Transfer Agreement for the 50% Equity Interest in MTU Maintenance Zhuhai Co., Ltd. of Zhuhai Bonded Area between China Southern Air Holding Company and China Southern Airlines Company Limited
Transfer
Agreement for the 50% Equity Interest
in
MTU
Maintenance Zhuhai Co., Ltd. of Zhuhai Bonded Area
between
China
Southern Air Holding Company
and
China
Southern Airlines Company Limited
This
Agreement was entered into on 28 September 2009 in Guangzhou, China
between:
Party
A: China Southern Air Holding Company
Legal
address: Baiyun International Airport, Guangzhou, Guangdong
Province
Legal
representative: Si Xian
Min
Position:
General Manager
and
Party
B: China Southern Airlines Company Limited
Legal
address: Economic and Technological Development Zone, Guangzhou, Guangdong
Province
Legal
representative: Si Xian Min
Position:
Chairman
Whereas:
1.
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MTU
Maintenance Zhuhai Co., Ltd. of Zhuhai Bonded Area is a sino-foreign
equity joint-venture enterprise jointly established by Party B and MTU
Aero Engines GmbH, in which each holds 50% equity
interest;
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2.
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Party
A is a state-owned group company established and existing under the laws
of the PRC. It is authorized to manage the state-owned assets of the group
company and all its subsidiaries and therefore, entitled to take the
subject equity interest under the Agreement pursuant to the legal
procedures;
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3.
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Party
B is a listed company established and existing under the laws of the PRC
with qualification of independent legal entity, and is entitled to dispose
of the subject equity interest it holds provided that the relevant
procedures as provided in applicable laws are duly carried
out.
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The
following agreement on the subject equity interest was entered into between both
parties after arm's length negotiation:
I.
Definitions
Both parties: collectively
Party A and Party B.
Each party, a party or the other
party: Party A or Party
B
Party
A, CSAHC or Transferee: China Southern Air Holding Company
Party
B, Company or Transferor: China Southern Airlines Company Limited
JV Company or MTU Co.: MTU
Maintenance Zhuhai Co., Ltd. of Zhuhai Bonded Area, a sino-foreign equity
joint-venture enterprise jointly established by Party B and MTU Aero Engines
GmbH, the legal address of which is at Zhuhai Bonded Area.
Germany
MTU or the foreign
shareholder of the JV Company:
MTU Aero Engines
GmbH
Subject equity interest: the
50% equity interest in MTU Co. held by Party B (including an investment of
US$31,550,000 and the proportionate
interest);
JV Contract: the joint venture
contract between China Southern Airlines Company Limited and MTU Aero Engines
GmbH entered into between China Southern Airlines Company Limited and MTU Aero
Engines GmbH on 12 March
2001;
MTU Articles: the articles of
association of MTU Maintenance Zhuhai Co., Ltd. of Zhuhai Bonded
Area;
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Taxes and levies: any of the
taxes, charges, fees and surcharges, including but not limited to income tax,
value-added tax and business tax calculated and levied by the State or any
governmental authorities or any of its branches at provincial, municipal or
county level in an individual, combined, separate or united way or otherwise,
which include the relevant interests, late fees, additional charges and
penalties.
Transition Period: the period
between 30 June 2009, the reference date of valuation of the transfer and the
date on which all the approvals are obtained and the procedure of changes on
industrial and commercial registration is
concluded.
Force majeure: the
unpredictable, inevitable and insuperable objective happenings, including but
not limited to wars, pandemic diseases, strikes, earthquakes and
floods.
SASC: the PRC State-owned
Assets Supervision and Administration Commission of the State
Council.
MOC: Ministry of Commerce of
the People's Republic of China
II.
Representations and warranties by the two parties
1.
Representations and warranties by Party A
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(1)
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Party
A warrants that it is a state-owned enterprise established and validly
existing under the laws of the PRC with due qualification as an entity to
sign and execute the Agreement and has obtained all necessary internal
authorization and approvals for taking the subject equity
interest;
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(2)
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Signing
and execution of the Agreement will not: 1) lead to breach of relevant
laws and regulations; 2) cause conflicts with its articles or similar
documents of such nature; 3) lead to or constitute default under the other
agreement or document to which it is a party or bond by
it;
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(3)
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Party
A undertakes to pay Party B as scheduled and in full the consideration for
the transfer of subject equity interest under the Agreement as set forth
therein;
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(4)
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Party
A has taken all appropriate and necessary actions to authorize signing and
delivery of the Agreement and all the other agreements and documents as
mentioned therein to which it is a party, and authorize execution and
compliance with the terms and conditions of the Agreement and such
agreements and documents.
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2.
Representations and warranties by Party B
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(1)
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Party
B warrants that it is a joint stock limited company established and
validly existing under the laws of the PRC with due qualification as an
entity to sign and execute the Agreement, and has obtained authorizations
or approvals from the Board of Directors for the transfer of its
investment;
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(2)
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Party
B warrants that the subject equity interest to be transferred is legally
owned by it, and it has duly performed its obligation as a shareholder to
make contribution to the registered capital of the Company, for which
there shall not be any pledge or other restrictive rights attached to the
subject equity interest. It has also dispatched a notice of transfer of
the subject equity interest to Germany MTU as per Clause 15.2 of the JV
Contract and Clause 13.2 of MTU Articles, with which it is deemed to have
completed its obligation of notifying the foreign shareholder of the JV
Company.
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(3)
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Signing
and execution of the Agreement will not: 1) lead to breach of relevant
laws and regulations; 2) cause conflicts with its articles or similar
documents of such nature; 3) lead to or constitute default under the other
agreement or document to which it is a party or bond by
it;
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(4)
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Party
B has taken all appropriate and necessary actions to authorize signing and
delivery of the Agreement and all the other agreements and documents as
mentioned therein to which it is a party, and authorize execution and
compliance with the terms and conditions of the Agreement and such
agreements and documents.
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(5)
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Party
B undertakes to be bond by the agreement on the arrangement for engine
maintenance under the four-party agreement among Party A, Party B, JV
Company and Germany MTU.
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3. The two parties confirm
that the representations, warranties and undertakings made by each of them under
the Agreement shall remain valid subsequent to the satisfactory performance of
the same.
III.
Transfer of the subject equity interest
1.
Transfer of the subject equity interest
Subject
to restriction of the terms and conditions of the Agreement, Party B agrees to
transfer its 50% subject equity interest in MTU Company to Party A, and Party A
agrees to take the 50% subject equity interest that Party B holds in MTU
Company.
2.
Consideration, terms and time of
payment
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(1)
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With
reference to the Property Valuation Report dated on 30 June 2009 provided
by China United Assets Appraisal Co., Ltd. and subject to the approval of
SASC, Party A and Party B confirm that consideration for the equity
interest transfer is
RMB1,607,850,000;
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(2)
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Party
A shall make full payment in cash upon the Contract becoming
effective.
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3.
Sha ring of taxes
The taxes
in respect of transfer of the subject equity interest under the Agreement shall
be borne by each party in accordance with the provisions of the laws and
administrative rules of PRC.
VI.
Handover of the subject equity interest
1. After
the Agreement is approved by the general meeting of Party B and SASC, the two
parties shall urge MTU Co. to obtain the approval from MOC on transfer of the
subject equity interest and complete the procedure of changes on shareholders at
the Administration of Commerce and
Industry.
2. Upon
MTU Co. obtaining the approval documents from MOC on transfer of the subject
equity interest and Party A making full payment for transfer of the subject
equity interest under the Agreement, transfer of the subject equity interest
under the Agreement is deemed to have been completed, Party B is notwithstanding
obliged to assist MTU Co. in fulfilling the procedure of changes on industrial
and commercial registration.
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3. Party
A and Party B agree that, should Party A have outstanding payment for the
consideration under the Agreement after MTU Co. has completed the procedure of
changes on industrial and commercial registration, Party B shall continue to
enjoy all the benefits of the subject equity interest, until Party A completes
such payment.
V.
Rights and obligations of the Parties
1. Rights
and Obligations of Party
A
Party
A shall
(1)hold 50% of equity
interest in MTU Co. upon the date of completion of the transfer of the subject
equity interest and shall enjoy and bear the benefits and obligations of a
shareholder;
(2) pay to Party B
the full transfer price due on time under the provisions of this Agreement.;
(3) work with the JV
partner to amend the MTU Articles, JV Contract and go through the approval
procedures at the MOC, and also assist MTU Co. in changes in commercial
registrations;
(4) be responsible
for effecting the equity transfer。
2. Rights
and Obligations of Party
B
Party
B shall
(1)receive the
transfer price under the provisions of this Agreement;
(2)assist MTU Co. in
amending the MTU Articles, JV Contract and go through the approval procedures at
the MOC, and also assist MTU Co. in changes in commercial registrations;
(3)coordinate with
Party A in effecting the transfer.
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VI.
Confirmations from the
Parties
1、 Labor
contracts entered into between MTU Co. and its employees continue to be
effective. No actions will be required or adopted by the Parties which will give
rise to the termination of employment, and thus any party will not be held
responsible for the compensations and related expenses arising upon termination
of employment. Any changes in directors assigned by Party B shall follow the
instructions of Party A. The six senior management members assigned by Party B
shall be transferred to Party A according to the principle of “movement of
business and staff as a whole” .
2、 MTU
Co. shall take on any credits and liabilities incurred during the course of its
business and continue to be held responsible for the same. The transfer of the
subject equity interest from Party A to Party B will not give rise to any
obligation on Party A to settle any liabilities incurred prior to the transfer
of the equity interest in MTU Co..
VII.
Transition Period Arrangement
1. During
the transition period, Party B shall not procure or permit MTU Co. to make any
distribution in cash or in
kind.
2. During
the transition period, the directors and senior management staff assigned by
Party B shall remain unchanged. Prior approval from Party A is required in case
of any intended changes of the above persons arising from job requirements or
personal
reasons.
3. During
the transition period, Party B shall not pledge or dispose the subject equity
interest or otherwise take any action that hinders the transfer of the
same.
4. During
the transition period, any gains or losses attributable from the subject equity
interest shall be enjoyed and born by Party A.
VIII.
Effectiveness of This Agreement
1. This
agreement shall become effective upon the satisfaction of the following
conditions:
(1) Party A having
obtained the approval from ASAC for the transfer of the subject
equity interest;
(2) Party B having
obtained the approval from its general meeting of shareholders for the transfer
of the subject equity interest;
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(3) Part
A and Part B having obtained the approval from MOC for the transfer
of the subject equity
interest.
2. In the
event of any of the above conditions not being satisfied on or before 31
December 2009 or any other later date as agreed upon by the Parties, this
Agreement may be terminated by agreement after negotiation and no liabilities
for default shall be borne by any party. Each party shall be responsible for the
respective expenses incurred by it. Each party shall have no further rights or
obligations other than those under this Agreement and no claims shall be made
against the other party for any reasons, except out of any prior
defaults.
IX.
Force majeure
1. Either
party shall use their best efforts to procure the success implementation of the
Agreement. Neither party shall be considered in breach of the Agreement to the
extent that performance of their respective obligation is prevented due to
reasons of force majeure and each party shall seek a fair solution through
mutual consultation. If a fair solution cannot be reached, such disputes shall
be resolved in accordance with Article 10 of the Agreement.
2.
Following the occurrence of a force majeure event, if the affected party cannot
perform its obligation under the Agreement, the time for performance as
prescribed hereunder shall be automatically extended for a period equivalent to
the period of force majeure. The affected party shall not bear any default
liability.
3. The
party claiming the existence of force majeure shall notify the other party as
soon as reasonably practicable and provide to the other party relevant evidence
of the occurence and expected duration of such force majeure and shall use all
reasonable endevour to minimise the losses arise therefrom.
X.
Default liability
Should a
party to the Agreement fail to fulfill its obligation under the Agreement, it is
considered as a breach of the Agreement. The defaulting party shall then be held
liable to the .non-defaulting party. However, neither party shall be deemed in
default or otherwise liable for failure to implement the equity transfer under
the Agreement due to reasons of state policy of the PRC or force
majeure.
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XI.
Modification and termination of the Agreement
1. Each
party to the Agreement shall act in good faith to comply and perform the
Agreement in full and shall immediately notify the other party of any major
personnel change. However, such change shall not affect the validity and timely
performance of the
Agreement.
2. The
terms of the Agreement shall be legally binding upon all parties once the
Agreement is executed. No party shall modify, supplement or terminate the
Agreement unless necessary approval has not been granted for the
Agreement.
3. Any
change or affairs not stated in the Agreement shall be covered by written
supplemental agreement reached between both parties through negotiation. The
supplemental agreement has the same legal effect as the
Agreement.
4. Under
the following circumstances, the Agreement may be
terminated:
(1) If
failure of the Agreement is due to reason of force majeure, either party may
terminate the Agreement and shall not be deemed as
default;
(2) If
failure of the Agreement is due to default of either party, the .non-defaulting
party may terminate the Agreement and demand indemnities from the defaulting
party for all the losses arise therefrom in accordance with Article 8 of the
Agreement;
(3)
Either party shall give 30 days’ prior written notice to the other party in
order to terminate the Agreement for reasons stated in (1) and (2)
above.
5. The
expiration or termination of the Agreement shall not affect the validity of any
provisions on default liability or disputes settlement.
XII.
Applicable laws and disputes settlement
1. The
execution, validity, interpretation, performance and disputes settlement of the
Agreement shall be governed by the laws of the People’s Republic of
China.
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2. For
any disputes arise from the execution or performance of the Agreement, the
parties shall first settle through friendly negotiation. If such disputes cannot
be settled thirty (30) days or such longer period as may be agreed by both
parties after negotiation commenced, either party may file a lawsuit in a
people’s court having competent jurisdiction for settlement through
litigation.
3. Any
excuse or allowance given or delay in exercising a right under the Agreement by
one party in respect of the other party’s default or delay performance shall not
be deemed as a waiver of such rights, nor shall it prejudice, affect or limit
any of its rights under the Agreement or any relevant laws and regulations of
the
PRC.
4. Upon
occurrence of any disputes or while any dispute is under processing, save for
such disputes, each party is still entitled to exercise the other rights under
the Agreement and shall perform their respective obligations
thereunder.
XIII.
Miscellaneous
1. This
Agreement is made as of the date of signature and seal by the legal
representatives or authorized signatories for each of the parties and came into
effect after having obtained all the
approvals.
2. This
Agreement shall be held in 10 copies, Party A and Party B each held 5 copies and
each copy has same legal effect.
Party A:
China Southern Air Holding Company
Legal
representative:
Party B:
China Southern Airlines Company Limited
Legal
representative:
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