EXHIBIT 4.3
CAPITAL CONTRIBUTION AGREEMENT
This Capital Contribution Agreement is entered into this 9th day of June, 2005
in Beijing by and among:
CHINA NATIONAL OIL AND GAS EXPLORATION AND DEVELOPMENT CORPORATION ("CNODC")
ADDRESS: International Investment Building D, Fuchengmen Beidajie, Xicheng
District, Beijing
LEGAL REPRESENTATIVE: Xxxx Xxxxxxx
CENTRAL ASIA PETROLEUM COMPANY LTD. ("CAPC")
ADDRESS: Xxxxx 0, Xxxxxxxxxxxxx Xxxxxxxx, Xx. 0 Xxxxxxxxxxxx, Xxxxxxxxx
District, Beijing
LEGAL REPRESENTATIVE: Wu Enlai
PETROCHINA COMPANY LIMITED ("PETROCHINA")
ADDRESS: World Tower,16 Andelu, Dongcheng District, Beijing
LEGAL REPRESENTATIVE: Xxxx Xxxx
CHINA PETROLEUM EXPLORATION & DEVELOPMENT COMPANY LIMITED ("CPEDC")
ADDRESS: International Investment Building D, Fuchengmen Beidajie, Xicheng
District, Beijing
LEGAL REPRESENTATIVE: Xxxx Xxxxxxx
WHEREAS:
1. CNODC, a collectively-owned company, was established on 13 May 1987 in
Beijing by law and validly existing, in compliance with laws of the
People's Republic of China; it is mainly engaged in overseas oil and gas
exploration and development.
2. CAPC, a company with limited liabilities, was established on 10 July 1996
in Beijing by law and validly existing, in compliance with laws of the
People's Republic of China; 100% of its equity is held by CNODC
indirectly.
3. PetroChina, a joint stock company with limited liabilities, was
established on 5
November 1999 in Beijing by law and validly existing, in compliance with
laws of the People's Republic of China; the shares and American Depositary
Shares of PetroChina are listed on the Stock Exchange of Hong Kong Limited
and the New York Stock Exchange.
4. CPEDC, a company with limited liabilities, was established by CNODC and
CAPC by law on 14 March 2005 in Beijing and validly existing, in
compliance with laws of the People's Republic of China; CNODC and CAPC
control the company by 95%/5%.
5. CAPC agrees to sign the Equity Transfer Agreement separately with CNODC,
to transfer its 5% equity of CPEDC to CNODC.
6. CNODC agrees to transfer the Transferred Assets (see Article 1.9 for the
definition) held by CNODC, directly or indirectly, to CPEDC Group for free
of charge. CPEDC agrees, when all closing conditions specified in Article
3.1 herein are satisfied or considered as satisfied according to Article
3.2 herein, to make capital increase, and PetroChina also agrees to
subscribe for all additional registered capital due to CPEDC's capital
increase ("this Transaction"). Upon the completion of this Transaction,
PetroChina will hold 50% equity of CPEDC.
NOW, THEREFORE, in consideration of equality and mutual benefit, through
friendly negotiation, and as per relevant laws and regulations of the People's
Republic of China, the parties agree upon this Transaction as follows:
ARTICLE 1 DEFINITION AND INTERPRETATION
Unless specified otherwise in this agreement, the terms and expressions herein
have the following meanings:
1.1. THE AGREEMENT: means the Capital Contribution Agreement and any revision
and modification hereto duly agreed and executed by and among the parties
hereto in writing from time to time.
1.2. REGISTERED CAPITAL SUBSCRIPTION: means that PetroChina subscribes for the
additional registered capital of CPEDC for the purpose of this
Transaction, i.e. XXX 00 million, to obtain 50% equity of CPEDC.
1.3. CLOSING: means that PetroChina pays the consideration specified in Article
5 herein when all closing conditions specified in Article 3.1 herein are
satisfied or considered as satisfied according to Article 3.2 herein.
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1.4. CLOSING DATE: means the date when PetroChina pays the consideration
specified in Article 5 herein when all closing conditions specified in
Article 3.1 herein are satisfied or considered as satisfied according to
Article 3.2 herein.
1.5. BASE DATE: means 31 December 2004.
1.6. RELATED PERIOD: means the period from 1 January 2005 to the Closing Date
(including).
1.7. MAJOR PROCEEDINGS: means any pending lawsuit, arbitration, administrative
appeal or other legal processes related to Transferred Assets arising
before the Closing Date, involving a value of more than US$3 million
individually.
1.8. SPECIAL REGIONS: means Sudan, Syria, Iran, Burma, and Iraq.
1.9. TRANSFERRED ASSETS: means all assets and liabilities located in areas
other than Special Regions, originally owned by CNODC whether directly or
indirectly, and listed in the Appraisal Report. See Exhibit 1 for
Transferred Assets-related projects and Exhibit 2 for Transferred
Assets-related companies.
1.10. EXAMINING AND APPROVING AUTHORITIES: mean all foreign and domestic
governmental examining and approving authorities that are entitled to
approve or authorize this Transaction and other actions related thereto.
1.11. APPRAISAL REPORT: means the report made by China Enterprises Appraisals
for the assets and liabilities of CPEDC and/or Transferred Assets on Base
Date.
1.12. CPEDC GROUP: means CPEDC and its owned companies listed in Transferred
Assets.
1.13. CNPC: means China National Petroleum Corporation. It is the controlling
parent company of CNODC and PetroChina.
1.14. FORCE MAJEURE: means war, natural disaster and any other unforeseen and
inevitable event that cannot be controlled by the parties hereto.
1.15. PREEMPTION RIGHTS: means that once CNODC or its controlling companies sell
their owned assets or equities in relation to oil/gas exploration,
development, production, pipelines, refining and chemical businesses, or
CPEDC issues a notice to CNODC or its controlling companies requesting for
purchase of aforesaid assets or equities, as negotiated by the parties,
CPEDC is entitled to a preemption, without breaching the governing laws
and regulations and any relevant agreements signed by CNODC or its
controlling companies.
ARTICLE 2 CAPITAL INCREASE
2.1 Capital Increase: CPEDC and its existing shareholders agree upon the
capital increase for CPEDC in accordance with the Agreement, i.e.,
increasing its registered capital from RMB 50,000,000 to RMB100,000,000,
and PetroChina
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agrees to subscribe for RMB 50,000,000 of the registered capital of CPEDC
at the consideration specified in Article 5.1 herein and obtain 50% of
CPEDC's equity interest.
2.2 From the Closing Date, PetroChina will hold 50% of CPEDC's equity. Within
20 working days after the Closing Date, CPEDC shall convene the
shareholders' meeting to elect its directors and amend its articles of
association, apply to relevant registration authorities for registration
changes regarding capital increase, and issue to CNODC and PetroChina
respectively the Capital Contribution Certificate reflecting the changed
equity structure of CPEDC.
2.3 The parties agree that the Articles of Association of CPEDC after
PetroChina completes capital increase to it shall be in the form attached
hereto as Exhibit 4, and the parties shall cause the Shareholders' Meeting
of CPEDC to approve the form set forth in Exhibit 4.
ARTICLE 3 CLOSING CONDITIONS FOR THIS TRANSACTION
3.1 The closing herein shall occur on the date agreed by the parties when all
preconditions below are satisfied or the parties agree unanimously that
any one or partial or all preconditions below are waived.
(1) All procedures (including but not limited to obtaining the approval
fromor filing with domestic and foreign examining and approving
authorities and the consent from third party) regarding transfer of
Transferred Assets from CNODC and/or its subsidiaries to CPEDC
and/or its subsidiaries have been completed;
(2) All necessary approvals from examining and approving authorities and
consent from third party have been obtained for this Transaction;
(3) The Appraisal Report for CPEDC and/or Transferred Assets have been
confirmed by CNODC and PetroChina, and all necessary formalities for
filing have been completed;
(4) PetroChina has obtained the approval to this Transaction by its duly
convened extraordinary shareholders' meeting; and
(5) The representations and warranties given in Exhibit 3 remain correct
and free from error, as of the Closing Date.
3.2 If the parties hereof agree, through negotiation, to grant waiver with
respect to the conditions set forth in (1) and (5) under Article 3.1
herein when such conditions have not been satisfied, it shall be
considered that all such conditions have been satisfied, but the waiver
with respect to item (1) shall be subject to
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the completion of relevant procedural formalities and conform to the laws
and regulations.
3.3 The deliverables to be delivered on the Closing Date are the Transferred
Assets for which the closing conditions have been satisfied or considered
to be satisfied in accordance with Article 3.2.
3.4 The parties believe and will make all reasonable efforts to ensure that
the closing will occur no later than 30 December 2005.
ARTICLE 4 CLOSING
4.1 If, before 10 December 2005, CNODC believes that the closing conditions
specified in Article 3.1 herein have been satisfied completely, it shall
issue a written notice to PetroChina for requesting the closing and
provide the copies of documents/evidences demonstrating that the closing
conditions have been satisfied, including but not limited to:
(1) Title certificates for Transferred Assets (including but not limited
to equity certificates, registration documents for changes to
petroleum contracts);
(2) Confirmation documents by the third party (if necessary);
(3) Approval/ratification documents by examining and approving
authorities in countries/regions where the Transferred Assets are
located (if necessary);
(4) Approval/ratification/filing documents by examining and approving
authorities in the PRC;
(5) Legal opinions on the validity of this Transaction and Transferred
Assets issued by Chinese lawyers of CNODC to PetroChina.
4.2 If PetroChina believes that all closing conditions have been satisfied, it
shall, within ten (10) days as of its receipt of the above notice from
CNODC, reply to CNODC in writing which shall specify the Closing Date;
provided that the closing date shall not be later than 30 December 2005.
4.3 If, on or before 10 December 2005, CNODC believes that the closing
conditions specified in Article 3.1 herein have not been satisfied
completely, it shall issue a written notice to PetroChina, stating such
fact. PetroChina shall, within ten (10) working days upon its receipt of
such written notice, notify CNODC in writing as to whether such
unsatisfied conditions will be waived and confirm whether the closing
conditions should be considered as satisfied in accordance with Article
3.2 hereinabove. If it is confirmed that the closing conditions should be
considered as satisfied, PetroChina shall also expressly specify the
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closing date in such notification; provided that the closing date shall
not be later than 30 December 2005.
4.4 At the Closing Date, PetroChina shall make the lump sum payment for the
consideration specified in Article 5.1 hereinbelow, in cash, to the
account indicated by CPEDC.
4.5 Immediately after CPEDC has received the consideration from Petrochina for
all of the additional registered capital subscribed for by PetroChina, the
parties shall duly consider PetroChina having become the shareholder of
CPEDC and holding 50% of CPEDC's equity. CPEDC shall within ten (10) days
after the Closing Date, appoint a qualified auditor to verify the
additional registered capital, who shall issue the capital contribution
verification report, and CPEDC shall be also responsible for going through
procedures necessary for registration change at the competent
administration for industry and commerce regarding its capital increase by
PetroChina.
ARTICLE 5 CONSIDERATION
5.1 The parties agree hereby, that PetroChina shall pay RMB20,741,250,000.00
(or US$2.5 billion + RMB50.00 million converted on the basis of benchmark
exchange rate of US$ vs RMB announced by the People's Bank of China on the
base date ) as the consideration for the additional registered capital of
CPEDC subscribed by it, and such consideration is based on the fact that
all Transferred Assets are injected into CPEDC upon the closing. After
capital verification, RMB 50,000,000 of aforesaid consideration will be
entered in the registered capital of CPEDC, and the remaining will be
entered in the capital surplus of CPEDC.
5.2 With respect to any items among the Transferred Assets that have been
approved by the governments in which such items are located and/or agreed
by the third party while, for which, the formalities regarding the
transfer to CPEDC have not been completed by the Closing Date (but CNODC
and PetroChina acknowledge that no legal obstacles exist in the execution
of such formalities) , the parties agree that the value of such items will
not be deducted from the consideration, instead such items will be
delivered along with those projects for which all the relevant formalities
have been completed. CNODC also undertakes to complete all the formalities
for transfer of such items to CPEDC as soon as possible.
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES
6.1. The parties undertake to each other that, unless specified otherwise
herein, the representations and warranties under the Agreement are true,
correct and complete in all material aspects, and also covenant to not
impair the truth, correctness and completeness of each representations and
warranties by any action or omission.
6.2. The parties hereby represent and warrant to each other as follows:
(1) Such party is duly established and validly existing in compliance
with the laws of the jurisdiction in which it is incorporated, and
has obtained all governmental authorizations and approvals required
for its business operation;
(2) Such party has obtained all authorizations and approvals specified
under relevant laws, regulations and articles, and has the power to
sign and perform the Agreement;
(3) The execution of the Agreement and all documents refereed to herein
by such party doesn't violate its articles of association, any
currently effective law or its obligations under any existing
contract or agreement to which it is a party;
(4) such party has never conducted any activity that impairs or would
impair the interests of any other party hereto, and will make
efforts to prevent any third party from conducting any such
activity.
6.3. CNODC's further representations and warranties regarding CPEDC Group, the
projects listed in Exhibit 1 as Transferred Assets and other related
matters, are attached hereto as Exhibit 3.
6.4. Any representations and warranties herein shall be able to be interpreted
severally and independently, and subject to any contrary provisions
herein, shall not be limited or restricted by any other provisions herein
or under other agreement between the parties or any judgment on aforesaid
articles.
6.5. If, from the date when the Agreement is signed to the Closing Date for
this Transaction, any party hereto is aware of any information that may
have a material adverse impact on the representations and warranties or
this Transaction, it shall disclose such information to all the other
parties, and take effective actions to minimize such adverse impact.
6.6. The representations and warranties of any party hereto shall constitute
preconditions for the other parties to perform the Agreement and the other
parties will enter into the Agreement by reliance on such representations
and
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warranties.
ARTICLE 7 RIGHTS AND OBLIGATIONS OF THE PARTIES
7.1 CNODC and CAPC shall, severally and jointly:
(1) prepare and submit all legal documents that shall be prepared and
submitted by CNODC and CAPC as required by the Examining and
Approving Authorities, in order to perform the Agreement;
(2) apply to the Examining and Approving Authorities and third parties
for, and make efforts to cause them to issue/provide, approval,
consent or permission from or filing with such authorities and such
third parties required to perform the Agreement;
(3) provide all necessary documents to assist CPEDC in going through
related procedures for change of business registration in relevant
registration authorities;
(4) after the conclusion of the Agreement, upon its receipt of any
notice regarding the progress of the examination and approval
procedures with the foreign and domestic authorities required for
the transfer of Transferred Assets, CNODC shall notify PetroChina in
writing of the information about such notice, as soon as possible;
(5) make efforts to assist PetroChina to prepare and submit all legal
documents that shall be prepared and submitted by PetroChina.
7.2 PetroChina shall:
(1) pay the consideration indicated in Article 5.1 in cash to CPEDC,
pursuant to the Agreement in a timely manner;
(2) prepare and submit all legal documents that shall be prepared and
submitted by it as required by the Examining and Approving
Authorities, in order to perform the Agreement;
(3) exert itself to assist CPEDC, CNODC and CAPC to prepare and obtain
all legal documents required by the Examining and Approving
Authorities;
(4) exert itself to assist CPEDC, CNODC and CAPC to obtain all approval,
consent, permission and filing of the government and the third
party;
(5) provide all necessary documents and assist CPEDC with procedures for
change of business registration in relevant registration
authorities;
(6) notify CNODC as soon as possible of the fact that its shareholders'
general meeting approves the Agreement by resolution.
7.3 CPEDC shall:
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Convene the shareholders' meeting of CPEDC as soon as possible, after the
closing of this Transaction, to elect its directors and amend its Articles
of Association, apply for change of business registration to relevant
registration authorities, and issue to CNODC and PetroChina respectively,
the Capital Contribution Certificate reflecting the changed equity
structure of CPEDC.
7.4 After the Agreement come into effect, PetroChina shall be entitled to
appoint two observers to CPEDC, who shall have the right of information
regarding the operations of CPEDC; CNODC and CPEDC shall enable such
observers to exercise the aforesaid rights; at the request of such
observers, CNODC and CPEDC shall provide them with all documents in
relation to the operations of CPEDC.
ARTICLE 8 ARRANGEMENTS IN THE RELATED PERIOD
8.1. The parties hereby agree that, any change of CPEDC's assets and
liabilities during the Related Period shall not impact PetroChina's
payment of the consideration in the amount for the registered capital
subscribed for by it in accordance with the Agreement. All income,
expenditure and profit generated during the Related Period shall be
attributable to the Transferred Assets and CPEDC Group.
8.2. The parties hereby also agree that, the parties shall, at the Closing
Date, clear any expenses advanced and any income received on behalf of
Transferred Assets by CNODC during the Related Period, including but not
limited to shareholders' loans, borrowings and capital increase, the
current accounts and the product sales income and profit gains, etc.,
during the Related Period. Within 30 days after the Closing Date, such
expenses and income shall be settled by CPEDC and CNODC after the
qualified auditor reviews and CNODC, PetroChina and CPEDC confirm such
amount.
8.3. CPEDC shall not obtain any other assets and liabilities beyond Transferred
Assets during the Related Period, without consent of PetroChina.
8.4. From the Effective Date of the Agreement to the Closing Date, unless
specified otherwise herein or agreed by PetroChina in writing, or as
mandatorily required by law or by examination and approval authorities,
CNODC, CAPC and CPEDC shall:
(1) operate the Transferred Assets on in the ordinary course of
business;
(2) maintain the Transferred Assets at conditions equivalent to that in
the Base Date, except for wear and tear;
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(3) not transfer, mortgage or pledge the Transferred Assets, or provide
guarantee for any other person with the Transferred Assets;
(4) CPEDC Group shall not sign any agreement, such as loan agreement,
that may increase the liabilities, unless it is necessary for normal
operation;
(5) not make any revision to any existing contract or agreement that is
detrimental to the Transferred Assets;
(6) perform the Agreement after being executed or any other documents in
relation to Transferred Assets and its business in a timely manner;
(7) not release anyone from any debts owed to CPEDC Group or waive any
claim of CPEDC Group;
(8) not make a compromise, settlement, withdrawal or waiver of rights in
any form with respect to any action or arbitration or any other
legal proceedings pending, in relation to CPEDC Group;
(9) not issue or plan to issue any additional equity or convertible
bonds of CPEDC Group or grant any subscription right or similar
rights to the aforesaid equity or convertible bonds, unless
otherwise specified in any agreement/contract binding upon CNODC
and/or CAPC and/or CPEDC.
ARTICLE 9 LIABILITY FOR BREACH OF CONTRACT
9.1 CNODC, CAPC and/or CPEDC shall be entitled to claim on PetroChina for
compensation for any direct loss and damage incurred by them, and any
costs and expenses arising from any action or claim incurred by them due
to the nonperformance or incomplete performance by PetroChina of any of
its obligations under the Agreement or breach of any provision hereof.
PetroChina shall not recover such compensation from CPEDC after having
paid the same.
9.2 PetroChina shall be entitled to claim on CNODC for compensation for any
direct loss and damage incurred by it, and any costs and expenses arising
from any action or claim incurred by it due to the nonperformance or
incomplete performance by CNODC, CAPC and/or CPEDC of any of their
respective obligations under the Agreement or breach of any provision
hereof. CNODC shall not recover such compensation from CPEDC after having
paid the same.
9.3 Notwithstanding the provisions in Article 9.2 above, if CPEDC fails to
fulfill or incompletely fulfills its obligations hereunder after the
Closing Date, the other parties shall be entitled to claim on CPEDC for
compensation for any direct loss and damage incurred by them, and any
costs and expenses arising from any
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action or claim incurred by them due thereto.
9.4 Notwithstanding any contrary provisions herein, if CNODC's breach of any
of its representations and warranties set forth in Article 6 hereinabove
results in any loss and damage to and/or cause any costs and expenses to
PetroChina arising from any action or claim due thereto, the amount of
loss that PetroChina can recover from CNODC for any individual claim shall
be no less than RMB4,000,000 and the accumulative amount of loss that
PetroChina can recover from CNODC for any individual claim shall be no
less than RMB20,000,000; provided that the total amount of loss that can
be recovered by PetroChina from CNODC hereunder shall not exceed 50% of
the consideration for this Transaction. In case of any breach by CNODC,
CPEDC or CAPC of any of their respective representations or warranties set
forth herein, if PetroChina doesn't make any claim with respect thereto
within twelve (12) months as of the Closing Date, CNODC shall not assume
any compensation therefor.
9.5 Notwithstanding any contrary provisions herein, if PetroChina's breach of
any of its representations and warranties set forth in Article 6
hereinabove results in any loss and damage to and/or cause any costs and
expenses to CNODC and/or CAPC and/or CPEDC arising from any action or
claim due thereto, the amount of loss that CNODC, CAPC or CPEDC can
recover from PetroChina for any individual claim shall be no less than
RMB4,000,000 and the accumulative amount of loss that CNODC, CAPC or CPEDC
can recover from PetroChina for any individual claim shall be no less than
RMB20,000,000; provided that the total amount of loss that can be
recovered by CNODC, CAPC or CPEDC from PetroChina hereunder shall not
exceed 50% of the consideration for this Transaction. In case of any
breach by PetroChina of any of its representations or warranties set forth
herein, if CNODC, CAPC or CPEDC doesn't make any claim on PetroChina
within twelve (12) months as of the Closing Date, PetroChina shall not
assume any compensation therefor.
9.6 Any tolerance, grace, preferential treatment granted by any party to any
other party or delay of any party to exercise any of its rights hereunder
shall not affect, damage or limit any rights or interests that such party
shall have under the Agreement and any laws and regulations, nor shall be
considered as such party's waiver of any of its rights or interests under
the Agreement, nor release the other parties from any of their obligation
under the Agreement.
9.7 All rights under the Agreement shall be cumulative and not prejudice any
other right or remedy specified in laws.
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9.8 Notwithstanding the above agreement, all of the parties agree that, none
of the parties hereto shall assume the default responsibility if the
Closing of this Transaction fails to occur as a result of the failure to
obtain from any of the Examining and Approving Authorities any
approval/ratification for any reason, and the parties shall assume their
respective costs arising out of or from this Transaction.
ARTICLE 10 FORCE MAJEURE
10.1 None of the parties shall be considered in default if it is unable to
perform this Agreement due to the occurrence of a force majeure event;
provided that such party shall make all necessary remedies if practicable
to mitigate the loss arising from the occurrence of the force majeure
event.
10.2 Any party who encountered the force majeure event shall notify the other
parties thereof in writing as soon as possible, and submit a report to the
other parties, stating the reasons for its inability to perform its
obligations under the Agreement either in whole or in part and for any
extension to perform its obligations, within fifteen (15) days after the
occurrence of the force majeure event and such party shall take all
actions practicable to mitigate the loss. If any force majeure event
occurs, any party shall not be responsible for any damage and additional
expense and loss suffered by the other parties due to the failure to
perform or any delay in the performance of obligations hereunder. The
party claiming force majeure shall take proper measures to mitigate or
remove the impact thereof and try to resume the performance of the
obligations hereunder affected by force majeure as soon as practicable.
ARTICLE 11 CONFIDENTIALITY
Each party shall treat all details about the Agreement and this Transaction, the
interrelationship among the parties and the documents provided to each other
hereunder as confidential materials, and without prior written approval by the
other parties, shall not disclose any of such materials to any party other than
the parties hereto in any way except for the purpose of this Transaction, except
for any disclosure to relevant agents, financial institutions and regulatory
authorities for the purpose of the Agreement.
ARTICLE 12 GOVERNING LAW
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The conclusion, effect, interpretation and performance of and settlement of any
dispute arising from the Agreement shall be governed by the laws of the People's
Republic of China.
ARTICLE 13 DISPUTE SETTLEMENT
13.1 Any dispute arising out of or from the Agreement shall be settled through
friendly negotiations between the parties, and may be referred to
arbitration if it is failed to be resolved through negotiation.
13.2 Such dispute shall be submitted to and resolved by China International
Economic and Trade Arbitration Commission for arbitration in Beijing in
accordance with its arbitration rules.
13.3 The award of China International Economic and Trade Arbitration Commission
shall be final and binding upon all the parties. The arbitration costs
shall be assumed by the losing party.
13.4 Pending resolution of any dispute, the parties shall continue to perform
the Agreement other than any matter under dispute.
ARTICLE 14 NOTICE
14.1 All communications between the parties regarding the Agreement shall be
delivered to each party at the following addresses by mail, facsimile,
telex or in other written form:
China National Oil and Gas Exploration and Development Corporation
Central Asia Petroleum Company Ltd.
China Petroleum Exploration & Development Company Ltd.
To: Xxxx Xxxx
Tel: 000-00000000
Fax: 000-00000000
PetroChina Company Limited
To: He Jia
Tel: 000-00000000
Fax: 000-00000000
14.2 In case of change of the contact person or any other contact information
of any
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party, such party shall notify the other parties in writing seven (7) days
in advance.
ARTICLE 15 ENTIRE AGREEMENT
15.1 The Agreement constitutes the entire and sole agreement among the parties
regarding this Transaction, and supersedes any other prior understandings,
arrangements and agreements among the parties regarding this Transaction.
15.2 All of the exhibits hereto shall constitute a valid integral part hereof
and shall have the equal legal effect as the Agreement.
ARTICLE 16 EFFECTIVENESS OF AND AMENDMENT TO AGREEMENT
16.1 The Agreement shall be signed by the authorized representatives of all of
the parties on the date first written above, and shall become effective
from the date when all of the parties have obtained all necessary internal
corporate authorizations and approvals required for the execution and
performance of the Agreement.
16.2 Any amendment and modification to the Agreement shall not be effective
unless made in accordance with Article 16.1 above.
ARTICLE 17 COUNTERPARTS OF THE AGREEMENT
The Agreement shall be executed in Chinese in fifteen (15) originals, with each
party to hold two and the remaining originals to be submitted to the competent
industrial and commercial administrative authorities and other relevant
governmental departments. Each original of the Agreement shall have the equal
legal effect.
ARTICLE 18 MISCELLANEOUS
18.1 CNODC hereby agrees to transfer, the Transferred Assets owned by it either
directly or indirectly, to CPEDC and/or its subsidiaries without any
consideration. All of the parties will make best to cause the closing
conditions for all Transferred Assets to be satisfied before 10 December
2005.
18.2 Any matter not covered hereunder shall be set forth in a supplementary
agreement by and among the parties which shall be attached hereto as an
exhibit. Such supplementary agreement shall not be effective unless made
in accordance
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with Article 16.1 above.
18.3 After consummation of this Transaction, CNODC will transfer all of its
equity in CPEDC to CNPC free of consideration, according to CNPC's
arrangement. PetroChina hereby agrees upon such transfer and also agrees
to waive its preemption.
18.4 CNODC and CPEDC shall be responsible for any tax and expense arising out
of or from the transfer of Transferred Assets from CNODC and/or its
subsidiaries to CPEDC and/or its subsidiaries in accordance with the
relevant laws and regulations.
18.5 Except as provided in Article 18.4 above, each party shall be solely
responsible for any tax imposed on it due to its execution and performance
of the Agreement pursuant to the relevant laws and regulations.
18.6 After the Closing Date, CPEDC will, at the appropriate time, convert part
of its capital surplus resulted from CNODC's assets transfer to it and
PetroChina's subscription for its registered capital into its own
additional capital stock.
18.7 Non-competition
(1) Non-competition
After the Closing Date, CNODC and its controlling enterprises will
not compete with CPEDC Group in the oil/gas exploration,
development, production, pipelines, refining and chemical businesses
in any overseas region other than Special Regions.
(2) Pre-emption Rights
i) After the Closing Date, for any assets other than the
Transferred Assets in relation to oil/gas exploration,
development, production, pipelines, refining and chemical
businesses in any overseas region other than Special Regions,
owned by CNODC or its controlling companies, CPEDC shall have
Preemption Rights to such assets after PetroChina becomes its
shareholder;
ii) After the Closing Date, subject to the consent by CNODC and
PetroChina, in case of any adjustment to the Special Regions
which makes the countries/regions where the overseas assets in
relation to oil/gas exploration, development, production,
pipelines, refining and chemicals owned by CNODC or its
controlling companies are not covered by the Special Regions
any longer, CPEDC shall have Preemption Rights to such assets
after PetroChina becomes its shareholder.
18.8 After the Agreement becomes effective till the Closing Date, CNODC shall
14
disclose any newly obtained information about any relevant overseas
oil/gas exploration, development, production, pipelines, refining and
chemical businesses other than Special Regions, to PetroChina as soon as
possible, after CNODC has indicated any substantial intention for
acquisition, without any breach of CNODC's obligations under any contract
signed by it.
15
[Signature Page]
China National Oil and Gas Exploration and Development Corporation (seal)
Authorized representative: Xxxx Xxxxxxx
Central Asia Petroleum Company Ltd. (seal)
Authorized representative: Wu Enlai
PetroChina Company Limited (seal)
Authorized representative: Xxxx Xxxxxxxx
China Petroleum Exploration & Development Company Ltd. (seal)
Authorized representative: Wu Dongshan
16
Exhibit 1:
PROJECTS OWNED BY CPEDC GROUP AFTER CLOSING OF ALL TRANSFERRED ASSETS
1. Development projects in Caracoles and Intercampo oilfields in Venezuela;
2. Orimulsion project in Venezuela;
3. Block 11 project in Ecuador;
4. Block 1-AB/8 in Peru;
5. Block 6/7 in Peru;
6. 8 projects in Canada;
7. Bilma project in Niger;
8. Tenere project in Niger;
9. Block H project in Xxxx;
10. ADAR upstream and downstream integration project in Algeria;
11. Block 350 project in Algeria;
12. Block 102a/112 project in Algeria;
13. Akjubin projects (Zhanazhol field/Kenkyak (post-salt) field and (per-salt)
field) and Central territory of eastern part in Kazakhstan;
14. Kenkiyak-Atyrau Pipeline project in Kazakstan;
15. North-Buzachi project in Kazakstan;
16. Bars project in Kazakstan;
17. KK project in Azerbaijan;
18. Gobustan project in Azerbaijan;
19. Block 5 project in Oman;
20. Projects in 4 blocks, including Yangpu in Beibuwan Basin,
Huangtong-Bailian in Fushan Depression, Jinfeng in Fushan Depression and
Huachang in Beibuwan Basin, in Hainan, China.
17
Exhibit 2:
ORGANIZATIONAL STRUCTURE OF CPEDC GROUP
AFTER THE CLOSING OF ALL TRANSFERRED ASSETS
18
Exhibit 3:
FURTHER REPRESENTATION AND WARRANTIES OF CNODC
For the purpose of this Transaction, in addition to the existing representations
and warranties, CNODC further makes the following representations and warranties
in accordance with Article 6.3 in the Agreement. Except for the information
disclosed to PetroChina prior to the execution date of the Agreement, to the
extent that CNODC knows and it should know as a shareholder of CPEDC Group
companies:
1. CORPORATE STATUS AND FORM OF CPEDC GROUP
1.1 Each of the entities of CPEDC Group is duly established and validly
existing in compliance with laws in the jurisdiction in which it is
incorporated, legally owns its assets, and is not subject to receivership,
liquidation, bankruptcy or winding-up nor does there exist any measure or
petition for its receivership, liquidation, bankruptcy or winding-up.
1.2 CPEDC Group conducts its businesses legally and has obtained all licenses
and approvals required for the conduct of its business, which are all
legal and valid. It has not received any notice of an intention to
terminate or modify any of the aforesaid licenses and approvals, nor has
it been aware of any matter that impedes or affects any extension or
renewal of any of such licenses and approvals.
1.3 CPEDC Group doesn't create any mortgage, pledge, lien, restriction,
preemption rights, third party interests or encumbrance or security
interest in any other form or any other preferential arrangements on any
of its assets, nor does there exist any fact that shall be disclosed or
any material legal defect.
1.4 CPEDC's existing registered capital is RMB50 million, which have been
fully paid up by CNODC and CAPC. As the sole shareholders of CPEDC, CNODC
and CAPC hold all of the interests in CPEDC, free from mortgage, pledge,
lien, restriction, preemption rights, third party interests, or
encumbrance or security interest in any other form, or any other
preferential arrangements, or any fact that shall be disclosed, or any
material legal defect.
1.5 CPEDC Group complies with its articles of association or other
organizational documents in all material aspects. It does not surpass its
power or fail to obtain any authorization in the conduct of its business,
execution of any contracts, making any undertakings or exercise of any of
its rights.
1.6 CPEDC's book of minutes of board meetings and shareholders' meetings of
19
CPEDC include the complete and accurate records of all resolutions passed
by the board and shareholders of CPEDC.
1.7 The execution and performance of the Agreement will not constitute any
violation or any material breach of any provision of any agreement,
instrument, law, award, order, permit, license or consent by which CPEDC
Group is bound.
1.8 CPEDC Group's continued operation of its existing business will not
conflict with or infringe upon any third party's rights in any way,
including but not limited to land ownership, land use rights, oilfield
exploration rights and oilfield exploitation rights.
1.9 CPEDC Group does no have any agreement or obligations with respect to its
share capital, whether issued or not, or the issue of any share, bond,
subscription right, stock option or other similar securities.
1.10 CPEDC Group has legal title to all of the assets set forth in the
Appraisal Report and doesn't allow any creditor's right to be created on
any of such assets. It has legal use rights to the assets used in the
operation of its business.
1.11 CPEDC Group or CNODC or CAPC has not taken any action or omission that
would result in circumstances under which CPEDC Group must or may be
responsible for:
(1) refunding any investment and financial support previously granted by
any government;
(2) repaying any governmental loan; or
(3) surrendering amount obtained by it under the preferential tax
treatment or tax reduction or exemption.
1.12 Neither CPEDC Group nor any of its directors is involved, in any criminal
act that has a material adverse impact on CPEDC Group's operation.
2. FINANCIAL STATEMENTS AND ACCOUNTING RECORDS OF CPEDC GROUP
2.1 CPEDC Group's financial statements:
(1) are complete and accurate in all aspects, and truly and fairly
reflect CPEDC Group's assets and liabilities on the Base Date, and
do not omit any debts or responsibilities;
(2) are prepared in compliance with relevant laws and/or International
Accounting Standards;
(3) no material adverse changes have occurred to the financial
conditions and prospects of the relevant business from the Base Date
to the effective date of the Agreement;
(4) reflect that the fixed assets of CPEDC Group have been depreciated
at the
20
depreciated at the depreciation ratio sufficient to reduce the value
of such assets to nil not later than the expiration of their service
life, after appropriate residual value of such fixed assets is
deducted; and
(5) disclose all contingent liabilities, commitments and deferred or
advance taxes and make proper provision therefor.
2.2 All book credits of CPEDC Group, whether indicated on the financial
statements of CPEDC or accrued since the Base Date, are valid and
enforceable, and have been or can be liquidated for their nominal value.
2.3 Except as disclosed in the financial statements of CPEDC Group, as of the
execution date hereof, CPEDC Group:
(1) hasn't had any capital expenditure (other than any payment made
under any contract that has been executed) or provided guarantee or
made other material commitments;
(2) has not made any borrowings except in the ordinary course of
business.
2.4 None of the secured borrowing as disclosed in the financial statements of
CPEDC Group exceeds the amount thereof as indicated therein, and all of
the similar borrowings newly made after the Base Date have been disclosed
to PetroChina in a timely manner.
2.5 Since the Base Date, there has no major adverse change to the financial
conditions or prospects of the relevant business.
2.6 CPEDC Group's Accounting Records:
(1) With respect to the relevant business and any changes to the
relevant business occurred during the period from the Base Date to
the execution date of the Agreement, CPEDC Group has established and
prepared properly all necessary account books and records, and all
such account books and documents that belong to or shall be held by
CPEDC are maintained and held by CPEDC.
(2) All accounts, account books, ledgers and all accounting records:
i) have been noted and completed adequately, properly and
accurately;
ii) free from material error and deviation; and
iii) record and reflect, truly and fairly, all transactions in
relation to relevant businesses.
3. TAXES OF CPEDC GROUP
3.1 All taxes payable by CPEDC Group, including any tax due and advance tax,
have been paid.
3.2 All tax returns and related materials to be prepared or filed by CPEDC
Group
21
for the purpose of any tax have been prepared or filed in time and on a
proper basis, and are true and accurate when prepared and consistent to
the fact at the time of filing thereof; any aforesaid will not or may not
lead to any dispute with any tax authorities.
3.3 CNODC has disclosed to PetroChina in detail of any and all of the
transactions entered into by CPEDC Group that are subject to approval or
permission by the competent tax authorities.
3.4 CPEDC Group and/or CAPC and/or CNODC have not taken any action that causes
CPEDC Group to assume any tax that is otherwise to be assumed by any party
other than CPEDC Group.
3.5 All remuneration, compensation, retirement or severance payment and other
amounts paid or payable to all of the current/former employees or
executives of CPEDC Group and all interests, annuities, patent royalty,
rent and other annual payment may be deducted before tax or treated in
other method as approved by tax authorities.
3.6 All documents to which CPEDC Group is a party, or that constitute part of
ownership of any entity of CPEDC Group to any assets, or in the
enforcement of which any entity of CPEDC Group has or may have interests,
and for which stamp tax or similar taxes shall be paid, have been stamped
or granted with tax exemption.
3.7 The materials submitted by CPEDC Group to relevant governmental
authorities and departments with respect to import or export of any goods
are true and accurate at submission; CPEDC Group has complied with all
ordinances, rules, orders, instructions or conditions regarding import and
export of goods and all custom affairs; and all duties payable by CPEDC
Group have been paid in full within the applicable time limit.
3.8 CPEDC Group has reported in full detail its provision of benefits to its
directors or employees to relevant tax authorities and the services
provided by any individual to CPEDC Group as required by applicable tax
laws.
3.9 CPEDC Group has made withholdings and disclosures to the authorities with
respect to any item for which it is obligated or entitled to make tax
withholding.
3.10 CNODC agrees to be fully responsible for or compensate for any accrued
taxation obligations of CPEDC Group that are payable but not paid, except
for those disclosed in the financial statements of CPEDC, unless otherwise
provided herein.
3.11 CPEDC Group does not have any tax dispute or suffer from any tax penalty,
22
and the existing tax preferences enjoyed by CPEDC Group have not ceased or
been deprived of. CNODC agrees to be fully responsible for or compensate
for any tax penalty incurred during the Related Period.
4. PROCEEDINGS OF CPEDC GROUP
4.1 CPEDC Group has not been involved in any Major Proceedings and there does
not exist any fact or situation at present that may involve CPEDC Group in
any Major Proceedings, other than the collection of accounts receivable in
the ordinary course of business.
4.2 None of the properties of CPEDC Group has been sealed up, frozen or
subject to any other enforcement actions by any administrative and/or
judicial authority.
5. LABOR RELATIONS OF CPEDC GROUP
CPEDC Group complies with the applicable laws and regulations and all of the
responsibilities to its employees under labor contracts in all material aspects,
and there is no material labor dispute involving a value/claim exceeding US$1
million individually pending between CPEDC Group and any of its employees.
6. ENVIRONMENTAL PROTECTION
6.1 CPEDC Group complies with the laws and regulations regarding environmental
protection in all material aspects.
6.2 CPEDC Group is not threatened with any civil, criminal or administrative
claim, investigation, complaint or lawsuit, in relation to environmental
protection that may result in a loss of US$3 million or more to CPEDC
Group.
7. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY
7.1 None of the confidential information used by CPEDC Group infringes upon
the legal rights of any third party to such confidential information.
7.2 CPEDC Group has legal ownership or use rights to any and all of the
intellectual properties used by it and its ownership or use thereof does
not infringe upon the intellectual properties of any third party.
8. INSURANCE
8.1 CPEDC Group has taken out insurance for its production and operation in
accordance with good commercial practice in international oil industry,
and CPEDC Group does not take any action or omission that may lead to the
23
invalidity of any of its insurance policies.
8.2 All materials provided in order to obtain or renew CPEDC Group's insurance
policies are correct, detailed and accurate at the time of provision.
8.3 CPEDC Group has not incurred any loss that is not covered under insurance,
or waived any substantial or valuable right, or allowed any insurance to
become invalid.
9. ARRANGEMENTS WITH RELATED PERSONS
All pecuniary arrangements between CPEDC Group and any of its directors, senior
officers or shareholders have been correctly reflected in the account books of
CPEDC Group.
10. ACCURACY OF MATERIALS PROVIDED
All materials provided by CNODC, CAPC and CPEDC for the purpose of this
Transaction are true, accurate and free of material omission.
11. FURTHER WARRANTIES
Except the exercise of its rights as a shareholder of CPEDC in accordance with
the Articles of Association of CPEDC and relevant laws and regulations, CNODC
warrants that:
11.1 After the Closing Date, none of the Transferred Assets will be involved in
or relate to any assets in Special Regions in any way.
11.2 During the Related Period, CNODC will not transfer any assets in Special
Regions in any way to CPEDC Group.
11.3 After the Closing Date, CPEDC Group will be completely independent of the
management of CNODC's assets in Special Regions, including but not limited
to:
(1) setting separate management structure and workflow;
(2) establishing management functions and personnel independent from
each other;
(3) being independent in financial matters, such as routine finance and
accounts management, capital flows, preparation of financial
statements; and
(4) CPEDC Group will not enter into any connected transaction with any
assets in Special Regions of CNODC or with the business activities
relating thereto.
24
Exhibit 4:
ARTICLES OF ASSOCIATION
OF CHINA PETROLEUM EXPLORATION & DEVELOPMENT COMPANY LIMITED
In order to meet the requirements of the socialist market economy and
improve the productivity, China Petroleum Exploration & Development Company
Limited ("the Company") is jointly established by China National Oil and Gas
Exploration and Development Corporation ("Party A") and PetroChina Company
Limited ("Party B"), in accordance with Company Law of the People's Republic of
China ("Company Law") and other relevant laws and regulations. In this regard,
these Articles of Association are hereby formulated.
CHAPTER 1 NAME AND ADDRESS OF THE COMPANY
Article 1 Name of the Company: China Petroleum Exploration & Development
Company Limited.
Article 2 Address: International Investment Building D, Fuchengmen Beidajie,
Xicheng District, Beijing, 100034
CHAPTER 2 OBJECTIVES AND SCOPE OF BUSINESS OF THE COMPANY
Article 3 Scope of business: the development of exploration technologies of
oil and gas fields; the investments in crude oil, natural gas and
refining & chemical projects; the investments in crude oil, natural
gas and oil product pipeline projects; the contracting of oil
operations and services; the import and export of goods and
technologies; acting as the import and export agent; the consulting
service and technical exchange regarding foreign trade; the sale of
equipment, apparatuses & instruments and parts as well as mud
materials, crude oil, special chemical and petrochemical products
for oilfields (excluding hazardous chemicals and Class I precursor
chemicals) .
CHAPTER 3 THE COMPANY'S REGISTERED CAPITAL
Article 4 The registered capital of the Company shall be RMB 100,000,000.
Article 5 Any increase or decrease in the registered capital of the Company
shall
25
be subject to the unanimous approval of all of the shareholders of
the Company through resolutions adopted at a duly convened
shareholders' meeting.
Article 6 If the Company intends to increase its registered capital, the
parties to the Company shall have the right to subscribe for such
increased registered capital in proportion to the percentage of
their respective equity interest in the Company. If either party to
the Company is unwilling to exercise its aforesaid right, the other
party may subscribe for the portion of the registered capital of the
Company that should be subscribed for by such party. In such case,
the parties' shareholding in the Company shall be adjusted
accordingly.
Article 7 In case the Company intends to reduce its registered capital, it is
also required to notify its creditors of its intention, within ten
(10) days, and shall make public announcements on a newspaper at
least three times within thirty (30) days, as of its adoption of the
shareholders' resolutions therefor. In the event any change to its
registered capital, the Company shall carry out procedures for
registering such change with the registration authority in
accordance with relevant laws.
CHAPTER 4 FORM, AMOUNT AND PERCENTAGE OF SHAREHOLDERS'
CAPITAL CONTRIBUTIONS
Article 8 The form, amount and percentage of shareholders' capital
contributions shall be as follows:
FORM AMOUNT PERCENTAGE(%)
(RMB'0000)
PARTY A: Cash 5000 50%
PARTY B: Cash 5000 50%
Article 9 The Company, is a limited liability company established in
compliance with laws of the People's Republic of China (the "PRC"),
and Party A and Party B shall be responsible to the Company to the
limit of their respective contributions to the registered capital of
the Company as specified in the Capital Contribution Agreement.
Party A and Party B
26
shall share the profit of the Company and be responsible for the
risks and losses of the Company in proportion to their respective
percentage of contribution to the registered capital of the Company.
Article 10 After both Party A and Party B have paid in full their respective
subscribed contributions to the registered capital of the Company as
specified above, the Company shall retain an accounting firm
registered in the PRC to verify the capital contribution of each
party and issue a capital contribution verification report, and on
the basis thereof, the Company shall issue the certificate of
capital contribution to each of the shareholders. The capital
contribution certificate shall set forth the corporate name, date of
establishment, name of each shareholder of the Company, amount of
contribution to the registered capital of the Company subscribed for
by each Party A and Party B, the date of payment of capital
contribution, and date of issue of the capital contribution
certificate.
CHAPTER 5 SHAREHOLDERS' RIGHTS AND OBLIGATIONS
Article 11 Each shareholder of the Company shall enjoy the following rights:
(1) to attend in person or by proxy shareholders' meetings of the
Company and to have and exercise voting rights in proportion
to its respective capital contributions;
(2) to understand the Company's operational and financial status;
(3) to elect members of the board and of the supervisory
committee;
(4) to receive dividends and transfer the contributions in
accordance with relevant laws, regulations and these Articles
of Association;
(5) to pre-emption rights to the contribution transferred by the
other shareholder;
(6) to subscribe for the increased registered capital of the
Company on a priority basis;
(7) to share the residual proprieties of the Company upon its
termination;
(8) to have the right to review and audit the minutes of
shareholders' meetings and the financial reports of the
Company.
Article 12 The shareholders of the Company shall assume the following
obligations:
(1) to comply with the Company's Articles of Association;
27
(2) to pay in full their subscribed capital contributions on time;
(3) to assume limited liabilities for the Company's debts to the
limit of their respective subscribed capital contributions to
the Company;
(4) not to withdraw their capital contributions after completion
of the required procedures for registration of the the
Company.
CHAPTER 6 CONDITIONS FOR SHAREHOLDERS' TRANSFER OF CAPITAL CONTRIBUTIONS
Article 13 Shareholders may transfer between themselves all or part of their
capital contributions; provided that such transfer shall ensure that
the number of shareholders of the Company shall meet the number as
specified under the Company Law.
Article 14 Any shareholders' transfer of any capital contribution of the
Company shall be subject to consideration and approval by the
shareholders' meeting of the Company. Where any shareholder
transfers its capital contribution to a person other than a
shareholder, the unanimous consent of all shareholders is required.
Any shareholder who does not consent to such transfer shall purchase
the capital contribution to be transferred, and shall be deemed to
have agreed to such transfer if it does not purchase such capital
contribution. With respect to any capital contribution that may be
transferred by any shareholder upon the consent of all of the
shareholders, other shareholders shall have Preemption Rights
thereto on the same conditions.
Article 15 When any shareholder of the Company transfers its capital
contribution to any third party other than the existing shareholders
of the Company, and/or the Company admits new shareholders in any
way, the transferor and/or the existing shareholder of the Company
shall cause such transferee and/or new shareholder of the Company to
accept, comply with and perform all regulations herein, including
but not limited to the provisions set forth in Articles 23 to 28
(meaning the provisions hereinbelow regarding the shareholders'
authorization to the board for consideration and approval and the
composition of the board), unless the aggregate shares of the
Company held by Party A and party B after such transfer and/or
capital increase are less than 50% (not inclusive) of the Company's
registered capital. Such transferee and/or new shareholder shall,
commencing from the date on which it becomes a shareholder of
28
the Company formally, accept, comply with and perform all provisions
of these Articles of Association, including but not limited to the
provisions set forth in Articles 23 to 28.
Article 16 After the consummation of a shareholder's transfer of its capital
contribution in accordance with the law, the Company shall record in
its shareholder register the name, domicile and amount of the
capital contribution by the transferee.
CHAPTER 7 SHAREHOLDERS' MEETING
Article 17 The shareholders' meeting of the Company shall be composed of all
shareholders of the Company. It shall be the Company's highest
authority and exercise the functions and powers as follows:
1. to decide on the Company's annual operational policies and
investment plans;
2. to elect and replace directors and to decide on matters
relating to the remuneration of directors;
3. to elect and replace supervisors and to decide on matters
relating to the remuneration of supervisors;
4. to examine and approve the annual report of the board of
directors;
5. to examine and approve the annual report of the supervisory
committee;
6. to examine and approve the Company's proposed annual financial
budget and final accounts;
7. to examine and approve the Company's profit distribution plans
(including cash and bonus) and loss recovery plans;
8. to resolve on the increase or decrease of the Company's
registered capital;
9. to resolve on the issue of bonds by the Company;
10. to resolve on the transfer by either shareholder of its
capital contribution to any person other than shareholders of
the Company;
11. to resolve on such issues as the merger, division, change in
corporate form, dissolution or liquidation of the Company;
12. to amend the Company's Articles of Association.
Article 18 With respective any matter set forth in items 1, 6, 7 and 9 under
Article 17, the board of directors shall first make a proposal and
then submit the same to the shareholders' meeting for consideration.
All of the
29
shareholders shall vote in favor of such proposal and the
shareholders' meeting shall adopt unanimous resolutions approving
such proposal.
Article 19 The shareholders' meeting shall be convened by the board of
directors and presided over by Chairman of the board. If the
Chairman of the board of directors is unable to perform his/her
duties for a particular reason, the vice-chairman or another
director designated by the Chairman shall preside over the meeting.
Article 20 Shareholders shall exercise their voting rights at shareholders'
meetings in proportion to their respective capital contributions to
the Company.
Article 21 Shareholders' meetings may be regular meetings or extraordinary
meetings. The Company shall notify all of its shareholders of each
shareholders' meeting fifteen (15) days before the date on which
such meeting is to be held. Subject to unanimous consent of all
shareholders, the above notice period of the shareholders' meeting
may be shortened. The regular shareholders' meetings shall be
convened once a year. The extraordinary shareholders' meetings
cannot be held unless Party A or Party B, three or more board
directors or the supervisory committee of the Company shall propose
to do so.
Article 22 A shareholders' meeting shall adopt resolutions on the matters
submitted to it for consideration. Any resolution of the Company at
the shareholders' meeting shall require the approval of the
affirmative votes of the shareholders representing more than
two-thirds or more of the voting rights of the Company, except as
otherwise provided herein. A resolution of the Company at the
shareholders' meeting for any increase or decrease of the registered
capital, division, merger, dissolution or change in corporate form
of the Company, or amendment of these Articles of Association shall
require the unanimous approval of all of the shareholders. Minutes
shall be made for each shareholders' meeting to record decisions on
each matter considered at such meeting, which shall be signed and
sealed by the shareholders present at such meeting.
CHAPTER 8 BOARD OF DIRECTORS
Article 23 The Company shall have a board of directors, which shall consist of
seven members (including the chairman), three of them shall be
elected from the candidates nominated by Party A and four of them
shall be elected from the candidates nominated by Party B, all of
whom shall be
30
elected and appointed by the shareholders' meeting. Either
shareholder shall cast the affirmative vote on any candidate for
director of the Company nominated by the other party and the
shareholders' meeting shall unanimously approve the election of such
candidates and appoint such candidates as directors of the Company.
Article 24 The term of office of each director is three years, and may be
renewable upon re-election at the expiry of his/her term. The term
of office of each director shall commence on the date when he/she is
elected as director of the Company at a shareholders' meeting. The
shareholders' meeting may not without reason remove any director
(including the chairman) from office before the expiry of the term
of office of such director.
Article 25 Any candidate for director of the Company nominated by Party B may
not hold a concurrent post in China National Petroleum Corporation
or any of its affiliated companies (excluding Party B or any of its
subsidiaries covered in Party B's consolidated financial
statements); otherwise, he/she must resign from aforesaid post
before the formal appointment as director of the Company by the
shareholders' meeting of the Company.
Article 26 Party B hereby undertakes irrevocably that, in no case (including
when Party A transfers all of its capital contribution in the
Company to a third party), Party B will abandon its seats of
directors granted by Article 23 herein, and also undertakes that,
when any director nominated by Party B resigns or is dismissed by
the board of directors of the Company, Party B shall nominate new
candidate for director within a reasonable period and submit such
nomination to the shareholders' meeting of the Company for election
and appointment. Party A respects and agrees upon Party B's above
arrangements.
Article 27 The board of directors of the Company shall have a chairman, who
will be elected and appointed by the board of directors.
Article 28 The board of directors shall be responsible to the shareholders'
meeting and shall exercise the following powers:
1. to be responsible for convening shareholders' meetings and
reporting on its work to the shareholders' meeting;
2. to implement the resolutions of the shareholders' meetings;
3. to decide on the annual operational plan and investment plan
of the Company;
4. to formulate the Company's proposed annual financial budget
and
31
final accounts;
5. to formulate plans for profit distribution and recovery of
losses;
6. to formulate plans for any increase or decrease of the
Company's registered capital;
7. to formulate plans for issuing the corporate bond;
8. to formulate plans for the merger, division, change in
corporate form and dissolution of the Company;
9. to decide on the structure of the Company's internal
management;
10. to formulate the Company's basic management system;
11. to appoint or dismiss the Company's general manager and
pursuant to the general manager's nomination to appoint or
dismiss the deputy manager and the chief financial officer of
the Company and decide on their respective remunerations;
12. to decide on any external borrowing or guarantee with a value
exceeding 10% of the annual budget and not covered under the
Company's annual operational plan.
Article 29 The rules for board meetings of the Company shall be as follows:
1. Meetings of the board of directors shall be held at least
twice each year and shall be convened and presided over by the
Chairman. The Chairman shall convene an extraordinary meeting
of the board of directors if it so requested by two or more
directors or the supervisory committee or the General Manager.
2. In the case of a regular board meeting, the Chairman shall
issue a notice in writing to all directors ten (10) working
days prior to the convention of such meeting, stating the
date, time, venue and agenda of such meeting. In the case of
an extraordinary meeting, the Chairman shall notify all
directors in writing of aforesaid items five (5) working days
prior to the convention of the meeting.
3. Notice of a meeting shall be deemed to have been given to any
director who attends the meeting without protesting against,
before or at its commencement, any lack of notice.
4. The board meeting may be held by telephone or any other
electronic audiovisual means in which ways the participants
can hear and communicate with each other at all times. Any
directors or proxies attending a board the meeting by
aforesaid means shall be deemed to be present the meeting in
person.
5. Where the Chairman is unable to hold, attend or preside over
the
32
meeting for any reason, he/she shall authorize the Vice
Chairman or any other director to do so on his/her behalf.
6. Any director who is unable to attend a board meeting may by
issuing a power of attorney entrust any other person (who must
also be a director of the Company) to participate in the
meeting on his/her behalf. The power of attorney shall be
submitted to the Chairman or convener of the relevant board
meeting at the commencement of such meeting. The proxy so
entrusted is entitled to equivalent rights and powers to that
of the entrusting director, including vote casting. One proxy
may represent one or more directors if so entrusted. Except
for his/her own rights and powers as a director, the proxy
entrusted may have more than one voting rights.
7. Where a director is unable to attend a meeting of the board of
directors and has not appointed a representative to attend
such meeting on his/her behalf, he/she shall be deemed to have
waived his/her right to vote at such meeting.
8. Each director shall have one (1) vote. The Chairman shall not
have a second vote or the power of veto
9. If a director or any other enterprise in which he/she is
employed is interested, directly or indirectly, in any
existing or potential contract, transaction or arrangement
(excluding the employment contract) of the Company, no matter
whether related things need to be approved by the board of
directors generally, such director shall disclose to the board
of directors the nature and extent of such interest as soon as
possible.
If a director is interested in any matter as mentioned above
to be resolved at the board meeting, such director shall
excuse him/herself from such meeting, shall not have any
voting right in respect of such matter and shall not be
counted in the quorum of such board meeting. When there is
dissent as to the existence of such interest, it shall first
be discussed whether such director has any interest in such
matter before such matter is reviewed, and the aforesaid
avoidance procedure shall be carried out if more than
two-thirds of directors consider such interest does exist.
10. Detailed minutes shall be kept for each board meeting and
signed by all directors and proxies present at such meeting.
Such minutes shall
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be kept by the Company in the period when the Company
survives. All of the shareholders and directors of the Company
may review the minutes of board meetings in the office of the
Company during normal business hours.
11. The Company shall be responsible for reasonable expenses
incurred by directors and proxies in their attendance at board
meetings, including travel and accommodation costs. For the
purpose of voting at a board meeting, directors may seek the
assistance of legal, financial and management professionals
when they believe necessary, at the Company's cost.
12. Board meetings shall be conducted in accordance with the
procedures stipulated herein and every item on the agenda
shall be properly discussed as necessary and set forth in
written board resolutions if necessary. All such written
records, including any resolutions passed, shall be
distributed to all directors for review and approval after
each board meeting.
13. Each director shall keep secret all matters discussed at the
board meetings, and shall not reveal the information thereof
to any third party without the approval of the board of
directors, unless required otherwise by laws or regulations.
Article 30 Unless otherwise provided herein, any decisions made by the board of
directors on any matters discussed at any board meeting shall
require the affirmative votes of more than half of all of the
directors, and shall be set forth in meeting minutes which shall be
signed by the directors present at such meeting.
Article 31 The directors shall be responsible for all the resolutions of the
board of directors. If any resolution of the board of directors
violates any law, administrative regulation or the Company's
Articles of Association, which results in serious losses to the
Company, the directors participating in the adoption of such
resolution shall be liable for compensating the Company. However, if
it can be proven that a director expressly objected to the
resolution when the resolution was voted on, and that such
objections were recorded in the minutes of the meeting, such
director may be free of liability.
Article 32 The Chairman of the board of directors shall be the legal
representative of the Company, and shall be elected and removed by
the board of directors, for a term of three (3) years. At the expiry
of such term, such
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term is renewable if the Chairman is re-elected. Before the expiry
of the term, the board of directors shall not remove the Chairman
without proper reason.
Article 33 The Chairman of the board of directors shall exercise the following
powers:
1. to exercise his/her authority as legal representative of the
Company;
2. to preside over shareholders' meetings;
3. to convene and preside over meetings of the board of
directors;
4. to check on the implementation of resolutions passed by the
board of directors and report to the shareholders' meeting the
result of such checking;
5. to sign relevant documents on behalf of the Company;
6. to exercise extraordinary power of decision and disposition on
the Company's affairs in event of emergency such as war and
ultra serious natural disaster, provided that such decision
and disposition shall be in the Company's interests, and shall
report to the board of directors and/or the shareholders'
meeting after having made such decision and disposition;
7. to exercise other powers conferred by the board of directors.\
When the Chairman is unable to exercise his/her powers, he/she shall
designate a Vice Chairman/director to exercise such powers on
his/her behalf.
Article 34 The Company shall have one Secretary to the Board, who shall be
appointed by the board of directors.
Article 35 The Company may formulate detailed Rules of Procedure of the Board
of Directors as required. The Rules of Procedure of the Board of
Directors shall not conflict with these Articles of Association and
shall be subject to the consideration and approval by the
shareholders' meeting.
CHAPTER 9 THE COMPANY'S OPERATION AND MANAGEMENT ORGANIZATIONS
Article 36 The Company shall set up operation and management organizations
subordinate to the board of directors to be responsible for the
Company's routine operations and managements of the Company. Such
organizations shall have one general manager who will be appointed
by the board of directors, and several vice general managers who
will be nominated by the general manager, appointed by the board of
directors
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and be responsible to the board of directors. The Company shall have
a chief financial officer, who will be nominated by the general
manager, appointed by the board of directors and be responsible to
the board of directors.
Article 37 The general manager is responsible to the board of directors and
exercises the following powers:
1. to be in charge of the company's production, operation and
management and direct the implementation of the resolutions of
the board of directors;
2. to direct the implementation of the Company's annual
operational plan and investment plan;
3. to make plans for the set up of the Company's internal
management structure;
4. to formulate the Company's basic management system;
5. to formulate specific rules and regulations for the Company;
6. to propose the appointment or dismissal of the Company's
senior management including vice general managers and
financial officers;
7. to draft the employee salary, welfare and rewards and
punishment systems, and to decide on the appointment and
dismissal of the Company's employees;
8. to handle important businesses on behalf of the Company with
external parties subject to the authorization of the board of
directors;
9. to propose the convention of extraordinary board meetings;
10. other powers conferred by the Company's Articles of
Association and the board of directors.
Article 38 General manager shall be present at meetings of the board of
directors; provided that if he/she is not a director, he/she shall
not have voting right at any board meeting.
Article 39 In exercising their powers, general manager and vice general
managers shall not alternate the resolutions of the shareholders'
meeting or the board of directors or go beyond their powers.
Article 40 In exercising their powers, general manager and vice general
managers shall act honestly and diligently and in accordance with
laws, administrative regulations and the Company's Articles of
Association.
Article 41 General manager and vice general managers shall serve a term of
three (3) years, and may be appointed by the board of directors
successively
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through re-nomination.
Article 42 The board of directors may remove the general manager and the vice
general managers from their position and terminate their term at any
time by resolutions.
CHAPTER 10 SUPERVISORY COMMITTEE
Article 43 The Company shall have a supervisory committee. It shall be the
permanent supervisory organization and responsible for supervising
the board of directors and its members as well as such senior
management as general manager, vice general managers and chief
financial officer, to prevent them from abusing their positions and
infringing the legal interests of any shareholders, the Company or
employees of the Company.
Article 44 The supervisory committee shall be made up of representatives of
shareholders and a reasonable proportion of representatives from the
Company's employees. The Company shall have three supervisors, one
of whom shall be selected from the candidates nominated by Party A,
one from the candidates nominated by Party B and one from the
representatives of employees.
Article 45 The representatives of shareholders in the supervisory committee
shall be elected by shareholders' meeting, and the representatives
of employees shall be elected by the Company's employees
democratically. The supervisory committee shall have a convener who
shall be unanimously nominated by all of the supervisors.
Article 46 The term of office of the supervisors is three years. At the expiry
of his/her term of office, the supervisor may serve consecutive
terms if re-appointed. The directors, general manager, vice general
managers and chief financial officer of the Company may not act
concurrently as supervisors.
Article 47 The supervisors exercise the following powers:
1. to examine the Company's financial conditions, and to review
the Company's accounting books and other accounting materials;
2. to exercise supervision over acts of the directors, general
manager, vice general managers and other senior management
taken in connection with their performance of their duties
which violate laws, regulations or the Company's Articles of
Association;
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3. to demand remedies from a director, general manager, vice
general manager and other senior management when any act of
them is detrimental to the Company's interests;
4. to propose the convention of an extraordinary shareholder's
meeting;
5. other powers conferred to supervisors in the Company's
Articles of Association.
Supervisors shall be present at meetings of the board of directors.
Article 48 Meeting of the supervisory committee shall be held at least once
every year. All such meetings shall be convened and presided over by
the convener of the meeting. An extraordinary meeting of the
supervisory committee may be held if requested by two or more
supervisors or the Chairman of the board of directors.
Article 49 The convener shall issue a notice in writing to all supervisors ten
(10) working days prior to the convention of each meeting of the
supervisory committee, stating the time, date, venue and agenda of
such meeting.
Article 50 Any supervisor who is unable to attend any meeting of the
supervisory committee may by issuing a power of attorney, entrust
any other person (who must also be a supervisor of the Company) to
participate in such meeting on his/her behalf. The power of attorney
shall be submitted to the convener of such meeting at the
commencement of such meeting.
Article 51 The supervisory committee shall make decisions by voting, one vote
for each supervisor. The supervisory committee' decisions shall
require the approval of more than half of all of the supervisors.
Article 52 The Company shall be responsible for any reasonable expenses
incurred by the supervisory committee in retaining such
professionals as legal counsels and accountants in exercising its
powers.
Article 53 The supervisory committee shall set forth their decisions on any
matters discussed at any of their meetings in meeting minutes, which
shall be signed by all supervisors and the clerk present at such
meeting. The supervisors are entitled to make in the meeting minutes
for any meeting, any illustrative note for their speeches made at
such meeting. The minutes of the supervisory committee shall be kept
as files of the Company for 15 years.
Article 54 The supervisors shall fulfill their supervision responsibilities
honestly in accordance with laws, administrative regulations and the
Company's Articles of Association.
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Article 55 The Company may formulate detailed Rules of Procedure of the
supervisory committee as required. The Rules of Procedure of the
supervisory committee shall not conflict with these Articles of
Association and shall be subject to consideration and approval by
the shareholders' meeting.
CHAPTER 11 FINANCE, ACCOUNTING AND PROFIT DISTRIBUTION
Article 56 The Company shall pay taxes in accordance with laws and regulations
of the PRC and withhold and pay the individual income tax payable by
its employees.
Article 57 The Company shall establish its financial and accounting systems
according to laws and regulations of the PRC and the Company's
Articles of Association, and put them into implementation after
being approved by its board of directors. Any significant changes to
the Company's financial and accounting systems may not be put into
implementation until after being approved by the board of directors.
Article 58 At the end of each fiscal year, the Company shall prepare a
financial report, which shall be examined and verified in accordance
with law. The Company's financial statements shall include the
following accounting statements and schedules:
1. balance sheets;
2. profit and loss statement;
3. statement of cash flows;
4. explanation of financial condition;
5. profit distribution statement.
Article 59 The Company shall adopt a calendar year as its fiscal year, which
shall commence from 1 January and expire on 31 December of the same
calendar year. The first fiscal year of the Company commences from
the establishment date of the Company and expires on 31 December of
the current year. The last fiscal year of the Company expires on the
dissolution date of the Company.
Article 60 The Company shall distribute its after-tax profits among its
shareholders in proportion to the shareholders' capital
contributions after the Company has made up for losses or made
allocations to the statutory common reserve fund and the statutory
common welfare fund.
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CHAPTER 12 LABOR AND EMPLOYMENT SYSTEM
Article 61 The Company shall recruit and employ its employees in accordance
with the rules established by the board of directors, with the
supervision and approval of general manager, in light of the
qualifications of the candidates.
Article 62 The Company shall sign a labor contract with each employee in
accordance with the Labor Law of the People's Republic of China and
relevant regulations. Such labor contract shall include provisions
regarding employee dismissal, resignation, salary, insurance,
welfare, reward, labor disciplines, penalty and other related
matters.
Article 63 Employees employed by the Company shall keep secret any information
obtained from the Company and shall not disclose such information to
any third party without approval of the Company.
Article 64 The standards on qualifications, compensation, social insurances,
welfare, travel and accommodation expenses of senior management
nominated and recommended by the shareholders shall be determined by
the board of directors.
Article 65 The labor and employment system shall be carried out in accordance
with relevant PRC laws and regulations and relevant rules of the
relevant labor departments under the State Council.
CHAPTER 13 DISSOLUTION AND LIQUIDATION OF THE COMPANY
Article 66 The Company shall have a term of thirty (30) years, commencing on
the date when its business license is issued.
Article 67 The Company may be dissolved upon the occurrence of any of the
following:
1. pursuant to the provisions of the Company's Articles of
Association, the term of the Company has expired or any other
event that shall constitute a cause for dissolution has
occurred;
2. a resolution for dissolution is passed by a shareholder's
meeting of the Company;
3. dissolution is necessary due to a merger or division of the
Company;
4. the Company is ordered to close down because of its violation
of laws and administrative regulations;
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5. the Company goes bankrupt.
Article 68 A liquidation group shall be appointed in accordance with the
Company Law upon dissolution of the Company, to carry out
liquidation for the Company. After the completion of the
liquidation, the liquidation group shall prepare a liquidation
report and present it to the shareholders' meeting or to the
relevant regulatory authority for confirmation, and apply to the
original registration authority of the Company for cancellation of
the Company's registration.
CHAPTER 14 MISCELLANEOUS
Article 69 The Company may modify these Articles of Association as necessary or
in event of changes to any items registered. The Articles of
Association, after being so modified, shall not conflict with any
laws or regulations, and the modification shall be subject to the
approval by all shareholders unanimously. The Articles of
Association, after being so modified, shall be submitted to and
filed with the Company's original registration authority. Where such
modification involves any change to any registered items of the
Company, procedures shall be carried out with the registration
authority of the Company for changing such registered items.
Article 70 The board of directors is entitled to interpret the articles of
association.
Article 71 These Articles of Association shall be jointly formulated by both
shareholders and come into effect upon approval by the shareholders'
meeting of the Company. These Articles of Association shall
supercede the original articles of association of the Company as of
the date of effectiveness hereof.
Article 72 The expression such as "above", "within", "before" and "below" (a
specific number) herein shall include the specific number itself,
while "less than", "lower than", "beyond" and "over" (a specific
number) shall not include the specific number itself.
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