Equity Transfer Agreement of Jiangsu Cold-Rolled Technology Co., Ltd.
Exhibit
10.5
Equity
Transfer Agreement of Jiangsu
Cold-Rolled
Technology Co., Ltd.
Content
Article
1. Definition
Article
2. Equity Transfer
Article
3. Conditions Precedent to Transfer
Article
4. Price of Equity Transfer
Article
5. Representations, Warranties and Undertakings
Article
6. Liabilities for Breach of Agreement
Article
7. Force Majeure
Article
8. Miscellaneous
The
Equity Transfer Agreement (the “Agreement”) was signed by representatives from
all the parties involved in Changshu City, Jiangsu Province on August 18,
2006.
Transferor:
| · |
Shanghai
Huaye Iron & Steel Group Co., Ltd.
Legal
Address: ▇▇.▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ Industrial Park, Baoshan
District,
Shanghai.
Legal
Representative: ▇▇▇▇ ▇▇▇
|
| · |
Huaye
(Hong Kong) International Group Co., Ltd.
Legal
Address: Unit A, 20/F, Empire Land Commercial Center, ▇▇-▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇.
Legal
Representative: ▇▇▇▇ ▇▇▇
|
Transferee:
| · |
▇▇▇▇▇
Steel Technology Co., Ltd
Registered
Address: P.O. Box 957, Offshore Incorporations Center, Road
Town,
Tcirtola
, British Virgin Islands.
Legal
Representative: ▇▇▇▇▇▇ ▇▇▇▇
|
Whereas:
|
1.
|
|
The
Transferor, Shanghai Huaye Iron & Steel Group Co., Ltd., is a limited
liability company established and validly existing under the laws
of
People’s Republic of China (“PRC”), and has the necessary corporate power
to sign the Agreement.
|
|
2.
|
|
The
Transferor, Huaye (Hong Kong) International Group Co., Ltd., is a
limited
liability company established and validly existing under the laws
of Hong
Kong Special Administrative Region of PRC, and has the necessary
corporate
power to sign the Agreement.
|
|
3.
|
|
The
Transferee is a limited liability company established under the laws
of
British Virgin Islands and has the corporate power to sign the
Agreement.
|
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4.
|
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Jiangsu
Cold-Rolled Technology Co., Ltd. is a Sino-Foreign Equity Joint Venture
established in PRC by the Transferor according to the Law of PRC
on
Chinese-foreign Equity Joint Venture Enterprises and other relevant
laws.
Jiangsu Cold-Rolled Technology Co., Ltd. has registered capital of
US
$36,000,000, with the Shanghai Huaye Iron & Steel Group Co., Ltd. and
Huaye (Hong Kong) International Group Co., Ltd. holding 75% and 25%,
respectively.
|
1
|
5.
|
|
The
Transferor agrees to transfer all its equity in Jiangsu Cold-Rolled
Technology Co., Ltd. to the Transferee, and the Transferee agrees
to
purchase such equity transferred by the
Transferor.
|
Therefore,
both parties agree as follows:
Article
1. Definition
1.1
Unless otherwise specified in the context, the following terms shall have the
meanings listed below:
Transferor:
Shanghai Huaye Iron & Steel Group Co., Ltd. and Huaye (Hong Kong)
International Group Co., Ltd.
Transferee:
▇▇▇▇▇ Steel Technology Co., Ltd. established and existing under the laws of
British Virgin Islands.
Cold-Rolled
Technology: Jiangsu Cold-Rolled Technology Co., Ltd. legally established under
the PRC laws.
Original
Articles of Association: Articles of Association of Jiangsu Cold-Rolled
Technology Co., Ltd. and amendments thereof executed by the Transferor before
the signature of the Agreement.
Articles
of Association: Articles of Association of Jiangsu Cold-Rolled Technology Co.,
Ltd to be executed by the Transferee for the completion of the equity transfer
under the Agreement.
Change
of
Business Form: The Change of Cold-Rolled Technology from a sino-foreign equity
joint venture company to a wholly foreign owned enterprise when the Transferor
transfer to the Transferee all of the equity in Cold-Rolled
Technology.
Equity
Transfer: Transferor transfers all the equity to the Transferee, and Transferee
becomes the shareholder of Jiangsu Cold-Rolled Technology with legally holding
100% of the equity in Jiangsu Cold-Rolled Technology.
Transfer
Equity: Transferor transfers to Transferee 100% of the equity in Jiangsu
Cold-Rolled Technology legally held by the Transferor.
Price
of
Transfer: Hong Kong dollar/US dollar/ British pound equivalent to RMB 1.204457
million Yuan. This price is determined by the net capital value verified in
Capital Verification Report with the number of 93rd
Jingyongtuosu verified on 30th,
June
2006 issued by Beijing Yongtuo C.P.A. Co., Ltd.
2
Working
days: From Monday to Friday in each week, except for the statutory holidays
in
People’s Republic of China as well as Hong Kong Special Administrative Region of
People’s Republic of China.
Transfer
Effective Date: The date when the Agreement is executed by Transferor and
Transferee and the Agreement is approved by the concerned governmental authority
of foreign trade and cooperation.
Transfer
Completion Date: The date when the Transferee pays off all the transfer price
to
the Transferor and carries out the registration procedure for the establishment
of the new wholly owned foreign enterprise.
PRC
refers to People’s Republic of China, excluding the following areas of People’s
Republic of China: Hong Kong Special Administrative Region of People’s Republic
of China, Marco Special Administrative Region of People’s Republic of China and
Taiwan Province for the purpose of the Agreement.
1.2
Unless otherwise specified, explanation of the Agreement is conducted as
follows:
|
(1)
|
Title
of agreement is only for reference; it neither constitutes part of
the
Agreement nor demonstrates any meaning of
agreement.
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(2)
|
Annexes
to the Agreement are an integral part of the Agreement, having equal
legal
effectiveness of the Agreement.
|
|
(3)
|
If
the deadline of the period defined in the Agreement is in non-working
days, then the deadline will be automatically postponed to working
days
following statutory holidays.
|
Article
2. Equity Transfer
2.1
Subject to satisfaction of conditions precedent to transfer provided in Article
3, the Transferor hereby transfers 100% of equity in Cold-Rolled Technology
to
Transferee. This Transfer will take effect upon the date when the Agreement
is
approved by the concerned governmental authority of foreign trade and
cooperation.
2.2
As of
the date for the Agreement taking effectiveness, Transferor will no longer
hold
any equity in Cold-Rolled Technology.
2.3
Transferor shall submit the following documents to Transferee prior to the
Transfer Effective Date:
(1)
Board
resolution on the consent of Equity Transfer adopted by the Board of Cold-Rolled
Technology.
3
(2)
All
the original and duplicate documents of Cold-Rolled Technology held by the
Transferor.
Transferor
shall fully comply with the above provisions and Article 3, or otherwise
Transferee shall not be obliged to complete the Agreement or perform the
obligation under Article 4.
Article
3. Conditions Precedent to Transfer
3.1
Transferor and Transferee should cause the following conditions precedent to
Transfer to be met on the day of _______, 2006 or the date agreed by both
parties:
|
(1)
|
Checklist
of documents to be verified has been submitted to Transferee upon
the
requirement of Transferee and the consultant of Transferee for the
conduct
of due
diligence, and Transferor has obtained confirmation of the satisfaction
to
the result of due diligence from Transferee in
writing.
|
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(2)
|
Both
parties have signed the Agreement and Transferee has formulated and
signed
articles of association.
|
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(3)
|
Board
of Cold-Rolled Technology has adopted the decisions on approval of
equity
transfer and change of business form of Cold-Rolled
Technology.
|
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(4)
|
The
concerned governmental authority of foreign trade and cooperation
has
issued approval certificate on equity transfer and change of business
form
of Cold-Rolled Technology.
|
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(5)
|
New
Business License has been issued by competent administration department
of
industry and commerce.
|
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(6)
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Board
of Transferee has adopted a consent approving the Agreement ( if
required
by applicable laws)
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3.2
Should conditions precedent to the transfer provided in Article 3.1 not
satisfied prior to the deadline, the Agreement will be automatically terminated
(except for the failure of satisfaction resulting from Force Majeure or approval
delay by the approving authorities) unless Transferee issues a written exemption
of such conditions. Once the Agreement is terminated, obligations and rights
of
both parties (excluding the liabilities for breach of the Agreement) will be
terminated and Transferor should not ask for price of equity
transfer.
3.3
Once
the Agreement is automatically terminated according to Article 3.2, both parties
should cooperate with each other to go through all the procedures required
for
the return of the equity from Transferee to Transferor (if necessary), in order
for the equity structure of Cold-Rolled Technology to return to its original
status.
Article
4.Price of Equity Transfer
4.1
If
Transferor fully performs the liabilities and obligations defined in the
Agreement and all the representations, warranties and undertakings are true
and
accurate, Transferee will pay off all the price of equity transfer as much
as
▇▇▇ ▇.▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ dollar. This price is determined by
the
net capital value verified in Capital Verification Report with the number of
93rd
Jingyongtuo verified on 30th,
June
2006 issued by Beijing Yongtuo C.P.A. Co., Ltd. Transferee should pay RMB
90,334,275.00 Yuan to Shanghai Huaye Iron & Steel Group Co., Ltd and RMB
30,111,425.00 Yuan to Huaye (Hong Kong) International Group Co.,
Ltd.
4
4.2
If
all the precedent conditions specified in Article 3.1 are satisfied within
the
period, Transferee should pay off all the price of equity transfer within 3
months after the issuance of new business license or the earlier date agreed
by
both parties.
4.3
The
date when Transferee pays the price to Transferor is equity transfer completion
date. As of the transfer completion date, Transferee finishes its obligation
of
payment of equity transfer price and Transferor should not ask for other
payment.
Article
5. Representations, Warranties and Undertakings
5.1
Transferor hereby represents, warrants and undertakes to Transferee
unconditionally and irrevocably as follows:
| (1) |
All
the representations, warranties and undertakings and the documents
concerning Transferor and Cold-Rolled Technology given and provided
by
Transferor are true, accurate, integral, complete and
unconditional;
|
| (2) |
Transferor
shall have all the legally required authorization and approval
to sign the
Agreement, perform the obligation and execute rights according
to the
Agreement, and would not violate the applicable laws;
|
| (3) |
Cold-Rolled
Technology is a Sino-foreign equity joint venture established
and existing
under the PRC laws and has the right to own its assets and to
operate
business within the registered business
scope;
|
| (4) |
There
exists no pending or unsettled litigation, arbitration, administrative
procedure, or claims concerning Cold-Rolled Technology, except
for those
(executed and confirmed by the Transferee) disclosed by Transferor
to
Transferee in writing before the execution date of the
Agreement;
|
| (5) |
No
outstanding payment obligations exist in Cold-Rolled Technology
except for
the accounting items informed to Transferee (Those items should
be
confirmed by the signature of
Transferee);
|
| (6) |
Operation
of Cold-Rolled Technology goes on as usual and no significant change
arises during the period from the signature of the Agreement and
the date
when equity transfer is finished;
|
| (7) |
Transferor
legally holds the equity to be transferred and free of pledge,
mortgage,
charges or claims;
|
| (8) |
Cold-Rolled
Technology is registered according to the rules of taxation laws
in
People’s Republic of China without violation of any tax laws and
regulations or be subject to fines imposed by taxation
bureau.
|
5
5.2
Transferee hereby represents, warrants and undertakes to Transferor
unconditionally and irrevocably as follows:
|
(1)
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All
the representations, warranties and undertakings and the documents
given
and provided to Transferor are true, accurate, integrate, complete
and
unconditional.
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(2)
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Transferee
shall have all the legally required authorization and approval to
sign the
Agreement, perform the obligation and execute rights according to
the
Agreement, and would not violate the applicable
laws.
|
Article
6. Liability of Breach of Agreement
6.1
Any
party not performing the obligation defined in the Agreement on time will be
deemed as breach of agreement and is due to take all the liabilities as well
as
economic damage resulting herefrom.
Article
7. Force Majeure
7.1
Force
Majeure refers to all the unpredictable, unavoidable or unconquerable events
partly or fully preventing any party from performing the Agreement, such as
earthquakes, typhoons, floods, fire and wars as well as other unpredictable,
unavoidable or unconquerable events, including the force majeure events defined
in the general international commercial customs.
7.2
Should force majeure happen, the party suffering the damage of force majeure
should stop performing obligations temporarily, notify the other party with
the
written notice and provide the relevant evidence witnessing the force majeure
event which shall be issued by a competent public notary. Otherwise it will
not
be deemed as force majeure event.
7.3
Should force majeure event happens, both parties should negotiate with each
other for the solution of mitigating the damage caused by the force majeure
event.
7.4
Should force majeure event happens, the party effected shall be exempted from
the responsibility of not performing the obligations during the course of the
force majeure event.
Article
8. Miscellaneous
8.1
Notice
All
the
notices and documents in connection with the Agreement should be given in
written form and delivered by the means specified in the Agreement. Notices
and
documents may be sent by personal delivery, faxed and mailed to the address
designated by the recipient. Notifications and documents shall be deemed to
have
been given: if by personal delivery the date on the receiving; if sent by post,
7 days after the postmark date; if by fax the date on confirmation report
printed out by the facsimile machine. If any party changes the recipient
information, written notification should be sent out 7 days in advance,
otherwise the damage caused hereby shall be borne by the changing
party.
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8.2
Applicable Laws
Laws,
regulations and provisions in PRC shall govern the conclusion, validity,
interpretation and performance of the Agreement. If any specific matters in
connection with the Agreement are not provided by PRC laws, regulations and
provisions, the general international commercial customs shall
apply.
8.3
Dispute Settlement
Both
parties shall take efforts to settle any dispute arising from the interpretation
or performance of or in connection with the Agreement through friendly
consultations. In case no settlement can be reached through consultations,
then
such matter shall be submitted to the China International Economic and Trade
Arbitration Commission (“CIETAC”) in Beijing for arbitration in accordance with
CIETAC rules. The arbitral award shall be final and binding on both parties.
8.4
Waivers
Failure
or delay on the part of any party to exercise any right, authority or privilege
under the Agreement or other contracts or agreements relevant to the Agreement
shall not operate as a waiver thereof, nor shall any single or partial exercise
of any right, authority or privilege preclude further exercise thereof.
8.5.Transfer
Unless
agreed by both parties, any rights, obligations or liabilities under the
Agreement shall not be transferred.
8.6
Amendment and Supplement
The
Agreement shall not be amended or supplemented orally and shall be amended
or
supplemented only if it is in writing and executed by both parties. The
supplement to the Agreement shall be deemed as an integral part of the
Agreement.
8.7
Words
and Copies
The
Agreement is written and signed in Chinese with six original copies and several
duplicate copies. Each party holds one original copy and the remaining copies
will be submitted to the relevant government authorities for approval and
registration. Each copy shall have equal legal validity.
8.8
Effectiveness
The
Agreement will take effect once signed by both parties and obtained the approval
of the concerned governmental authority of foreign trade and
cooperation.
7
8.9
Severance
If
any
provision of this Agreement is held invalid, the validity of the remaining
provisions shall not be affected.
8.10
Entire Agreement
The
Agreement and its annexes shall be integral part of the Agreement, constituting
the whole agreement executed by both parties in connection with the subject
matters of the Agreement, and replacing all the prior memos, letters of intent,
preliminary agreements (such documents shall become invalid as of the transfer
completion date).
8.11
Expense
Both
parties shall bear their respective expenses for the execution of the
Agreement.
Transferor:
Shanghai Huaye Iron & Steel Group Co., Ltd
(Seal
of
Transferor)
By:
/s/
▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇;
authorized representative
Transferor:
Huaye (Hong Kong)International Group Co., Ltd
(Seal
of
Transferor)
By:
/s/
▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇;
authorized representative
▇▇▇▇▇
Steel Technology Co., Ltd.
(Seal
of
Transferee)
By:
/s/
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇; authorized representative
8