EQUITY TRANSFER AGREEMENT among LU BENZHAO (Seller A) and LU TINGLAN (Seller B) and MAANSHAN GLOBAL MINING RESOURCES LIMITED (Purchaser) August 11, 2008 Nanjing, the People's Republic of China
EXECUTION
COPY(Sudan)
EXHIBIT
10.1
among
LU
BENZHAO
(Seller
A)
and
XX
XXXXXXX
(Seller
B)
and
MAANSHAN
GLOBAL MINING RESOURCES LIMITED
(Purchaser)
August
11,
2008
Nanjing,
the People's Republic of China
EXECUTION
COPY(Sudan)
TABLE
OF CONTENTS
|
ARTICLE
1.
|
DEFINITIONS
|
2
|
|
|
ARTICLE
2.
|
EQUITY
TRANSFER
|
3
|
|
|
ARTICLE
3.
|
CONDITIONS
PRECEDENT
|
5
|
|
|
ARTICLE
4 .
|
AGREEMENTS
PRIOR TO CLOSING
|
6
|
|
|
ARTICLE
5.
|
NON
COMPETITION
|
7
|
|
|
ARTICLE
6.
|
CLOSING
|
8
|
|
|
ARTICLE
7.
|
SETTLEMENT
AND COMPENSATION OF THE EMPLOYEES OF THE TARGET COMPANY
|
10
|
|
|
ARTICLE
8.
|
DISPOSAL
OF DEBTS PRIOR TO THE EQUITY TRANSFER
|
11
|
|
|
ARTICLE
9
|
NON
COMPETITION
|
11
|
|
|
ARTICLE
10
|
BREACH
OF RESPONSIBILITY
|
12
|
|
|
ARTICLE
11
|
CONTRACT
EFFECTIVENESS AND NULLIFICATION
|
13
|
|
|
ARTICLE
12
|
APPLICABLE
LAW AND DISPUTE RESOLUTION
|
14
|
|
|
ARTICLE 13
|
MISCELLANEOUS
|
15
|
Schedules
:
| Schedule 1: |
List
of Selected Employees
|
| Schedule2: |
Breakdown
of Assets
|
| Schedule 3: |
Representations
and Warranties
|
EXECUTION
COPY(Sudan)
THIS
AGREEMENT
(“Agreement”)
is
executed on August 11, 2008 in Nanjing, the People’s Republic of China
(“China” or “PRC”)
by and
between:
| (1) |
Maanshan
Global Mining Resources Ltd.,
a
limited liability company duly incorporated and validly existing
pursuant
to the laws of the PRC, having its legal address at Xx. 0, Xxxxx
Xxxxxx
Xxxx, Xxxxxxxx Economic and Technology Development Zone (hereafter
referred to as the "Purchaser");
|
| (2) |
Xx.
XX Benzhao,
a
PRC citizen, residing now at Xx. 000, Xxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx
District, Maanshan Municipality, Anhui Province and his ID number
is
000000000000000000 (hereinafter referred to as the "Seller
A");
and
|
| (3) |
Xx.
XX Xxxxxxx,
a
PRC citizen, residing now at Xx. 000, Xxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx
District, Maanshan Municipality, Anhui Province, and her ID number
is 000000000000000000
(hereinafter referred to as "Seller
B").
|
For
the
purpose of this Agreement, Seller A and Seller B are collectively referred
to as
the "Sellers";
the
Purchaser and the Sellers are referred to individually
as a “Party”
and
collectively as the “Parties”.
WHEREAS:
| (A) |
Nanjing
Sudan Mining Co., Ltd. is a limited liability company duly established
and
legally existing under the PRC law, and its main business is mining,
processing and sale of iron ore (hereinafter referred to as "Target
Company").
|
| (B) |
Sellers
are the legitimate owners and beneficiaries of the 100 percent equity
of
the Target Company, among which Seller A holds 98% equity, and Seller
B
holds 2% equity of the Target Company.
|
| (C) |
The
Purchaser is interested to purchase from the Sellers and the Sellers
are
interested to sell to the Purchaser One Hundred percent (100%) equity
interest in the Target Company. The Parties have entered into a Equity
and
Assets Transfer Heads of Agreement for the aforementioned, and the
Purchaser has paid to Seller A the deposit as set forth in such heads
of
agreement ("Deposit").
|
| (D) |
In
order to effect this transaction, the Parties have decided to enter
into
this Agreement which shall be submitted to the relevant Chinese
authorities for approval and registration in accordance with PRC
laws.
|
NOW,
THEREFORE,
after
friendly consultations conducted in accordance with the principles of equality
and mutual benefit, the Parties hereby enter into this Agreement:
1
EXECUTION
COPY(Sudan)
ARTICLE
1. DEFINITIONS
For
the
purposes hereof, the terms with a capitalized initial letter (which are in
bold
in the Chinese version) shall have the meaning set forth below:
"Affiliate"
shall
mean any corporation, partnership, company (whether with limited or full
liability), joint venture, trust, association or other entity (i) which is
directly or indirectly controlled by the Sellers or (ii) which directly or
indirectly controls, or is controlled by, or is under common control with,
the
Purchaser. For the purpose hereof, the term "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the decisions relating
to any corporation, partnership, limited liability company, joint venture,
trust, association or other entity, whether by the ownership of voting
securities or otherwise. With respect to the Sellers, "Affiliate" shall also
mean their spouse, child, parent, sibling or person sharing their
household.
"Business"
shall
mean the business engaged in by the Target Company and consisting mainly to
mine, process and sale iron ore.
"New Business
License"
shall
mean the business license issued subsequent to Target Company's transformation
into the subsidiary of the Purchaser.
"Equity
Transfer"
shall
mean the transfer of all the equity in Target Company by the Sellers to the
Purchaser as per this Agreement.
"Encumbrance"
shall
mean any charge, claim, lien, option, pledge, mortgage, security interest,
right
of first refusal, or restriction of any kind, including any restriction on
use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Selected
Employees"
shall
mean the employees previously employed by Target Company, which is listed in
Schedule 1 as annexed to this Agreement. The names, titles, ages, fixed
salaries, bonuses and other economical and non-economical rewards are listed
therein.
"Governmental
Authority"
means,
with respect to any country, the government of the state, city, locality or
other political subdivision thereof, any agency, authority, regulatory body,
or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions.
"Intellectual
Property Rights"
shall
mean (i) all patents, trademarks, service marks, trade names and copyrights
for
which registrations have been issued or applied for in any country or other
jurisdiction and that are used by the Target Company in connection to the
Business and (ii) all agreements, commitments, contracts, understandings,
licenses, assignments or other Applicable Contract relating or pertaining to
any
right described in the preceding clause.
"Legal
Requirements"
shall
mean, with respect to any country, the constitution, laws, ordinances,
regulations, statutes, treaties, conventions or administrative orders of any
Governmental Authority of that country, as in effect on or prior to the Closing
Date.
2
EXECUTION
COPY(Sudan)
"Ordinary
Course
" shall
mean any
action taken or decision made in relation to the Business which satisfies the
following conditions:
| (i) |
is
consistent in nature, scope and magnitude with the past practices
of the
Business;
|
| (ii) |
is
taken in the ordinary course of the normal, day-to-day operations
of the
Business; and
|
| (iii) |
does
not require any authorization by the board of directors or the general
shareholders’ assembly (or by any person or group of persons exercising
similar authority) and does not require any other separate or special
authorization of any nature.
|
"Registration
Authority"
shall
mean the State Administration for Industry and Commerce in China and/or any
local administrative authorities duly authorized by the State Administration
for
Industry and Commerce.
"Associated
Equity Transfer"
shall
mean the transfer to the Purchaser of (i) the 100% equity held by the Sellers
in
Maanshan Xiaonanshan Mining Co., Ltd. ("Xiaonanshan")
and
(ii) the 100% equity held by the Sellers in Maanshan Zhaoyuan Mining Co., Ltd.
("Zhaoyuan").
"Assets"
shall
mean all equipment, tools, molds, machinery, vehicles, installations, furniture,
intellectual property, inventory (including components of machineries), cash,
account receivables and other Assets, including land use rights and real
properties, plants, office buildings, etc. (if any), that are owned by the
Target Company in connection with the Business. A list of the Assets is attached
hereto in Schedule 2.
ARTICLE
2.
EQUITY TRANSFER
|
2.1
|
Equity
Transfer from the Sellers to the
Purchaser
|
| 2.1.1 |
Subject
to the terms and conditions provided in this Agreement, , the Sellers
shall sell to the Purchaser One Hundred percent (100%) Equity in
the
registered capital of the Target Company, among which Seller A shall
sell
to the Purchaser 98% equity, and Seller B shall sell to the Purchaser
2%
equity; the Purchaser buys from the Sellers all the
Equity.
|
| 2.1.2 |
Upon
completion of the Equity Transfer, the Target Company shall be converted
into a foreign owned subsidiary wholly held by the Purchaser
("Global
Mining Subsidiary").
|
| 2.1.3 |
The
Equity transferred by the Sellers to the Purchaser does not bear
any
encumbrances, and is not pertained by any other liabilities or third
party
rights.
|
3
EXECUTION
COPY(Sudan)
| 2.1.4 |
The
Sellers fully understand that the Purchaser's execution of this Agreement
is based upon all the statements, representations and warranties
contained
under this Agreement.
|
| 2.2 |
Purchase
Price and Payment of Purchase
Price
|
| 2.2.1 |
The
consideration for the Equity Transfer shall be in based upon the
appraisal
on the value of the Equity issued by a asset appraisal firm, and
shall be
RMB 160 million in cash or the equivalent USD in cash ("Purchase
Price").
The exchange rate between USD and RMB shall be the middle rate issued
by
the People's Bank of China on the date of Aug 11,
2008.
|
|
2.2.2
|
The
value of the Assets up to the Closing Date shall be affirmed based
upon
the mid term financial statement issued by accounting firm. Such
value
shall the basic value for the
closing.
|
|
2.2.3
|
The
Purchaser shall pay to the Sellers as set forth in 2.2.5 the first
instalment of the Purchase Price (“ First Instalment”) in the amount of
RMB 90.8 million in cash or the equivalent USD in cash within 20
working
days after the conditions precedent provided in Clause 3.2 of this
Agreement are fully satisfied. The exchange rate between USD and
RMB shall
be the middle rate issued by the People's Bank of China on the date
of Aug
11, 2008.
|
|
2.2.4
|
The
Purchaser shall pay to the sellers as set forth in 2.2.5 the second
instalment of the Purchase Price (“Second Instalment”) in the amount of
RMB 69.2 million in cash or the equivalent USD in cash 15 days before
the
closing date. The exchange rate between USD and RMB shall be the
middle
rate issued by the People's Bank of China on the date of Aug 11,
2008. The
Sellers shall, before Dec 5th, 2008, inform the Purchaser in good
faith
the estimated closing date and provide evidence to prove that the
closing
can take place on that date.
|
|
2.2.5
|
The
above payment shall be remitted by telegraphic transfer into the
bank
account ("Escrow
Account")
inside the PRC designated by Escrow Agent ("Escrow
Agent"),
who is both approved by the Purchaser and the Sellers.
|
| 2.3 |
Reimbursement
and Budget
|
|
The
Sellers are obligated to improve the Target Company's plant, equipment,
including but not limited to the road construction, construction
of the
second production plant and property, expansion of the dam capacity,
improvement to equipment, investment to the vehicles, for the purpose
of
improving the production. The cost and expenses, in a total amount
of RMB
120 million, expended for the above purpose, and shall be reimbursed
by
the Purchaser to the Sellers (“reimbursement”), and such reimbursement has
been already included in the Purchase Price in Article 2.2.1. However,
the
Sellers are going to provide a detailed budget to the Purchase before
Sep
10th,
2008, which shall including but not limited to the expenses for road
construction, the second production plan, the increase of the dam
capacity, and the increase of any trucks or equipment. The budget
shall be
subject to the approval of the
Purchaser.
|
4
EXECUTION
COPY(Sudan)
ARTICLE
3.
CONDITIONS PRECEDENT
The
Equity Transfer shall be subject to prior satisfaction of the following
conditions precedent:
| 3.1 |
Conditions
precedent in relation to Equity
Transfer:
|
| (a) |
All
regulatory approvals deemed necessary by the Purchaser to complete
the
Equity Transfer and the Associated Equity Transfers shall have been
validly and unconditionally obtained; and
|
| (b) |
the
registration authority has issued the New Business License to the
Global
Mining Subsidiary, Zhaoyuan and Xiaonanshan, with a company term
of 30
years.
|
|
3.2
|
Conditions
precedent for the Purchaser's performance of the duties under this
Agreement:
|
|
(a)
|
the
representations and warranties listed in Clause 5 and Schedule 3
of this
Agreement are true, precise and
complete.
|
|
(b)
|
the
Target Company has passed each annual inspection for the year of
2007;
|
|
(c)
|
the
shareholders' meeting of the Sellers have reached the resolution
in
approving the Equity Transfer.
|
|
(d)
|
the
executive director of the Target Company has approved the Equity
Transfer.
|
|
(e)
|
the
Target Company has paid off all the taxes and other Pre-Equity Transfer
Liabilities as from it's start of Businesses
operation.
|
|
(f)
|
the
Sellers and the Purchaser have entered into an escrow agreement with
the
Escrow Agent that is in full compliance with the relevant provisions
of
this Agreement.
|
| (g) |
the
Sellers has provided all supply agreements entered into the Target
Company
and iron ore concentrate buyers, to prove that the Target Company
has had
good relationships with all business customers.
|
|
(h)
|
the
Sellers have obtained and validly maintained all the valid originals
necessary to prove the legal use or ownership for the use of the
land, the
plants and constructions in the name of the Target Company, including
but
not limited to:
|
5
EXECUTION
COPY(Sudan)
| (i) |
land
use right certificate;
|
| (ii) |
premises
ownership certificate;
|
|
(iii)
|
construction
use land planning permit;
|
| (iv) |
construction
project planning permit; and
|
| (v) |
lease
agreements entered into with competent
xxxxxx.
|
|
(i)
|
the
relevant Government Authority has completed the foreign debt registration
for the Purchaser at its
application.
|
|
(j)
|
a
list of assets as Schedule 2 of the Target Company approved by the
Purchaser and the Sellers.
|
The
Purchaser may decide in its own discretion to waive any of the conditions under
Clause 3.2.
|
3.3
|
Conditions
precedent for the Sellers' performance of the duties under this
Agreement:
|
|
(a)
|
China
Global Mining Resources Ltd., as the parent company of the Purchaser
("Global
Mining")
has signed a Consultancy Service Agreement with Seller
A.
|
|
(b)
|
Global
Mining Subsidiary has signed an employment contract with Seller
A.
|
ARTICLE
4 . AGREEMENTS PRIOR TO CLOSING
| 4.1 |
Assets
of Target Company
|
During
the date of execution of this Agreement and the date of completion of Closing,
the Sellers shall assure that all the assets of the Target Company including
(without limitation) Assets are ready for the Purchaser or the Purchaser's
representative to check according to the Schedule 2. The difference between
the
actual total value of such Assets and the records on the Target Company's books
shall not exceed 0.1 %, otherwise the Purchase Price shall be deducted
accordingly.
| 4.2 |
Both
Parties' Duties
|
| 4.2.1 |
The
Parties agree to perform the following
duties:
|
|
(a)
|
During
the period extending from the date of this Agreement until the Closing
Date, the Sellers shall cause the Target Company to conduct its Business
only in the Ordinary Course;
|
| (b) |
The
Sellers shall improve the grade of the iron ore concentrate produced
by
the Target Company to 62% ± 1% as part of the normal production
standard.
|
6
EXECUTION
COPY(Sudan)
|
(c)
|
The
Sellers shall, and shall cause the directors/executive director of
the
Target Company appointed by them, to take all actions as may be necessary
or desirable in order to effect and/or facilitate the Equity Transfer;
and
|
|
(d)
|
The
Parties shall take all actions, execute all documents and more generally
do everything necessary or desirable in order to obtain the Business
License from the relevant Governmental Authorities as soon as
possible.
|
|
4.2.2
|
During
the execution of this Agreement and the completion of Closing, without
the
consent by the Purchaser, the Sellers shall
not:
|
|
(a)
|
dispose
any assets the Target Company, unless during the ordinary course
of
business operation;
|
|
(b)
|
set
any mortgage, pledge, lien or any other third party rights on the
assets
of the Target Company; or
|
|
(c)
|
make
any payment to any individual (including employee), company, enterprise
or
organization that is not compliant with the normal business
operation
|
|
(d)
|
undertake
any conduct that is not compliant with the normal business operation
in
any means, no matter in terms of the nature, scope or means of operation
etc. in respect of the Business .
|
ARTICLE
5. NON COMPETITION
| 5.1 |
Each
of the Parties represents and warrants the
following:
|
| 5.1.1 |
Each
Party represents and warrants to the other Party the
following:
|
|
(a)
|
such
Party has or has already had all necessary power, approval or
authorisation, and has completed all necessary legal procedures,
to
execute this Agreement and completely perform each of the duties
under
this Agreement;
|
|
(b)
|
the
representative of such Party to execute this Agreement has the
authorization to execute this
Agreement;
|
|
(c)
|
upon
approval and registration by the registration authority, the provisions
in
this Agreement shall be legally, effectively and bindingly constitute
duties for such Party;
|
|
(d)
|
such
Party's exercise of rights and performance of duties under this Agreement
will not violate any governing law and any other agreement entered
into by
such Party;
|
|
(e)
|
each
of such Party's representations and warranties in the schedule to
this
Agreement is true and precise;
|
7
EXECUTION
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|
(f)
|
such
Party shall indemnify and compensate the other Party if its violation
of
any of the representations, warranties and undertakings under this
Agreement cause any losses, damages or incur any expenses or costs
for the
other Party.
|
| 5.2 |
The
Purchaser and the Sellers undertake to each other the
following:
|
|
5.2.1
|
The
Purchaser undertakes to the Sellers, it will assure before or at
the time
this Agreement is executed to cause Global Mining to enter into a
Consultancy Service Agreement with Seller A, and clearly setting
forth
that Global Mining shall directly pay to Seller A service fee in
accordance with the Consultancy Service Agreement. The main clauses
of the
Consultancy Service Agreement shall include the
following:
|
|
(a)
|
the
Sellers shall provide consultancy services to the
Purchaser;
|
|
(b)
|
the
term of the Consultancy Service Agreement shall be two (2) years
full time
service as from the completion of the transaction;
and
|
|
(c)
|
the
Sellers shall in his own capacity obtain any necessary approval for
executing and performing the Consultancy Service Agreement, and shall
bear
by himself the taxes incurred inside and outside the PRC by the payment
of
services fees.
|
|
5.2.2
|
Seller
A and Seller B undertakes to the Purchaser, it shall assure, before
the
completion of Closing of the Equity
Transfer:
|
|
(a)
|
to
obtain approval on the Equity Transfer from the relevant government
authority and the relevant registration change by the registration
authority.
|
|
(b)
|
the
Target Company has passed annual inspection of each of its aspects
for the
year 2007.
|
|
(c)
|
the
Associated Equity Transfer is approved by the relevant government
authority and registration change by the registration
authority.
|
|
(d)
|
each
of the representations and warranties made to the Purchaser in Schedule
3
is true, complete and precise.
|
ARTICLE
6. CLOSING
| 6.1 |
Closing
|
The
closing of the Equity Transfer ("Closing")
shall
be completed within 15 days after the issuance of the new Business License
and
shall be subject to the satisfaction of all the conditions precedent set out
in
Article 3 hereof, but shall not be later than Dec 20, 2008 ("Closing
Date"),
otherwise shall be agreed by the Purchaser. The Closing shall take place at
DLA
Piper UK LLP Shanghai office for Closing .
8
EXECUTION
COPY(Sudan)
| 6.2 |
Deliveries
by Seller
|
On
the
Closing Date, Seller shall deliver and shall procure delivery to Purchaser
all
documents evidencing the satisfaction of all the conditions precedent set out
in
Article 3 hereof, including without limitation:
|
(a)
|
the
New Business License issued to the Global Mining Subsidiary by the
registration authority after the Equity
Transfer;
|
|
(b)
|
the
original of the Business License of the Target Company that has undergone
the 2007 annual examination and the following latest and valid originals:
|
| (i) |
the
organization code certificate;
|
| (ii) |
tax
registration certificates (for national and local
taxes);
|
| (iii) |
finance
registration certificate;
|
| (iv) |
2007
annual examination report;
|
|
(v)
|
the
common tax receipts for the tax as from its inception paid off by
the
Target Company.
|
|
(c)
|
the
following latest valid originals necessary for the plants and
constructions in the name of the Target
Company:
|
| (i) |
land
use right;
|
| (ii) |
premises;
|
|
(iii)
|
construction
use land planning permit;
|
| (iv) |
construction
project planning permit; and
|
| (v) |
lease
agreements.
|
|
(d)
|
evidences
that the Associated Equity Transfers have been approved and registered
by
relevant Government Authorities;
|
|
(e)
|
document
and/or registration evidencing that the Target Company is qualified
to
issue VAT invoice;
|
| (f) |
resolution
of Seller's shareholders meeting approving the Equity
Transfer;
|
|
(g)
|
the
Target Company's resolution signed by the executive director approving
the
Equity Transfer;
|
|
(h)
|
a
duly
executed statement reiterating the truthfulness, completeness and
accuracy
of the Sellers' representations and warranties at the Closing
Date.
|
|
(i)
|
assets
as listed in Schedule 2, time is of the
essence.
|
9
EXECUTION
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|
6.3
|
Payment
by the Purchaser
|
|
Subject
to Clause 6.2, the Purchaser orders on the Closing Date the escrow
agent
bank to release all the Purchase Price in the Escrow Account to the
Sellers, and thereafter the Escrow Account shall be
cancelled.
|
|
6.4
|
Delay
and Termination of the
Closing
|
|
6.4.1
|
In
case the conditions precedent set out in Article 3 hereof have not
been
fully fulfilled as of the Closing Date, unless the failure is caused
by
the breach of Purchaser, Purchaser shall be entitled to:
|
| (a) |
use
reasonable effect, after discussion and agreement with Seller, to
cause
the
Closing to take place as soon as possible; or in case no agreement
reached,
|
|
(b)
|
terminate
the Closing and ordering the Escrow Agent to return all the Purchase
Price
to the Purchaser.
|
| 6.4.2 |
Prior
to completion of the Closing, if:
|
|
(a)
|
Purchaser
becomes aware of any material breach by Seller of the representations,
warranties or undertakings hereunder;
or
|
|
(b)
|
Seller
has seriously breached its obligations hereunder and failed to remedy
the
same to the satisfaction of Purchaser if the breach is remediable;
or
|
|
(c)
|
any
event occurs, which if would have occurred prior to the execution
of this
Agreement should have constituted material breach of the representations
or warranties made by Seller hereunder;
or
|
|
(d)
|
any
event occurs that causes materially adverse impact on the business
Seller
is engaging in or such event might occur after the
Closing,
|
Then,
without prejudice to any other rights of Purchaser, Purchaser may choose to
terminate this Agreement after inform Seller in writing to such effect without
being liable to Seller therefor.
ARTICLE
7. SETTLEMENT AND COMPENSATION OF THE EMPLOYEES OF THE TARGET
COMPANY
|
7.1
|
The
Sellers' Duties
|
The
social securities and termination, compensation and settlement in respect of
the
current employment of the employees (including the Selected Employees) of the
Target Company arising from this Agreement shall be solved by Seller at its
own
costs. Seller agrees to draft a settlement plan for its employees (including
the
Selected Employees) and submit it to relevant authority as part of the Equity
Transfer application documents.
10
EXECUTION
COPY(Sudan)
|
7.2
|
Nullification
of the Existing Employment
Contracts
|
After
the
execution of this Agreement and before the registration authority has issued
a
new Business License to the subsidiary of Global Mining, Seller shall cause
the
Target Company to terminate all existing employment contracts with all its
employees and make reasonable compensation to the employees in accordance with
relevant Chinese employment laws and regulations. Seller shall make its best
effort to assist the subsidiary of Global Mining to conclude new employment
contracts with the Selected Employees.
|
7.3
|
Execution
of New Employment
Contracts
|
Within
5
working days after the issuance of the new Business License, Purchaser shall
cause the Subsidiary of Global Mining to enter into employment contract with
the
Selected Employees and the salary, wage, bonus, subsidy, social securities,
benefits and holidays and leaves of the Selected Employees under the new
employment contracts shall not be lower than that in the employment contract
prior to the termination.
ARTICLE
8. DISPOSAL OF DEBTS AND LIABILITES PRIOR TO THE EQUITY
TRANSFER
|
8.1
|
Debts
and Liabilities prior to the Equity
Transfer
|
|
Seller
agrees to bear and pay off before Closing any and all liabilities,
debts,
xxxxxx, penalties, claims, actions, disputes and other claims arising
from
or in connection with the Business, land using, demolition, plant
construction, environmental protection, taxes, mining permit, safe
working, employment, salary and benefits, social security funds,
and
contracts in relation to the operation of the Target Company, regardless
of whether it has occurred or is occurring or will occur ("Debts
prior to
the Equity Transfer").
|
|
8.2
|
Indemnification
|
|
Seller
agrees to indemnify Purchaser against and hold it harmless form loss,
claims and expenses (including lawyer's fee) arising from or in connection
with the Debts prior to the Equity
Transfer.
|
ARTICLE
9 NON COMPETITION
|
9.1
|
Non-Competition
|
|
9.1.1
|
Within
five (5) years after this Agreement's effectuation, the Sellers and
its
Affiliates may not directly or indirectly, in any means, own, participate
or engage in prospecting, mining, processing, purification,
transportation, purchase and sale of iron ore products or any business
related to such products.
|
|
9.1.2
|
Notwithstanding
the above provisions, the Sellers may still hold its interests in
the
mining companies in which the Sellers started to hold such interests
before the Equity Transfer, and may hold no more than 10% equity
in a
listed company engaging in investment in the mining
industry.
|
11
EXECUTION
COPY(Sudan)
|
9.1.3
|
Either
the Sellers or Affiliates may not employ, intend to employ or solicit
any
employee or future employee, or sign Consultancy Service Agreements
with
them.
|
|
9.1.4
|
Either
the Sellers or Affiliates may not transact with any clients or customers
of the Business, or seek any clients or customers of the
Business.
|
|
9.1.5
|
The
duties of the Sellers and Affiliates under this Clause 9 shall be
effective within five (5) years after effectuation of this
Agreement.
|
|
9.2
|
Pre-emptive
Right
|
|
After
execution of this Agreement, the Sellers and its Affiliates undertake
to
the Purchaser that, if the Sellers or any company that is directly
or
indirectly controlled by the Sellers through holding 25% or more
equity in
it, procures or invests in, independently or through joint ventures,
mining or mining product processing and/or any related activities,
the
Sellers shall authorize, or procure to the Sellers' best that such
invested company to authorize the Purchaser the pre-emptive right
to
purchase such business from the Sellers or such invested company
(as
applicable).
|
ARTICLE
10 BREACH OF RESPONSIBILITY
| 10.1 |
Damage
and Indemnification
|
|
Seller
A and B shall be jointly and severally liable for (i) performance
of their
duties and provisions under this Agreement and the agreement, and
(ii)
causing the Target Company to comply with the provisions regarding
their
duties this Agreement.
|
|
10.1.1
|
If
the Sellers breach any of the duties under this Agreement, the Sellers
shall bear the following liabilities:
|
|
(a)
|
returning
to the Purchaser all the deposit in full and additional expenses
(if
any)
|
|
(b)
|
pay
to the Purchaser twice the full deposit and additional expenses (if
any)
as damages
|
|
(c)
|
pay
to the purchaser all the expenses directly or indirectly arising
from
transactions, including but not limited to, all the legal, accounting,
tax, and mining technology consultant charges
.
|
| 10.1.2 |
If
the Sellers or the Target Company
|
|
(a)
|
the
Target Company is not completely incorporated, or ceases to operate,
or is
dissolved, or deregistered;
|
|
(b)
|
act
or omit, resulting in that the transaction under this Agreement may
not be
completed,
|
12
EXECUTION
COPY(Sudan)
the
Sellers and the Target Company shall be jointly and severally liable for the
following:
|
(i)
|
returning
all the deposit and additional expenses (if any) to the
Purchaser;
|
|
(ii)
|
paying
to the Purchaser USD 33 millionor
equivalent RMB as
a pre-agreed damages.
|
The
Sellers confirm that the above damages are true pre-appraisal of the losses
to
be suffered by the Purchaser. The payment made by the Sellers and the Target
Company in accordance with this 10.1.2 are pre-agreed damages in nature. It
doesn't affect any other provisions of this Agreement, and also doesn't affect
the effectiveness of any other remedies that the Purchaser is entitled to
against the Sellers and the Target Company in enforcing this
Agreement.
| 10.1.3 |
If
the Purchaser fails to make the payment to the Seller according to
this
agreement, the Purchaser shall pay USD 33 million (or equivalent
RMB) to
the Seller as the pre-agreed
damages.
|
| 10.2 |
Escrow
|
Within
15
days of or at the time of execution of this Agreement, the Parties shall sign
an
escrow agreement with the escrow agent, which shall be fully compliant with
this
Agreement.
ARTICLE
11 CONTRACT
EFFECTIVENESS AND NULLIFICATION
|
11.1
|
Contract
Effectiveness
|
|
This
Agreement shall take effect at the same time of effectuation of the
Associated Equity Transfer upon execution by Seller A, Seller B and
duly
authorized representative of the
Purchaser.
|
|
11.2
|
Termination
|
|
This
Agreement shall be terminated prior to the Closing if any of the
following
events occur:
|
|
(a)
|
the
Parties agree to terminate in
writing;
|
| (b) |
a
Party serves a written notice to the other Party that, if
|
| (i) |
the
other Party conducts a material breach of any provision of this Agreement,
and have not remedy such breach within 15 days after service of the
written notice of such breach or the non-breaching party waives the
right
of claiming the breach; or
|
| (ii) |
any
agreement for the Associated Equity Transfer is
terminated;
|
13
EXECUTION
COPY(Sudan)
| (c) |
a
Party serves
a written notice to the other Party prior
to the Closing upon
the occurrence of any of the following events:
(i) one Party may not perform part of or all the material duties
under
this Agreement due to Events of Force Majeure (as defined below),
or (ii)
becomes insolvency, or (iii) goes bankruptcy, liquidation, debt
restructuring, dissolution or enters into similar procedures; or
|
| (d) |
the
Purchaser terminates this Agreement according to Clause 6.4, or the
closing has not taken place by Dec 20, 2008
.
|
|
11.3
|
Effect
of Termination
|
|
The
Parties hereby agree that if this Agreement is terminated due to
any of
the reasons specified in Article 11.2 herein above, this Agreement
shall
be terminated. However the duties under Clauses 11.3, 10, 12 and
13 shall
continue to be effective, or be terminated due to that one or more
conditions under this Agreement by the terminating Party is not satisfied
because of a breach of this Agreement by the non-terminating Party,
the
terminating Party’s right to pursue all legal remedies after the
termination of this Agreement shall survive such termination
unimpaired.
|
ARTICLE
12 APPLICABLE
LAW AND DISPUTE RESOLUTION
|
12.1
|
Applicable
Law
|
|
This
Agreement shall be governed by the laws of the PRC.
|
|
12.2
|
Arbitration
|
|
(a)
|
Any
dispute, controversy, or claim between or among the Parties arising
out of
or relating to this Agreement, or the breach, termination, or invalidity
thereof, shall be settled through amicable negotiations between the
Parties involved.
|
|
(b)
|
In
case no settlement can be reached through amicable negotiations between
the Parties within sixty (60) days of the issuance of a written notice
from a Party to the other Party of a dispute, the dispute shall be
submitted for arbitration in Shanghai under the auspices of the China
International Economic and Trade Arbitration Commission ("CIETAC").
Any Party initiating an arbitration proceeding shall give notice
to the
other Party.
|
|
(c)
|
The
arbitration proceedings shall be held in accordance with the arbitration
rules of CIETAC in effect on the date of the signing of this Agreement
(the "Rules").
However, if certain provisions of the Rules are in conflict with
the
provisions of this Article 2.2, the provisions of this Article 2.2
shall
prevail.
|
|
(d)
|
The
number of arbitrators shall be three (3). Each Party shall appoint
one (1)
arbitrator and the third arbitrator shall be jointly selected by
the
Parties. If the Parties fail to select the third arbitrator, the
chairman
of CIETAC shall select the third arbitrator. If a Party does not
appoint
an arbitrator within thirty (30) days after the selection of the
first
arbitrator, the relevant appointment shall be made by the chairman
of
CIETAC
|
14
EXECUTION
COPY(Sudan)
|
(e)
|
A
request for interim measures addressed by any Party to a judicial
authority shall not be deemed incompatible with the agreement to
arbitrate
or as a waiver of the agreement to arbitrate.。
|
|
(f)
|
The
arbitration award shall be final and binding on all of the Parties,
including any Party that was duly notified of the arbitration but
chose
not to participate. Judgement upon the award rendered by the arbitration
tribunal may be enforced in any court having jurisdiction
thereof。
|
|
(g)
|
The
arbitration proceedings shall be conducted in English and
Chinese.
|
|
12.3
|
Continued
Implementation of this
Agreement
|
|
During
the period when a dispute is being resolved the Parties shall in
all other
respects continue their implementation of the
Agreement.
|
| 12.4 |
Survival
of the Arbitration Clause
|
The
termination of this Agreement shall not affect the validity of the arbitration
clause herein.
ARTICLE
13 MISCELLANEOUS
|
13.1
|
Press
Releases and Public
Announcement
|
No
Party
shall disclose to any third party relating to the existence of this Agreement
and/or the subject matter of this Agreement prior to the Closing without the
prior written approval of the other Party except if required by applicable
laws
and to their professional advisors.
|
13.2
|
Force
Majeure
|
|
13.2.1
|
Event
of Force Majeure
|
An
"Event
of Force Majeure"
means
an event that could not have been foreseen by a Party at the time of the
execution of this Agreement, or the occurrence and consequence of which could
not have been avoided and reasonably prevented by that Party, and as a result,
such Party is unable to perform its obligations under this Agreement. An Event
of Force Majeure includes, but is not limited to: prohibition or acts by
governments or public agencies, riots, war, hostility, public disturbance,
strikes, failure or interruption of transportation or other utilities,
epidemics, fire, floods, earthquakes, storms, tidal waves or other acts of
nature
15
EXECUTION
COPY(Sudan)
|
13.2.2
|
Notification
of Occurrence
|
| (a) |
If
one Party has been prevented from performing its obligations stipulated
in
the Agreement because of an Event of Force Majeure, , it shall notify
the
other Party in writing within seven (7) days after the occurrence
of such
Event of Force Majeure, and all Parties shall use reasonable endeavors
to
mitigate damages,
|
| (b) |
If
an Event of Force Majeure occurs, neither Party shall be responsible
for
any damage,
increased costs or loss, such non-compliance or delay in implementation
shall not be considered a breach of this
Agreement
|
| (c) |
A
Party claiming inability to perform due to an Event of Force Majeure
shall
take appropriate means to minimize or remove the effects of the Event
of
Force Majeure and, within the shortest possible time, attempt to
resume
performance of the obligation affected by the Event of Force
Majeure.
|
|
13.3
|
Amendment
|
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and duly signed by the Parties.
|
13.4
|
Entire
Contract
|
All
of
the Schedules attached hereto are integral parts of this Agreement and together
constitute
the entire agreement between the Parties with respect to the subject matter
of
this
Agreement. This Agreement supersedes all previous agreements, understandings
and communications with respect to the subject matter.
|
The
headings to the Articles are for ease of reference only and shall
have no
legal effect.
|
|
13.5
|
Severability
|
The
invalidity of any provision of this Agreement shall not affect the validity
of
any other
provision of this Agreement
|
13.6
|
Language
|
|
This
Agreement shall be written in both Chinese and English in Nine (5)
counterparts each. Both versions shall be equally authentic and are
consistent in all substantial respects.
|
In
the
event of any inconsistency between the two versions, such discrepancy shall
by
interpreted in accordance with the purposes of this Agreement
|
13.7
|
Waiver
|
|
Unless
otherwise provided for in the laws of China, failure or delay on
the part
of any Party hereto to exercise any right under this Agreement shall
not
operate as a waiver thereof, nor shall any single or partial exercise
of
any right preclude exercise of any other
right
|
16
EXECUTION
COPY(Sudan)
|
13.8
|
Notices
|
| (a) |
The
dates on which the notices shall be considered
valid notice served
as
follows:
|
| (i) |
Notices
given by messenger shall be deemed effectively given on the date
of
delivery;
|
|
(ii)
|
Notices
given by registered airmail shall be deemed effectively given twelve
(12)
days after the postage payment of the registered airmail (i.e., twelve
(12) days after the post xxxx
date);
|
| (iii) |
Notices
given by facsimile transmission shall be deemed effectively given
upon the
delivery of the fax report evidencing the transmission of the document;
and
|
|
(iv)
|
Notices
given by courier shall be deemed effectively given on the third
(3rd)
day after they were sent by a recognized courier
service.
|
Each
of
the Parties shall have the right to change its address and its nominee at any
time, provided that after any such change the other Party shall be notified
promptly in writing of such change。
| (b) |
All
notices between the Parties hereto shall be written in English and
Chinese
and delivered
to following addresses:
|
To
Purchaser:
Address:
Xx. 0, Xxxxx Xxxxxx Xxxx, Xxxxxxxx Economic and Technology Development Zone
To
the
Sellers:
Address:
Xx. 000, Xxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx District, Maanshan Municipality,
Anhui Province
| 13.9 |
Assignment
by Purchaser
|
The
Purchaser shall have the right to assign all its rights and obligations under
this Agreement and the Equity Transfer Agreement to one of its Affiliates but
shall inform the Seller in advance. The Sellers shall provide necessary
assistance to the Purchaser in executing relevant assignment contracts with
the
assignee(s) designated by the Purchaser.
17
EXECUTION
COPY(Sudan)
IN
WITNESS THEREOF,
the
Parties have caused this Agreement to be executed on the date as set forth
above
by their duly authorized representatives.
|
PURCHASER
|
|
Maanshan
Global Mining Resources Ltd.
/s/
Xxxxxxx X. Xxxx
|
|
Name
|
|
Title
CEO
|
|
Seller
A
|
|
Xx.
Xx Benzhao
/s/
Lu Benzhao
|
|
Seller
B
|
|
Xxx.
Xx
Xxxxxxx
/s/
Xx Xxxxxxx
|
18
EXECUTION
COPY(Sudan)
SCHEDULE
1
LIST
OF SELECTED EMPLOYEES
19
EXECUTION
COPY(Sudan)
SCHEDULE
2
BREAKDOWN
OF ASSETS
20
EXECUTION
COPY(Sudan)
SCHEDULE
3
REPRESENTATIONS
AND WARRANTIES
This
schedule states the representations and warranties made by the Sellers to the
Purchaser and shall be regarded as being made as of the date hereof and as
of
the Closing Date.
| 3.1 |
Corporate
Organization
|
|
3.1.1
|
The
Target Company is a limited liability company duly organized, validly
existing and in good standing under the laws of China, having its
registered office at Danyang Town, Jiangning District, Nanjing
Municipality, with full legal and corporate power, right and authority
to
carry on the Business and to own and lease its properties and
assets.
|
|
3.1.2
|
The
establishment and subsequent corporate operations of the Target Company
have been registered in a timely and valid manner with the Registration
Authority in accordance with all Legal
Requirements.
|
|
3.1.3
|
Since
its date of establishment, the Target Company has operated its business
in
accordance with its articles of association and business license,
and has
complied with Legal Requirements in all material
respects.
|
|
3.1.4
|
No
arrangement and, in particular, no shareholders' agreement, interprets
or
modifies the rules set forth in the articles of association of the
Target
Company in force prior to Closing with respect to the voting, dividend,
ownership, transfer or other rights or obligations of the equity
holders.
|
|
3.1.5
|
The
Target Company is not on the point of being, or has been, (i) subject
to any Insolvency Related Procedure in respect of part or all of
its
assets, or (ii) in voluntary liquidation procedure, and no such procedure
is Threatened or contemplated.
|
|
3.1.6
|
There
are no circumstances which could permit a Person to demand the liquidation
or dissolution of the Target Company, and no corporate decision has
been
taken or voted by the Target Company, which could result in such
dissolution or liquidation.
|
| 3.2 |
Capitalization
|
|
3.2.1
|
The
registered capital of the Target Company amounts to RMB 9 million.
The
registered capital of the Target Company is entirely
paid-up.
|
|
3.2.2
|
At
Closing Date, the Sellers have full and valid title and ownership
to One
Hundred percent (100%) equity interest in the registered capital
of the
Target Company. Such Equity shall bear no encumbrances or any third
party
rights.
|
|
3.2.3
|
Subject
to the restrictions set forth in the articles of association, the
equity
interest of the Target Company is freely negotiable and free and
clear of
all Encumbrance, nor is it the subject matter of any dispute or claim.
The
Sellers have full legal right, authority and power to sell, transfer
and
convey the Equity to the Purchaser in accordance with the terms of
this
Agreement.
|
21
EXECUTION
COPY(Sudan)
|
3.2.4
|
Except
for the transactions contemplated in this Agreement, there are no
outstanding options, warrants, or other rights to acquire, or agreements
or commitments to issue, sell, purchase or redeem, any equity interests
in
the Target Company.
|
|
3.2.5
|
There
are no shareholders' agreements, voting agreements or any other similar
contracts, agreements, arrangements, commitments, plans or understandings
restricting or otherwise relating to voting, dividend, ownership
or
transfer rights with respect to the equity interest of the Target
Company.
|
| 3.3 |
Effects
of the Transfer of the
Equity
|
The
transfer of the Equity in accordance with this Agreement will not result
in:
|
3.3.1
|
Any
breach of any agreement or undertaking by the Target
Company;
|
|
3.3.2
|
The
possibility for any Person dealing with the Target Company (i) to
terminate any agreement or contract or to modify the effects thereof,
or
(ii) to claim the reimbursement of any subsidy, grant, loan or advance;
or
|
|
3.3.3
|
The
possibility for a Person to invoke any guarantee, surety, letter
of
comfort or any other document having an equivalent effect which may
have
been granted by or in favor of the Target
Company.
|
| 3.4 |
Subsidiaries
and Investments
|
|
3.4.1
|
The
Target Company does not, directly or indirectly, (i) own any outstanding
securities or other interest in any company, partnership, joint venture
or
other entity with or without legal status, other than investments
in
publicly traded securities, or (ii) control any corporation, partnership,
joint venture or other entity.
|
|
3.4.2
|
The
Target Company has not acquired and has no agreements, arrangements,
commitments, plans or understandings to acquire, all or substantially
all
of the equity or assets of another corporation or
entity.
|
| 3.5 |
Authority
and no Conflict
|
|
3.5.1
|
The
Sellers have full power and authority to enter into this Agreement
and to
consummate the transactions contemplated
herein.
|
|
3.5.2
|
The
execution and delivery of this Agreement, and every document or instrument
to be executed and delivered by the Sellers, and the consummation
of the
transactions contemplated herein and therein have been duly and validly
authorized and approved by all necessary corporate actions on the
part of
the Sellers.
|
|
3.5.3
|
Subject
to the consents, approvals and registrations set forth in Article
3.2
herein, neither the execution nor delivery by the Seller of this
Agreement, including all the agreements referred to herein, nor the
consummation of the transactions contemplated herein and therein,
require
any authorization, consent, approval or registration of any Governmental
Authority or of any other Person.
|
22
EXECUTION
COPY(Sudan)
| 3.6 |
Books
and Records
|
|
3.6.1
|
The
corporate books and records, including the shareholders' registry
and the
minutes books, of the Target Company have been properly maintained
and are
complete and correct.
|
| 3.7 |
Liabilities
|
|
3.7.1
|
The
Target Company has no liabilities or obligations of any nature, and
there
is no basis known to the Sellers for any claim against the Target
Company,
for any such liabilities or obligations, due or to become due, except
for
(a) accounts payable and accrued expenses incurred in the Ordinary
Course
and (b) current liabilities incurred in the Ordinary Course consistent
with past practice (none of which results from, arises out of or
in
connection with, or was caused by a breach of contract, tort, product
liability, infringement of rights or violation of
law).
|
| 3.8 |
Taxes
and Social Obligations
|
|
3.8.1
|
The
Target Company has filed or caused to be filed (on a timely basis
since
its establishment date) all Tax and Social returns that are or were
required to be filed pursuant to applicable Legal Requirements. All
Tax
and Social Returns filed by the Target Company are true, correct,
and
complete.
|
|
3.8.2
|
The
Target Company has paid all Tax and Social liabilities required to
be paid
in China on or before the Closing Date and have accrued as Tax and
Social
liabilities on the books and records of the Target Company all amounts
required to be so accrued in accordance with Chinese GAAP and applicable
Legal Requirements.
|
|
3.8.3
|
The
Target Company has never been the subject of Tax and/or Social
audits.
|
|
3.8.4
|
No
claims of deficiencies for any Tax and/or Social liability are being
or
have been asserted, proposed or Threatened against the Target Company,
and
no audit or investigation of any Tax and/or Social return is currently
pending or Threatened against the Target
Company.
|
|
3.8.5
|
All
Taxes that the Target Company is or was required by Legal Requirements
to
withhold or collect have been duly withheld or collected and, to
the
extent required, have been duly paid to the proper tax authority
or other
person or Governmental Authority.
|
| 3.8.6 |
All
the resource taxes, resource compensation fees up to the Closing
Date of
this Agreement have been fully paid off or provisioned for in the
accounting books.
|
| 3.9 |
Conduct
of Business in the Ordinary
Course
|
Except
as
expressly contemplated in this Agreement, since the date of establishment of
the
Target Company, the Business has been conducted only in the Ordinary Course
and
in conformity with past practice. Without limiting the generality of the
foregoing, the Target Company has not:
23
EXECUTION
COPY(Sudan)
| 3.9.1 |
Created
any Encumbrance on any asset;
|
|
3.9.2
|
Sold,
leased or transferred or agreed to sell, lease or transfer any assets
or
rights with a gross book value in excess of XXX 00 xxxxxxxx, xxxxx
than
inventory sold or transferred in the Ordinary
Course;
|
|
3.9.3
|
Canceled
or agreed to cancel any debts or claims, waived or agreed to waive
any
rights of value, or allowed to lapse or failed to keep in force any
franchise, permit or other right, in each case involving an amount
in
excess of XXX 00 xxxxxxxx;
|
|
3.9.4
|
Made
or permitted any amendment or termination of any contract, agreement
or
license involving an amount in excess of XXX 00
xxxxxxxx;
|
|
3.9.5
|
Undertaken
or committed to undertake capital expenditures exceeding XXX 00 thousand
for any single project or related series of projects;
|
|
3.9.6
|
Increased
the compensation paid or to become payable to any Officers or Employees,
except for increases in the Ordinary Course consistent with past
practice.
|
|
3.9.7
|
Undergone
any adverse change in its relationship with suppliers, customers,
distributors and lessors;
|
|
3.9.8
|
Instituted,
settled or agreed to settle any litigation, action, or proceeding
before
any Governmental Authority relating to the Business or assets of
the
Target Company or otherwise affecting the conduct of the Business;
or
|
|
3.9.9
|
Entered
into or become committed to enter into any other transaction of a
type not
set forth above in excess of XXX 00
xxxxxxxx.
|
| 3.10 |
Accounts
Receivable
|
|
3.10.1
|
All
accounts receivable owing to the Target Company as of the Closing
Date
represent obligations arising from sales actually made or services
actually performed by the Target Company in the Ordinary Course.
|
|
3.10.2
|
The
Accounts Receivable recorded in the accounts as of the Closing Date,
are
current and fully collectible.
|
|
3.10.3
|
There
is no contest, claim, or right of set-off under any contract with
any
obligor of an Accounts Receivable relating to the amount or validity
of
such Accounts Receivable. The Accounts Receivable are free and clear
of
all Encumbrance.
|
| 3.11 |
Inventory
|
|
3.11.1
|
The
inventory of the Target Company, including raw materials, supplies,
work-in-process, and finished goods (the "Inventory"),
taken as a whole, is in merchantable condition and is reflected in
the
accounts at cost subject to reserves for obsolete and slow-moving
inventory ("Inventory
Reserves").
|
24
EXECUTION
COPY(Sudan)
|
3.11.2
|
The
Inventory is free and clear of
Encumbrance.
|
| 3.12 |
Products
|
|
3.12.1
|
The
products manufactured or sold by the Target Company are in compliance
with
Legal Requirement, notably in terms of safety, quality control and
labeling.
|
| 3.12.2 |
The
iron ore concentrates manufactured by the Target Company meet the
standard
as grade 62% ±1%.
|
|
3.12.3
|
No
claim has been asserted against the Target Company with respect to,
and,
there is no basis for any claims arising out of, any injury to
individuals, damage to property or other liability as a result of
the use
or ownership of any product manufactured or sold in the
Business.
|
|
3.12.4
|
The
Target Company is not party to an Applicable Contract containing
covenants
that in any way purport to restrict the business activity of the
Target
Company or limit its freedom to engage in any line of business or
to
compete with any Person.
|
| 3.13 |
Assets
|
|
3.13.1
|
The
Target Company has good, valid and exclusive ownership and title
of the
Assets.
|
|
3.13.2
|
The
Assets are free and clear of any type of Encumbrance or any
other restriction preventing them from being fully owned and operated
by
the Target Company, and
there is no actual or potential claim by any Person that would give
such
Person the right to use, occupy control or own the Assets or any
item
thereof, directly or indirectly.
|
|
3.13.3
|
The
Assets are in normal condition of use, maintenance and repair, subject
to
normal wear and tear in the Ordinary Course, and none of them have
any
latent or hidden defects which may prevent them from being used for
the
purposes for which they are
intended.
|
|
3.13.4
|
All
the Assets have been duly recorded in the financial statements of
the
Target Company at a value determined in conformity with Chinese
GAAP.
|
|
3.13.5
|
The
Assets are in compliance with the Legal Requirements with respect
to
environmental and safety matters.
|
|
3.13.6
|
The
Assets are sufficient to the Target Company to continue the conduct
of the
Business after the Closing Date in substantially the same manner
as
conducted prior to the Closing
Date.
|
| 3.14 |
Real
Property
|
|
3.14.1
|
The
Target Company owns the land use right and the premises (if any)
as
necessary for the mining on the mining field on which it has mining
right,
and such land use right and its term shall not be less than the term
of
existence of the mining right held by the Target
Company.
|
25
EXECUTION
COPY(Sudan)
|
3.14.2
|
The
Target Company owns all the real property as reflected in its balance
sheet, without any, including but not limited to, encumbrances or
retention of ownership. The owned real property is complete and without
material defects.
|
| 3.15 |
Loans
and Guaranties
|
|
3.15.1
|
The
Target Company does not have any payment obligations nor any other
rights
or liabilities to any Person in relation to either the borrowing
of money
or the lending of money.
|
|
3.15.2
|
No
mortgage, pledge or other Encumbrance have been granted by or extended
to
the Target Company.
|
| 3.16 |
Intellectual
Property
|
|
3.16.1
|
The
Intellectual Property Rights together with the Trade Secrets constitute
the sole intellectual property rights required in order to conduct
the
Business after the Closing Date in substantially the same manner
as it was
conducted prior to the Closing
Date.
|
|
3.16.2
|
All
patents owned or used by the Target Company are valid and in full
force,
and all patent applications of the Target Company are in good standing,
all without challenge of any kind, filed in the appropriate governmental
agency office, and the Target Company owns the entire right, title
and
interest in and to such patents and patent applications so scheduled
as
being owned by it without Encumbrance of any kind.
|
|
3.16.3
|
All
of the registrations for trade names, trademarks, service marks and
copyrights owned by the Target Company or used by the Target Company
are
valid and in full force, and all applications by the Target Company
for
such registrations are pending and in good standing, all without
challenge of any kind, filed in the appropriate governmental agency
office, and the Target Company owns the entire right, title and interest
in and to all such trade names, trademarks, service marks and copyrights
so scheduled as being owned by it as well as the registrations and
applications for registration therefor without qualification, limitation,
burden or Encumbrance of any kind.
|
|
3.16.4
|
The
Sellers have caused the Target Company to take all reasonable precautions
to protect the secrecy, confidentiality and value of all Trade Secrets.
The Trade Secrets are not part of the public knowledge or literature
and
have not been divulged or appropriated for the benefit of any Person
or to
the detriment of the Target
Company.
|
|
3.16.5
|
The
Target Company owns or has the right to use all patents, trademarks,
service marks, copyrights, trade names, inventions, improvements,
processes, formulae, Trade Secrets, and other proprietary information
used
by it in conducting the Business. No infringement of any patent,
patent
right, trademark, service xxxx, trade name, or copyright or registration
thereof has occurred or results in any way from the operations or
business
of the Target Company. No claim or threat of any such infringement
has
been made in respect of any of the foregoing,
|
|
3.16.6
|
No
claim of invalidity of any patent owned by the Target Company has
been
made, and no proceedings are pending or Threatened against the Target
Company which challenge the validity or ownership of any patent,
trademark, trade name, service xxxx or copyright or the ownership
of any
other Intellectual Property Rights.
|
26
EXECUTION
COPY(Sudan)
|
3.16.7
|
None
of the Sellers or the Target Company have had notice of, any claim
that
the operations, activities, products, equipment, machinery or processes
used in relation to the Business infringes the patents, trademarks,
service marks, trade names, copyrights or other similar property
rights of
any other Person.
|
| 3.17 |
Required
Permits
|
|
3.17.1
|
The
Target Company holds all necessary or appropriate permits, certificates,
approvals, registrations, licenses or other administrative authorizations
or recordings which are necessary to own, lease and operate its properties
and to conduct the Business after the Closing Date the same way it
was
conducted before the Closing Date (the "Required
Permits"),
including but not limited to land use certificate, property ownership
certificate, mining license, operation safety permit, environmental
protection permit, use of explosives permit, planning permit and
other
licenses; all the licenses and certificates shall be effective on
the
Closing Date, and the effective terms shall not be less than the
maximum
term regulated by laws and regulations, and may be legally
extended.
|
|
3.17.2
|
All
Required Permits are in full force and effect and the Target Company
is
not in default under the terms of any such Required Permit or has
received
notice of any default thereunder.
|
|
3.17.3
|
All
the fees under the Required Permits, including but not limited to
land use
fees, mining right fees, mining resource taxes have been legally
paid
off.
|
| 3.18 |
Employment
|
|
3.18.1
|
All
salaries, benefits, severance payments and related Tax and/or Social
liabilities with respect to the Employees have been paid by the Target
Company when due for all periods through the date hereof, and, as
of the
Closing Date, will have been paid by the Target Company when due
for all
periods through the Closing Date.
|
|
3.18.2
|
No
Employee has been transferred to the Target Company that is not
employed
within the scope of the Business or is not directly
dedicated
to the Business.
|
|
3.18.3
|
The
Target Company has complied with the terms of the employment contracts
relating to the Employees and has complied with all labor Legal
Requirements in particular, but not limited to, the applicable regulations
on working hours, worker’s compensation, overtime and safety and security
measures.
|
|
3.18.4
|
There
are no pending or Threatened labor litigations or labor disputes
between
the Employees and the Target
Company.
|
|
3.18.5
|
The
Target Company does not provide, and have not undertaken to provide,
any
Plan under which any Employee working for the Target Company has
or may
have any current or future rights to benefits in excess of those
rights
required by Legal Requirements.
|
27
EXECUTION
COPY(Sudan)
| 3.19 |
Officers
|
|
3.19.1
|
The
powers of each of the Officers comply with Legal Requirements and
no
person other than an Officer has general or special management powers
with
respect to the Target Company.
|
|
3.19.2
|
No
Officer is engaged in a business, or has an interest in any corporation,
partnership, limited liability company or other entity that is engaged
in
a business, which competes with the
Business.
|
|
3.20
|
Litigation
|
There
are
no claims, actions, investigations, inquiries, suits or proceedings pending
or
Threatened before any court or other Governmental Body to which the Target
Company is, or would be, a party, as plaintiff or defendant, acting on behalf
of
itself or any other Person for which it may be held liable or whose obligations
it may have guaranteed.
| 3.21 |
Environment
|
|
3.21.1
|
The
Target Company is in compliance in all material respects with Legal
Requirements relating to the protection of the environment and in
effect
prior to the Closing Date (“Environmental Laws”).
All the liabilities related to environmental protection in relation
to or
arising from the Business of the Target Company have been paid off
or
provisioned for in the accounting books.
|
|
3.21.2
|
The
Target Company has obtained all relevant and necessary authorizations
and
permits and has made all required declarations and filings pursuant
to
Environmental Laws within the context of the
Business.
|
|
3.21.3
|
The
Target Company has not received any claim, notice or demand, and
no
investigation, action or proceeding, is pending, or Threatened, by
any
Governmental Authority or any third Person, concerning any failure
of the
Target Company to comply with Environmental Laws, or any alleged
liability
under Environmental Laws within the context of the Business.
|
|
3.21.4
|
With
respect to the Business, the Target Company has not released into
the air,
water or ground, any substance which may present any danger to public
health and safety or the protection of environment and which might
give
right to a claim by any Governmental Authority or any third Person.
|
| 3.22 |
Compliance
with Laws
|
|
3.22.1
|
The
Target Company is in compliance with the provisions of Legal Requirements,
except to the extent that the failure to comply therewith would not
have
an material adverse effect on the Target Company.
|
28
EXECUTION
COPY(Sudan)
|
3.22.2
|
There
are no existing or proposed orders, judgments, decrees, governmental
takings, condemnations or other proceedings (i) to which the Target
Company is a party and which would have an adverse effect on the
Target
Company, or (ii) which is or would be binding upon the business,
operations or properties of the Target Company and which would have
an
adverse effect on the Target Company; provided, however, that no
representations is made under this clause with respect to orders,
judgments, decrees, governmental takings, condemnations or other
proceedings proposed by any Governmental Authority which would have
a
general effect on business (e.g., tax laws).
|
| 3.23 |
Certain
Transactions with the Sellers and their
Affiliates
|
Neither
the Sellers nor their Affiliates (a) have any direct or indirect interest in
any
property, asset or right which is used by the Target Company in the conduct
of
the Business (except for the Main Site and Liaoyuan Site), (b) have filed any
intellectual property right application which arises out of the operations
of
the Business or is being used in connection therewith, or (c) have any
contractual relationship with the Target Company under which they have rights
against the Target Companies.
| 3.24 |
Certain
Payments
|
The
Target Company, its Officers and Employees, or any other Person acting at the
direction of the Target Company, have not, directly or indirectly, except for
transfers of value not exceeding 1,000 RMB per annum to any one Person or
entity:
|
(i)
|
made
any gift or payment of any kind to any Person or entity, private
or public
(including but not limited to Governmental Authorities), regardless
of
form, whether in money, property, or services (a) to obtain favorable
treatment in securing business, (b) to pay for favorable treatment
for
business secured, (c) to obtain special concessions or for special
concessions already obtained, for or in respect of the Target Company,
or
|
| (ii) |
established
or maintained any fund or asset that has not been recorded in the
books
and records of the Target Company which might be used for payments
of the
kind described in clause (i).
|
| 3.25 |
Information
Provided
|
|
3.25.1
|
All
the documents and information provided to Purchaser in the course
of the
legal due diligence by and on behalf of the Sellers, a list of which
is
attached hereto as Annex 7.25.1 are true, correct and complete.
|
|
3.25.2
|
No
representation or warranty of the Sellers contained in this Agreement,
and
no statement contained in any document, certificate or Schedule furnished
by or on behalf of the Sellers to Purchaser pursuant to this Agreement,
omits to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or
therein
not misleading
|
29
