

Further assurance

15.1

The Parties shall each execute (or cause to be executed) other documents as required by relevant laws and regulations or deemed necessary for the effectiveness or performance of this Agreement.

16.

Taxes and expenses

16.1

Subject to Article 16.2, unless otherwise provided hereunder (or under any other Transaction Documents), each Party shall be responsible for its own costs, expenses and other payments incurred in relation to the Transaction.

16.2

The Parties shall bear and pay all taxes arising under this Agreement or any other Transaction Documents in accordance with laws, regulations and relevant rules or decisions, and all fees collected by governmental authorities, regulatory institutions and stock exchanges.

16.3

With respect to the Transaction, unless otherwise required by laws and regulations and/or agreed by the Parties, all expenses incurred due to the Handover of the Target Assets shall be reasonably arranged and resolved through negotiation by and between the Parties.

16.4

The internal reorganization under Article 6.4 involves the transfer of original branches and related assets to the Target Companies. The Parties shall negotiate amicably to make the Purchaser eligible for obtain the corresponding Value-Added Tax (“VAT”) input deduction. In case where termination registration with the Administration for Market Regulation or cancellation of tax registration is involved, the Seller hereby agrees to complete such termination/cancellation within 12 months.

16.5

The Parties shall negotiate amicably, and deal with tax matters regarding the transfer of the Target Assets in accordance with VAT Regulations and relevant regulations. If the PRC taxation authority believes that the Transaction is within the VAT taxation scope, the Seller shall take the appraised asset value as the VAT-excluded price and invoice the Purchaser based on such price at the tax rate provided by relevant tax laws, and the Purchaser shall pay the price with tax included.

16.6

Assuming the special tax treatment to the Transaction is applicable to the Seller, the Purchaser shall ensure that the relevant acquisition adopts the special tax treatment principles under the Notice of the Ministry of Finance and the State Administration for Taxation on Several Issues Concerning the Enterprise Income Tax Treatment on Enterprise Reorganization (No. 59 [2009] of the Ministry of Finance), and it will not transfer the equity interest it acquired in the Target Companies in any form and that the Target Company will not change its original substantive operations (within the extent of its capacity as a shareholder) within 12 consecutive months from the Reorganization date. Meanwhile, the Seller will not transfer the equity interest it acquired in the Purchaser within 12 consecutive months from the date immediately following the date on which it is registered as a shareholder of the Purchaser. The Parties participating in the Reorganization (including the Purchaser, Target Company and the Seller) shall complete the registration and filing in accordance with tax-related requirements. If any Party fails to perform the above undertakings and covenants, the observant Party is entitled to pursue the breaching Party’s liability for its breach of contract with respect to actual losses incurred to the observant Party.

17.

Notice

17.1

Any notice related to this Agreement shall be written in Chinese, and delivered via designated courier, fax, email or express delivery by a courier company recognized by both Parties. The notice is effective upon receipt and is deemed to have been received at the following time: (a) if via designated courier or express delivery, on the third day after it is delivered to the recipient or sent out by the courier company; (b) if via fax, at the time the sender sends the notice with the notice showing that it has been delivered; or (c) if via email, when the relevant email reaches that recipient’s email address. In each case, if it is delivered out of the business hours, the notice shall be deemed to be received at the beginning of the business hours on the next Business Day.

17.2

For the purposes of Article 17.1, contact information such as the addresses and fax numbers of the Parties are set forth in Appendix 4.

18.

Conflict with other agreements

18.1

This Agreement and its appendices constitute all the legal document with respect to the Transaction. If any oral discussion and written agreement entered into by the Parties before the execution of the Agreement is inconsistent with the Agreement, the content of the Agreement shall prevail, unless the Parties expressly agreed otherwise.

19.

Waiver, rights and remedies

19.1

Unless otherwise expressly provided in the Agreement, no waiver, failure or delay by any Party in exercising any right, power or remedy hereunder or under any other Transaction Documents shall be deemed as a waiver thereof, nor shall it preclude any future exercise of such right, power or remedy, and no single or partial exercise of any such right, power or remedy shall preclude any other or future exercise thereof.

20.

Texts

20.1

This Agreement is prepared in Chinese. The Agreement is made in twelve originals with each Party holding three copies, and the remaining six copies reserved for approvals and/or filings by the governmental authorities. The aforementioned texts of the Agreement have the same legal effect.

21.

Effective date and amendment

21.1

This Agreement shall be established upon the execution by the legal representatives or authorized representatives of the Parties and the affixation of the official chops of both Parties, and shall enter into force upon the satisfaction of the following conditions:

(1)

the Purchaser’s shareholder has decided to approve the Transaction;

(2)

the Seller’s shareholders’ meeting has approved the Transaction.

21.2

Upon the date of establishment of this Agreement, Articles 12 (Announcement), 13 (Confidentiality), 14 (No assignment), 16 (Taxes and expenses), 17 (Notice), 18 (Conflict with other agreements), 19 (Waiver, rights and remedies), 21 (Effective date and amendment), 22 (Invalidity), 23 (Jurisdiction and arbitration) and Appendix 1 (Definition and interpretation) shall be legally binding upon the Parties.

21.3

Upon the execution of this Agreement, any amendment to this Agreement (or any other Transaction Document) shall be made in writing, and effective upon the execution by the legal representatives or authorized representatives of the Parties and the affixation of the official chops of both Parties.

22.

Invalidity

22.1

The provisions of this Agreement and other Transaction Documents are severable. If any such provision is deemed to be or become invalid or unenforceable in any respect in accordance with laws and regulations, it shall be ineffective in that respect, and the Parties shall make reasonable efforts to replace such provision with a valid and enforceable alternative provision whose effect is as close as possible to the intended.

23.

Jurisdiction and arbitration

23.1

This Agreement is governed by, and shall be interpreted in accordance with, the PRC laws and regulations.

23.2

The Parties shall use good faith to resolve any dispute, controversy or claim (collectively, the “Dispute”) arising from, or in connection with, the interpretation or performance of this Agreement through amicable negotiation, during which the Parties may consult the regulatory authority. If a settlement cannot be reached through negotiation within sixty Days after one Party has brought the matter to the other Party, the Parties may refer such matter to arbitration.

23.3

The Dispute shall be submitted to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with its rules in force at the time of arbitration. The Dispute shall be decided by three arbitrators. Each party shall appoint one arbitrator, and the third arbitrator shall be appointed by the other two arbitrators, provided that if the other two arbitrators cannot decide on the choice of the third arbitrator, such arbitrator shall be appointed by CIETAC.

23.4

The arbitration proceedings shall be presided over by CIETAC as the presiding authority and shall be conducted in Chinese. The arbitration proceedings shall be held in Beijing.

23.5

The arbitration award made in accordance with the above arbitration procedures shall be final and binding upon the Parties, and shall be enforceable in accordance with its provisions.

23.6

The arbitration fees shall be borne by the losing Party. The Parties agree that if it is necessary for one Party to enforce the arbitral award through legal proceedings of any type, the Party subject to enforcement shall pay all reasonable fees and expenses as well as legal fees in connection with the enforcement of the arbitral award.

23.7

During the dispute resolution, the Parties shall continue to implement this Agreement in all other aspects except for the matter in dispute.

24.

Force majeure

24.1

In the event of a Force Majeure event that either Party is in whole or in part unable to perform its obligations under this Agreement due to the influence of such event, it shall be exempted from the liabilities in whole or in part according to the circumstances affected by Force Majeure. The performance of the obligations by the Parties under this Agreement may be suspended during the delay period caused by Force Majeure, and shall be automatically extended for a period equal to the delay period. The Party suffering from Force Majeure shall notify the other Party in writing as soon as possible and provide valid proof documents certifying the occurrence and time of Force Majeure within 15 Days. The Party suffering from Force Majeure shall take all reasonable measures to mitigate the consequences of Force Majeure as soon as possible. In the event of a Force Majeure event, the Parties shall negotiate immediately in order to find a fair solution and make their best effort to mitigate the consequences caused by Force Majeure.

Agreement

means this Agreement on Additional Issuance of Equity to Purchase Relevant Oil and Gas Pipeline Assets

Purchaser/PipeChina

means China Oil & Gas Pipeline Network Corporation

Seller

means China Petroleum & Chemical Corporation

Transaction

means, as contemplated hereunder, the proposed sale by the Seller of the Target Assets as set forth in the Appendix 2 owned by the Seller, and the proposed acquisition and takeover by the Purchaser of such Target Assets subject to the terms and on the conditions hereunder.

Reorganization

means a combination of this Transaction and the proposed equity investment by the Relevant Investors into PipeChina, either in cash or in kind. Upon the completion of this Reorganization, the registered capital of PipeChina will be RMB500 billion.

Relevant Investors

means all investors set forth in the Appendix 3 (other than the Seller) which propose to participate in this Reorganization through in-kind (with certain oil and gas pipelines assets) and/or cash contribution.

Target Assets/Appraised Assets

means, as set forth in the Article 1.1, assets the Seller proposes to sell to the Purchaser, as set forth in the Appendix 2, i.e., the equity interests in the Target Companies owned by the Seller (which Target Companies own and operate oil and gas pipelines, gas storages and LNG terminals and its ancillary facilities, pipeline inventory and other related assets).

Target Assets List

means the target assets list set forth in the Appendix 2.

Target Company/Companies

means, in whole or in part, target companies within the scope of the Target Assets.

Transaction Consideration

has the meaning set forth in Article 2.

Equity Consideration

has the meaning set forth in Article 2.

Valuation Date

means the valuation date set forth in the Valuation Report, i.e., December 31, 2019

Valuation Report

means the Report with Respect to the purchase by China Oil & Gas Pipeline Network Corporation of Certain Oil and Gas Pipeline Assets owned by China Petroleum & Chemical Corporation through Issuance of Equity numbered “▇▇▇▇▇ ▇▇▇▇ Ping Bao Zi [2020]896,” issued by China United Assets Appraisal Group Co., Ltd. on July 23, 2020.

Execution Date

means the date when the legal representative or authorized representative of the Parties execute this Agreement and affix the official chops of the Parties.

Closing

means the closing of transfer of Target Assets as set forth in Article 5.

Closing Date

means September 30, 2020.

Transition Period

means the period starting from the Valuation Date (exclusive) through the Closing Date (inclusive).

Handover

has the meaning set forth in Article 5.4.

Transaction Documents

means this Agreement and all appendix thereto, any supplemental agreements entered by and between Parties from time to time, and the Valuation Report (including the specifics of the Appraised Assets).

Conditions Precedent

means closing conditions set forth in Article 4.1, and a “Condition Precedent” means any one of such Conditions Precedent.

Third Party/Parties

means any entity or individual other than the Parties hereunder.

Third-Party Claim

means the disputes, controversies, litigations or arbitrations raised (by Third Parties) in relation to the Target Assets, and the liabilities and indemnification obligations in relation thereto.

Representative(s)

means, with respect to a Party and/or its Affiliates, its and or its Affiliate’s director, senior management, employee, agent, counsel, accountant and consultant.

Provider

has the meaning set forth in Article 13.1.

Recipient

has the meaning set forth in Article 13.1.

Transferring Construction in Progress into Fixed Assets

means, after the completion of the construction in progress, and upon the final acceptance of the construction, the construction in progress is put into use and be recorded as fixed assets on the book(s) of the Seller.

Affiliates

means, with respect to any Party, any entity controlled by such Party, controlling such Party or under common control with such Party.

Liability

means all current or future, actual, potential or debitive, liability, obligation and debts in all nature, incurred as a result of agreements, operations of law or other reason, and incurred jointly or separately either as a debtor or a guarantor.

Material Adverse Change/Material Adverse Effect

means incident(s) that, individually results in an actual or reasonable foreseeable loss of no less than RMB3.6 billion to the assets sold by the Seller and its Affiliates to the Purchaser and business in relation thereto, or in aggregate result in an actual or reasonable foreseeable loss of no less than RMB6 billion to the assets sold by the Seller to the Purchaser and business in relation thereto.

Major Loss(es)

means, accumulative and actual losses of more than RMB6 billion to the assets sold by the Seller and its Affiliates to the Purchaser and business in relation thereto.

Dispute

has the meaning set forth in Article 23.2.

CIETAC

has the meaning set forth in Article 23.3.

Intellectual Property Rights

means patents, trademarks, service marks, company logos, trade names, domain names, design rights, copyrights (including but not limited to computer software copyrights) and database rights, semiconductor circuit rights, utility models, design rights, invention rights, proprietary technology rights, and other intellectual property rights (regardless of whether it has been registered or not) and all rights or forms of protection that have equivalent or similar utility anywhere in the world, and the term “registration” includes registration and application for registration.

Tax

shall include (a) taxes levied on total or net income, profits and gains, and (b) all other taxes, levies, tariffs, import taxes, charges and withholding taxes (if applicable) of any nature, including any consumption tax, value-added tax and its additional taxes, corporate income tax, personal income tax (if applicable), real estate tax, land value-added tax, deed tax, farmland occupation tax, urban land use tax, environmental protection tax, stamp duty, etc., or withholding of any nature (including any related fines, penalties, late fees or interest).

Confidential Information

means, (i) with respect to the Purchaser’s obligation, any materials received or held by PipeChina (or any of its Representatives) that are relating to the Seller or the Target Assets, or any materials with respect to the Target Assets received or held prior to the Closing; (ii) with respect the Seller’s obligation, any materials received or held by the Seller (or any of its Representatives) that are relating to PipeChina, or any materials with respect to Target Assets received or held prior to and after the Closing; or any materials in relation to this Agreement or other Transaction Documents and the negotiation thereof.

Force Majeure

means unforeseeable, unavoidable and insurmountable objective conditions, including natural disasters such as earthquakes, typhoons, floods, and heavy rains (subject to the information issued by the local government or functional management departments such as meteorology), fires, wars, plagues (including COVID-19 pandemic), any government actions, any changes and promulgation of laws, etc., that directly affects the performance of this Agreement (or cause the performance of this Agreement deviates from the terms thereunder).

PRC/China

means the People’s Republic of China (for the sole purpose of this Agreement, excluding the applicable laws of Hong Kong Special Administrative Region of China, Macao Special Administrative Region of China and Taiwan).

RMB

means the legal currency of China.

Day(s)

means, unless otherwise specified, calendar days, provided that in any circumstances, if the last day of a given period hereunder is a holiday, then the last day of such period shall be the next day immediately following such holiday. Unless otherwise specified, “prior to a certain day” shall mean a period ending on such day, while “after a certain day” shall mean a period starting from the next day of such day.

Business Day(s)

means any day other than a Saturday, Sunday or a national holiday determined by the PRC government.

(1)

a “person” shall mean any individual, business name, organization, company (whether legal person or not), government (including but not limited to central and local governments and their constituent departments), any joint venture, association, partnership enterprises, institutions, work councils or employee representative organizations (regardless of whether they have independent legal personality or not);

(2)

an “Article” shall be an article hereunder;

(3)

headings are set for the ease of references only and shall not affect the interpretation of this Agreement;

(4)

in order to facilitate the payment in RMBs, any other amounts denominated in foreign currencies shall be converted into RMBs at the exchange rate on such date;

(5)

words introduced by terms like “including,” “includes” or “especially” or other similar terms shall be deems as explanatory only and does not limit the meaning of the words prior to such terms; and

(6)

for laws and regulations, including laws, administrative regulations, administrative rules, local regulations, etc., unless otherwise expressly provided in this Agreement, any explicit reference to a regulation (including any regulation in any jurisdiction) shall include: (a) the laws and regulations as revised, merged or re-enacted before or after the Execution Date; (b) the laws and regulations that were re-promulgated (whether revised or not); and (c) any supplementary regulations (including regulations) formulated in accordance with the laws and regulations (before or after the Execution Date) that have been revised, merged or re-enacted as described in paragraph (a) or (b) above, unless any matters mentioned in paragraphs (a) to (c) appear after the date of the Execution Date, and increase or change the Purchaser’s or Seller’s responsibilities hereunder.

4.

Inconsistence. If any defined terms in this Appendix 1 is inconsistent with any articles or terms set forth in other Appendices, for the interpretation of such Articles or Appendices, the definition in such Articles or Appendix shall prevail.