Re: Series A Convertible Preferred Stock Securities Purchase Agreement by and between China New Energy Group Company and China Hand Fund I, LLC
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August
20, 2008
China
Hand Fund I, LLC
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Attn:
▇▇▇▇▇▇▇ Dryer
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Re:
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Series
A Convertible Preferred Stock Securities Purchase Agreement by and
between
China New Energy Group Company and China Hand Fund I,
LLC
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Dear
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In
connection with the Series A Convertible Preferred Stock Securities Purchase
Agreement (the “Purchase
Agreement”),
dated
August 8, 2008, between China New Energy Group Company (the “Company”)
and
China Hand Fund I, LLC (together with its successors and assigns, collectively,
“China
Hand”),
we
hereby agree that the Company will, following the closing of the transactions
contemplated by the Purchase Agreement (the “Closing”),
undertake the following actions (collectively, the “Company
Obligations”):
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1.
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The
Company shall obtain, or cause Tianjin SingOcean Public Utility
Development Co., Ltd. (“SingOcean”)
to obtain, the relevant governmental permits and/or certificates
regarding
project application, land use, construction and operation of Tianjin
SingOcean Public Utility Development Co., Ltd. - Dashiqiao Division
and
its Dashiqiao
Pipeline Gas Engineering Construction
Project;
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2.
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The
Company shall cause Willsky Development, Ltd. (“Willsky”)
to contribute the remaining $5,445,000 due to the registered capital
of
SingOcean, and shall obtain all relevant governmental approvals and
certificates indicating that SingOcean is a validly existing company
in
the People’s Republic of China (“PRC”)
and is in good standing in accordance with PRC law;
and
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3.
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The
Company shall cause SingOcean to replace its existing foreign exchange
registration certificate in accordance with relevant PRC law, and
shall
have such new foreign exchange registration certificate recorded
with, and
examined by, the relevant governmental authority.
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4.
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The
Company shall obtain, or cause SingOcean to obtain, a legal opinion
from
its PRC counsel with respect to the matters outlined in paragraphs
1
through 3 above in a form that is reasonably satisfactory to China
Hand.
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The
Company hereby agrees that all actions and requirements of each of the Company
Obligations will be performed to the satisfaction of China Hand and its legal
counsel located in the People’s Republic of China within seventy (70) days of
the Closing (the “Cure
Period”)
that
if the Company Obligations are not satisfied within the Cure Period, that the
Company shall be obligated to pay to China Hand, as liquidated damages and
not
as a penalty, $90,000, representing one percent (1%) of China Hand’s investment
pursuant to the Purchase Agreement, on the seventy first (71st)
day
following the Closing, and an additional $90,000 every thirty (30) days
thereafter until the Company Obligations have been satisfied (the “Liquidated
Damages”);
provided, however, that no Liquidated Damages shall be due to China Hand
hereunder if the Company Obligations are satisfied on or before the ninetieth
(90th)
day
following the Closing; provided further, that any Liquidated Damages due
hereunder shall be payable on a pro-rata basis until the Company Obligations
are
satisfied. Notwithstanding the foregoing, the maximum aggregate Liquidated
Damages payable hereunder shall be $900,000, or ten percent (10%) of China
Hand’s investment pursuant to the Purchase Agreement.
Further,
each of the parties who are signatories to this Letter Agreement agrees as
follows: (i) this Letter Agreement and the Transaction Documents (as defined
in
the Purchase Agreement) constitute the entire agreement between the parties
regarding the subject matter hereof and supersedes all prior understandings,
agreements, or representations by or between the parties, written or oral,
to
the extent they related in any way to the subject matter hereof; (ii) no
changes, modifications, or waivers to this Letter Agreement will be effective
unless in writing and signed by each of the signatories hereto; (iii) the terms
and conditions of this Letter Agreement shall be governed by and construed
in
accordance with the laws of the State of New York, without regard to the
conflicts of laws provisions of such state; (iv) none of the parties signatory
hereto may assign its rights or delegate its duties under this Letter Agreement
without the express prior written consent of the other party, which consent
shall not be unreasonably withheld; (v) this Letter Agreement may be executed
in
two or more counterparts, each of which shall be deemed an original and all
of
which, together, shall constitute one and the same instrument; (vi) facsimile
execution and delivery of this Letter Agreement is legal, valid and binding
execution and delivery for all purposes.
Please
indicate your consent to the terms of this Letter Agreement by executing Letter
Agreement in the space provided below.
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Very
truly yours,
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By:
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/s/
Jiaji Shang
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Printed
Name: Jiaji Shang
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Title:
Chairman
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Accepted
and Agreed as of
the
date
of this letter:
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By:
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/s/
▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Member-Manager
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