Pingdingshan Tai Ao Expressway Co., Ltd. North 30, Jianshe Road, Pingdingshan City, Henan Province, China Henan Shengrun Real Estate Co., Ltd. No.3 25th Floor Unit 1, No.1 Building, 219 Jinshui Road, Zhengzhou， Henan Province, China Zhengzhou Simian...
EXECUTION COPY
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October 10, 2011
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Pingdingshan Tai Ao Expressway Co., Ltd.
North 00, Xxxxxxx Xxxx, Xxxxxxxxxxxx Xxxx,
Xxxxx Xxxxxxxx, Xxxxx
Henan Shengrun Real Estate Co., Ltd.
Xx.0 00xx Xxxxx Xxxx 0, Xx.0 Building, 219 Jinshui Road, Zhengzhou，
Henan Province, China
Zhengzhou Simian Real Estate Co., Ltd.
0 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxxxxx，
Henan Province, China
Gentlemen:
Reference is hereby made to the various loan agreements and loan renewal agreements set forth on Exhibit A hereto (collectively, the “Loan Agreements”) pursuant to which Pingdingshan Pinglin Expressway Co., Ltd. (“Pingdingshan Pinglin”), an indirect, wholly-owned subsidiary of China Infrastructure Investment Corporation (“CIIC”), lent certain amounts to Pingdingshan Tai Ao Expressway Co., Ltd. (“Pingdingshan Tai Ao”) and Zhumadian Xinyang Expressway Co., Ltd. (“Zhumadian Xinyang”). Immediately preceding the June Provisions (as defined below), RMB1,215,794,786 Yuan (approximately US$188 million) of principal including advances to Pingdingshan Tai Ao in the amount of RMB258,889,121 Yuan (approximately US$40 million) and RMB120,599,079 Yuan (approximately US$19 million) of interest were due and outstanding in the aggregate under the Loan Agreements]. Reference is also hereby made to the provisions for bad debt expense made by the Company as of June 30, 2011 equal to $66,502,996 with respect to amounts owed by Pingdingshan Tai Ao, and equal to $83,087,504 with respect to amounts owed by Zhumadian Xinyang (collectively, the “June Provisions”). Following the June Provisions, Pingdingshan Pinglin retained a note receivable from Pingdingshian Tai Ao in the amount of $57,169,593 (the “Outstanding Note Receivable”).
Given that (i) the Outstanding Note Receivable is non-performing, and (ii) Henan Shengrun Real Estate Co., Ltd. (“Henan Shengrun”), an affiliate of Pingdingshan Tai Ao, owns 100% of the equity interests in Zhengzhou Simian Real Estate Co., Ltd. (“Simian Real Estate”), which respectively holds net assets of US$112,097,242 pursuant to its audited balance sheet as of June 30, 2011 (including real estate assets with an audited balance of real estate under development at approximately US$131 million, which currently appraised at a value of RMB1,000,000,000 Yuan (approximately US$157 million) (pursuant to an appraisal conducted by America Appraisal, the report of which is attached hereto as Exhibit B)), the parties hereto have agreed, subject to the terms and conditions set forth herein, to cancel the Outstanding Note Receivable in consideration for the transfer by Henan Shengrun of 51% of its ownership interests in Simian Real Estate to be effected by the entry of Henan Shengrun into VIE arrangements for the benefit of Pingdingshan Pinglin with respect to 51% of its ownership interests in Simian Real Estate. The parties agree that such VIE arrangements shall be memorialized pursuant to the forms of exclusive business cooperation agreement, exclusive option agreement, equity pledge agreement and power of attorney attached hereto as Exhibits C through F, respectively, each of which shall be validly dated, executed and delivered as of the date hereof (the “Simian VIE Arrangements”).
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Except to the extent specifically set forth below, following satisfaction of the conditions set forth above to the satisfaction of CIIC and Pingdingshan Pinglin in their sole discretion, Pingdingshan Pinglin hereby acknowledges and agrees that (i) all obligations and liabilities of Pingdingshan Tai Ao, including the obligation to pay the Outstanding Note Receivable, shall be deemed discharged, and (ii) Pingdingshan Tai Ao shall no longer be deemed to be a party to any agreement or contract setting forth any obligation to pay the Outstanding Note Receivable.
The parties hereto also further agree that, to the extent that the Simian VIE Arrangements are deemed to be invalid or unenforceable by any court or governmental authority of the People’s Republic of China at any time on or after the date hereof, Pingdingshan Tai Ao, Henan Shengrun and Simian Real Estate will be deemed to be immediately, unconditionally and jointly and severally liable to Pingdingshan Pinglin and CIIC for cash damages in an aggregate amount equal to the Outstanding Note Receivable plus interest from the date hereof.
Any dispute, controversy or claim arising out of or relating to this contract, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force when the Notice of Arbitration is submitted in accordance with these Rules. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English.
This letter agreement shall be governed by and construed in accordance with the laws of the People’s Republic of China.
Notices under this letter agreement shall be made to the parties hereto as set forth below:
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Address:
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Xxxx X, 0X, Xxxxxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx Road, Zhengzhou, Henan Province, China
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Attn:
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Li Xipeng
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Phone:
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0000-0000000
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Facsimile:
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0371-68261839
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with a copy to:
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Loeb & Xxxx XXX
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Xxxxx 0000, Xxxxx X, Xxxxxxx Yintai Center
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2 Jianguomenwai Dajie, Xxxxxxxx Xxxxxxxx
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Xxxxxxx 000000, Xxxxx
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Attn: Xxxxxxxx Xxxxxxxx / Xxxxx Xxxxxxxx
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Pingdingshan Pinglin Expressway Co., Ltd.
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Address:
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Pinglin Expressway Toll Gate, Xincheng District, Pingdingshan, Henan Province, China
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Attn:
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Xxx Xxx
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Phone:
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0000-0000000
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Facsimile:
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0375-2754444
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Pingdingshan Tai Ao Expressway Co., Ltd.
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Address:
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North 00, Xxxxxxx Xxxx, Xxxxxxxxxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxx
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Attn:
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Ren Junfeng
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Phone:
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0000- 0000000
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Facsimile:
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0375-7258222
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Henan Shengrun Real Estate Co., Ltd.
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Address:
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0xx Xxxxx, Xx.00 Xxxxxxxx, Xxxxxx Garden, Jinshui Road, Zhengzhou
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Attn:
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Shi Jingying
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Phone:
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0000-00000000
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Facsimile:
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0371-68260955
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Zhengzhou Simian Real Estate Co., Ltd.
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Address:
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0xx Xxxxx, Xx.00 Xxxxxxxx, Xxxxxx Garden, Jinshui Road, Zhengzhou
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Attn:
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Fan Jinhua
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Phone:
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0000-00000000
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Facsimile:
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0371-68261738
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EXECUTION COPY
This letter agreement may be executed in one or more counterparts each of which taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed an original signature hereto.
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Very truly yours,
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By:
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/s/ Li Xipeng | |
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Name: Li Xipeng
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Title: Chief Executive Officer, Chairman
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Pingdingshan Pinglin Expressway Co., Ltd.
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By:
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/s/ Li Xipeng | |
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Name: Li Xipeng
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Title: Chairman
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[SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]
FIRST SIGNATURE PAGE TO
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Accepted, Acknowledged and Agreed
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as of this __ day of October, 2011:
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Pingdingshan Tai Ao Expressway Co., Ltd.
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By:
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/s/ Li Xipeng |
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Name: Li Xipeng
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Title: Chairman
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Henan Shengrun Real Estate Co., Ltd.
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By:
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/s/ Shu Pujuan |
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Name: Shu Pujuan
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Title: Chairman
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Zhengzhou Simian Real Estate Co., Ltd.
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By:
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/s/ Shu Pujuan |
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Name: Shu Pujuan
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Title: Chairman
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Exhibit A
Loan Agreement dated June 26, 2005 by and between Pingdingshan Tai Ao Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 28, 2006 by and between Pingdingshan Tai Ao Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 29, 2007 by and between Pingdingshan Tai Ao Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Renewal Agreement dated June 26, 2008 by and between Pingdingshan Tai Ao Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 29, 2010 by and between Pingdingshan Tai Ao Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 18, 2004 by and between Zhumadian Xinyang Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 28, 2006 by and between Zhumadian Xinyang Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 28, 2007 by and between Zhumadian Xinyang Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Renewal Agreement dated June 26, 2008 by and between Zhumadian Xinyang Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
Loan Agreement dated June 29, 2010 by and between Zhumadian Xinyang Expressway Co., Ltd. and Pingdingshan Pinglin Expressway Co., Ltd.
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00-Xxx-00
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XXX
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Long-Term Note Receivable from related parties
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Principal
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Interest
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开始时间
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Total amount
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Tai'ao
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480,026,168 | 60,442,495 | |||||||||||
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1-Jul-05
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540,468,663 | ||||||||||||
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Xinyang
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476,879,497 | 60,156,584 | |||||||||||
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1-Jul-04
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537,036,081 | ||||||||||||
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Sub-Total
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956,905,665 | 120,599,079 | 1,077,504,744 | ||||||||||
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Long Term Advance to a related party
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Tai'ao
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258,889,121 | 258,889,121 | |||||||||||
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Total
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1,215,794,786 | 120,599,079 | 1,336,393,865 | ||||||||||
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EXHIBIT B
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EXHIBIT C
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EXHIBIT D
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EXHIBIT E
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EXHIBIT F
