CHINA NATURAL GAS, INC. AMENDMENT TO SECURITIES PURCHASE AGREEMENT
AMENDMENT
TO
This
Amendment to the Securities Purchase Agreement (this “Amendment”)
is
made and entered into as of January 29, 2008, by and among China Natural Gas,
Inc. (the “Company”),
a
Delaware corporation, the other Group Companies (as defined in the Purchase
Agreement (defined below)) and Abax Lotus Ltd., (the “Purchaser”).
RECITALS
WHEREAS,
the Purchaser, the Company and the other Group Companies entered into that
certain Securities Purchase Agreement dated as of December 30, 2007 (the
“Purchase
Agreement”),
pursuant to which, among other things, the Company agreed to (i) the issuance
and sale of up to US$40,000,000 in principal amount of its 5.0% Guaranteed
Senior Notes due 2014; (ii) the Purchaser’s option to purchase up to
US$10,000,000 in principal amount of its 5.0% Guaranteed Senior Notes due 2014
and (iii) the issuance of warrants representing the right to purchase 2,900,000
shares of the Company’s common stock, par value $.0001; and
WHEREAS,
Purchaser, the Company and the other Group Companies now desire to (i) amend
certain provisions of the Purchase Agreement and (ii) amend certain disclosures
contained in the Disclosure Schedules thereto, all as further provided
herein.
NOW,
THEREFORE, in
consideration of the premises and the mutual promises made in the Purchase
Agreement and this Amendment, and in consideration of the representations,
warranties, and covenants contained in the Purchase Agreement and this
Amendment, the undersigned hereby agree as follows:
ARTICLE
1
PURCHASE
AGREEMENT PROVISIONS
1.01. Definitions
and Interpretation.
Capitalized terms used and not defined in this Amendment shall have the meanings
ascribed thereto in the Purchase Agreement, and all rules as to interpretation
and usage set forth in the Purchase Agreement shall apply to this
Amendment.
1.02. Authorization
and Issuance of Securities.
Section
1(a)
and
1(b)
of the
Purchase Agreement are amended and restated in their entirety as
follows:
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(a)
|
The
Company has authorized (i) the issuance and sale of up to RMB145,000,000
(the equivalent of US$20,000,000) in principal amount of its 5.0%
Guaranteed Senior Notes due 2014 (the “Initial
Notes”), (ii) the grant by the Company to the Purchaser of
the option to purchase up to RMB145,000,000 (the equivalent of
US$20,000,000) in principal amount of its 5.0% Guaranteed Senior
Notes due
2014 (the “First Option Notes”), (iii) the grant
by the Company to the Purchaser of the option to purchase up to
RMB73,000,000 (the equivalent of US$10,000,000) in principal amount
of its
5.0% Guaranteed Senior Notes due 2014 (the “Second Option
Notes” together with the First Option Notes, the
“Option Notes” and together with the Initial
Notes, the “Notes”), and (iv) the issuance of
warrants (each, a “Warrant”) representing the
right to purchase 2,900,000 shares of the Company’s common stock, par
value $.0001 (the “Common Stock”) pursuant to the
Warrant Agreement (as defined below). For the purposes of this Agreement,
the “Principal Amount” shall be the greater of (i)
US$40,000,000 (the equivalent of RMB290,000,000) and (ii) the actual
aggregate principal amount of Notes issued on the date that is 30
calendar
days following the Second Closing
Date.
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|
(b)
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Subject
to the terms and conditions of this Agreement, the Company will,
at the
Closing provided for in Section 3, issue and sell to the Purchaser
and the
Purchaser will purchase from the Company, Notes in the principal
amount
specified opposite the Purchaser’s name in Schedule I, and the Company
will issue to the Purchaser such number of Warrants specified opposite
the
Purchaser’s name in Schedule I, for the consideration in the amount
specified opposite the Purchaser's name in Schedule I. Subject to
the
terms and conditions of this Agreement, the option to purchase the
First
Option Notes will expire on March 3, 2008 and such option shall be
exercised on such date (unless otherwise agreed upon in writing by
the
Company and the Purchaser) in the event that the conditions contained
herein, including without limitation Section
7,
are fulfilled. Subject to the terms and conditions of this Agreement,
the
option to purchase the Second Option Notes will expire on the date
that is
30 days following the Second Closing Date and may be exercised in
whole or
in part from time to time on one or more occasions at the discretion
of
the Purchaser. Any such time and date of delivery of the Option Notes
shall be determined by the Company, but shall not be later than seven
(7)
full business days after the exercise of said option, nor in any
event
prior to the First Closing Date (as defined
below).
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1.03. Purchase,
Sale and Delivery.
Section
3(b)
of the
Purchase Agreement is hereby amended and restated in its entirety as
follows:
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(b)
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(i)
Subject to the terms and conditions herein, prior to March 3, 2008,
the
Purchaser shall have the option to require the Company to issue the
First
Option Notes on any Business Day that may be agreed upon in writing
by the
Company and the Purchaser, but in any event no later than seven (7)
full
Business Days after the exercise of said option, nor in any event
prior to
the First Closing Date, (such date referred to herein as the “Second
Closing Date”).
The delivery of the respective Option Notes to be purchased shall
occur at
the aforementioned office on such
date.
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(ii)
Subject to the terms and conditions herein, within 30 days from and after the
Second Closing Date, the Purchaser shall have the option to require the Company
to issue the Second Option Notes on any Business Day that may be agreed upon
in
writing by the Company and the Purchaser, but in any event no later than seven
(7) full Business Days after the exercise of said option, nor in any event
prior
to the First Closing Date (such date referred to herein as the “Third
Closing Date”
collectively with the First Closing Date and the Second Closing Date, each,
as
applicable, a “Closing
Date”
and
each such time, as applicable, a “Closing”).
The
delivery of the respective Option Notes to be purchased shall occur at the
aforementioned office on such date.
1.04. Purchase,
Sale and Delivery.
Section
3(c) of the Purchase Agreement is hereby amended and restated in its entirety
as
follows:
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(c)
|
Subject
to the terms and conditions herein, at the First Closing (or the
Second or
Third Closing in the case of the Option Notes), the Company shall
deliver
to the Purchaser one or more global certificates representing the
Initial
Notes (or Option Notes, as the case may be) and the Company shall
deliver
to the Purchaser one or more global certificates representing the
Warrants, in each case registered in such names and denominations
as the
Purchaser may request (but not less than the minimum amount required
by
the Indenture), against payment by the Purchaser of the aggregate
purchase
price for the Notes and the Warrants (as more specifically set forth
in
Schedule I hereto) by immediately available funds bank wire transfer
to
such bank account as the Company shall have theretofore designated
to the
Purchaser. In addition, in the event that any or all of the Option
Notes
are purchased by the Purchaser, payment of the purchase price for,
and
delivery of notes for, such Option Notes shall be made at the
above-mentioned offices, or at such other place as shall be agreed
upon by
the Purchaser and the Company, on each Closing Date.
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1.05. Conditions
to Purchase Securities at Closing.
Section
7(k)
of the
Purchase Agreement is hereby amended and restated in its entirety as
follows:
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(k)
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On
the First Closing Date, the Notes with aggregate of principal amount
of up
to RMB145,000,000 (the equivalent of US$20,000,000) and Warrants
to
purchase an aggregate of 2,900,000 Warrant Shares shall be sold to
the
Purchaser pursuant to this Agreement at the First Closing. To the
extent
exercised, (i) on the Second Closing Date, the Notes with aggregate
of
principal amount of up to RMB145,000,000 (the equivalent of US$20,000,000)
shall be sold to the Purchaser pursuant to this Agreement and (ii)
on the
Third Closing Date, the Notes with aggregate of principal amount
of up to
RMB73,000,000 (the equivalent of US$10,000,000) shall be sold to
the
Purchaser pursuant to this
Agreement.
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1.06. Conditions
to Purchase Securities at Closing.
Section
7(l)
of the
Purchase Agreement is hereby amended and restated in its entirety as
follows:
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(l)
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In
the event that the Purchaser exercises its option to purchase all
or any
portion of the Option Notes after the Closing Date, the Purchaser
shall
receive, dated as of the relevant Closing Date, the items referred
to
herein under Section
7,
dated as of such Closing Date, and true and correct as of such date.
Notwithstanding anything to the contrary contained in this agreement,
prior to the Second Closing Date, the Purchaser shall have received
evidence reasonably satisfactory to it that the WFOE has amended
its
Memorandum and Articles of Association to reflect the expanded business
scope on its new business license by March 3
2008.
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1.07. Schedule
I.
Schedule
I
of the
Purchase Agreement is hereby amended and restated in its entirety as
follows:
SCHEDULE
I
Schedule
of Purchaser
I. Closing
of the Sale and Issuance of Notes and Warrants
First
Closing Date: January 29, 2008
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Name and Address
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Principal Amount of Notes
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Number of
Warrants |
Purchase Price
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|||
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Abax
Lotus Ltd.
x/x
Xxxx Xxxxxx Xxxxxxx (Xxxx Xxxx) Limited
Suite
6708, 67/F Two
International
Finance Centre
0
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx SAR
Fax:
x000 0000 0000
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RMB145,000,000
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2,900,000
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The
amount of U.S. dollars obtained by converting RMB into U.S. dollars
at a
rate of 7.2350 (the base rate for the purchase of U.S. dollars
with RMB as
quoted by the People’s Bank of China on January 24,
2008)
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Second
Closing Date: March 3, 2008
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Name and Address
|
Principal Amount of Notes
|
Number of
Warrants |
Purchase Price
|
|||
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Abax
Lotus Ltd.
x/x
Xxxx Xxxxxx Xxxxxxx (Xxxx Xxxx) Limited
Suite
6708, 67/F Two
International
Finance Centre
0
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx SAR
Fax:
x000 0000 0000
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RMB145,000,000
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None
|
The
amount of U.S. dollars obtained by converting RMB into U.S. dollars
at a
rate of 7.2350 (the base rate for the purchase of U.S. dollars
with RMB as
quoted by the People’s Bank of China on January 24,
2008)
|
Third
Closing Date:
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Name and Address
|
Principal Amount of Notes
|
Number of
Warrants |
Purchase Price
|
|||
|
Abax
Lotus Ltd.
x/x
Xxxx Xxxxxx Xxxxxxx (Xxxx Xxxx) Limited
Suite
6708, 67/F Two
International
Finance Centre
0
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx SAR
Fax:
x000 0000 0000
|
RMB73,000,000
|
None
|
The
amount of U.S. dollars obtained by converting RMB into U.S. dollars
at a
rate of 7.2350 (the base rate for the purchase of U.S. dollars with
RMB as
quoted by the People’s Bank of China on January 24,
2008)
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ARTICLE
II
PURCHASE
AGREEMENT DISCLOSURE SCHEDULE PROVISIONS
2.01. Disclosure
Schedule 4(r) Taxes.
“Schedule
4(r) - Taxes”
is
hereby added as follows:
“The
Group Companies have not paid any taxes in the United States of America, nor
filed any documentation with respect to any taxes that may be owed in the United
States of America. Neither the Company, nor any of the Group Companies, owe
any
taxes in the United States of America (past due or otherwise) and may not be
deemed to have any liability, monetary or otherwise, with respect to any taxes
in such jurisdiction.”
ARTICLE
III
MISCELLANEOUS
3.01. Effectiveness.
All of
the provisions of this Amendment shall be effective as of the date hereof.
Except as specifically provided for in this Amendment, the terms of the Purchase
Agreement shall remain in full force and effect.
3.02. Entire
Agreement.
The
Purchase Agreement, as amended by this Amendment and the documents referred
to
in the Purchase Agreement and this Amendment supersede all prior discussions
and
agreements between the parties with respect to the subject matter hereof and
contain the sole and entire agreement between the parties hereto with respect
to
the subject matter hereof.
3.03. Governing
Law.
This
Amendment, and all claims or causes of action (whether in contract or tort)
that
may be based upon, arise out of or relate to this Amendment or the negotiation,
execution or performance of this Amendment (including any claim or cause of
action based upon, arising out of or related to any representation or warranty
made in or in connection with this Amendment), shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the conflicts of laws principles thereof.
3.04. Counterparts;
Delivery by Facsimile.
This
Amendment may be executed in any number of counterparts, each of which will
be
deemed an original, but all of which together will constitute one and the same
instrument.
This
Amendment, to the extent signed and delivered by means of a facsimile machine
or
through an e-mail communication utilizing Adobe Portable Document Format (PDF),
shall be treated in all manner and respects as an original contract and shall
be
considered to have the same binding legal effects as if it were the original
signed version thereof delivered in person. At the request of any party hereto
or to any such contract, each other party hereto or thereto shall re-execute
original forms thereof and deliver them to all other parties. No party hereto
or
to any such contract shall raise the use of a facsimile machine or an e-mail
communication utilizing Adobe Portable Document Format (PDF) to deliver a
signature or the fact that any signature or contract was transmitted or
communicated through the use of facsimile machine or an e-mail communication
utilizing Adobe Portable Document Format (PDF) as a defense to the formation
of
a contract and each such party forever waives any such defenses.
[Remainder
of this Page Intentionally Left Blank]
IN
WITNESS WHEREOF, this Amendment has been duly executed and delivered by the
duly
authorized officer of each party hereto as of the date first above
written.
| GROUP COMPANIES | ||
| CHINA NATURAL GAS INC. | ||
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| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
| SHAANXI XILAN NATURAL GAS EQUIPMENT CO., LTD. | ||
| |
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|
| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
| XI’AN XILAN NATURAL GAS CO., LTD. | ||
| |
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|
| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
| SHAANXI JINGBIAN LIQUEFIED NATURAL GAS CO., LTD. | ||
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| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
| SHAANXI XILAN AUTOMOBILE CONVERSION CO., LTD. | ||
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| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
[SIGNATURE
PAGE TO AMENDMENT TO PURCHASE AGREEMENT]
| HENAN BRANCH OF XI’AN XILAN NATURAL GAS CO. LTD. | ||
| |
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|
| By: | /s/ Qinan Ji | |
| Name: | ||
| Title: | ||
[SIGNATURE
PAGE TO AMENDMENT TO PURCHASE AGREEMENT]
| Accepted and Agreed to: | |
| ABAX LOTUS LTD. | |
| By: | /s/ Xxxx Xxxxx Dong |
|
|
Name:
Title:
Authorized Signatory
|
[SIGNATURE
PAGE TO AMENDMENT TO PURCHASE AGREEMENT]
