Equity Transfer Agreement on 70% Equity of Zhuolu Dadi Gas Co. Ltd.
70% Equity of Zhuolu Dadi Gas Co.
Ltd.
This
Agreement is entered by and between the Transferor, the Transferee and the Related
Party of Transferor in Beijing on the day of
September 14，2010.
Transferor:
Beijing
Fengyin Xianghe Scientific Technology Co., Ltd.
Transferee:
China New
Energy Investment Co.,Ltd
Authorized
Representative:
ID
No.:
Related
Party of Transferor:
▇▇▇▇
▇▇▇▇▇▇▇▇ (ID No._ 110227195610211817)
(The
Transferor, the Transferee and the Related
Party of Transferor
shall hereinafter be referred to individually as the "Party" and collectively as
the "Parties".)
Target
Company：
Zhuolu
Dadi Gas Co. Ltd., (hereinafter referred to as “Zhuolu Company” or the “Target
Company”), a limited company established and existing under the laws of China,
with its registered address at Zhuolu County, Zhangjiakou, Hebei Province, with
its legal representative of ▇▇▇▇ ▇▇▇▇▇▇▇▇.
1
Whereas:
|
1)
|
The
Related Party of Transferor is the actual controller of (i) the
Transferor; (ii) Target Company and its related companies listed in Annex
I (List of Target Company and its related companies) and (iii) majority
shareholders of Target Company and its related
companies;
|
|
2)
|
The
Transferor undertakes that after the execution of this Agreement and
within 45 days after the Transferee paid the first installment payment to
the Mutual Management Bank Account he will reach the target of holding
100% equity of the Target Company by purchasing the
equity;
|
|
3)
|
The
Transferee agrees that after the Transferor holding 100% equity of the
Target Company, the Transferee will purchase 70% equity of the Target
Company from the Transferor;
|
|
4)
|
Target
Company and its related companies listed in Annex I intend to invest
projects listed in Annex VII; and
|
|
5)
|
The
Transferor provides the separate and consolidated financial statements
(including balance sheet and income statement) of Target Company and its
related companies listed in Annex I as indicated in Annex VIII. Transferor
and the Related Party of Transferor represent and agree that all financial
statements contained in Annex VIII are accurate and
complete.
|
Pursuant
to the Company Law of the
People's Republic of China and Contract Law of the People's
Republic of China and other applicable laws and regulations the
Transferor, the Transferee and the Related Party of Transferor, after friendly
consultations, conclude this Agreement regarding the equity transfer as
follows:
2
1.
Transferred Equity
|
1.1
|
The
Transferor agrees that after the execution of this Agreement and within 45
days after the Transferee paid the first installment payment to the Mutual
Management Bank Account it will reach the target of holding 100% equity of
the Target Company by purchasing the equity. The Transferor agrees to sell
70% equity interest of the Target Company held by it to the
Transferee.
|
|
1.2
|
The
Transferee agrees to purchase the 70% equity interest of the Target
Company from the Transferor after its holding 100% equity interest of the
Target Company.
|
|
1.3
|
After
the completion of registration in AIC for this equity transfer the
Transferee will enjoy the shareholder's rights, and undertake obligations
and responsibilities of shareholder in accordance with applicable China
laws and the provisions of the Articles of Association of the Target
Company.
|
|
2.
|
Principles
of Transfer of Equity
|
|
2.1
|
The
Parties agree that the respective obligations of the Transferor and the
Transferee to effect the sale and purchase of the Transferred Equity and
the Completion shall comply with the following
principles:
|
|
|
(1)
|
that
all necessary permissions, instructions, consents, licenses, approval or
authorization of any governmental
authority, bureau, agency or other body required in connection with the
legality, validity or enforceability of the sale and purchase of the
Transferred Equity have been obtained or
made;
|
|
(2)
|
that
all necessary procedures, formalities and steps and regulatory
requirements relating to the sale and purchase of the Transferred Equity
have been completed or complied
with;
|
|
(3)
|
that
this transfer of equity shall not result in the deprivation of operating
right of urban gas pipeline project of the Target Company and its related
companies listed in Annex
I.
|
3
|
2.2
|
The
Transferee may at any time in writing exempt the performance of any of the
above principles by the Transferor, and such exempt may be made subject to
such terms and conditions as determined by the
Transferee.
|
The
Parties agree that unless otherwise provided in this Agreement, the Transferee
shall be entitled to terminate this Agreement unilaterally without any liability
of breach of this Agreement if some or all of the principles have not been
complied with before the completion of the transfer due to the Transferor. In
the event of such termination by the Transferee, any installments of the
purchase price previously paid shall be returned to the Transferee and the
Transferee is entitled to a penalty of RMB 5,000,000.00. If the penalty can not
cover the damages or losses suffered by the Transferee hereby, the Transferor
shall compensate the shortfall of such losses of the Transferee. If the
Transferee suffers from damages or losses hereby, the Transferor shall
compensation such losses to the Transferee.
|
3.
|
Arrangement
of Mutual Management Bank Account
|
|
3.1
|
Both
the Transferee and the Transferor mutually agree that the Parties will
open a mutual managed bank account with the Beneficiary of the Transferee
within 3 working days after the execution of this Agreement. Any interest
arise from the money deposited in the Mutual Management Bank Account shall
belong to the Transferee.
|
In the
event that pursuant to the laws and regulations or the terms and conditions of
this Agreement, this Agreement shall be terminated and the Transferor was
obliged to refund partial or entire payment paid by the Transferor; then release
the mutual managed bank account
|
3.2
|
Both
the Transferee and the Transferor mutually agree that relevant documents
in connection with the terms and conditions of escrow may be made,
including Supplementary Agreement for the Escrow Terms and Conditions for
the First Installment.
|
4
|
4.
|
Consideration
and Payment Schedule
|
Both
the Transferor and the Transferee agree that the consideration of 70% equity of
the Target Company (hereinafter referred to as the "Consideration") shall be
RMB135,000,000.00 (including tax). In any cases, the amount of the Consideration
will not be adjusted. But if any party breaches this Agreement, the breaching
party shall take the corresponding liabilities of breach.
|
4.1.1
|
The
Consideration shall be paid in Renminbi or equivalent US Dollars (the
exchange rate between RMB and USD shall be the rate upon each installment
of payment) by installments.
|
|
4.1.2
|
Both
the Transferor and the Transferee agree the value of the corresponding
equity of the Target Company and its related companies listed in Annex I
is included in the Consideration. After this acquisition, the Target
Company shall achieve the shareholding structure listed in Annex
III.
|
|
4.2
|
Payment
Schedule
|
The
Parties agree that the Consideration shall be paid according to the following
Payment Schedule:
|
4.2.1
|
The
amount of the first installment is
RMB60,000,000.00.
|
|
4.2.1.1
|
Transferee
shall make the first installment payment to the Mutual Management Bank
Account within 5
working days after the execution of this
Agreement.
|
5
Notwithstanding
aforesaid, if the Transferee failed to pay the agreed amount to the Transferor
to the Mutual Management Bank Account before the expiration day of the first
installment payment, the Transferee will be in a 5 days grace period. After such
grace period expired, if the transferee still failed to pay the agreed amount in
accordance with this Agreement, the Transferee shall pay overdue penalties at
the amount of 0.1% of the amount payable of the first installment to the
Transferors per day. However, that in no event shall the penalty of the late
payment of first installment payment be greater than RMB5,000,000.00
Yuan.
|
4.2.1.2
|
The
Parties agree that after the satisfaction of first installment payment
release preconditions, the Transferor is entitled to transfer partial or
entire first installment payment from the Mutual Management Bank Account
to any bank account at its sole discretion within 45 days (including the
45th
day) after the first installment payment was paid to the Mutual Management
Bank Account. The first installment payment release preconditions are as
follows:.
|
|
(1)
|
Transferor
owns 100% equity of the Target Company by purchasing equity and has
completed the corresponding alteration of AIC registration, namely after
such alteration the Transferor shall hold 100% equity of the Target
Company.;
|
|
(2)
|
The
Target Company has accomplish the equity purchase of the entire equity on
the purpose of achieving the shareholding structure listed in Annex II and
completed the corresponding alteration registration of AIC. In order to
avoid ambiguity, the Parties agree that the consideration of the equity
transfer which the Target Company purchase on the purpose of achieving the
shareholding structure listed in Annex II shall be included in the
Consideration of this Agreement and the Transferor shall be in charge of
making relevant payment of such consideration of the equity transfer to
the seller of such equity and ensure that there will not be any liability
incurred by the Target Company
hereby.
|
6
|
(3)
|
Transferor
has transferred 70% equity of the Target Company to the Transferee and
completed the alteration of AIC registration for the equity transfer of
the Target Company (during which the Transferee shall provide necessary
assistance), namely after such alteration the Transferee shall hold 70%
equity of the Target Company. For the Board of the Target Company after
such alteration of AIC registration 5 directors of shall be appointed by
the Transferee and 2 shall be appointed by the Transferor. The Target
Company has obtained the new Business License. The business scope of all
the Target Company shall at least include the operation, management and
services of urban gas pipeline when submitting to MOC for
approval and the subsidiary companies wholly-owned, controlled
of Target Company listed in Annex II shall remain the
same.
|
|
(4)
|
The
Target Company has achieved the shareholding structure listed in Annex
II;
|
|
(5)
|
Before
the completion of the Transfer, Articles of Associations of the Target
Company and subsidiaries wholly-owned, controlled of Target Company listed
in Annex II shall satisfy that: (i) resolutions of the shareholders’
meeting with respect to decision of amending the articles of the
association of the company, increasing or decreasing the registered
capital, and merge, split, dissolution or alteration of the company form,
shall be passed by the shareholders which represent two-thirds of the
approving votes; and (ii) the Transferor or the Target Company has the
right to appoint all the directors or executive director of the Target
Company and subsidiaries wholly-owned, controlled of Target Company listed
in Annex II. In the case when the Transferor transfer its equity of the
Target Company partially or entirely, such right of director appointment
shall be still be valid to the transferee of such equity, unless otherwise
provided under this
Agreement;
|
7
|
(6)
|
Both
Transferor and the Related Party of Transferor has entered into an
agreement involving all the following contents by and between all the
shareholders (other than the Target Company, Transferee and Transferor) of
the Target Company and Subsidiary Companies wholly-owned, controlled of
Target Company listed in Annex
II):
|
|
(i)
|
Both
the Transferor and the Related Party of Transferor undertakes
that after the completion of the Transfer (A) except provided otherwise in
the agreement,they will not take part in any day-to-day operation and
management (including but not limited to, taking the position of director,
supervisor, senior officer, etc.) of the Target Company and Subsidiary
Companies wholly-owned, controlled and equity affiliates of Target Company
listed in Annex II; (B) the Transferor shall have the right appoint 2
directors and the Transferee shall have the right to appoint 5 directors
and (C) waive the first right of refusal (if any) to purchase any equity
sold by other shareholders of any the Target Company and Subsidiary
Companies wholly-owned, controlled of Target Company listed in Annex II
any more. Transferor shall only have the rights to enjoy the dividends and
vote for the resolution of shareholder’s meeting according to his equity
proportion; and
|
|
(7)
|
DADI
GAS undertakes in writing that from the execution day of this Agreement it
will not operate any business in connection with city gas and also will
not operate any business in connection with the gas construction in the
area of the Target Company, any Subsidiary Companies wholly-owned,
controlled of Target Company, the projects planned and the area the
Transferee operate and will operate without the prior written consent of
the Transferee;
|
8
|
(8)
|
The
Transferor and the Target Company shall assist the Transferee to inspect
and check the fixed assets of the Target Company and Subsidiary Companies
wholly-owned, controlled of Target Company listed in Annex II)(If
due to the reasons caused by the Transferee and which results the
completion of fixed inspection and physical check could not be completed,
then it deems as the Transferor has fulfilled their obligation).
|
|
(9)
|
The
Transferor shall procure the Target Company and Subsidiary Companies
wholly-owned, controlled of Target Company listed in Annex II to complete
to transfer following materials to the Transferee, including but not
limited to, company stamps, certificates, licenses, government permits and
documents and materials of engineering, finance, human resources and
business contracts of operation, no matter in writing or in electronic;
and
|
|
(10)
|
Completion
of the Transfer;
|
|
(11)
|
The
Transferor and the Related Party of Transferor has caused all the
corresponding signatory parties of the legal documents regarding to the
projects planned listed in Annex VII agree that (i) the Transferor, the
Related Party of Transferor and their affiliates (where applicable) is
entitled to transfer all of its rights and liabilities set forth in the
corresponding legal documents to the Transferee or any third party
nominated by the Transferee with no additional consideration; and (ii) the
transfer of rights and liabilities aforesaid shall not cause any adverse
affect to its transferee on the performance of such legal documents.
Simultaneously, any legal documents regarding to such rights and
liabilities transfer is duly executed. In addition, the Transferor obtain
the written undertaking from DADI GAS of which DADI GAS will not take part
in such projects planned in any manners without the prior written consent
from the Transferee; and
|
9
|
(12)
|
All
Obligations of all parties set forth in Supplementary Agreement for the
Escrow Terms and Conditions for the First Installment have fully
performance, there is no any breach for all
parties.
|
The
Transferor shall submit original certificate or documents on satisfaction of
above conditions after obtainment. After the Transferee has received all the
certificates and documents, the Transferee shall issue a written confirmation
immediately. The day on which such written confirmation is issued is the
satisfaction day of the first installment payment release preconditions.
Notwithstanding aforesaid, the Transferee shall not refuse to issue the written
confirmation unreasonably when such certificates and documents submitted by the
Transferor are true, necessary and sufficient. Above-mentioned first installment
payment release preconditions shall be satisfied or fulfilled within 45 days
after the Transferee paid the first installment payment to the Mutual Management
Bank Account. In the event that the Transferor failed to satisfy all the first
installment payment release preconditions prior to the expiry of such time limit
and the Transferor submit a list in writing on the completion situation of the
preconditions (including all the completed items and uncompleted items) on the
expiration day of such time limit. the Transferee agreed to provide a remedy
period for the Transferor, the preliminary remedy period are 15 days . During
such preliminary remedy period, the Transferor does not need to pay any penalty
for its failure on satisfaction of all the first installment payment release
preconditions. In the event that the Transferor failed to satisfy all the first
installment payment release preconditions prior to the expiry of such
preliminary remedy period, the Transferor is entitled to submit a written
application on the extension of the remedy period of which the Transferor shall
state the reasons of its failure to satisfy all the first installment payment
release preconditions. The Transferee is entitled to decide whether such reasons
are reasonable or not. If not reasonable or the Transferor does not submit such
extension application, the remedy period will be expired on the expiration day
of the preliminary remedy perod; if reasonable, the Transferee may provide a 15
days extension of the remedy period (extension remedy period) for the
Transferor, The remedy perod will be expired on the expiration day of the
extension remedy period. During such extension
remedy period, the Transferor need to pay 0.1% of the first payment per day as
the penalty to the Transferee until the Transferor satisfy all the first
installment payment release preconditions，but in case that
the Transferor fails to satisfy all the first installment payment release
preconditions due to the liability of the Transferee, such penalty shall not
apply. In the event the Transferor is not able to satisfy all the first
installment payment release preconditions prior the expiry of remedy period, the
Transferee is entitled to take any of the following action (except due to the
liability of the Transferee ):
10
|
|
i.
|
to
terminate this Agreement, have the first installment payment which has
been paid to the Mutual Management Bank Account returned and require the
Transferor to pay the Transferee RMB5,000,000.00Yuan as
penalty.
|
|
|
ii.
|
to
delay the issuance of the written confirmation of the first installment
payment release preconditions until all the items are satisfied and
require the Transferor to pay the Transferee no less than RMB
5,000,000.00Yuan as penalty.
|
|
|
iii.
|
to
be entitled to deduct the corresponding amount of the first installment
payment according to how the first installment payment release
preconditions are satisfied at its sole discretion. In the event that
there are 2 or more than 2 deduction situation occurs, all the deduction
situations will be applied.
|
11
|
|
iv.
|
Notwithstanding
aforesaid, when the Transferee exercise its right set forth in item (i) to
(iii) above-mentioned, the Transferee is entitled to decide at its sole
discretion to waive any of its rights partially or
entirely.
|
Notwithstanding
the foregoing provided, if the Transferor intends to borrow some of the first
installment in the Mutual Management Bank Account, subject to the satisfaction
Supplementary Agreement for the Escrow Terms and Conditions for the First
Installment it is entitled to use 50% of ▇▇▇▇▇ installment and the Transferee
shall coordinate with it.
|
4.2.2
|
The
amount of the second installment is RMB65,000,000.00. After the
satisfaction of the following payment preconditions, the Transferee shall
make the second installment payment to the Transferor within 90 days
(including the 90th
day) after the Transferee released the first installment payment, provided,
however, that the extension and grace period set forth later in this
section shall apply:
|
12
(1) In the
case that the Target Company holds less than 70% equity of any subsidiary
companies wholly-owned, controlled, equity affiliates of Target Company listed
in Annex II, the balance portion of the equity between the current shareholding
percentage and 70% has been transferred to the Target Company from one or more
than one non Target Company shareholder. Such equity transfer of the balance
portion shall be caused successfully by the Transferor and/or the Related Party
of Transferor. The corresponding alteration of AIC registration (the Transferee
and the Target Company shall provide the necessary assistance during the
procedure) shall be completed as well, namely, after the alteration of AIC
registration, the Target Company holds 70% equity of such company. For example,
the Target Company holds 60% equity of Chengde Dadi Gas Ltd., Co. (hereinafter
call “Chengde Company”) currently. The balance portion of equity is 10% equity
of Chengde Company. 10% equity of Chengde Company has been transferred to the
Target Company from one or more than one non Target Company shareholder. Such
equity transfer of 10% equity of Chengde Company shall be caused successfully by
the Transferor and/or the Related Party of Transferor. The corresponding
alteration of AIC registration (the Transferee and the Target Company shall
provide the necessary assistance during the procedure) shall be completed as
well, namely, after the alteration of AIC registration, the Target Company holds
70% equity of Chengde Company.
(2) The
Target Company has achieved the shareholding structure listed in Annex III. The
business scope of all the subsidiary companies wholly-owned, controlled of
Target Company listed in Annex III shall remain the same.;
and
(3) All the
materials submitted from the Transferor to the Transferee on the Delivery of the
transfer are true, accurate and sufficient and necessary and
complete;.
13
The
Transferor shall submit original certificates or documents on satisfaction of
above conditions after obtained. After the Transferee has received all the
certificates and documents, the Transferee shall issue a written confirmation
immediately. The day on which such written confirmation is issued is the
satisfaction day of such payment precondition. Notwithstanding aforesaid, the
Transferee shall issue the written confirmation when such certificates and
documents submitted by the Transferor are true, necessary and
sufficient. Above-mentioned payment preconditions shall be satisfied
or fulfilled within 180 days after the Transferee release the first installment
payment. In the event that the Transferor failed to satisfy all the second
installment payment preconditions prior to the expiry of such time limit and the
Transferor submit a list in writing on the completion situation of the
preconditions (including all the completed items and uncompleted items) on the
expiration day of such time limit,, the Transferee agreed to provide a remedy
period for the Transferor, the preliminary remedy period are 15 days. During
such preliminary remedy period, the Transferor does not need to pay any penalty
for its failure on satisfaction of all the second installment payment
preconditions. In the event that the Transferor failed to satisfy all the second
installment payment preconditions prior to the expiry of such preliminary remedy
period, the Transferor is entitled to submit a written application on the
extension of the remedy period of which the Transferor shall state the reasons
of its failure to satisfy all the second installment payment preconditions. The
Transferee is entitled to decide whether such reasons are reasonable or not. If
not reasonable or the Transferor does not submit such extension application, the
remedy period will be expired on the expiration day of the preliminary remedy
period; if reasonable, the Transferee may provide a 15 days extension of the
remedy period (extension remedy period) for the Transferor, The remedy period
will be expired on the expiration day of the extension remedy period. During
such extension
remedy period, the Transferor need to pay 0.1% of the second payment per day as
the penalty to the Transferee until the Transferor satisfy all the second
installment payment preconditions，but in case that
the Transferor fails to satisfy all the second installment payment release
preconditions due to the liability of the Transferee, such penalty shall not
apply. In the event the Transferor is not able to satisfy all the second
installment payment preconditions prior the expiry of remedy period, the
Transferee is entitled to take any of the following action (except due to the
liability of the Transferee ):
14
|
|
i.
|
to
terminate this Agreement, have the first installment payment which has
been paid to the Mutual Management Bank Account returned and require the
Transferor to pay the Transferee RMB5,000,000.00 Yuan as
penalty.
|
|
|
ii.
|
to
delay the issuance of the written confirmation of the second installment
payment release preconditions until all the items are satisfied and
require the Transferor to pay the Transferee no less than
RMB5,000,000.00Yuan as penalty.
|
|
|
iii.
|
to
be entitled to deduct the corresponding amount of the second installment
payment according to how the second installment payment release
preconditions are satisfied at its sole discretion. In the event that
there are 2 or more than 2 deduction situation occurs, all the deduction
situations will be applied.
|
|
|
iv.
|
Notwithstanding
aforesaid, when the Transferee exercise its right set forth in item (i) to
(iii) above-mentioned, the Transferee is entitled to decide at its sole
discretion to waive any of its rights partially or
entirely.
|
Notwithstanding
aforesaid, after the expiration day of the second installment payment, the
Transferor confirm that the Transferee is entitle to have a extension of 90 days
without any penalty. After such extension if the Transferee failed to pay the
agreed amount to the Transferor after such extention, the Transferee will be in
a 45 days grace period. After such grace period expired, if the transferee still
failed to pay the agreed amount in accordance with this Agreement, the
Transferee shall pay overdue penalties at the amount of 0.1% of the amount
payable of the second installment to the Transferors per day. However, that in
no event shall the penalty of the late payment of second installment payment be
greater than RMB 5,000,000.00Yuan.
15
|
4.2.3
|
The
amount of the third installment is RMB10,000,000.00. For the purpose of
smoothly transition and stable operating of the Target Company, the third
installment shall be considered as the reserved payment of this
transaction and will be paid to the Transferor within 180 days (including
the 180th
day) after the Transferee paid the second installment payment under the
condition that the Transferor are free of any liabilities of breach or
compensation.
|
|
4.2.4
|
Notwithstanding
aforesaid, both the Transferor and the Transferee agreed
that:
|
|
(i)
|
Notwithstanding
aforesaid, if the Transferee failed to pay the agreed amount to the
Transferor in the mutual management bank account before the expiration day
of the third installment payment, the Transferee will be in a 45 days
grace period. After such grace period expired, if the transferee still
failed to pay the agreed amount in accordance with this Agreement, the
Transferee shall pay overdue penalties at the amount of 0.1% of the amount
payable of the third installment to the Transferors per day. However, that
in no event shall the penalty of the late payment of third installment
payment be greater than RMB 500,000.00
Yuan.
|
16
|
(ii)
|
The
third installment payment shall be paid by the Transferee to a mutual
management bank account opened under the name of the Transferor. Within 3
years after the completion of the Transfer, in the event that the
Transferor breaches any provisions of this Agreement, the Transferee is
entitled to require to transfer the penalty in such mutual management bank
account to the bank account appointed by the Transferee. If it is not
sufficient, the Transferor shall pay the outstanding penalty to the
Transferee immediately. In the event that the Transferor does not breach
this Agreement or has already completed the remedy (including but not
limited to payment of the penalty of breaching) of its breach of this
Agreement, the Transferee shall withdraw its management of such mutual
management bank account after the expiration of such period of 3 years. If
this provision is conflict with PRC rules and regulations，PRC rules
and regulations shall
prevail.
|
|
4.3
|
Notwithstanding
the provisions on the payment period of Article 4.2.1 and Article 4.2.2,
in the event there is less than 10 working days between a satisfaction day
of payment preconditions and the corresponding expiration day of payment,
the 10the working day after such satisfaction day of payment shall be
deemed as the expiration day of such
payment.
|
|
4.4
|
The
Transferor agree that when the Transferee makes payment to the Transferor,
the Transferee is entitled to deduct any of the remaining payables
confirmed by the parties (if any) owed by the Transferor on its own
discretion without any prior consent of the
Transferor.
|
|
4.5
|
The
Transferee agrees that, except as otherwise provided in this Agreement,
when making the payment of the consideration to the Transferor, the
Transferee will make the payment to the bank account instructed by the
Transferor. The Transferor agrees that, such payment following the
Transferor’s payment instruction shall be considered as the payment to the
Transferor.
|
17
|
5.
|
Business
Operation before the Completion
|
|
5.1
|
Both
the Transferor and the Related Party of Transferor undertakes jointly and
severally that theTarget Company and its related companies listed in Annex
I and the shareholder’s meeting and the board of directors meeting of each
company will procure that the business of each company respectively will
be operated in a normal and prudent basis and in the ordinary course of
day-to-day operations and, will not do or omit to do (or allow to be done)
or to be omitted to be done any act or thing (in either case whether or
not in the ordinary course of day-to-day operations) which is material and
in particular (but without limiting the generality of the foregoing) the
Transferor will procure that the Target Company and its related companies
listed in Annex I shall NOT prior to Completion, without the prior written
consent of the Transferee:
|
|
(1)
|
issue or agree to issue any shares or loan
capitals, or; offer or agree to offer or withdraw any option of purchase,
or; amend any existing terms concerning the acquisition or subscription of
the option or right of any shares or loan
capital;
|
|
(2)
|
make a loan or raise
money;
|
|
(3)
|
terminate any Agreements, arrangements or
Agreements of great value, or; waive any rights of material
value;
|
|
(4)
|
create or permit to arise any mortgage, charge,
lien, pledge, other form of security or encumbrance of equity of
whatsoever nature, whether similar to the foregoing or not, on or in
respect of any part of its undertaking, property or assets other than
liens arising by operation of law in amounts which are not
material;
|
|
(5)
|
give any guarantee, indemnity, surety or security
to any third
party;
|
|
(6)
|
dispose or agree to dispose of or acquire or agree
to acquire any material
asset;
|
|
(7)
|
dispose
of the ownership, possession, custody or control of any corporate or other
books or records;
|
18
|
(8)
|
other
than in the ordinary and usual course of its business, compromise, settle,
release, discharge or compound any material civil, criminal, arbitration
or other proceedings or any material liability, claim, action, demand or
dispute or waive any right in relation to any of the
foregoing;
|
|
(9)
|
other
than in the ordinary course of its business, release compromise or write
off any material amount recorded in the books of account of the company as
owing by any debtors of the
company;
|
|
(10)
|
let
or agree to let the company to transfer the possession or ownership of the
whole or any part of the Property, or take on lease or assume possession
of any real property;
|
|
(11)
|
terminate
any or allow to lapse any material insurance policy now in effect or
defaulting under any provision
thereof;
|
|
(12)
|
Cause
any employees to terminate their
employment;
|
|
(13)
|
Materially
change the terms of any existing employment
arrangements;
|
|
(14)
|
Make
any payments to the shareholders;
or
|
|
(15)
|
Conduct
any behaviors which will cause any change or effect which, individually or
in the aggregate with all other such changes and effects, is materially
adverse to the business or to the condition (financial or otherwise),
assets, operations, financial condition, results of operations or
prospects of the company, taken as a whole, or that would materially and
adversely effect the ability of the company to conduct its business as
regularly conducted.
|
19
|
6.
|
Matters
prior to Completion
|
|
6.1
|
Both
the Transferor and the Related Party of Transferor jointly and severally
confirms that, in order to enhance the work efficiency of the transaction,
within 7 days after the execution of this Agreement, the Parties will
designate personnel to form a transfer preparing working team
respectively. The Parties shall coordinate to cause the working team
perform its duty. The main duty of the working team includes: (1)
coordinating and assisting the Transferee to complete the Delivery of the
transfer; (2) ensuring the normal day-to-day operation of Target Company
and Subsidiary Companies wholly-owned, controlled, equity affiliates of
Target Company listed in Annex II before the delivery of transfer; (3) any
other responsibilities agreed by the
Parties.
|
|
6.2
|
To
ensure the steady handover, the Parties mutually agree to make the
corresponding arrangement for the work during the period from the
execution of this Agreement to
Completion.
|
|
6.3
|
The
transfer preparing working team shall provide a list for the documents for
the Transfer to the Target Company and Subsidiary Companies wholly-owned,
controlled, equity affiliates of Target Company listed in Annex II and
prepare all documents for the Transfer mentioned in Section
7.4.
|
|
7.
|
Completion
of the Transfer
|
|
7.1
|
The
Parties agree that after all preparation work for the Transfer has been
set forth in Section 6.3 of this Agreement has been completed they will
establish a “transfer team” ("Transfer Team") jointly to deliver the
Target Company (including the Target Company and subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II) within 3
working days. The day when Transfer Team is established is the
Commencement Day of Handover.
|
|
7.2
|
The
Transferor shall prepare a list of transfer for the Transfer Team. The
list shall show all the assets, corporate books required by the law,
account books, documents, agreements, and contracts and so on of the
Target Company and subsidiary companies wholly-owned, controlled of Target
Company listed in Annex II.
|
20
|
7.3
|
If
the Transferor provide reports or data of the Target Company and
subsidiary companies wholly-owned, controlled of Target Company listed in
Annex II which are materially different from actual facts, the Transferor
shall be considered as in breach of this Agreement, the Transferee is
entitled to terminate this Agreement (whereupon Transferor will be
entitled to a refund of the purchase price paid by the Transferor) and
require the Transferor to compensate relevant damages and losses. The
Transferee is entitled to decide to waive such rights partially or
entirely at its sole discretion.
|
|
7.4
|
To
facilitate the Completion of the Transfer, the Transferor shall submit the
following documents to the
Transferee:
|
|
(1)
|
Permits
and approvals in writing for the alteration registration of equity
transfer of the Target Company and subsidiary companies wholly-owned,
controlled of Target Company listed in Annex II (if any) from Committees
of Foreign Trade and Economic Cooperation and
AIC;
|
|
(2)
|
Certificates
of ownership of the Transferred Equity (including register of shareholders
of the Target Company and subsidiary companies wholly-owned, controlled of
Target Company listed in Annex
II);
|
|
(3)
|
Certificates
or documents which proves that the Target Company and subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II have legally
and validly owned the operation right of gas pipeline, the qualification
of gas operation and the charging right of gas. The certificates or
documents include but not limited to the agreement of operation right of
gas pipeline entered into by and between the local government or authority
of the local government, administrative permit of the qualification of gas
enterprise, certificate of gas
charging.
|
21
|
(4)
|
The
true, necessary and sufficient certificates or documents which proves that
the Transferor has transferred all trademark, patent, know-how and other
intangible asset right (if any) which is owned by third party but
currently using by the Target Company and subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II from the
owner to the Target Company.
|
|
(5)
|
Letters
of resignation from all the current directors, supervisors of the Target
Company and subsidiary companies wholly-owned, controlled of Target
Company listed in Annex II, in which confirm that none of them have
involved corresponding Target Company or subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II respectively
in any claims (no matter on the basis of the compensation for resignation
or any other reasons). The resignation shall be effective upon the
delivery day;
|
|
(6)
|
Confirmation
letters of senior management of the Target Company and subsidiary
companies wholly-owned, controlled of Target Company listed in Annex II to
confirm that none of the them have claims against the corresponding Target
Company and subsidiary companies wholly-owned, controlled of Target
Company listed in Annex II respectively (no matter on the basis
of the compensation for resignation or any other
reasons);
|
|
(7)
|
Certificates
that prove property right alteration registration procedures concerning
the selling and purchasing of Transferred Equity have been duly
completed;
|
|
(8)
|
Certificates
that prove the authorization orders of existing bank accounts of all the
Target Company and subsidiary companies wholly-owned, controlled of Target
Company listed in Annex II have been rendered void and new authorization
orders have been issued to personnel appointed by the
Transferee;
|
22
|
(9)
|
Certificates
of ownership of the assets of all the Target Company and subsidiary
companies wholly-owned, controlled of Target Company listed in Annex II;
and
|
|
(10)
|
Certificates
issued by the banks of the Target Company and subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II stating the
amount of the debit or credit of such accounts at close of business on the
day of Completion of the
Transfer.
|
|
(11)
|
In
the circumstance that the Target Company and subsidiary companies
wholly-owned, controlled of Target Company listed in Annex II do not have
any instance where the situations set forth in item (1) - (10) are not
applicable, the Transferor shall make statements as to the
non-applicability of the item and shall guarantee in writing, and
furthermore the Transferor shall undertake if there is any untrue and
inaccurate in statement which cause the Transferee suffer damages hereof
that the Transferor shall assume the responsibility of
compensation.
|
|
(12)
|
Any
other document or approval necessary to the completion fo the transfer of
equity to the Transferee.
|
|
7.5
|
The
Parties agree that the transfer shall be deemed to be completed on the day
when the alteration registration of this Transfer in AIC and also the
Transferee confirms that all works of delivery has completed and the
Transferor have fulfilled its obligations under Section 7.4 and issues a
written confirmation. Such day is the satisfaction day of Completion of
the Transfer. Notwithstanding aforesaid, the Transferee shall not refuse
to issue the written confirmation unreasonably when such certificates and
documents submitted by the Transferor are true, necessary and
sufficient.
|
23
|
7.6
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertake and warrant that the net assets value of each Target Company and
its related companies of the satisfaction day of Completion of the
Transfer shall not be lower than its net assets value of December 31, 2009
which was confirmed by the Transferee. Otherwise, the Transferor shall
submit a explanation on why the net assets value drops in writing. The
Transferee is entitled to decide whether such explanation from the
Transferor is reasonable or not at its sole discretion. If the Transferee
decides that such explanation is not reasonable, the Transferee is
entitled to deduct the Consideration
accordingly.
|
|
8.
|
Undertakings
and Warranties
|
|
8.1
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertake and warrant that on the execution day of this
Agreement:
|
|
8.1.1
|
The
Transferor shall increase its equity holding of in the shortest duration
at its best effort to reach the target of holding no less than 70% equity
of the Target Company by purchasing the equity interest. After the
completion of such equity purchase, the Transferor shall legally own 70%
of the equity of the Target Company. Should any third Party claim any
ownership or other interest in the aforesaid equity, the Transferor shall
assume full responsibility and shall be liable to compensate the
Transferee for any loss incurred
hereof.
|
|
8.1.2
|
Upon
execution by the Parties, this Agreement will be binding upon the
Transferor and the Related Party of the
Transferor.
|
|
8.1.3
|
The
Transferor and the Related Party of the Transferor will negotiate with the
Transferee on matters concerning equity transfer not mentioned herein in
accordance with PRC laws and regulations and relevant
policies.
|
24
|
|
8.1.4
|
Both
the Transferor and the Related Party of Transferor jointly and severally
acknowledges that the Transferee is entering into this Agreement in
reliance upon the accuracy of each of the
Warranties.
|
|
8.1.5
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertakes that upon the execution of the Agreement, it will terminate any
negotiation in connection with the equity transfer of the Target Company
with any third Party except the Transferee and it will not carry out new
negotiations in connection with the equity transfer of the Target Company
with any third Party except the
Transferee.
|
|
8.1.6
|
The
above-mentioned undertakings and warranties are made as of the execution
day of the Agreement and shall survive after the Completion Day of the
Agreement.
|
|
8.2
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertake and warrant that:
|
8.2.1 The
Transferor and Related Party of the Transferor shall cause the Target Company to
set up a wholly-owned enterprise subsidiary – Zhuolu Dadi Municipal Engineering
Construction Technology Service Ltd. Co.. Simultaneously, Zhuolu Dadi Municipal
Engineering Construction Technology Service Ltd. Co. satisfies all the following
conditions:
|
|
8.2.1.1
|
Before
October 15,2010 , owns all the receivable and payables, operation
contracts and assets (including but not limited fixed assets) which are
(A) booked in the financial statement upon December 31, 2009 confirmed by
the Transferee of Shijiazhuang Branch of Beijing Dadi Gas Engineering Co.,
Ltd., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of Beijing Dadi Gas Engineering Co., Ltd., Baigou
Branch of Beijing Dadi Gas Engineering Co., Ltd., Xian County Branch of
Beijing Dadi Gas Engineering Co., Ltd., Huahua Port Branch of Beijing Dadi
Gas Engineering Co., Ltd., Zhuolu Branch of Beijing Dadi Gas Engineering
Co., Ltd. and Chengde Branch of Beijing Dadi Gas Engineering Co., Ltd..;
and (B) occurred during the period from January 1, 2010 to the
satisfaction day of Completion of the Transfer, instead of such branches
respectively; and
|
25
|
8.2.1.2
|
Apart
from the credits and debts, operation contracts and assets (including but
not limited fixed assets) set forth in item 8.1.2.2 aforesaid, does not
own any other debts or potential
debts;
|
|
8.2.2
|
The
Transferred Equity shall not subject to any restriction under any laws and
agreements beyond the ones stipulated expressly in this Agreement. Should
any third Party produce effective evidence that the transfer by the
Transferor is subject to any restriction under any laws and agreements,
the Transferor shall assume full responsibility and shall be liable to
compensate the Transferee for any loss incurred
hereof.
|
|
8.2.3
|
Upon
the performance of this Agreement, the Transferred Equity purchased by the
Transferee and its subsidiary rights and interests or those to be
generated from the equity are free of any rights and interests of any
third Party.
|
|
8.2.4
|
Target
Company and its related companies listed in Annex I are established and
legally existing under the laws of
China.
|
26
|
8.2.5
|
Target
Company and its related companies listed in Annex I own and have acquired
all the effective authorization letters, licenses, approvals and permits
to manage existing assets and carry out all the business operations
(specified in Annex IV " The production and operation information of
Target Company and its Related Companies"). The above-mentioned
authorization letters, licenses, approvals and permits have been
registered and recorded in relevant authorities in accordance with
applicable laws and regulations. The Transferor shall explain for any
exceptional case (if has) in advance and ensure to settle such
case.
|
|
8.2.6
|
Target
Company and its related companies listed in Annex I have legally and
validly owned the operation right of gas pipeline, the qualification of
gas operation and the charging right of gas. The certificates or documents
include but not limited to the agreement of operation right of gas
pipeline entered into by and between the local government or authority of
the local government, administrative permit of the qualification of gas
enterprise, certificate of gas charging. The Transferor shall explain for
any exceptional case (if has) in advance and ensure to settle such
case.
|
|
8.2.7
|
Target
Company and its related companies listed in Annex I have completed the
corresponding comprehensive acceptance inspection for the vaporizing
station and completed pipeline (including but not limited to examination
and filing procedures of Construction Bureau, Quality Supervision Bureau,
Environmental Protection Bureau and Security Supervision Bureau) and
obtain the acceptance inspection report for relevant authorities. The
Transferor shall explain for any exceptional case (if has) in advance and
ensure to settle such case;
|
27
|
8.2.8
|
Except
disclosure to the Transferee in writing, the assets of the Target Company
and its related companies listed in Annex I are free of any guarantees or
any right of third Party or any other limitations that might have adverse
affect to the execution of rights concerning the above-mentioned assets or
interests values. As of the execution day of the Agreement, nobody has
executed or claimed to execute any rights that might have significantly
adverse affect the conditions of the transferred assets, or raised any
disputes directly or indirectly involving the transferred
assets.
|
|
8.2.9
|
Except
disclosure to the Transferee in writing, there exists no litigation,
arbitration or administrative procedures involving any relevant
enterprises or its Target Company and its related companies listed in
Annex I.
|
|
8.2.10
|
Except
explicit disclosure in Annex VI Obligations Transfer
List, the assets of the Target Company and its related companies listed in
Annex I are free of any other loans to be paid or debts of any forms.
Contingent liabilities or other liabilities of the Target Company and
subsidiary companies wholly-owned, controlled of Target Company listed in
Annex II before the completion which the Transferor HAS not disclosed in
Annex VI (Obligations transfer list) of this Agreement shall be assumed by
the Transferor and the Related Party of Transferor jointly and severally.
If the corresponding Target Company or subsidiary companies wholly-owned,
controlled of Target Company assumes or pays such liabilities in advance,
the Transferor shall reinburse all the payments to the corresponding
Target Company or subsidiary companies wholly-owned, controlled, equity
affiliates of the Target Company within 5 working days after the
occurrence of the payment.Further more, all intercompany accounts payable
among or between subsidiaries of the Target Company and Subsidiary
Companies wholly-owned, controlled of Target Company listed in Annex II
and the affiliates of the Transferor and Related Party of Transferor were
incurred in the ordinary course of each respective subsidiary’s business
with the exception of those listed in Annex
VI Obligations Transfer List which shall be paid by the
Transferor.
|
28
|
8.2.11
|
There
is no written notice, nor is the Transferor or the Related Party fo
Transferor aware of the treat of any notice from creditors that will cause
a mandatory disposal of assets of the Target Company and its related
companies listed in Annex I.
|
|
8.2.12
|
as
far as the Transferor’s knowledge (refer to the Transferor knows, or
should know from making a diligent examination), no material adverse
affect occurs or might occur on the basis of reasonable judgment to the
existing business, finance or operation on the Target Company and its
related companies listed in Annex
I.
|
|
8.2.13
|
The
Assets Confirmation List (specified in Annex V) of the Target Company and
its related companies listed in Annex I provided by Transferor to
Transferee is true, accurate and
complete.
|
|
8.2.14
|
On
the day of December 31, 2009,the Target Company and its related companies
listed in Annex I have effective and tradable ownership for all the fixed
assets stipulated in Assets Confirmation List, including but not limited
to all the machines, constructions, on-going projects, gas pipeline, land
and other fixed and current assets. Moreover, the Target Company will
still have effective and tradable ownership in the above-mentioned assets
and all the acquired assets upon the date of the Completion of the
Transfer.
|
|
8.2.15
|
Major
assets in operation of the Target Company and its related companies listed
in Annex I shall be in good condition and comply with normal standards of
gas industry after periodical and proper
maintenance.
|
29
|
8.2.16
|
The
operations (including but not limited to the operation of business
involved in the business scope, financial, taxation, environment
protection, labor and human resources, security manufaction, etc )of the
Target Company and its related companies listed in Annex I have never gone
against rules and regulations of China , never received any written notice
from relevant management or public service department that indicates
authorizations, licenses, approvals and permits awarded to the Target
Company before have been revoked due to its delinquent behaviors and the
revocation of the above-mentioned documents, compliance with relevant
regulations or remedial measures adopted have made material adverse
affects to the business operation of the Target Company and subsidiary
companies wholly-owned, controlled of Target Company. Before the
satisfaction day of Completion of the Transfer, none of the Target Company
and Subsidiary Companies wholly-owned, controlled of Target Company listed
in Annex II has any disputes or infringement of the legal interest of
their employees respectively.
|
|
8.2.17
|
All
the employees who has the employment relationship with the Target Company
and Subsidiary Companies wholly-owned, controlled of Target Company listed
in Annex II have no dispute or claim against the corresponding Target
Company and subsidiary companies wholly-owned, controlled of Target
Company listed in Annex II respectively (no matter on the basis
of whatever reasons)，otherwise
the Transferor shall assume full responsibility and shall be liable to
compensate the Transferee for any loss incurred
hereof;
|
30
|
8.2.18
|
The
Obligations Transfer List (please refer to Annex VI) of the Target Company
and its related companies listed in Annex I provided by Transferor to
Transferee is true, accurate and
complete.
|
|
8.2.19
|
Before
the delivery day, all the debts owed by the Target Company and its related
companies listed in Annex I have been shown in the Debt Transfer List
(specified in Annex VI).
|
|
8.2.20
|
Except
for debts shown in the Debt Transfer List (please refer to Annex VI),
there is no other debt owed by the Target Company and its related
companies listed in Annex I before the Date of
Completion.
|
|
8.2.21
|
If
the Transferee has reasonable grounds to believe that a breach of any of
the Warranties has occurred then the Transferor and the Related Party of
the Transferor shall ensure that for a period of three (3) years after the
date of Completion the Transferee and its advisers and representatives
shall be given all facilities which they may reasonably request and in
particular shall allow them full access to all accounting and other
records of the Transferor in order that they might ascertain whether a
breach of the Warranties has
occurred.
|
31
|
8.2.22
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertakes that all the shareholders of Target Company and its related
companies listed in Annex I other than Transferor or the Target Company
(hereinafter referred to as "Non-Transferor Shareholders") shall
completely cooperate with Transferor and obey the instructions of
Transferor on the matters of this transaction (including but not limited
to, waiver of right of first refusal, etc.), do not hold any substantive
rights to control any Target Company and Subsidiary Companies
wholly-owned, controlled of Target Company; to control or dispose of any
assets or take action on behalf of any Target Company and Subsidiary
Companies wholly-owned, controlled of Target Company; or to acquire a
greater interest in any Target Company and Subsidiary Companies
wholly-owned, controlled of Target Company with more preferred condition
than Transferee.
Further more; Non-Transferor Shareholders shall not cause any
obstacles to the transaction and the transfer of equity will not trigger
any additional rights for Non-Transferor shareholders that they do not
currently possess.;
|
|
8.2.23
|
The
above-mentioned undertakings and warranties are made as of the Completion
Day of the Transfer and shall survive after the Completion Day of the
Transfer.
|
|
8.3
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertake and warrant that after the completion of the
Transfer:
|
|
8.3.1
|
The
books and records and personal with the knowledge necessary to complete
the audit of the Target Company and the subsidiaries companies
wholly-owned, controlled of Target Company listed in Annex II which audit
is under US GAAP, are currently available to the Transferee and such
materials and information shall remain available until the completion of
the audit;
|
|
8.3.2
|
The
Transferor and the Related Party of Transferor shall
endeavor to give their reasonable efforts to assist the
Transferee to cause the non-transferor shareholders of the Target Company
and, subsidiaries companies wholly-owned, controlled of Target Company
listed in Annex II to execute the template of joint venture agreement
provided by the Transferor.
|
32
|
8.3.3
|
The
Transferor and Related Party of the Transferor shall cause DADI GAS to
cancel the registration of all the branches of DADI GAS mentioned in
Section 8.2.1.1 immediately upon receiving the writing notice of request
for such cancellation.
|
|
8.3.4
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertakes that during the operation term of the Target Company and
subsidiary companies wholly-owned, controlled, equity affiliates of Target
Company, all the brand name which is currently using by the Target Company
and its related companies listed in Annex I shall be continuously used for
free until the company cancels its registration in
AIC.
|
|
8.3.5
|
Both
the Transferor and the Related Party of Transferor jointly and severally
undertakes, after the completion of the Transfer of equity, in the period
that the Transferor still holds any equity of the Target Company and its
related companies listed in Annex I and within 3 years after the
Transferor does not hold such equity any more, the Transferor, the Related
Party of the Transferor and the companies controlled by them shall NOT
conduct the business of urban gas and NOT operate any business in
connection with the gas construction in the area of the Target Company,
any Subsidiary Companies wholly-owned, controlled of Target Company and
projects planned and the area the Transferee operate and will operate, or
hold any post in any company conducting the business of urban gas, or take
any measures to affect any potential
projects of Target Company and its related companies (including but not
limited to any projects planned listed in Annex
VII)..
|
33
|
8.3.6
|
Without
the prior written consent of the Transferee, neither the Transferor nor
the Related Party of Transferor or their affiliates shall not hire any
employee who has the employment relationship with any of the Target
Company and its related companies listed in Annex I on the execution day
of this Agreement.
|
|
8.4
|
With
regard to companies related the exceptional case which the Transferor
point out subject to Section 8.2.7, the Transferor and Related Party of
the Transferor undertakes that prior to the second installment they will
make their best effort to assist such companies to obtain all necessary
qualifications and certifications for the Target Company and its related
companies conducting business in
their locality. However, for Chengde Dadi Gas Ltd., Co. and Baigou Dadi
Gas Ltd. Co. the Transferor may remedy the entire certificates within a
certain period with the prior consent of the Transferee. If the Transferor
and Related Party of the Transferor refuses to perform such assistant
obligation, they will assume the liability set forth in Section
9.7.
|
|
8.5
|
The
Transferee undertakes and warrants
that:
|
|
8.5.1
|
The
Transferee is a legal entity established and legally existing under the
laws of P.R.C..
|
|
8.5.2
|
The
Transferee will negotiate with the Transferor on matters concerning equity
transfer not mentioned herein in accordance with PRC laws and regulations
and relevant policies.
|
34
|
8.5.3
|
The
Transferee shall be responsible for the above mentioned undertakings and
warranties. If the Transferor have fulfilled its obligations under the
Agreement, the Transferee shall also bear relevant obligations and pay
Consideration to the Transferor as stipulated in this
Agreement.
|
|
8.5.4
|
The
Transferee undertakes that the Transferee may consider offering, but shall
have no obligation to offer the Related Party of the Transferor a proper
position in Transferee upon the request of Related Party of Transferor.
And for purpose successful delivery and smoothly transition the Transferee
may consider offering the Senior Management of the Target Company , but
shall have no obligation to offer, a proper position in
Transferee.
|
|
9.
|
Liability
for breach of the Agreement
|
|
9.1
|
In
the event that there is any substantial omission, inaccuracy or
misrepresentation in the documents or data submitted by the Transferor,
the Agreement may be terminated by the Transferee. The Transferor shall
take the liabilities of breaching and indemnify the Transferee for the
damages for the breach thereof.
|
|
9.2
|
The
Parties mutually agree that, unless otherwise provided under this
Agreement, if a Party is in material breach of this Agreement ("breaching
Party"), then the other Party (“observant Party”) has the right to
terminate this Agreement according to the Contract Law of People's
Republic of China and applicable judicatory interpretations and claims
damages arising from the
breach.
|
35
|
9.3
|
If
the Transferor makes explanations for any exceptional case for
undertakings and warranties in Section 8.2.5, Section 8.2.7, the
Transferor shall settle such cases within the time limit approved by the
Transferee. If failed to do so, the Transferee is entitle to choose any of
following measures:
|
|
9.3.1
|
terminate
this Agreement and require the Transferor to pay the Transferee
RMB5,000,000.00 Yuan as
penalty.
|
|
9.3.2
|
deduct
no less than RMB5,000,000.00 Yuan from payables of the
Transferee.
|
|
9.4
|
The
Parties confirm simultaneously that, if a Party is in breach of
obligations with regard to the escrow terms and conditions (including but
not limited to the escrow terms and conditions in this Agreement and any
other agreement the parties agreed in connection with the escrow terms and
conditions), the beaching party shall assume responsibility of breach in
accordance with Supplementary Agreement for the Escrow Terms and
Conditions for the First
Installment.
|
|
9.5
|
The
Parties confirm simultaneously that, unless otherwise provided in this
Agreement, if a Party is in breach of their undertakings, warranties and
facts stated in the Section 8 under the Agreement，the
observant Party has the right to terminate this Agreement and claim
damages arising from the breach.
|
|
9.6
|
After
Completion of the Transfer, the Transferor shall take positive measures to
solve all disputes or debts caused by the operation of the Target Company
before the Date of Completion, or unforeseeable disputes before the Date
of Delivery. The Transferor shall compensate for the direct or indirect
damages rising thereof.
|
36
|
9.7
|
If
the Transferor and Related Party of the Transferor refuses to fulfill
their obligation under Section 8.4 of this Agreement, the Transferor are
in breach of the Agreement and the Transferee has the right to exercise
any of the following options:
|
|
9.7.1
|
to
delay the subsequent payments to the Transferor
or.
|
|
A.
|
Lack of exclusive operating agreement and not be
able to remedy before the second installment, the Transferor shall
compensate RMB2,000,000.00 per agreement to the
Transferee;
|
|
B.
|
Lack
of certificate of qualification on gas operating and not be able to remedy
before the second installment, the Transferor shall compensate
RMB2,000,000.00 per certificate to the
Transferee;
|
|
C.
|
Lack
of certificate of fee collection permit and not be able to remedy before
the second installment, the Transferor shall compensate RMB2,000,000.00
per certificate to the
Transferee;
|
|
D.
|
Lack
of other certificate which is necessary for the regular operating of gas
company before the second installment, the Transferor shall compensate
RMB500,000.00 per certificate to the
Transferee.
|
|
9.7.2
|
to
terminate this Agreement and claim damages rising
thereof
|
|
9.7.3
|
For
Chengde Dadi Gas Ltd., Co. and Baigou Dadi Gas Ltd., Co. Section 9.7 above
shall not apply.
|
37
|
9.8
|
Unless
this Agreement is otherwise provided, if the Transferor have performed all
the provisions of this Agreement strictly; however the Transferee
unilaterally terminates by violating this Agreement, the Transferee shall
compensate the Transferor for their direct damages rising
hereby.
|
|
9.9
|
Unless
otherwise provided under this Agreement, each Party shall not terminate
this Agreement without the consent of the other Party; otherwise the
termination party shall pay the other Party RMB 5,000,000.00Yuan as
penalty.
|
|
9.10
|
The
Parties agree that, under any of a situation or situations under Section
10.2.3 to Section 10.2.9 of the Agreement, Transferee has the right to
terminate this Agreement at its own discretion without taking any
liability and has the right to request Transferor to pay it RMB
5,000,000.00Yuan as penalty.
|
|
9.11
|
If,
according to this Agreement, the Transferee does not make the second
installment payment to the Transferor after the expiration of the grace
period of second installment payment, the Transferee shall assist the
Transferor to transfer 42% equity of the Target Company which is held by
the Transferee to the Transferor ( after this transfer, the Transferee
will possess 28% of the Target Company’s
shares.)
|
|
10.
|
Termination of this
Agreement
|
The
Parties mutually agree that unless otherwise provided in this Agreement, this
Agreement shall be terminated only under following situations:
38
|
10.1
|
This
Agreement shall be terminated upon the consent of the
Parties;
|
|
10.2
|
Transferee
is entitle to terminate this Agreement at its own discretion under any of
the following situations:
|
|
10.2.1
|
Transferee
is unable to complete the transaction due to relevant policies and rules
of the State;
|
|
10.2.2
|
Necessary governmental approvals are unable to
obtain for this transaction (if necessary)；
|
|
10.2.3
|
Transferee
discovers that there are material defects of the Transferred Equity or
Transferor and/or Non-Transferor Shareholders are unable to transfer the
Targets of this transaction;
|
|
10.2.4
|
Transferee
discovers that there is any conceal, omission or fraud in the documents or
data submitted by Transferor in connection with the Target Company and
Subsidiary Companies wholly-owned, controlled of Target Company listed in
Annex II;
|
|
10.2.5
|
Transferee
discovers that before the completion of the Transfer there are martial
barriers for the Target Company and Subsidiary Companies wholly-owned,
controlled of Target Company listed in Annex II which will result in
disability for conducting their business in further 3
years;
|
39
|
10.2.6
|
Transferee
discovers that Transferor fails to ensure the Work Group and the staff of
Transferee to smoothly work together with relevant staff from the Target
Company and Subsidiary Companies wholly-owned, controlled of Target
Company listed in Annex II, which result in Transferee is unable to
complete its prospective work requirements for continuous 5
days;
|
|
10.2.7
|
Transferee
discovers that Transferor consults or negotiates relevant issues in
connection with the transfer of part and/or all Transferred Equity or
signs relevant written documents with any third party other than
Transferee;
|
|
10.2.8
|
Non-Transferor
Shareholders fail to comply with the instructions of Transferor in
connection with the transaction of the Target Company and Subsidiary
Companies wholly-owned, controlled of Target Company listed in Annex II
(including but not limited to the percentage of the transfer, the price of
the transfer etc.), which results in any obstacle for such proposed
transaction of Transferee by Non-Transferor Shareholders；or
|
|
10.2.9
|
The
Transferor fails to complete or satisfy one or more Transferee’s payment
and/or payment release preconditions within the time limit provided in
this Agreement.
|
|
10.3
|
Unless
otherwise provided under this Agreement, in the case when the Transferee
terminate this Agreement pursuant to the provisions of this Agreement, the
Transferee is entitled not only to claim the liabilities of breach against
the breaching party, but also to require the Transferor to fully return
any payment paid to the Transferor from the
Transferee.
|
|
10.4
|
Transferor
is entitle to terminate this Agreement at its own discretion under any of
the following situations:
|
40
|
10.4.1
|
On
conditions that there is no freeze,
distrain, pledge, mortgage, or other right limitations against the
Transferred Equity, Transferor is unable to complete the transaction due
to relevant policies and rules of the
State;
|
|
10.4.2
|
Necessary
governmental approvals are unable to obtain for this transaction (if
necessary).
|
|
11.
|
Assignment
of this Agreement
|
Both the
Transferor and the Related Party of Transferor jointly and severally agrees
that, before the second installment if Transferee may transfer its entire or
partial rights and/or obligations to any third party designated by Transferee
who is affiliated with Transferee with the consent of the Transferor and the
Related Party of the Transferor for such transfer; after the second installment
the Transferee may make such transfer without the consent of the Transferor and
the Related Party of the Transferor,but the Transferee will notify. Both the
Transferor and the Related Party of Transferor jointly and severally further
agrees that, such third Transferee aforesaid may be person, legal entity or
other economic organizations. Transferee has the right to designate one natural
person, legal entity or other economic organization or two or more natural
persons, legal entities or other economic organizations as such third Transferee
its own discretion.
41
|
12.
|
Tax
Issues
|
|
12.1
|
Unless
otherwise provided under this Agreement, Transferee and Transferor shall
bear relevant payable taxes and expenses in connection with the
performance of this Agreement and this transaction respectively. If
required by law, Transferee will withhold and remit tax when making
payment (if any).
|
|
12.2
|
Before
the completion of delivery, Transferor shall be in charge of the tax
issues of the Target Company and its related companies listed in Annex I.
After completion, in case of economic damages and losses arising hereof,
Transferee has the right to claim for such damages and losses against
Transferor.
|
|
13.
|
The
Related Party of the Transferor undertakes that all the liabilities which
shall be performed by the Transferor set forth in this Agreement shall be
applicable to the Related Party of the Transferor as well. Further more,
the Related Party of the Transferor will take joint guarantee liability
for the liabilities which shall be performed by the Transferor set forth
in this Agreement.
|
42
|
14.
|
Force
Majeure
|
Neither
Party shall be prevented from failure of performance of any of its obligations
under this Agreement due to an event of Force Majeure outside the reasonable
control of that Party. The Party affected by such event of force majeure shall
notify the other Party immediately in convenient way, and shall no later than 15
days after the commencement of such event submit the documentary evidence
notarized by local notary organ to the other Party. The Parties shall negotiate
the way of dealing with the aftermath such event in time. Any delay in the
performance of any of the duties or obligations of either party shall not be
considered a breach of this Agreement, and the time required for performance
shall be extended for a period equal to the period of such delay, if such delay
has been caused by or is the result of acts of God; acts of public enemy;
insurrections; riots; injunctions; embargoes; labor disputes, including strikes,
lockouts, job actions, or boycotts; fires; explosions; earthquakes; floods;
shortages of energy; governmental prohibition or restriction; or other
unforeseeable causes beyond the reasonable control and without the fault or
negligence of the party so affected. The party so affected shall
immediately notify the other party of such inability and of the period for which
such inability is expected to continue. The party giving such notice
of a force majeure event, shall be excused from the performance, or the punctual
performance, of such obligations, as the case may be, from the date of such
notice, up to a maximum of nine (9) calendar months, after which time the party
who is not able to perform, may terminate this Agreement. To the
extent possible, each party shall use reasonable efforts to minimize the
duration of any force majeure.
|
15.
|
Confidentiality
|
Either
Party of this Agreement shall not disclose any information related to this
Agreement to any person、entity or company
during the term of the Agreement or five years after the expiration of the
Agreement, no matter the person、entity or company
has a competitive relationship with the other Party or not, except following
circumstances:
(1) Such
disclosure is made in accordance with the governing laws or requested by the
competent government, justice authority;
43
(2) The
information has been publicized and such publicizing is not a result of any
breach or violation of a contract, agreement or other binding
documents;
(3) The
Party of such disclosure has already obtained such Information without any
confidentiality limitation from other parties when it receives the Information
from the other Party；
(4)
Disclose to the employees, directors, management, consult, CPA, agent and
representative of any party, or its affiliates and the employees, directors,
management, consultant, accounts, agent and representative of such
affiliates.
In case
any Party is in breach of the provision of the confidentiality and causes the
other Party suffering from economic damages and losses, the breaching Party
shall assume relevant liabilities of such breach to the other Party. But the
information disclosed pursuant to the applicable law or compulsory requirements
of the court or any other authorities will not be applied.
|
16.
|
Notices
|
|
16.1
|
Any
and all notices shall be delivered in writing, including by facsimile、letter、courier
service delivered letter, and notices shall be deemed to have been
delivered at the 7th
days after the written notice delivered. The notifying date of unwritten
notice (telephone or email, etc) shall be the date of written confirmation
of the receiver.
|
|
16.2
|
Either
Party may change its particulars for receipt of notices by notice given to
the other Party within 3 days after such change. If the Party fails to
notice the other party its changes on its particulars for receipt of
notices, it shall take all legal liability for all results rising
hereof.
|
44
If to the
Transferor, notices shall be delivered as follows:
Addressee
: Position :
Address : Post
Code :
Facsimile : Email :
If to the
Transferee, notices shall be delivered as follows:
Addressee
: Position :
Address : Post
Code :
Facsimile : Email :
If to the
Related Party of the Transferor, notices shall be delivered as
follows:
Addressee
: Position :
Address : Post
Code :
Facsimile : Email :
|
16.3
|
All
notices and relevant expenses under this Agreement shall be processed by
either Party respectively in accordance with laws and regulations at their
own cost.
|
45
|
17.
|
Governing
Law
|
The
formation、validity、interpretation
and/or performance of this Agreement shall be governed by PRC LAWS.
|
18.
|
Settlement
of Dispute
|
Any
disputes arising from or in connection with this Agreement shall be settled
through friendly negotiation among the Parties. If the dispute cannot be
resolved by negotiation, then any Party may submit the dispute to China
International Economic and Trade Arbitration Committee located in Beijing for
arbitration according to and regulations in effect at the time of applying for
arbitration. The arbitration award shall be final and binding on all
parties.
|
19.
|
Severability
|
Any
provision of the Agreement shall be deemed as severable. If any provision of the
Agreement is invalid, it shall not affect the validity of the rest of the
provisions of this Agreement.
|
20.
|
Non-waiver
|
Either
Party's failure to insist the other Party on the performance of any provision of
the Agreement at any time shall not be deemed to waive such provision or waive
the right to request the other Party on execution of such provision in
future.
46
|
21.
|
Transcript
|
The
formal text of the Agreement shall be written in CHINESE. Any provision of such
Agreement shall be interpreted under the usual meaning of the words in the
Chinese version.
|
22.
|
Title
and Subtitles
|
All tile
and subtitles of the Agreement are in the convenience of the reference only and
shall not limit or affect any provision provided in the Agreement.
|
23.
|
Entire
agreement
|
|
23.1
|
Entire
Agreement of this transaction include this Agreement, General Framework
Agreement for Corporation, Exclusive Option Agreement and Supplementary
Agreement for the Escrow Terms and Conditions for the First Installment,
as well as all ancillary agreements to each related to the subject of this
Agreement and supersedes any and all previous written or oral agreements
and/or memorandums concluded by any consultation relating to the subject
of this agreement. Unless this agreement is otherwise provided expressly,
any other condition, definition, guarantee or statement related to the
subject of this agreement shall not be binding on the
Parties.
|
47
|
23.2
|
Any
correction、amendment、replacing or
modification of this Agreement shall be made in writing and shall be
ascertained that it is relevant to the Agreement and shall be signed by
the representatives or designated person(s) of the Parties of the
Agreement.
|
|
23.3
|
Both
the Transferor and the Transferee mutually agree that in the convenience
of processing the procedure of the alteration registration related to the
equity transfer hereof with the local industry and commercial bureau, both
parties may enter into a simpler equity transfer agreement. The content of
such simple equity transfer agreement shall not be controversial with this
Agreement hereof. In case of any controversy, this Agreement shall
prevail.
|
|
24.
|
This
Agreement shall become into effective upon the execution of the Parties
and the approval from the
government.
|
|
25.
|
This
Agreement is executed in [6] counterparts. Each Transferor holds [2], the
Transferee holds [2] and the Related Party of the Transferor holds
[2].
|
Annexes：
Annex
I List of Target
Company and its Related Companies
Annex II
The Shareholding Structure to be Achieved Prior the First Installment Payment
Release
48
Annex III
The Shareholding Structure to be Achieved Prior to the Second Installment
Payment
Annex
IV The production and operation information of Target Company
and its Related Companies
Annex
V Assets Confirmation List
Annex
VI Obligations Transfer List
Annex VII
List of Projects Planned of Target Company and its Related
Companies
Annex
VIII Financial Statements of Target Company and its Related
Companies
49
Notwithstanding
anything to the contrary contained above, the Annexes hereto shall be required
to be delivered as set forth in the chart below:
|
Annexes
|
时间Delivery
Date
|
|
|
1
|
Delivered
|
|
|
2
|
Delivered
|
|
|
3
|
Delivered
|
|
|
4
|
Within
7 days after execution of this Agreement
|
|
|
5
|
Within
7 days after execution of this Agreement
|
|
|
6
|
Within
7 days after execution of this Agreement
|
|
|
7
|
Delivered
|
|
|
8
|
Within
7 days after execution of this
Agreement
|
(This
page is blank below)
50
Signature
Page
Transferor:
Beijing
Fengyin Xianghe Scientific Technology Co., Ltd.
Authorized
Representative:
Transferee:
China New
Energy Investment Co.,Ltd
Authorized
Representative:
Related
Party of theTransferor:
▇▇▇▇
▇▇▇▇▇▇▇▇ (Singature)：
Date:
51
Annex
I List of Target Company and its Related Companies
|
|
1、Target
Company: Zhuolu Dadi Gas Co. Ltd.
|
|
|
2、Related
companies of Target Company
include:
|
|
|
(1)
Xian County Dadi Gas Ltd., Co..
|
|
|
(2)
Tianjin Dadi Gas Technology Development Ltd.,
Co.
|
|
|
(3)
Dadi Xingying Gas Ltd., Co.
|
|
|
(4)
Shijiazhuang Dadi Gas Ltd., Co. ;
|
|
|
(5)
Chengde Dadi Gas Ltd., Co. ; and
|
|
|
(6) Baigou Dadi
Gas Ltd., Co. .
|
|
|
(7)
Beijing Xiadu Dadi Gas Ltd., Co..
|
52
Annex
II The Shareholding Structure to be Achieved Prior the First Installment Payment
Release
1、The Transferee
holds 70% equity of the Target Company, the Transferor holds 30% equity of the
Target Company.
2、The wholly-owned
subsidiary companies of the Target Company include:
(1)
Beijing Xiadu Dadi Gas Ltd., Co.;
(2) Xian
County Dadi Gas Ltd., Co.; and
(3)
Zhuolu Dadi municipal engineering Construction technology service Ltd.
Co..
|
3、
|
Name
of Subsidiary Companies controlled by the Target Company and the equity
proportion held by the Target Company
include:
|
|
|
(1)
Tianjin Dadi Gas Technology Development Ltd., Co.
(70%)
|
|
|
(2)
Dadi Xingying Gas Ltd., Co. (80%)
|
|
|
(3)
Shijiazhuang Dadi Gas Ltd., Co.
(80%);
|
|
|
(4)
Chengde Dadi Gas Ltd., Co. (60%);
and
|
|
|
(5)
Baigou Dadi Gas Ltd., Co. (80%).
|
Annex
III The Shareholding Structure to be Achieved Prior to the Second Installment
Payment
53
1、 The Transferee
holds 70% equity of the Target Company, the Transferor holds 30% equity of the
Target Company.
2、 The wholly-owned
subsidiary companies of the Target Company include:
(1)
Beijing Xiadu Dadi Gas Ltd., Co.;
(2) Xian
County Dadi Gas Ltd., Co.; and
(3)
Zhuolu Dadi municipal engineering Construction technology
service Ltd. Co..
|
3、
|
Name
of Subsidiary Companies controlled by the Target Company and the equity
proportion held by the Target Company
include:
|
|
|
(1)
Tianjin Dadi Gas Technology Development Ltd., Co.
(70%)
|
|
|
(2)
Dadi Xingying Gas Ltd., Co. (80%)
|
|
|
(3)
Shijiazhuang Dadi Gas Ltd., Co.
(80%);
|
|
|
(4)
Chengde Dadi Gas Ltd., Co. (70%);
and
|
|
|
(5)
Baigou Dadi Gas Ltd., Co. (80%).
|
54
Annex IV
The production and operation information of Target Company and its Related
Companies
Part one
Basic Information of Target Company
Business
License
Business
License No.:
Registration
No.:
Issuing
Date:
Address:
Type
of Enterprise
Registered
Capital
Business
Scope:
Business
Term:
Board
of Directors:
|
Name
|
Designated
by
|
Position
|
55
|
Board
of Supervisors
|
|
|
Name
|
Designated
by
|
56
Part
2 Certificates and Licenses of Operations
57
Annex V
Assets Confirmation List
58
Annex VI
Obligations transfer list
59
Annex VII
List of Projects Planned of Target Company and its Related
Companies
|
1.
|
Qing
County, located at Hebei Province
|
|
2.
|
Yangyuan
County, located at Zhangjiakou City, Hebei
Province
|
|
3.
|
Wuqiang
County, located at the hinterland of Hebei
Province
|
|
4.
|
Fucheng
County, located at Northeast Hengshui City, Hebei
Province
|
|
5.
|
Wuyi
County, located at Northeast Hengshui City, Hebei
Province
|
|
6.
|
Lingshou
County, located at Central and Western Hebei
Province
|
|
7.
|
Guyuan
County, located at Northwest Hebei
Province
|
|
8.
|
Huailai
County, located at Hebei Province
|
|
9.
|
Dongguang
County, located at southern Cangzhou City, Hebei
Province
|
|
10.
|
Xianxian
is the franchise territories for gas operation controlled by our
company.
|
60
Annex
VIII Financial Statements of Target Company and its Related
Companies
61