[Exhibit 10.7]
China Energy Conservation and Environmental
Protection Technology Investment LTD.
And
China Clean and Renewable Energy Corporation
Strategic Partnership Agreement
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This Agreement is signed the 1st day of September, 2007 in Beijing.
Party A: China Energy Conservation and Environmental Protection
Technology Investment LTD., a company incorporated in the
PRC, the registered office of which is in Room 801 Jieneng
Mansion, 00 Xxxxxxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx.
Legal representative: Zeng Wu
Party B: China Clean and Renewable Energy Ltd, a company
incorporated in Hong Kong, the registered office of which
is in Room 602 Beautiful Group Tower, 00-00 Xxxxxxxxx
Xxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxx.
Legal representative: Xxxxx Xxxx
RECITALS:
i) Party A is a State owned enterprise that reports
directly to the State Council. It's primary mission is
to develop and invest in energy conservation projects
in China.
ii) Party B is a internationally based company who was
primarily established to invest and operate clean and
renewable energy projects in China. Party B is backed
by international investors, funds, and an experience
management team.
iii) Party A and Party B agree to form a strategic
partnership to develop, invest, operate, and manage
energy conservation projects in China.
Now the Parties agree as follows:
1. Principle
Party A and Party B will jointly seek to explore, develop,
invest, operate, and manage energy conservation projects in
China. All projects invested by the Parties will be based on
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commercially driven standards within economically driven
return criteria established by the Parties.
2. Primary Roles
1) Party A
a) Introduce conservation & renewable energy projects that
it is involve in China.
b) Provide studies, research and development of
conservation & renewable energy products and projects.
c) For each specific project to be undertaken by the
Parties, provide its extensive network of engineering and
operating staff to support such project.
d) For each specific project to be undertaken, help develop
marketing and distribution network.
e) For each specific project to be undertaken, assist in
accessing relevant government entities and responsible
departments.
2) Party B
a) Party B will jointly work with Party A on conservation &
renewable energy projects.
b) Party B will primarily use its experience and expertise
in the financial markets, both internationally and
domestically in China, to tap funding for specific
projects.
c) Party B will also deploy its international management
expertise in the operations of specific projects.
3. Joint Development of Projects
1) In seeking projects, the Parties agree to be commercially
driven, and apply economic return criteria suitable to both
parties in their analysis of each specific project.
2) Party A and Party B will enter into separate specific
Agreements for each specific project as developed by the
Parties. The terms and conditions of each specific
Agreement should be mutually beneficial to both Parties and
not be in conflict with this Agreement.
3) The Parties agree to set up criteria and standards for
evaluating projects as follows:
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a) Industry and Sector Specific Analysis
Both parties will exchange ideas on which industry to
focus and prioritize on. The Parties will seek
industries where it can be a market leader and bring
specific value added to such projects. The Parties have
identified (1) the waste heat energy conversion business
as a starting point for investment. Industries where
project opportunities exist in this field include the
Steel industry as well as cement, refining, and metals
industries. The Parties have also identified (2) the
Municipal energy lighting sector as a sector for
investment. The parties expect these 2 sectors to
provide amble investment project opportunities and
superior returns to the Parties over the next several
years
The Parties will also explore and prioritize other energy
conservation sectors for investment. These sectors may
include wind and solar energy related projects in China.
b) Risk Analysis
Both parties agree to develop and update constantly the
risk factors for each and every specific project. Such
risk factors include the size of projects, the soundness
of collateral, strength of payback period, etc.
In operating projects, the Parties agree that each party
shall bear its own resources, analyze it own risks, and
be responsible for its own expenses.
c) Legal Protection
All projects must comply with applicable Chinese laws and
regulations.
d) Return Analysis
Each project must independently be reviewed by each Party
as to its own expected returns. The Parties must agree
to the expected returns prior to engaging in any
investment.
e) Negotiations and Documentation of each Project
While the Parties agree to allow flexibility in the
negotiation of projects, (for example, Party A may be the
sole negotiator for each project in order to get better
terms and conditions), the Parties agree to document all
terms and conditions on each specific project so as to
ensure protection of all interest by the Parties.
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4. Division of Profits
1) Each project will be evaluated base on its risk and return
profile and will be agreed to by both Parties before any
investment. As such, every project must meet expected
returns to both Parties.
2) For Party B, each project must meet a minimum expected
return (no less than 15% IRR) before it will invest.
3) Party B agrees to provide "Incentive Bonuses" to Party A
for their work and support of each project. Such Incentive
Bonuses will be granted by Party B as follows:
a) Such Incentive Bonuses will be 10% of the returns
received if the IRR received by Party B is 15%.
b) Such Incentive Bonuses will be 40% of the returns
received if the IRR received by Party B is from 15% to
25%.
c) Such Incentive Bonuses will be 60% of the returns
received if the IRR received by Party B is more than 25%.
5. Right of First Refusal
Pursuant to this Agreement, Party A agrees to grant Party B a
right of first refusal for conservation and renewable energy
projects it expects to pursue. Party B will have a right for
30 days to decide whether to invest or participate in any
project referred by Party A.
6. Principal of Contact
1) Party A:
Zhang Jun EMAIL: xxxxxx@xxxxx.xxx
2) Party B:
Xxx Xxxxx EMAIL: xxxxxxxx@xxxxx.xxx
7. Other Conditions
1) The information in this agreement is confidential.
2) This agreement shall be governed by and construed in
accordance with the PRC law.
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3) This agreement shall take effect after it is signed by the
legal representatives and authorized people of the parties.
4) The term of this agreement is 10 years from date of Signing.
EXECUTION PAGE
China Energy Conservation and Environmental
Protection Technology Investment LTD.
Signature: /s/ Zeng Wu
---------------------------------
Name: Zeng Wu.
China Clean and Renewable Energy, Ltd
Signature: /s/Xxxx Hei Ping
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Name: Xxxx Hei Ping
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