ONSHORE SHARE PLEDGE AGREEMENT
ONSHORE
SHARE PLEDGE AGREEMENT
This
SHARE PLEDGE
AGREEMENT,
dated
as of January 29, 2008 (this “Agreement”),
is
executed between China Natural Gas, Inc., a corporation incorporated and
established under the laws of the state of Delaware (the “Pledgor”)
and DB
Trustees (Hong Kong) Limited (with its successors in such capacity, the
“Pledgee”).
WITNESSETH:
(1) The
Pledgor incurred a certain amount of debt in connection with the issuance of
the
Guaranteed Senior Notes Due 2014 (the “Notes”)
issued
pursuant to an Indenture dated January 29, 2008 between the Pledgor and DB
Trustees (Hong Kong) Limited as trustee (the “Trustee”);
(2) The
Pledgee is acting as an agent to the Holders (as defined in the Indenture)
to
the Note; and
(3) The
Pledgor owns all the issued and outstanding equity interests in Shaanxi Xilan
Natural Gas Co., Ltd. (榫皁皁笣天然气瑂备有榰公司),
a
wholly foreign owned enterprise organized and existing under the laws of the
People’s Republic of China (“PRC”)
(the
“WFOE”
or
“Pledged
Entity”).
The
Pledgor is pledging its equity interests in the WFOE, representing 65% of the
outstanding equity interests of the WFOE, as set forth on Exhibit
A
attached
hereto and made a part hereof (the “Equity
Interests”);
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor and the Pledgee hereby agree as follows:
1.
Defined
Terms.
Unless
otherwise defined herein, each capitalized term used herein that is defined
in
the Notes shall have the meaning specified for such term in the Indenture.
2.
Pledge.
To the
maximum extent permitted by applicable law, the Pledgor hereby, and shall from
time to time and on a continuous basis, pledges to the Pledgee and grants to
the
Pledgee a security interest in, the following (collectively, the “Pledged
Collateral”):
(a)
All
of
the right, title and interest of the Pledgor in the Equity Interests now
existing (such now-existing shares being identified on Exhibit
A
attached
hereto and made a part hereof) and hereinafter held in the name of the Pledgor
resulting from the exercise of any options or warrants (all of the said Equity
Interests being hereinafter collectively referred to as the “Pledged
Shares”),
herewith delivered to the Pledgee, and all dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Pledged Shares;
(b)
Any
additional equity interests of the WFOE otherwise to be pledged to the Pledgee
pursuant to the Notes or other Security Documents (as defined in the Indenture)
binding the Pledgor which equity interests are not yet Pledged Shares described
on Exhibit A attached hereto (as such exhibit may be amended from time to time)
(“Additional
Equity Interests”)
from
time to time acquired by and held in the name of the Pledgor from the date
hereof in compliance with the then effective articles of association of the
WFOE
(any such additional equity interests shall constitute part of the Pledged
Shares and the Pledgee is irrevocably authorized to amend Exhibit
A
from
time to time to reflect such additional equity interests), which might result
from (a) the exercise of any options or warrants or (b) any change in the
capital structure of the WFOE, and all dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Equity
Interests or Additional Equity Interests;
(c)
Any
options, warrants and other rights and options in respect of or in exchange
for
any or all of the Equity Interests or Additional Equity Interests, to the extent
such options, warrants and rights are permitted to be pledged to the Pledgee
under the then effective law;
(d)
All
proceeds of the foregoing; and
(e)
The
proceeds of any liquidation, winding up or dissolution of the WFOE payable
to
the Pledgor.
3.
Security
for Liabilities.
The
Pledged Collateral secures the full and prompt payment, performance and
observance when due (whether at stated maturity, by acceleration or otherwise)
of (i) the payment of all of the principal of and interest and premium, if
any,
on the Notes, (ii) all other Note Obligations, and (iii) all obligations of
the
Pledgor under this Agreement (all such obligations referred to in Clauses (i),
(ii) and (iii) now or hereafter existing being hereinafter collectively referred
to as the “Liabilities”).
4.
Perfection
of Pledge; Registration and Acknowledgments.
(a)
The
Pledgor shall, promptly after the execution of this Agreement but in no event
later than ten (10) Business Days from the date hereof, at its own cost, grant
a
power of attorney to a foreign investment related service company to act as
a
sponsor (the “Sponsor”)
designated by the Pledgee with irrevocable instructions to the Sponsor (i)
submit all the required documents and apply for the approval for the pledge
over
the Pledged Shares hereunder with the Ministry of Commerce of the PRC or its
competent local counterpart (“MOFCOM”,
such
approval from the MOFCOM being referred herein as the “MOFCOM
Approval”),
(ii)
notify the Pledgee of the name and other relevant details of the Sponsor, and
(iii) deliver to the Pledgee a certified true copy of such approval upon its
obtaining MOFCOM Approval or any written evidence of disapproval received from
MOFCOM if such application is denied by the MOFCOM. Pledgor shall, within five
(5) calendar days after obtaining the MOFCOM Approval, at its cost, (x) register
this Agreement and the Pledged Collateral with the State Administration of
Industry and Commerce of the PRC or its competent local counterpart
(“SAIC”),
and
(y) deliver to the Pledgee a certified true copy of registration or filing
certificate.
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(b)
Following
the execution of this Agreement, Pledgor shall as soon as practicable procure
the recording of the Pledged Shares under this Agreement in the register of
shareholders of the WFOE, and at its own cost, deliver to the Pledgee a copy
of
the register of shareholders certified by the legal representative of the WFOE
stating that the share pledge has been duly recorded on the register of
shareholders after such recordation.
(c)
Following
the execution of this Agreement, the Pledgor shall as soon as practicable
procure the recording of the particulars of this Agreement and the security
hereby created in its Register of Mortgages, Charges and other Encumbrances
and
provide a certified copy of such Register to the Pledgee.
5.
Pledged
Collateral Adjustments.
If,
during the term of this Agreement:
(a)
Any
share
dividend, reclassification, readjustment or other change is declared or made
in
the capital structure of the WFOE, or any option included within the Pledged
Collateral is exercised, or both, or
(b)
Any
subscription warrants, shares, or any other rights or options shall be issued
in
connection with the Pledged Collateral,
then
all
new, substituted and additional shares, warrants, rights, options or other
securities, issued by reason of any of the foregoing, shall be immediately
delivered to and held by the Pledgee, under the terms of this Agreement and
shall constitute Pledged Collateral hereunder. The Pledgor further agrees and
undertakes to cause the Sponsor to continuously and diligently complete the
required approval, registration and recordation procedures with the PRC
Governmental Authority with respect to the increase of the registered capital
of
the Pledged Entity and in accordance with such procedures as described in the
above Section
4(a)
and
Section
4(b)
hereof.
For the purpose of this Agreement, “Governmental
Authority”
shall
mean any court, tribunal, arbitrator, authority, agency, commission, official
or
other instrumentality of the PRC, any foreign country or any domestic or foreign
state, county, city or other political subdivision.
6.
Representations
and Warranties.
The
Pledgor represents and warrants as follows:
(a)
The
Pledgor is the sole legal and beneficial owner of the Equity Interests set
forth
opposite its name on Exhibit
A
attached
hereto and made a part hereof, free and clear of any Lien, except for the Liens
created by this Agreement or arising by operation of law;
(b)
The
registered capital of the WFOE has been duly paid up by the Pledgor to the
extent required (i) pursuant to the provisions of the WFOE’s current articles of
association, as approved by the MOFCOM and properly filed with the SAIC, (ii)
by
PRC law or regulation applicable to the WFOE, and (iii) by any PRC Governmental
Authority;
(c)
All
of
the Pledged Shares have been duly authorized, fully paid and duly
verified;
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(d)
As
of the
date hereof, there are no existing options, warrants, calls or commitments
of
any character whatsoever relating to the Pledged Shares;
(e)
The
Pledgor has full power and authority to enter into this Agreement;
(f)
There
are
no restrictions upon the voting rights associated with, or upon the transfer
of,
any of the Pledged Collateral except for the approval requirement in respect
of
the transfer of the Pledged Collateral pursuant to PRC law;
(g)
The
Pledgor has the right to vote, pledge, assign and grant a security interest
in
or otherwise transfer such Pledged Collateral free of any Liens and the pledge
of the Pledged Shares pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral, securing the payment
of all Liabilities;
(h)
Except
for the approval by MOFCOM and registration with SAIC, no other authorization,
approval, or other action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the pledge of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this
Agreement by the Pledgor or (ii) for the exercise by the Pledgee of the voting
or other rights provided for in this Agreement or the remedies in respect of
the
Pledged Collateral pursuant to this Agreement;
(i)
There
is
no action, suit, proceeding, governmental investigation or arbitration before
or
by any Governmental Authority, pending, or to the knowledge of the Pledgor,
threatened against the Pledgor or any of its property which will materially
and
adversely affect the ability of the Pledgor to perform its obligations under
this Agreement;
(j)
The
execution, delivery and performance of this Agreement by the Pledgor (i) does
not violate any indenture, trust deed, mortgage, any other agreement or any
applicable laws or regulations to which the Pledgor is a party or is subject
to
or by which any of its properties or assets may be bound; (ii) complies with
all
corporate organizational documents of the Pledgor; and (iii) does not violate
any restriction on such transfer or encumbrance of the Pledged Collateral;
and
(k)
The
Pledged Shares constitute all of the issued and outstanding Equity Interests
of
the WFOE as set forth in Exhibit
A
hereto.
7.
Dividends
and Other Distributions.
(a)
So
long
as no Default or an Event of Default under the Notes shall have occurred and
be
continuing:
(i)
The
Pledgor shall be entitled to receive and retain any and all dividends and
distributions paid in respect of the Pledged Collateral upon obtaining the
necessary approval(s) or completing the filing procedures administered by the
PRC Governmental Authorities, notwithstanding such dividends and distributions
being subject to the pledge and assignment thereof pursuant to Section
2,
provided,
however,
that
any and all
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(A)
dividends
and distributions paid or payable other than in cash with respect to, and
instruments and other property received, receivable or otherwise distributed
with respect to, or in exchange for, any of the Pledged Collateral;
(B)
dividends
and other distributions paid or payable in cash with respect to any of the
Pledged Collateral on account of a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus; and
(C)
cash
paid, payable or otherwise distributed with respect to principal of, or in
redemption of, or in exchange for, any of the Pledged Collateral;
shall
be
Pledged Collateral, and shall be forthwith delivered to the Pledgee to hold
as
Pledged Collateral and shall, if received by the Pledgor, be received in trust
for the Pledgee and be segregated from the other property or funds of the
Pledgor, and be forthwith delivered to the Pledge as Pledged Collateral in
the
same form as so received (with any necessary endorsement); and
(ii)
The
Pledgee shall execute and deliver (or cause to be executed and delivered) to
the
Pledgor all such proxies and other instruments in a form reasonably acceptable
to the Pledgor and as required by the relevant laws and regulations to enable
the Pledgor to receive the dividends which it is authorized to receive and
retain pursuant to clause
(i)
above.
(b)
After
the
occurrence and during the continuation of a Default or an Event of Default
under
the Notes:
(i)
All
rights of the Pledgor to receive the dividends and other distributions which
it
would otherwise be authorized to receive and retain pursuant to Section
7(a)(i)
hereof
shall cease, and all such rights shall thereupon become vested in the Pledgee,
which shall thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and other distributions;
(ii)
The
Pledgor hereby commits that it shall, and cause the WFOE to, endeavor to enable
such Pledgee to receive the dividends and other distributions of the WFOE to
the
maximum extent permitted by the PRC law;
(iii)
All
dividends and other distributions which are received by the Pledgor contrary
to
the provisions of this Section
7(b)
shall be
received in trust for the Pledgee;
(iv)
The
Pledgor shall cooperate with Sponsor and procure the Pledged Entity and its
legal representative and directors to execute and deliver all such instruments
and documents to the Sponsor as may be required by applicable law or may be
necessary in practice to dispose of the Pledged Shares;
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(v)
The
Pledgee shall be entitled to, at the expense of the Pledgor, grant an
irrevocable instruction to the Sponsor and deliver the Sponsor the Documents
under Custody pursuant to Section
10(b) to
let
Sponsor apply for and obtain all the necessary governmental approvals and to
complete the requisite filing procedures to legally validate and perfect the
disposal of the Pledged Collateral in any manner to the extent permitted under
the applicable law, within or outside of the PRC;
(vi)
The
Pledgee shall be entitled to, at the expense of the Pledgor, grant an
irrevocable instruction to the Sponsor and deliver to the Sponsor the Documents
under Custody pursuant to Section
10(b) to
complete the relevant government approval procedure in relation to all other
acts and things as may be necessary to make effect such sale of the Pledged
Collateral or any part thereof valid and binding and in compliance with any
applicable law.
The
Pledgor will reimburse the Pledgee and the Sponsor for all expenses incurred
by
the Pledgee or the Sponsor (as the case may be), including, without limitation,
attorneys’ and accountants’ fees and expenses in connection with the
foregoing.
8.
Transfers
and other Liens.
Other
than as permitted by the terms of the Notes, the Pledgor agrees that it will
not
(i) sell, transfer or otherwise dispose of, or grant any option with respect
to,
any of the Pledged Collateral without the prior written consent of the Pledgee,
or (ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral (except for the security interest under this Agreement or
Liens arising by operation of law). Except as permitted by the Indenture, the
Pledgor further agrees that it will procure, or take reasonable efforts to
procure, that the Pledged Entity and any other direct or indirect subsidiary
thereof shall carry on business only in the ordinary course and will not dispose
of or agree to dispose of a substantial part of its assets or undertaking
without the prior written approval of the Pledgee.
9.
Defense
of Title.
The
Pledgor will defend the title to the Pledged Collateral and the Liens of the
Pledgee in the Pledged Collateral against the claim of any person or entity
and
will maintain and preserve such Liens.
10.
Remedies.
(a)
After
the
occurrence and during the continuation of an Event of Default under the Notes,
the Pledgee shall have such powers of sale and other powers as may be conferred
by any applicable law. The Pledgor agrees to pay to the Pledgee all expenses
(including, without limitation, court costs and attorneys’ and paralegals’ fees
and expenses) of, or incident to, the enforcement of any of the provisions
hereof.
(b)
In
order to effect the remedies stipulated in this Section
10,
after
the execution of this Agreement, upon the request of the Pledgee, the following
documents shall be provided by the Pledgor and under the custody of the Pledgee
(the “Documents
under Custody”);
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(i)
Two
(2)
original copies of the executed Share Transfer Agreement in the form and
substance acceptable to the Pledgee, with the information of the name of the
transferee, the transfer price and the date of execution being left in
blank;
(ii)
A
copy of
the business license and certificate of approval of the WFOE;
(iii)
A
copy of
the articles of association of the WFOE (the “Charter”);
(iv)
A
unanimous board resolution of the WFOE approving the share transfer duly signed
by all of the directors of the WFOE, with the resolution date left in
blank;
(v)
An
amendment to the Charter reflecting the share transfer and change to the
shareholder, bearing the authorized signature of the Pledgor;
(vi)
An
application letter to assign the shares of the WFOE bearing the authorized
signature of the Pledgor;
(vii)
An
original copy of a power of attorney (the “Enforcement
Power of Attorney”)
issued
by the Pledgor and the WFOE (with the company stamp of the WFOE and authorized
signature of the Pledgor and WFOE), entrusting Pledgee or its delegate to submit
the required documents and apply for the sales of the shares and the share
transfer with the competent PRC Governmental Authority while leaving blank
the
issuance date. The Enforcement Power of Attorney shall explicitly stipulate
that
Pledgee or its delegate is obligated to take such action as set forth in the
Enforcement Power of Attorney. The copy of business license of the WFOE and
the
contact details of the Sponsor shall be provided to the Pledgee together with
the Enforcement Power of Attorney; and
(viii)
Other
documents used for the enforcement of the Pledge upon the occurrence of a
Default or an Event of Default which may be required by the Pledgee from time
to
time.
11.
Pledgee
Appointed Attorney-in-Fact.
The
Pledgor hereby appoints the Pledgee and any of its delegates or sub-delegates
to
be its attorney-in-fact irrevocably coupled with an interest, with the detailed
power of delegation duly executed, with full authority, in the name of the
Pledgor or otherwise, after the occurrence and during the continuation of an
Event of Default, from time to time in the Pledgee’s sole discretion, to take
any action and to execute any instrument which the Pledgee or any Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend or other distribution
in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of the Pledged Entity to the name of the Pledgee or
the
Pledgee’s nominee. The Pledgee shall be entitled to instruct the Sponsor to take
the above actions at its discretion, pursuant to above Section
10.
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12.
Pledgee
May Perform.
If the
Pledgor fails to perform any agreement contained herein, the Pledgee may itself
perform, or cause performance of, such agreement, and the expenses of the
Pledgee incurred in connection therewith shall be payable by the Pledgor under
Section 13 hereof and constitute Liabilities secured hereby.
13.
Expenses.
The
Pledgor will upon demand be liable to pay to the Pledgee the amount of any
and
all expenses, including, without limitation, the Pledgee’s commission as agreed
in writing, the fees and expenses of the Pledgee’s counsel and of any experts
and agents, which the Pledgee may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, sale
of,
collection from, or other realization upon, any of the Pledged Collateral,
(iii)
the exercise or enforcement of any of the rights and remedies hereunder of
the
Collateral Agent and the Holders, or (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof. This survives the termination and
expiry of this Agreement.
14.
Security
Interest Absolute.
All
rights of the Pledgee and security interests hereunder, and all obligations
of
the Pledgor hereunder, shall be absolute and unconditional irrespective
of:
(a)
any
lack
of validity or enforceability of any provision of the Indenture, the Notes
or
any other Security Document or any other agreement or instrument relating
thereto;
(b)
any
change in the time, manner or place of payment of, or in any other term of,
or
any increase in the amount of, all or any of the Liabilities, or any other
amendment or waiver of any term of, or any consent to any departure from any
requirement of, the Indenture, the Notes or any other Security
Document;
(c)
any
exchange, release or non-perfection of any Lien on any other collateral, or
any
release or amendment or waiver of any term of any guaranty of, or consent to
departure from any requirement of any guaranty of, all or any of the
Liabilities.
15.
Waivers.
The
Pledgor waives, to the fullest extent permitted by applicable laws, presentment
and demand for payment of any of the Liabilities or notice of Event of Default
with respect to any of the Liabilities and all other notices to which the
Pledgor might otherwise be entitled except as otherwise expressly provided
herein.
16.
Effectiveness
and Term.
(a)
This
Agreement shall take effect upon execution, provided
that the
Lien on the Pledged Collateral under this Agreement shall only become effective
immediately after this Agreement is approved by the MOFCOM and properly filed
with the SAIC.
(b)
This
Agreement shall remain in full force and effect after satisfying the
effectiveness conditions as stated in Section 16(a)
above
until the final payment in full, in cash, of the Liabilities. Upon the
termination of this Agreement as provided above (other than as a result of
the
sale of the Pledged Collateral), the Pledgee will upon written instructions
of
the Trustee release the security interest created hereunder and, if it then
has
possession of any Pledged Shares pledged hereunder, will make available for
collection by the Pledgor at the specified office of the Pledgee such Pledged
Shares previously delivered to it.
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17.
Definitions.
The
singular shall include the plural and vice versa and any gender shall include
any other gender as the context may require.
18.
Binding
Effect; Successors and Assignees.
This
Agreement shall be binding upon the Pledgor and its successors and assignees,
and shall inure to the benefit of the Pledgee and its successors and assignees.
The Pledgor’s successors shall include, without limitation, a receiver or
trustee of or for the Pledgor. The Pledgee shall provide notice to the Pledgor
prior to any assignment of this Agreement by Pledgee. The Pledgor hereby agrees
and undertakes to cause the Sponsor to continuously and diligently complete
the
required approval, registration and recordation procedures with the PRC
Governmental Authority as described in the above Section
4(a)
and
Section
4(b)
hereof
upon receipt of such notice.
19.
Governing
Law and Dispute Resolution.
(a)
Any
dispute between the Pledgee and the Pledgor arising out of or related to the
relationship established between them in connection with this Agreement, and
whether arising in contract, tort, or otherwise, shall be resolved in accordance
with the laws of the PRC.
(b)
Any
dispute, controversy or claim arising out of or in connection with this
Agreement shall be settled through negotiations between the parties; if the
parties fail to resolve such dispute within sixty (60) days after the date
such
negotiation was first requested in writing by either party, it shall be settled
by arbitration in accordance with the Arbitration Rules of the China
International Economic and Trade Commission (“CIETAC”)
(as
amended from time to time and by the rest of this Agreement). In the case of
any
conflict between the terms of this Agreement and the CIETAC Arbitration Rules,
the terms of this Agreement shall prevail. The institution administering the
arbitration shall be CIETAC Shenzhen Sub-commission. The arbitration shall
be
held in Hong Kong. The arbitral tribunal shall consist of three arbitrators,
with one appointed by each of the parties and a third neutral arbitrator to
be
appointed by other two (2) party-appointed arbitrators and who shall act as
the
Chairman. The parties agree to the appointment of arbitrators who are not on
CIETAC’s Panel of Arbitrators. If either party fails to appoint an arbitrator
within the time specified in the CIETAC Arbitration Rules, or if the two
party-appointed arbitrators fail to jointly appoint the third neutral arbitrator
within the time specified in the CIETAC Arbitration Rules, the Chairman of
CIETAC shall make such an appointment. The arbitration shall be conducted on a
confidential basis. All arbitration proceedings shall be held in the English
language. Any arbitration award made by the arbitration panel shall be final
and
binding on the parties and may be entered and enforced in any court of competent
jurisdiction. The parties shall submit to the jurisdiction of any such court
for
purposes of the enforcement of any such award. Notwithstanding the foregoing
agreement to arbitrate, the parties expressly reserve the right to seek
provisional relief from any court of competent jurisdiction to preserve their
respective rights pending arbitration.
20.
Advice
of Counsel.
The
Pledgor represents and warrants to the Pledgee that it has discussed this
Agreement and, specifically, the provisions of Section 19
hereof,
with the Pledgor’s lawyers.
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21.
Severability.
If any
provision of this Agreement is held to be prohibited or unenforceable in any
jurisdiction the substantive laws of which are held to be applicable hereto,
such prohibition or unenforceability shall not affect the validity or
enforceability of the remaining provisions hereof and shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
22.
Further
Assurances.
(a)
The
Pledgor agrees that with effect from the occurrence of an Event of Default
under
the Notes which has been notified to the Pledgor, the Pledgor or its appointed
Sponsor will, at the expense of the Pledgor, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
required by applicable law or may be necessary or desirable, in order to perfect
and protect any security interest granted or purported to be granted hereby
or
to enable the Pledgee to exercise and enforce its rights and remedies hereunder
with respect to any of the Pledged Collateral.
(b)
The
Pledgor hereby further agrees that it shall not make any change to (i) its
name
or jurisdiction or the form of its organization or (ii) the current organization
structure of the WFOE, i.e., the members of the board of directors, without
prior written consent of the Pledgee.
23.
The
Pledgee’s Duty of Care.
(a)
The
Pledgee shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Pledged Collateral, except for those arising
out
of or in connection with the Pledgee’s gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Pledgee shall be under
no
obligation to take any steps necessary to preserve rights in the Pledged
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Pledgor,
and shall constitute part of the Liabilities secured hereby.
(b)
No
provision of this Agreement shall require the Pledgee to do anything which
may:
(i) be illegal or contrary to applicable law or regulation; (ii) cause it to
expend or risk its own funds or otherwise incur any financial liability in
the
performance of any of its duties or in the exercise of any of its own rights
or
powers, if it shall have grounds for believing that repayment of such funds
or
satisfactory indemnity against such risk or the liability is not assured to
it.
(c)
Notwithstanding
anything to the contrary in this Agreement, the Pledgee shall not in any event
be liable for any failure or delay in the performance of its obligations
hereunder if it is prevented from so performing its obligations by any existing
or future law or regulation, any existing or future act of Governmental
Authority, act of God, flood, war whether declared or undeclared, terrorism,
riot, rebellion, civil commotion, strike, lockout, other industrial action,
general failure of electricity or other supply, aircraft collision, technical
failure, accidental or mechanical or electrical breakdown, computer failure
or
failure of any money transmission system or any reason which is beyond the
control of the Pledgee.
10
(d)
The
Pledgee shall engage and consult, at the expense of the Pledgor with any legal
adviser and professional adviser selected by it and rely upon any advice so
obtained the Pledgee and its respective directors, officers, employees and
duly
appointed agents shall be protected and shall not be liable in respect of any
action taken, or omitted to be done or suffered to be taken, in accordance
with
such advice.
(e)
The
Pledgee shall not be deemed to have notice of any Event of Default unless
written notice of any such Event of Default under the Notes is received by
the
Pledgee at the office of the Pledgee.
(f)
The
Pledgee’s sole duty with respect to the custody, safekeeping and physical
preservation of the Pledged Collateral shall be to deal with it in the same
manner as the Pledgee deals with similar property for its own
account.
(g)
Notwithstanding
any other term or provision of this Agreement to the contrary, the Pledgee
shall
not be liable for special, punitive, indirect or consequential loss or damage
of
any kind whatsoever including but not limited to loss of profits, whether or
not
foreseeable, and regardless of whether the claim for such loss or damage is
made
in negligence, for breach of contract, breach of trust, breach of fiduciary
obligation or otherwise. The provisions of this section shall survive the
termination or expiration of this Agreement or the resignation or removal of
the
Pledgee.
(h)
The
Pledgee may execute any of its powers and perform any of its duties hereunder
directly or through delegates or attorneys and may consult with counsel,
accountants and other skilled persons to be reasonably selected and retained
by
it. The Pledgee shall not be liable for the acts of such delegates or attorneys,
or for anything done, suffered or omitted by it in accordance with the advice
or
opinion of any such counsel, accountants or other skilled persons.
(i)
Whenever
in this Agreement, the Indenture, the Notes, other transaction documents or
by
law, the Pledgee shall have discretion or permissive power it may decline to
exercise the same in the absence of approval by the Holders. Save as expressly
provided in this Agreement, the Pledgee will have absolute and unfettered
discretion as to the exercise of its functions and will not be responsible
for
any loss, liability, cost, claim, action, demand, damages, expense or
inconvenience (for purposes of this clause, collectively “losses”) which may
result from their exercise or non-exercise except to the extent that a court
of
competent jurisdiction determines such losses arise directly from the fraud,
willful misconduct or gross negligence of the Pledgee.
(j)
The
Pledgee shall be obligated to perform such duties and only such duties as are
set out in this Agreement and no implied duties or obligations shall be read
into this Agreement against any of the Pledgee.
(k)
The
Pledgee may rely upon and shall not be liable for acting or refraining from
acting upon any written notice, instruction or request furnished to it hereunder
and believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Pledgee shall be under no duty to inquire into
or
investigate the validity, accuracy or content of any such document.
11
(l)
In
the
event that the Pledgee shall be uncertain as to its duties or rights hereunder
or shall receive instructions, claims or demands, in its opinion, conflict
with
any of the provisions of this Agreement, it shall be entitled to refrain from
taking any action until it is directed in writing by a final order or judgment
of a court of competent jurisdictions.
(m)
The
Pledgee may execute and exercise any of the rights or powers hereby vested
in it
or perform any duty hereunder either itself or by or through its attorneys,
accountants, agents or other experts, and the Pledgee will not be answerable
or
accountable for any act, default, neglect or unintentional misconduct of any
such attorneys or agents or for any loss to the Company or the Holders resulting
from any such act, default, neglect or unintentional misconduct, absent gross
negligence, willful misconduct or bad faith(as each is determined by a final
non-appealable order of a court of competent jurisdiction) in the selection
and
continued employment thereof.
(n)
The
Pledgee shall not be liable for any action taken or omitted by it except to
the
extent that a court of competent jurisdiction determines that the Pledgee’s
gross negligence or willful misconduct directly caused or contributed to any
such loss to the Holders.
24.
Additional
Provisions Relating to the Pledgee.
Any
corporation, bank, trust company or association into which the Pledgee may
be
merged or converted or with which it may be consolidated, or any corporation,
bank, trust company or association resulting from any merger, conversion or
consolidation to which the Pledgee shall be a party, or any corporation, bank,
trust company or association succeeding to all or substantially all the
corporate trust business of the Pledgee, shall be the successor of the Pledgee
hereunder, without the execution or filing of any paper or any further act
on
the part of any of the parties hereto.
25.
Notices.
Any
notice, demand, request or any other communication required or desired to be
served, given or delivered hereunder shall be in writing and shall be served,
given or delivered to the address and facsimile number of each party as
specified below:
For
the
Pledgor:
Address:
00xx
Xxxxx, Xxxxxxxx X, Xxx Xxxxxxxxxx
Xx.
00
Xxxxxx Xxxx
Xi’an
710065, Shannxi Province
P.R.
China
Attention: Mr.
Ji
Qinan
Tel: x00
00
0000 0000
12
For
the
Pledgee:
DB
Trustees (Hong Kong) Limited
Address: 48th
Floor, Xxxxxx Kong Center
2
Queen’s
Road, Central
Hong
Kong
Attention:
The
Managing Director
Facsimile: x00
00000000
x00
00000000
26.
Indemnity
and Expenses.
The
Pledgor hereby unconditionally and irrevocably covenants and undertakes to
indemnify and hold harmless the Pledgee, its directors, officers, employees
and
agents (each an “Indemnified
Party”)
in
full at all times against all losses, liabilities, actions, proceedings, claims,
demands, penalties, damages, costs, expenses disbursements, and other
liabilities whatsoever (the “Losses”),
including without limitation incidental and out-of-pocket expenses and the
costs
and expenses of legal advisors and other experts, which may be incurred,
suffered or brought against such Indemnified Party as a result or in connection
with (a) their appointment or involvement hereunder or the exercise of any
of
their powers or duties hereunder or the taking of any acts in accordance with
the terms of this Agreement or its usual practice; (b) this Agreement the
Indenture, Notes and other transaction documents, or (c) any instruction or
other direction upon which the Pledgee may rely under this Agreement, as well
as
the costs and expenses incurred by an Indemnified Party of defending itself
against or investigating any claim or liability with respect of the foregoing,
provided
that
this indemnity shall not apply in respect of an Indemnified Party to the extent
but only to the extent that any such Losses incurred or suffered by or brought
against such Indemnified Party arises directly from the fraud, wilful misconduct
or gross negligence of such Indemnified Party as determined by a court of
competent jurisdiction. The Pledgee shall notify the Pledgor promptly of any
claim for which it may seek indemnity. Failure by the Pledgee to so notify
the
Pledgor shall not relieve the Pledgor of its obligations under this Section,
to
the extent the Pledgor has been prejudiced thereby. The Pledor shall defend
the
claim, and the Pledgee shall cooperate in the defense. The Pledgor need not
pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld. The Pledgor need not reimburse any expense or indemnify
against any loss incurred by the Pledgee through the Pledgee’s own willful
default or gross negligence.
The
obligations of the Pledgor under this Section shall survive the satisfaction
and
discharge of this Indenture, the resignation or removal of the Pledgee and
payment in full of the Liabilities through the expiration of the applicable
statute of limitation.
27.
No
Implicit Duties.
The
Pledgee shall be obligated to perform such duties and only such duties as are
set out in this Agreement and no implied duties or obligations shall be read
into this Agreement or the against the Pledgee.
13
28.
Not
Liable for Actions.
The
Pledgee shall not be liable for any action taken or omitted by it except to
the
extent that a court of competent jurisdiction determines that the Pledgee’s
gross negligence or willful misconduct was the primary cause of any loss to
the
Pledgor. Notwithstanding any other term or provision of this Agreement to the
contrary, the Pledgee shall not be liable under any circumstances for special,
punitive, indirect or consequential loss or damage of any kind whatsoever
including but not limited to loss of profits, regardless of whether the claim
for such loss or damage is made in negligence, for breach of contract, breach
of
trust, breach of fiduciary obligation or otherwise. The provisions of this
Section shall survive the termination or expiration of this Agreement or the
resignation or removal of the Pledgee.
29.
Delegation
and Expert Advice.
The
Pledgee may execute any of its powers and perform any of its duties hereunder
directly or through delegates or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Pledgee shall not be liable for the acts of such delegates or attorneys, or
for
anything done, suffered or omitted by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled persons. The Pledgee
may engage and consult, at the expense of the Pledgor with any legal adviser
and
professional adviser selected by it and rely upon any advice so obtained and
each of the Pledgee and its directors, officers, employees and duly appointed
agents shall be protected and shall not be liable in respect of any action
taken, or omitted to be done or suffered to be taken, in accordance with such
advice.
30.
Successor.
Any
corporation into which the Pledgee may be merged or converted or with which
it
may be consolidated, or any corporation resulting from any merger, conversion
or
consolidation to which the Pledgee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Pledgee, shall be the successor to the Pledgee hereunder without the execution
or filing of any papers or any further act on the part of any of the parties
hereto.
31.
Retirement
of Pledgee.
The
Pledgee may retire at any time on giving not less than 30 days prior written
notice to the Pledgor without assigning any reason and without being responsible
for any costs, charges and expenses occasioned by such retirement. The Pledgor
hereby covenants that in the event of the Pledgee giving notice under this
Section, it shall use its best endeavors to procure a new Pledgee to be
appointed and if it fails to procure the appointment of a new Pledgee within
15
days of the expiration of such written notice, the Pledgee shall petition any
court of competent jurisdiction for its resignation; provided
that it
has notified the Pledgor prior to it doing so. If such petition is granted,
the
Pledgee shall notify all transaction parties in writing of its
resignation.
32.
Amendments,
Waivers and Consents.
None of
the terms or provisions of this Agreement may be waived, altered, modified
or
amended, except by or pursuant to an instrument in writing which (i) is duly
executed by the Pledgor and the Pledgee. Any such waiver shall be valid only
to
the extent set forth therein. A waiver by the Pledgee of any right or remedy
under this Agreement on any one occasion shall not be construed as a waiver
of
any right or remedy which the Pledgee would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Agreement on the part of the Pledgee shall operate as
a
waiver thereof; and no single or partial exercise of any right, power or
privilege under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
14
33.
Section
Headings.
The
section headings herein are for convenience of reference only, and shall not
affect in any way the interpretation of any of the provisions hereof.
34.
Execution
in Counterparts; Language.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which shall together constitute one and the same
agreement. This Agreement is written in both Chinese and English. The
English and Chinese versions are intended to be equally valid. In the event
that
there is any discrepancy between the Chinese and English versions, the
arbitration panel as constituted pursuant to above Section
16(b)
shall
decide which version more accurately reflects the true intention of the parties
hereto.
[remainder
of page intentionally left blank]
15
IN
WITNESS WHEREOF,
the
Pledgor and the Pledgee have executed this Agreement as of the date set forth
above.
| CHINA NATURAL GAS, INC. | ||
| |
|
|
| By: |
/s/
Qinan Ji
|
|
|
Name: |
||
| Title: | ||
Acknowledged
and agreed to
as
of the
date first written above.
DB
TRUSTEES (HONG KONG) LIMITED
as
the Pledgee
| By: |
/s/
Xxxx Xxx-Xxxxxxx
|
| Name: Xxxx Xxx-Xxxxxxx | |
| Title: Director | |
| By: |
/s/
Xxxx Xxx Xxxx Xxxxxx
|
| Name: Xxxx Xxx Xxxx Xxxxxx | |
| Title: Authorized Signatory |
[SIGNATURE
PAGE TO ONSHORE SHARE PLEDGE AGREEMENT]
ACKNOWLEDGMENT
The
undersigned hereby acknowledges receipt of a copy of the foregoing Share Pledge
Agreement, agrees promptly to note on its books the security interests granted
under such Share Pledge Agreement, agrees it will not record a transfer of
the
Pledged Shares to any other person without giving prior notification to the
Pledgee (and that it shall place a notice to such effect on any certificates
representing Pledged Shares), and waives any rights or requirement at any time
hereafter to receive a copy of such Share Pledge Agreement in connection with
the registration of any Pledged Collateral in the name of the Pledgee or its
nominee or the exercise of voting rights by the Pledgee.
|
SHAANXI
XILAN NATURAL GAS (榫皁皁笣天然气瑂备有榰公司)
(SEAL)EQUIPMENT CO., LTD. |
||
| |
|
|
| By |
/s/
Qinan Ji
|
|
|
Name: |
||
| Title: | ||
EXHIBIT
A
PLEDGED
SHARES
|
Name of
Pledgor |
Name of the Pledged Entity
|
Percentage of
Share |
||
|
Shaanxi
Xilan Natural Gas Equipment Co., Ltd.
(榫皁皁笣天然气瑂备有榰公司) |
65%
|
