Equity Interest Transfer Agreement
Exhibit
99.1
Transferor:
Junning International Industry Co. Ltd. (“Party A”)
Registered
Office Address:
Transferee:
Sinoenergy Holding Limited (“Party B”)
Registered
Office Address:
Guarantor:
Qingdao Guang An Industry Co. Ltd. (“Party C”)
Registered
Office Address:
Whereas,
1. |
Party
A incorporated a sole corporation Qingdao Jingrun General Machinery
Co.
Ltd. (hereinafter referred to as “Target Company”) at Xuechi Road, Hongdao
Sub-district, Chengyang District of Qingdao. Registered capital is
$5
million, foreign-funded corporation. Party A invested $0
in
Target Company up to the signature date of the
Agreement.
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2. |
Party
A, as Transferor, shall be pleased to transfer entire equity interest
of
Target Company to Party B and Party B, as Transferee, shall agree
to
accept entire equity interest of Target Company owned by Party
A.
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3. |
Party
A and Party B shall fully understand and clarified rights and obligations
of each party in the process of the equity interest transfer and
shall
agree to fulfill the equity transfer comply with applicable laws
and
regulations.
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Therefore,
Party A and Party B shall enter into the agreement of equity transfer by
friendly negotiation and principle of equity and mutual benefits complying
with
applicable laws and regulations of PRC.
ARTICLE
I
DEFINITIONS
As
used
herein and unless otherwise expressly stipulated, the following terms shall
have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
“Target
Company” shall mean Qingdao Jingrun General Machinery Co. Ltd.
“Examination
and Approval Agency” shall mean Ministry of Foreign Trade and Economic
Cooperation of PRC or provincial governing departments of foreign trade and
economic cooperation;
“Registration
Administration Agency” shall mean State Administration of Industry and Commerce
of PRC or any other hereof authorized local administration of industry and
Commerce;
“Transition
Period” shall mean a period from the signature date of the Agreement to the date
of completion of all requested approvals, alterations and registrations in
accordance with applicable regulations and that Party B shall acquire ownership
of transferred equity interest and become shareholder of the Target Company.
“Force
Majeure” shall mean any cause beyond the control of the Parties including, but
not limited to, acts of God, typhoon, earthquake, flood, lockouts, strike,
fires, riots, acts of war declared and compliance with any request, ruling,
order or decree of any governmental authorities, and any other events which
could not be expected, avoided and overcome.
ARTICLE
II. PRECODITIONS FOR EQUITY INTEREST TRANSFER
The
equity interest transfer under this agreement shall be implemented after the
preconditions are fulfilled, which include:
1. |
All
guaranties and consents both Party A and Party B made in the process
of
the equity interest transfer shall be true and
correct.
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2. |
The
Equity Interest Transfer Agreement shall be approved by Examination
and
Approval Agency.
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3. |
Both
Party A and Party B shall perform and observe their major obligations
as
well as their tag along obligations with accordance to such terms
and
conditions as stipulated under this
Agreement;
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4. |
Both
Party A and Party B shall sign up “Confirmation Letter of Completion of
Property Takeover ”;
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5. |
Party
A shall comply with the formality of appraisal to proposed transferred
equity interest under the applicable laws and regulations of
PRC.
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ARTICLE
III
TRANSFERING
BID AND PAYMENT
1. |
Party
A shall transfer entire equity interest of Target Company it holds
to
Party B.
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2. |
Party
B shall agree to accept the foregoing transferred equity interest
and
shall carry and bear the rights and liabilities agreed by Party A,
Party B
and Party C in the Liability Confirmation
Letter.
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3. |
Taking
the amount of net assets of Target Company which provided by Qingdao
Qingfang Appraisal Firm as reference (up to Aug 1, 2007, the audited
total
assets of Target Company is_62.1 million and audited total liability
is
_31.02 million ), as set out in Article III1, Party A and Party B
hereto
agree the transferring cost of entire equity interest and entire
assets of
Target Company which held by Party A shall be Renminbi SIXTY MILLION
(_60000000.00), including Renminbi THIRTY TWO
MILLION (_32000000.00) paid to Party A, former shareholder of Target
Company as cost of equity interest transfer, other Renminbi TWENTY
EIGHT
MILLION (_28000000.00) shall be directly paid to Target Company for
confirmed liability repayment for the purpose of acquiring _62.1
million
of total assets. When completion of equity interest transfer, Party
B
shall solely undertake
and enjoy all rights, obligations and liabilities in the Target Company
and Party A shall not carry through any activities in the name of
Target
Company.
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4. |
Payment
in installments, after the Agreement is signed, Party B shall pay
the
transferring cost for thrice from time to time to Party A or any
other
companies appointed by Party A which is subject to the prior written
consents and confirmation from both Parties and concerned creditors
of
Target Company.
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The
First
Payment: Party B shall pay 90% of equity interest transferring cost to Party
A
within the 7 days from the date of this Agreement signed;
The
Second Payment: Party B shall pay the remaining 10% of the equity interest
transferring cost to Party A within 7 days from the date that the Target Company
is granted the Certificate of Land Use Right by concerned land administration
department, the registration of transfer of equity interest is completed and
business license is granted; Meanwhile, Party B shall fund Target Company to
repay 50% of the confirmed liability;
The
Third
Payment: Party B shall fund the Target Company to repay the remaining 50% of
the
confirmed liability within 90 days from the date that the Second Payment is
done.
5. |
Party
A shall ensure the book net assets is not less than the amount in
the
appraisal report which is set forth in the ARTICLE III 3 when setting
over
the Target Company, or else, the part less than the amount in the
appraisal report shall be complemented by Party A or deducted from
the
cost Party B shall pay Party A, otherwise, Party B shall not pay
the cost
set forth in the ARTICLEⅢ4
and have right to terminate the
Agreement.
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ARTICLE
IV
EXAMINATION,
APPROVAL AND REGISTRATION OF EQUITY INTEREST TRANSFER
1. |
Party
A shall comply with the examination and approval procedures of the
equity
interest transfer in the Examination and Approval Agency with
corresponding jurisdiction and comply with the formality of industry
and
commerce registration of equity alteration. Party A shall complete
the
foregoing procedures within 15 days from the date of this Agreement
signed, the expense and cost of approval and registration shall be
born by
Party A. Party B shall assist Party A to transact above mentioned
procedures of approval of equity transfer and registration of equity
alteration.
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2. |
Party
A shall provide all documentations necessary to approval and registration
of equity transfer.
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ARTICLE
V
COMPLETION
AND WAY OF EQUITY INTEREST TRANSFER
1. |
The
equity interest transfer of Target Company shall be completed at
the date
that procedures of shareholder alteration is fulfilled under the
verification of departments of administration of industry and
commerce.
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2. |
With
respect to the rights and obligations and liability of Target Company
related to the equity interest, before the completion of equity interest
transfer, the liability and rights agreed by Party A, Party B and
Party C
in the Liability Confirmation Letter shall be born by Party B, any
other
rights and liabilities shall be born by Party A; the rights and
liabilities coming force after completion of equity interest transfer
shall be born by Party B unless otherwise expressly
stipulated.
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ARTICLE
VI
REPRESENTITIVES
AND WARRANTIES
1. |
Party
A shall disclose Party B all agreements, contracts, confirmation
letters,
covenants and indenture pursuit to Target Company and any promissory
documentation and files to Target Company and/or Party A and shall
guarantee the documentations and files hereto authenticity and
validity.
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2. |
Party
A shall guarantee the transferred equity interest without any mortgage
and
warranty and entirely or partially transferring to any other Third
Parties, or transferring its rights and interests in the Target Company
by
any other ways, and guarantee exemption of claiming from any other
Third
Party. Otherwise, any other obligations arisen from such conditions
shall
be totally born by Party A.
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3. |
Party
A shall guarantee to sign and perform this Agreement without prejudice
to
any other terms and conditions under any other agreements, contracts,
confirmation letters and/or any other promissory documentations and
files
to Party A which are signed in the name of Party A and shall guarantee
to
transfer its equity interest in the Target Company without prejudice
to
any other warranties, mortgages, pledges and liens to assets of Target
Company and/or any other forms of regulations, without violating
any other
rules, regulations and decrees Transferors have to comply
with.
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4. |
Party
B shall guarantee to sign and perform the Agreement without prejudice
to
any other terms and conditions under any other agreements, contracts,
confirmation letters and/or any other promissory documentations and
files
to Party B which are signed in the name of Party B, and shall guarantee
to
not violate the Article of Association of Party B and any other rules
and
regulations Party B shall comply
with.
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5. |
Party
A shall guarantee that the Target Company neither have any other
undisclosed litigations, arbitrations and any other actions disobeying
laws and administrative formalities, nor any other evidences and
circumstances may result in occurrence of above mentioned
actions.
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6. |
Both
Party A and Party B guarantee that provided cases proving the guarantees
made hereof inauthentic and inaccurate or misunderstanding occur,
each
Party shall notify each other in written form immediately. In the
event
that any other Party default its guarantees under this Agreement
or its
guarantees are inauthentic, inaccurate, incomprehensive or misleading
which result in that another Party could not enjoy any other interests
stipulated in the Agreement or expense and cost increase to another
Party,
or bear extra obligations or other economic damages, the breach Party
shall guarantee observe Party to indemnify all losses and damages
caused
by its breach and default and compensate all costs in the process
of
claiming indemnity.
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7. |
Both
Party A and Party B shall cooperate to go through the necessary procedures
of administrative approval and registration of equity interest alteration,
if it is necessary for Party A to provide related documentations
or
certificates or to sign and stamp documents, Party A shall fulfill
the
requirements in Party B’s reasonable
term.
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8. |
The
Target Company has no any other contingent liability besides that
disclosed in this Agreement. Before
completion of equity alteration registration, Party B shall have
right to
appoint staffs to enter the audit work of Target Company for financial
status, Party A shall be liable to repayment in the event of any
liabilities and account payable and any obligations; additionally,
Party A
shall guarantee to keep and maintain property of Target Company safely
or
take measures to save interests of Target Company during the Transition
Period (property list and conditions shall be described in the
attachments), shall not damage or loss assets and any other interest
of
Target Company.
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9. |
From
the date that Party A receive the first fund from Party B, the stamps
including corporation stamp and financial special stamp shall be
handed
over to staff appointed by Party B for supervision, after the completion
of equity interest transfer, Party A shall hand over all integrate
financial account book and related documents and files in original,
replies and related archives from administrative departments in original
and documents of rules and regulations on Company operation in original
and employment information within 2
days.
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10. |
Party
B shall guarantee to pay Party A the equity transferring cost and
repay
creditors of Target Company the liability complying with the way
and term
of payment stipulated in this
Agreement.
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11. |
The
equity interest transfer shall be guaranteed by Party C, whom shall
confirm to guarantee the liabilities coming forth before completion
of
equity transfer and undisclosed liability by Party A after completion
of
Target Company equity transfer; the guarantees include related obligations
from above mentioned liabilities, the indemnify, liquidated damage,
interests arisen from foregoing liabilities, the term of guarantee
is 2
years from the date of completion of the equity interest
transfer.
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ARTICLE
VII
COVENANTS
ON TRANSITION PERIOD
1. |
In
the Transition Period, Party A shall guarantee to govern and operate
business of Target Company taking effective and active measures and
operate the Company in good and legal
standing.
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2. |
Party
A shall not transfer its equity interest to the Third Party or perform
any
other forms of guarantee in the Transition
Period.
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3. |
Party
A shall not implement any acts which damage to operation and financial
status of Target Company with any other Third
Party.
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4. |
Party
A shall recall its legal representatives appointed to Target Company
due
Transition Period expire.
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5. |
Both
Party A and Party B shall have obligation of keeping confidential
to all
documents and information provided in this Agreement in the Transition
Period.
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ARTICLE
VIII
BREACH
OBLIGATIONS
1.
Unless
otherwise expressly stipulated in the Agreement, Each of the Parties shall
use
their best efforts to ensure due performance and observance of all the terms
and
guarantees of this Agreement, otherwise, breach party shall have to bear the
breach obligations, provided Party A breach the Item 5 and Item 8 of ARTICLE
VIII and is sued or punished accordance with the administrative procedures,
which of the actions involve Party B, all cost of litigation (include but not
limited to lawsuit claims, law case fee and counsel
fee) or fine shall be born or paid to Party B by Party A besides breach
obligation. ( Provided prior payment by Party B, Party B shall perform recourse
to Party A.)
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2.
Each
of the Parties shall perform and observe the terms and conditions complying
with
the schedule stipulated in this Agreement which shall not be modified by any
Party at will.
If
any
case of delaying performance the terms and conditions under this Agreement,
unless the observe Party agree to delay performance or otherwise expressly
stipulated in the Agreement, the breach party shall pay observe party liquidate
damages daily on the standard of 5/10000 of the transferring cost under this
Agreement. The breach Party shall not exempt the obligations to perform after
paying the liquidate damages.
3.
And
then the agreement shall be terminated automatically and the total sum of money
paid from part B
should
be returned to part B in 7 day by part A and The interest will be paid by part
A
according to lending rate of bank the corresponding period.
4.The
Party B shall deduct equivalent fund from transferring cost Party B shall pay
Party A in the event that Party A breach ARTICLE VI item 6.
ARTICLE
IX
CONFIDENTIALITY
1.
The
both Parties shall keep confidentiality from news and employee and client and
other relate company or person before finishing the equity interest transfer.
2.
For
business secret of both Parties gotten acquainted with, the both Parties shall
not release confidentiality to any other Third Party without prior written
consents from each Party.
ARTICLE
X
FORCE
MAJEURE
1.Since
force majeure direct effect Party A or Party B to perform the Agreement, the
affected Party shall immediately inform the other Party with written
notification. At same time the affected Party shall provide the reason of
failing performing the Agreement and availability certificate and detail things
of force majeure. According to influencing of force majeure, the other Party
decide whether continually perform the Agreement or terminate the Agreement.
2.
The
affected Party can be exempt from obligations under the situation that he takes
a necessary action to keep from damages or inform other Party with written
notification duly.
3.The
Party A shall refund the transferring cost of equity interest to Party B within
7 days, which is received from Party B, provided force majeure lead to the
Agreement termination. At same time, the Party B shall return the documentations
about equity transfer to Party A within 2 days from the date of receiving the
transferring cost of equity interest.
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ARTICLE
XI
AGREEMENT
MODIFICATIONS AND TERMINATION
1.
Any
Party
shall not modify or terminate the Agreement unless both Parties
agreements.
2.
Both
Parties shall reach a written agreement to terminate the Agreement, which shall
be effective unless
it
signed and sealed by Both Parties.
ARTICLE
XII
DISPUTE
RESOLUTION AND APPLICATION OF LAW
1.
The
Agreement is applicable for People's Republic of China
2.
All
disputes due to performing the Agreement shall be resolved negotiation. Both
Parties shall choose
the follows NO.2.1 to resolve the disputes if the disputes could not resolved:
2.1 o
Any Party could lawsuit
in courts of which location the Target Company located. .
2.2
o Instituting
an
arbitration to Qingdao Arbitration Commission
ARTICLE
XIII
EFFECTIVENESS
OF THE CONTRACT AND MISCELLANEOUS
1
o The
Agreement
shall come into force from the date of Party A Party B and Party C sign and
seal.
2.
The
Attachments of this Agreement are integral parts of this Agreement, which taking
equal force with this Agreement.
3.
The
Agreement shall have two versions with Chinese and English. Each version is
three originals with equal force. Each of Party A, Party B and Party C hold
one
original and the rest of them shall be provide to Examination and Approval
Agency. Chinese version shall be served as standard version if two versions
are
contradictory.
4.
Other
terms are still effect if any other terms of the Agreement are terminated or
invalid.
5.
The
Agreement is signed by Party A, Party B and Party C in Qingdao City, Shandong
province, China.
Aug. 28, 2007.
Attachments:
Assets
Appraisal Report of Target Company
Property
Handover List of Target Company
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Party
A:
Transferor: Junning International Industry Co. Ltd. (seal)
Legal
Representative/ Authorized Representative: (Signature)
Party
B:
Sinoenergy Holding Limted (seal)
Legal
Representative/ Authorized Representative: (Signature)
Party
C:
Qingdao Guang An Industry Co. Ltd.(seal)
Legal
Representative/ Authorized Representative: (Signature)
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