C3 Capital, Limited And Changchun Master Industry Co., Ltd In matter of Yili Master Carborundum Production Co., Ltd. Enter Into Equity Interest Transfer Contract July, 2008
C3
Capital, Limited
And
Changchun
Master Industry Co., Ltd
In
matter of
Yili
Master Carborundum Production Co., Ltd.
Enter
Into
July,
2008
Contents
|
Chapter
I
|
Definitions
of the Contract
|
2
|
|
|
Chapter
II
|
Object
Equity Interest
|
4
|
|
|
Chapter
III
|
Price of Equity Interest Transfer |
4
|
|
|
Chapter
IV
|
Capital
Increase
|
6
|
|
|
Chapter
V
|
Approval
and Checking
|
7
|
|
|
Chapter
VI
|
Assumption of Debts of Object Company |
8
|
|
|
Chapter
VII
|
Dispositon of Credits of the Object Company |
9
|
|
|
Chapter
VIII
|
Employees |
10
|
|
|
Chapter
IX
|
Rights, Obligations and Guarantees of Party B |
10
|
|
|
Chapter
X
|
Rights,
Obligations and Guarantees of Party A
|
12
|
|
|
Chapter
XI
|
Performance, Wind-up and Termination |
12
|
|
|
Chapter
XII
|
Representations and Statements of Party B |
13
|
|
|
Chapter
XIII
|
Representations and Statements of Party A |
16
|
|
|
Chapter
XIV
|
Confidentiality |
17
|
|
|
Chapter
XV
|
Liability for Breach of Contract |
17
|
|
|
Chapter
XVI
|
Force Majeure |
19
|
|
|
Chapter
XVII
|
Disputes
Settlement
|
20
|
|
|
Chapter
XVIII
|
Applicable
Law
|
20
|
|
|
Chapter
XIX
|
Miscellaneous
|
20
|
|
The
equity interest transfer contract (hereinafter referred to as “Contract”) is
made and entered into as the date of July
31st
, 2008
at
Beijing P. R. China by and among:
Party
A: C3
Capital, Limited,
a
company registered and established under the laws of the BVI Business Companies
Act 2004 and incorporated in the British Virgin Islands on 25th
day of
October, 2007, BVI Company Number: 1439706;
Party
B: Changchun
Master Industry Co., Ltd,
a
company registered and incorporated under the laws of People’s Republic of
China, registered No. 220107020002801ôregistered
address: ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇,
▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇.▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇, and its legal representative is ▇▇▇ ▇▇▇▇▇▇▇.
WHEREAS:
| 1. |
Yili
Master Carborundum Production Co. Ltd (the “Object Company”) has
registered with Administration of Industry and Commerce for Yining
County,
▇▇▇▇ ▇▇▇▇▇ Autonomous Prefecture, XinJiang Uygur Autonomous Region,
registered No. 65402100000504. The Object Company has constructed and
is
now operating 35,000 tonnes Carborundum Metallurgy Project of YiLi
Master
(the “Carborundum Project”). At present, a set of 5,500 kilovolt-ampere
carborundum metallurgy and production system, corollary producing
equipment and infrastructure has been built up, (hereinafter referred
to
as “Project Phase I”). Phase II of the Carborundum Project plans to make
the production capacity of carborundum metallurgy project rise to 15,000
tons per year. Phase III of the Project plans to make the production
capacity of carborundum metallurgy project rise to 35,000 tons per
yearôand
build up a plant which has the capacity to process 5,000 tons granulation
and micro mist of carborundum per year.
|
1
| 2. |
The
registered capital for the Object Company is RMB 3.8 million Yuan which
is
invested solely by Party B. Party B plans to transfer to Party A all
its
holding shares of the Object Company (“the Object Equity Interest”). Party
A intends to purchase the equity
interest.
|
|
According
to the principle of equality and mutual benefit and through friendly
consultation, Party A and Party B agree on the following terms and
conditions, in accordance with the Contract Law of the People’s Republic
of China, and other applicable Chinese laws and regulations. The parties
will abide by and fulfill the Contract in good
faith.
|
Chapter
I Definitions
of the Contract
Article
1 Definition
The
terms
hereinafter used in the Contract shall have the meanings set forth as follows:
| 1.1 |
“Industrial
and commercial administration”
(AIC) means the industrial and commercial administration of People’s
Republic of China which performs the job of business registration and
issues business license.
|
| 1.2 |
“Department
of Commerce”
means Ministry of Commerce of People’s Republic of China, or so far as the
examination and approval is concerned, the local department of commerce
with competent power of examination and
approval.
|
| 1.3 |
“Foreign
Exchange Administration”
means the State Administration of Foreign Exchange and local foreign
exchange administrations at all levels.
|
| 1.4 |
“Examination
and Approval Authority”
means the relevant Chinese governmental departments having authority
defined by relevant Chinese laws, regulations, regulatory rules and
policies to examine and approve the Contract, the equity interest transfer
and the capital increase, including but not limited to Ministry of
Commerce (MOC),
|
2
|
National
Development and Reform Commission (NDRC), State Administration of Foreign
Exchange (SAFE), Industrial and Commercial Administration (AIC),
etc.
|
| 1.5 |
“Capital
Increase”
means, after Party A accepts the equity interests of the Object Company
from Party B, Party A puts additional registration capital into the
Object
company.
|
| 1.6 |
“Encumbrance”
shall mean any mortgage, pledge, other security interest, assignment,
lien, charge, option, trust interest, pre-emptive right, lease and
any
other restrictions or conditions.
|
| 1.7 |
“Closing
date”
means the date on which the Object Equity Interest Transfer has performed
the formality of alteration registration with the industrial and
commercial administration, subject to the date on which the industrial
and
commercial administration has performed examination and approval procedure
and issued new business license to the Object
Company.
|
| 1.8 |
“New
Business License” means
the new business license issued by the industrial and commercial
administration to the Object Company after completion of the Equity
Interest Transfer.
|
| 1.9 |
“Disclosed
Information” means
the related materials, explanation, statement and other information
disclosed or made by Party B to Party A or its designated intermediaries
during Party A’s due diligence investigation of the object company, the
Carborundum project and the object equity interest; or the information
disclosed by the Party B to Party A in relation to the object company,
the
Carborundum project and the object equity
interest.
|
| 1.10 |
“Employees”
mean all personnel who work in the Object Company and have employment
relations with or de facto employment relations with the Object Company
by
the date the contract is executed.
|
| 1.11 |
“Force
Majeure”
means the special events such as earthquake, typhoon, flood disaster,
fire
disaster, war, political disturbance, etc., or the events defined by
Chinese laws and regulations as Force Majeure.
|
3
| 1.12 |
“PRC”
or
“China”
means the People’s Republic of China, and insofar as the Contract is
concerned, shall exclude Hong Kong, Taiwan and
Macau.
|
| 1.13 |
“Tax”
means the state or local taxes defined by Chinese laws and regulations,
including relevant interest, fine or any other burden imposed by any
government authorities in relation to such
taxes.
|
Chapter
II
Object
Equity Interest
|
Article
2
|
According
to the Contract, Party B shall sell to Party A their respective
equity
interests of the Object Company and all the related rights and
interests
in a way free of any encumbrance. Party A shall pay the equity
interest
transfer price.
|
|
Article
3
|
After
the transfer of the equity interest is completed as per the Contract,
Party A will hold 100% equity interest of the Object
Company.
|
Chapter
III Price
of Equity Interest Transfer
|
Article
4
|
The
price of the equity interest transfer will be based on the evaluation
of
the object equity interest by the assets evaluation agency. The
two
parties confirm that the price of the equity interest transfer
is US
dollar equal to RMB 3,800,000.00 Yuan, reading RMB three million
eight
hundred thousand Yuan (equity interest transfer price).
|
|
Article
5
|
Each
payment of the equity interest transfer shall be based upon satisfaction
of the following conditions:
|
| 5.1 |
The
equity interest transfer and the Contract have been examined and approved
by all examination and approval authorities. Party A and Party B have
duly
opened bank accounts which are used to pay and
receive the price of the equity
interest.
|
4
| 5.2 |
The
flaws, defects of the Object Company discovered in the course of the
due
diligence investigation and in the course of the handover and operation,
have all been solved in a way accepted by Party A or have been provided
guarantee as per requirement of Party A.
|
| 5.3 |
The
representations and statements made by Party B in the Contract are
all
true and correct.
|
Article
6 Payment of the equity interest transfer price
| 6.1 |
First
payment
|
|
Within
3 days after the competent department of commerce has approved the
equity
interest transfer and the competent authority has issued new approval
certificate of foreign invested enterprise to the Object Company as
per
the said approval, Party A shall pay 50% (first payment) of the equity
interest transfer price to Party B.
|
| 6.2 |
Second
payment
|
|
Within
3 days after the industrial and commercial alteration registration
procedure has been duly performed and the Object Company has obtained
new
business license, Party A shall pay 40% (second payment) of the equity
interest transfer price to Party B.
|
| 6.3 |
Arrears
of payment
|
|
The
arrears of equity interest transfer price are used as Party B’s deposit.
After
the obligations under Article 27, 28 have been fulfilled and within
3 days
after Party A confirms in writing that the Carborundum Project operates
legally and no significant issue exists in the facilities and equipments,
Party A shall pay the arrears of the equity interest transfer price
to
Party B.
|
|
Article
7
|
The
parties to the Contract shall bear their respective payable taxes
arising
from the revenue or activity under the Contract according to the
relevant
laws, administrative regulations, rules and normative documents.
|
5
|
Article
8
|
Party
B shall issue formal and valid receipt and invoice to Party A immediately
after receiving each equity interest transfer payment from Party
A. Within
5 (five) days after receiving the equity interest transfer payment,
Party
B shall go to the local foreign exchange administration and perform
the
registration for receiving foreign exchange from foreign investor
for the
Equity Interest Transfer, a corresponding certificate procured
by Party B
shall be provide to Party A.
|
|
Chapter
IV Capital Increase
|
|
|
Article
9
|
Purpose
of the capital increase
|
|
|
Up
until the execution of this Contract, the Carborundum Project Phase
I
under the Object Company has finished construction and was put
into use on
January 16th, 2006. After closing date, Party A commits the capital
increase to the Object Company, in order to invest in the construction
of
continual project for the Carborundum Project.
|
|
Article
10
|
Scheme
of increase
|
|
|
The
first capital increase shall be conducted within 21 days upon the
closing
date (in case that the preconditions stipulated by Article 11 are
all met
after the closing date, the date on which such preconditions are
all met
will govern instead of the closing date) and the amount is US$
8.00
Million. The time and amount of capital increase later on by Party
A shall
be fixed depending on the construction process of the continual
project
and fund demand.
|
| Article 11 |
The
preconditions for the capital increase
|
| 11.1 |
Party
B has already performed all the obligations stipulated by this contract
and the statements and guarantees made by Party B in this contract
are all
true and correct.
|
6
| 11.2 |
The
approval procedures including the project approval, environmental
protection, construction and planning required for the construction
and
operation of the continual project of the first phase Carborundum Project
and the follow-up projects have been performed and the follow-up project
construction can be started legally.
|
| 11.3 |
The
debts of the Object Company before the closing date have been fully
paid
off by Party B or Party B has provided adequate guarantee for the debt
as
mentioned before.
|
Chapter
V Approval
and Checking
|
Article
12
|
Upon
the Contract coming into force, Party A and Party B shall cooperate
and immediately perform procedures relating to the industrial and
commercial alteration registration of the object equity interest
transfer.
|
|
Article
13
|
Checking
|
| 13.1 |
Party
B commits that, after the execution of this Contract, all assets or
any
documents (including electronic data and written materials) of the
Object
Company, shall be kept in full and safe condition and checking procedure
shall be conducted.
|
| 13.2 |
Upon
the Contract coming into force, Party A and Party B shall form a checking
team and work together to do the checking work relating to the Object
Company.
|
| 13.3 |
The
checking work shall include but not limited
to:
|
| (1) |
All
the official seals, financial seals and contract seals and other seals
of
the Object Company;
|
| (2) |
All
certificates and licenses of the Object
Company;
|
| (3) |
The
assets of the Object Company;
|
7
| (4) |
The
financial books and the accounting records of the Object
Company;
|
| (5) |
All
documents on the archives of the Carborundum Project (including but
not
limited to the project application, feasibility study report, preliminary
design report, engineering drawings, equipment drawings, all competent
authorities’ replies, permits, records or acceptance documents relating to
the Carborundum Project);
|
| (6) |
All
contracts for which the Object Company is one party (including but
not
limited to Engineering Construction Contract, Equipment Purchase Contract
and Installation Contract, Electricity Provision contract, Raw Materials
Purchase Contract, Product Sales Contract and Loan Contracts)
;
|
| (7) |
Other
check and handover procedures reasonably required by Party
A.
|
| 13.4 |
The
check and handover work shall be completed within seven days after
the
Contract is effective. The completion of the check and handover work
shall
be confirmed by the representatives of both parties in
writing.
|
| 13.5 |
After
the completion of the handover, the parties shall draw up detailed
list of
the handover items which shall be confirmed by representatives of both
parties.
|
Chapter
VI Assumption of Debts of Object Company
|
Article
14
|
Party
B shall disclose to Party A all loans of the Object Company before
the
execution date of this Contract (including tax payable and administration
cost). Party B shall provide Party A with detailed list of the
foregoing
debts (the list shall contain the amount of each debt, the debtor,
the
fulfillment period, the guarantee condition and the names of the
documents
related to the debts, etc.).
|
|
|
|
|
Article
15
|
All
debts owed by the Object Company before the closing date shall
be borne by
Party B. Party B shall perform the payment obligation according
to the
deadline and the amount as agreed in the underlying documents of
the
paid-off debts. The payment conduct shall be legal and
valid.
|
8
|
Article
16
|
The
debts owed by the Object Company before the closing date and undisclosed
by Party B at the time of executing the Contract shall be borne
by Party
B. If Party A or the Object Company detects that the undisclosed
debts do
exist, Party A or the Object Company is entitled to ask Party B
to
immediately pay off the debts or dispose of the debts.
|
|
|
|
|
Article
17
|
In
respect of the debts owed by the Object Company before the closing
date
and agreed to be borne by Party B according to Article 15 and Article
16
of the Contract, if Party B does not pay off the debts or Party
B does not
bear the debts according to the Contract, thus causing a result
that the
related creditors make claims against the Object Company, the Object
Company or Party A is entitled to seek compensation from Party
B on the
basis of this Contract. The scope of compensation includes the
debts
itself and all costs and expenses incurred by the Object Company
or Party
A in disposing of and settling the debts, including but not limited
to
litigation cost, arbitration fee, enforcement fee, attorney’s fee and
traveling costs, etc.
|
Chapter
VII Disposition
of Credits of the Object Company
|
Article
18
|
Except
the Contract provides otherwise, all credits of the Object Company
before
the closing date shall be owned by Party B.
|
|
Article
19
|
Party
B shall complete the work of disposing of the credits of the Object
Company as per Article 18 of the Contract in timely manner. The
disposing
work performed by Party B shall be in compliance with Company Law
of
People’s Republic of China and the related provisions of the Articles
of
Association of the Object Company.
|
|
Article
20
|
When
Party B disposes of the credits of the Object Company before the
closing
date as per the Contract and the disposing work is performed after
the
closing date, Party A shall provide necessary assistance without
contravening relevant laws and regulations.
|
9
Chapter
VIII Employees
|
Article
21
|
Within
three days after the contract comes into force, Party B shall provide
Party A with detailed list of employees and managers of the Object
Company
before the closing date (including gender, age, deadline of the
employment
contracts, remuneration level, position, code for employment contracts
and
etc).
|
Chapter
IX Rights,
Obligations and Guarantees of Party B
In
addition to Party B’ rights, obligations and guarantees specified by other
clauses of the Contract, Party B shall enjoy rights, bear obligations and
provide guarantees as per the following provisions of this chapter:
|
Article
22
|
Except
as otherwise provided by this Contract,
upon execution of the Contract, no act shall be performed which
leads to
or may lead to loss or damage of the assets, rights and interests
of the
Object Company.
|
|
Article
23
|
Upon
execution of the Contract, Party B shall not pledge, transfer or
put into
trusteeship its holding equity interest of the Object Company or
do any
other act which may affect Party A’s procurement of the object equity
interest.
|
|
Article
24
|
Upon
execution of the Contract, Party B guarantees that: it will operate
and
manage the Object Company in normal matter with duty of care of
a
kindhearted administrator, after the execution of the Contract,
including
but not limited to: (1) not to change the documents for establishing
the
Object Company; (2) not to change the financial policies of the
Object
Company; (3)on disposing of the assets, the credits and debts and
other
rights and obligations of the Object Company, Party B shall procure
advance approval from Party A.
|
10
|
Article
25
|
Party
B shall assist Party A to complete the examination, approval and
filing
procedures for the equity interest transfer.
|
|
Article
26
|
Party
B shall timely conduct the checking working specified in Chapter
Five of
the Contract.
|
|
Article
27
|
Within
42 days upon the full payment of the first capital increase stipulated
in
Article10, Party B shall perform the procedure relating to land
use for
Carborundum Project for the Object Company and obtained the “certificate
for stated-owned land use right”.
|
|
Article
28
|
Within
six months upon the full payment of the first capital increase
stipulated
in Article 10, Party
B shall conduct the rights registration procedure for real estate
including the office premises, factory buildings and other buildings,
perform and complete
the procedures of planning permit for construction land, planning
permit
for construction project, and other registration procedure for
real
estateåParty
B shall conduct and complete the overall completion acceptance
for the
Carborundum Project Phase I within 6 months after the increased
capital is
paid.
|
|
Article
29
|
Party
B guarantee that, all losses (including the administrative liability)
suffered by the Object Company from flaws in the project approval,
land,
engineering, design, machine and equipment, installation and operation,
enviromental protection, completion acceptance etc., will be compensated
by Party B if the flaws are confirmed to be incurred or exist before
the
Contract is executed.
|
|
Article
30
|
Party
B shall provide Party A with necessary assistance for Party A to
perform
its obligations or enjoy rights under this Contract.
|
|
Article
31
|
Party
B shall give timely written notice to Party A when Party B is in
knowledge
of any situation which may lead to failure in fulfilling all or
any part
of the Contract.
|
|
Article
32
|
Party
B are entitled to receive the equity interest transfer price as
per the
Contract.
|
11
Chapter
X
Rights,
Obligations and Guarantees of Party A
In
addition to Party A’s rights, obligations and guarantees specified by other
clauses of the Contract, Party A shall enjoy rights, bear obligations and
provide guarantees in accordance with the following provisions:
|
Article
33
|
Party
A shall assist Party B to perform all approval procedures in relation
to
the equity interest transfer and commit to provide all necessary
cooperation.
|
|
Article
34
|
Party
A shall assist Party B to perform all industrial and commercial
registration alteration procedures in relation to the equity interest
transfer and promise to provide all necessary
cooperation.
|
|
Article
35
|
Party
A shall pay the equity interest transfer price to Party B as per
the
Contract and shall increase the registration capital of the Object
Company
as per the Contract in order to ensure the start of construction
for the
Carborundum Project Phase II.
|
|
Article
36
|
Party
A shall give necessary cooperation to Party B when Party B perform
their
obligations under the Contract or exercise their rights under the
Contract.
|
|
Article
37
|
Party
A shall give timely written notice to Party B when Party A is in
knowledge
of any situation which may lead to failure in fulfilling all or
any part
of the Contract.
|
Chapter
XI Performance,
Wind-up and Termination
|
Article
38
|
The
parties shall perform their contractual obligations fully and completely
as per the provisions of the Contract.
|
12
|
Article
39
|
Party
B and Party A shall work well together, give mutual cooperation,
prepare
all necessary application documents and complete all procedures
relating
to the equity interest transfer under the Contract, including but
not
limited to examination and approval, record-keeping, industrial
and
commercial registration. The costs and expenses incurred therefrom
shall
be borne evenly among the parties.
|
|
Article
40
|
If
there are any undisclosed facts or circumstances relating to the
Object
Company before the Contract is executed, which have material and
adverse
impact on the legal and normal operation of the Object Company
after the
closing date, Party A is entitled to terminate the Contract.
|
|
Article
41
|
If
Party A does not pay the equity transfer price or does not pay
the price
of increased capital according this Contract, resulting in the
Project
Phase II construction unrealizable, Party B has the right to terminate
this Contract.
|
|
Article
42
|
If
the abiding party terminates the Contract as per Article 40 and
Article 41
of the Contract, it shall give written termination notice to the
breaching
party. The breaching party shall bear the liability of breach a
contract
as per the Contract.
|
|
Article
43
|
If
the Contract and the equity interest transfer fail to be approved
by the
examination and approval authority and such failure is not due
to Party A
or Party B, the Contract shall be automatically terminated and
no parties
to the Contract shall bear breach of contract
liability.
|
Chapter
XII Representations
and Statements of Party B
As
the
substantial basis for Party A to execute the Contract, Party B represent
and
state that:
13
|
Article
44
|
Party
B has full civil right capability and capacity for civil conduct
to
execute and fulfil the Contract and Party B has procured due authorization
to execute and fulfil the Contract.
|
|
Article
45
|
After
the Contract is effective, the Contract is legally binding upon
Party B
and is enforceable against Party B under relevant Chinese laws
of
bankruptcy, liquidation, reorganization, moratorium and other laws
relating to the creditor’s rights and remedies.
|
|
Article
46
|
The
registered capital of the Object Company has been fully paid in
as per
related Chinese laws. The Object Company is a legal person duly
incorporated and validly existing under Chinese laws. The Object
Company
legally owns the Carborundum Project and has procured business
license,
permit, registration and approval, which are legal and have not
been
violated.
|
|
Article
47
|
The
equity interest to be transferred by Party B to Party A does not
bear any
encumbrance preventing the transfer to Party A.
|
|
Article
48
|
The
execution, closing and fulfilment of the Contract by Party B, will
not (1)
violate any articles of association of the Object Company; (2)
cause the
Object Company, or Party B to violate any agreements, covenants,
commitments or other documents; (3) violate any laws, administrative
regulations, rules, normative documents, administrative replies
or any
judgments, awards, verdicts, orders or decrees, where the violation
will
have material adverse impact on the business, operation, assets
or
financial condition of the Object Company or Party B, or (4) result
in the
creation of (or the obligation to create) any encumbrance or restriction
of any kind on any properties or equity interests of the Object
Company.
|
|
Article
49
|
Except
the disclosed information, there is no other circumstance affecting
the
legality and validity of the equity interest transfer and there
is no
circumstance affecting the legal interest of the Object Company.
The
copies of the materials provided by Party B or the Object Company
to Party
A or Party A appointed professional agencies are consistent with
the
original copies and the original copies are truly existent, legal
and
valid. There are no other credits, debts, restrictive rights, potential
disputes, defects or flaws of the assets (including design and
building
defects or flaws) of the Object Company which are undisclosed to
Party
A.
|
14
|
Article
50
|
Except
the information disclosed by Party B, the assets (construction
projects,
machines and equipment) of Carborundum Project are in good standing
and
have no material defects. They are in good operational condition
and fit
well the purpose of their design, construction and manufacture.
|
|
Article
51
|
The
Object Company has full ownership of the assets under its name.
The assets
are free of any encumbrance, mortgage, pledge or liens.
|
|
Article
52
|
By
the date the Contract is executed, the Object Company does not
have any
pending litigation, arbitration, administrative penalty nor does
the
Object Company have any fact or issue which may lead to a
dispute.
|
|
Article
53
|
The
Object Company is in compliance with requirements of all Chinese
laws in
respect of environment protection, health and safety and does not
have any
harmful act which will entitle a third party to file a claim against
the
Object Company, demanding removal of the harm or obstacle or compensation
for its loss.
|
|
Article
54
|
The
Object Company has legally completed tax registration and has legally
and
sufficiently fulfilled its tax payment obligations before the closing
date. The Object Company does not have any pending tax claim and
is not
threatened by any auditing and investigation.
|
|
Article
55
|
The
Object Company before the closing date does not have any outstanding
salaries, remuneration, housing accumulation fund, social insurance,
employment compensation, employment injury compensation, nor does
the
Object Company have any labor disputes or potential issue which
may lead
to labor disputes.
|
15
|
Article
56
|
Regarding
the financial statement of the Object Company up to May 31st ,
2008, the
statement is: (a) true, accurate and complete; (b) consistent with
the
accounting books of the Object Company;(c) reflecting the uniform
financial condition, assets and debts of the Object Company at
the
respective dates and the operational result and cash flow change
of the
Object Company within the time period, and (d) prepared according
to the
sustainable accounting principle and financial system.
|
|
Article
57
|
From
the date the Contract is executed until the closing date, Party
B will
operate and manage the Object Company and the Carborundum Project
in
normal manner. The operation, business and condition of the Object
Company
and the Carborundum Project will not have any material and adverse
change
compared with the condition before the Contract is
executed.
|
Chapter
XIII Representations
and Statements of Party A
As
the
substantial basis for Party B to execute the Contract, Party A represent
and
state that:
|
Article
58
|
Party
A has full civil right capability and capacity for civil conduct
to
execute and fulfil the Contract and has procured due authorization
to
execute and fulfil the Contract.
|
|
Article
59
|
After
the Contract is effective, the Contract is legally binding upon
Party A
and is enforceable against Party A under relevant Chinese laws
of
bankruptcy, liquidation, reorganization, moratorium and other laws
relating to the creditor’s rights and remedies.
|
|
Article
60
|
The
execution and fulfilment of the Contract by Party A will not (1)
cause
Party A to violate any agreement, covenant, commitment or other
document;
(2) violate any laws, statutory laws, regulations, statutory rules
or any
judgments, injunctions, orders or decrees where the violation will
have
material and adverse impact on the business, operation, assets
or
financial condition of Party A.
|
16
Chapter
XIV Confidentiality
|
Article
61
|
The
party which receives the disclosed information as per the Contract,
shall:
|
|
(1)
|
Keep
the disclosed information confidential within five years upon
execution of
the Contract;
|
|
(2)
|
Except
that the above materials and information are disclosed to the
employees or
consultants on need-to-know basis, any party to the Contract
shall not
disclose to the third party the above materials and
information.
|
|
Article
62
|
Article
61 is not applicable to the following
cases:
|
|
(1)
|
Before
the disclosing party discloses the information to the receiving
party, the
receiving party has already known the information or the
receiving party
can prove the materials and information may be known through
other legal
channels.
|
|
(2)
|
The
receiving party obtains the materials and information from
the third Party
who is not subject to any confidentiality obligations.
|
|
(3)
|
The materials and information are disclosed as per requirement of laws and regulations. |
Chapter
XV Liability
for Breach of Contract
|
Article
63
|
If
Party A and Party B fail to obtain internal authorization to execute
and
fulfill the Contract, or, the execution and fulfillment of the
Contract
contradicts with or contravenes articles of association, government
authorization or approval, or due to something one party shall
take blame
for, the Contract is invalidated, becomes impossible to be fulfilled
or
fully fulfilled, such party shall be deemed to have breached the
Contract.
The breaching party shall pay the abiding party 1% of the Equity
Interest
Transfer Price as penalty.
|
17
|
Article
64
|
If
the significant issues related to Party A
but not disclosed by Party A before this Contract is executed,
causes the
equity interest transfer and Phase II construction of the Carborundum
Project impossible, then Party B is entitled to terminate this
Contract.
Party A shall return the equity interest of the Object Company
transferred
according to this Contract and shall also compensate Party B for
the total
loss resulted from the execution and performance of this
Contract.
|
|
Article
65
|
If
Party B, before this Contract is executed, has not disclosed the
facts
which may impact the legal existence of the Object Company and
the
Carborundum Project, thus the legal existence of the Object Company
or the
Carborundum Project is seriously impacted after the Equity Interest
Transfer is completed, Party A is entitled to terminate this Contract
and
Party B shall immediately repay all payments received as per the
Contract.
Party B shall also compensate Party A for the total loss resulted
from the
execution and performance of this Contract.
|
|
Article
66
|
In
case that Party A does not perform any of
its obligations under this Contract, and this non-performance has
a
significant adverse impact on the construction of Carborundum Project
Phase II, in addition, Party A does not eliminate the adverse effect
or
fulfill the compensation obligation, Party B has the right to terminate
this Contract. Then Party A shall compensate Party B for its loss
resulting from the execution and performance of this
Contract.
|
|
Article
67
|
If
Party B does not perform any of its
obligations under this Contract, and this non-performance has a
significant adverse impact on the Object Company after closing
date, in
addition, Party B does not eliminate the adverse effect or fulfill
the
compensation obligation, Party A has the right to terminate this
Contract.
Then Party B shall repay all payments received as per the Contract.
Party
B shall also compensate Party A for the total loss resulted from
the
execution and performance of this
Contract.
|
18
|
Article
68
|
During
the period from the Contract execution date to the closing date
of the
equity interest, if Party B commits any act which ▇▇▇▇▇ the assets,
rights
and interests of the Object Company, it shall constitute a breach
of the
Contract. Party B shall be liable to make compensation to Party
A or the
Object Company for any damages arising from the breach of the Contract.
|
|
Article
69
|
If
Party A does not make the payment of equity
interest transfer price according to the deadline as agreed, for
each day
delay, Party A shall pay 0.5‰ of the delayed amount as late payment
fee.
|
|
Article
70
|
If
either Party A or Party B violates the obligations under the Contract
or
the representations and statements are false, or the guarantee
responsibilities are not fulfilled, it shall constitute a breach
of
contract. If the penalty as agreed is not sufficient to cover the
financial losses suffered by the abiding party in executing and
fulfilling
the Contract, the breaching party shall make up the losses suffered
by the
observant party.
|
Chapter
XVI Force
Majeure
|
Article
71
|
In
case Force Majeure event occurs, the obligations of the affected
party and
any time period binding on such affected party shall be suspended
and
extended automatically during the period of the Force Majeure event.
In
such case, the affected party shall not bear any liability for
breach of
the Contract as provided in the Contract.
|
|
Article
72
|
The
Party alleging the occurrence of a Force Majeure event shall inform
the
other Party in writing within seven (7) days after the Force Majeure
event, and shall provide sufficient evidence issued by competent
authority
proving the occurrence and the continuation of the Force Majeure
event
occurs. The party alleging Force Majeure shall to the best of its
ability
eliminate the adverse effect of the Force Majeure event on the
fulfillment
of the Contract.
|
19
Chapter
XVII Disputes
Settlement
|
Article
73
|
Any
dispute arising from the Contract or related to the contract, may
be
submitted the dispute to China International Economic and Trade
Arbitration Commission (hereinafter referred to as “CIETAC”) for
arbitration pursuant to the prevailing CIETAC arbitration rules,
the
arbitration site is Beijing .
|
|
Article
74
|
The
arbitration award issued by CIETAC shall be final and binding on
each
party.
|
Chapter
XVIII Applicable
Law
|
Article
75
|
The
establishment, validity, interpretation and implementation of this
Contract shall be governed and bound by the laws and regulations
of the
PRC. In the event the laws of the PRC do not have provision on
a certain
issue relating to this Contract, a reference shall be made to the
general
international commercial practice.
|
Chapter
XIX Miscellaneous
|
Article
76
|
Amendment
|
|
|
An
Amendment of the Contract is only effective upon the execution
of written
document by both Parties. If the amendment is only effective
upon approval
by relevant administrative departments according to Chinese laws,
it shall
be approved by such competent administrative
departments.
|
|
Article
77
|
Severability
|
20
|
|
The
invalidity of any article in this Contract shall not affect the
validity
of the other articles in this Contract.
|
|
Article
78
|
The
Contract is written and executed in Chinese and English. If there
is any
discrepancy between the Chinese and English version, the Chinese
version
shall prevail.
|
|
Article
79
|
The
Contract has six copies in duplicate. Each party keeps two copies.
The other two copies shall be submitted for approval.
|
|
|
|
|
Article
80
|
The
Contract shall be effective upon seals of both parties and the
date when
the approval is granted by examination and approval
authority.
|
|
Article
81
|
Notification
|
|
81.1
|
Unless as otherwise specified in the Contract, any notice or written communication shall be sent by one party to the other party via express mail service. All notices shall be deemed to have been served on the fifth day after the date (subject to the postal seal) when the notices are sent to the correspondence address specified in the Contract. If the date of actual receipt is earlier than the said date, the date of actual receipt shall be the date of receipt. |
|
81.2
|
All notices and correspondences shall be sent to the following addresses unless the other party gives written notice to update such addresses. |
Party
A’s
correspondence address:
Phoneæ
Addresseeæ
Party
B’s
correspondence address:
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Baisheng Huayuan, Xinhua ▇▇▇▇▇ ▇▇▇▇ ▇▇.▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; post code: 830004
Phoneæ
13999966895
AddresseeæGao
Zhigang
Execution
page follows
21
No
text
on this page, for signature only.
Party
A
Authorized
representative:
Date:
Party
B
Authorized
representative:
Date:
22