CHINA NATURAL GAS, INC.
January
29, 2008
To:
The
Investor listed on Schedule
A
(the
“Investor”)
Ladies
and Gentlemen:
This
letter will confirm our agreement that pursuant to and effective as of your
purchase of certain 5.0% Guaranteed Senior Notes due 2014 (the “Notes”)
and
warrants (the “Warrants”,
with
the Warrants and the Notes collectively referred to as the “Securities”)
to be
issued by China Natural Gas, Inc. (the “Company”),
a
Delaware corporation pursuant to the applicable securities purchase agreement
(as
may be
amended, restated or supplemented, the
“Securities
Purchase Agreement”)
dated
December 30,
2007
among the Company, the Investor and the other parties thereto, the Investor
(and
its subsidiaries and affiliates) shall be entitled to the following contractual
rights to certain financial information, inspection rights, and other rights
specifically provided herein:
1. Subject
to the Company’s compliance with applicable laws and regulations and except for
information already provided to the Trustee pursuant to the Indenture, the
Company will concurrently furnish to the Investor all material information
(at
the address set forth on Schedule
A
hereto
or at such other address as the Investor may notify the Company in writing)
provided generally to all shareholders (including but not limited to financial
statements, details of material contracts, and acquisitions or disposals of
material assets and public filings with the trading market on which any of
the
Company’s capital stock is traded and the relevant regulatory authorities);
provided,
however,
that
any such information filed on the Securities and Exchange Commission’s XXXXX
database need not be separately furnished.
2. The
Company will use its commercially reasonable efforts to provide the Investor
with access to the books and records of the Company at all such reasonable
times
and as often as may be reasonably requested upon reasonable notice, provided
that any
visit by the Investor shall not unduly interrupt the daily operation of the
Company and shall not be more frequent than semi-annually if no event of default
has occurred and is continuing under the indenture for the Notes, provided
further
that
access to communications between the Company and its subsidiaries with its
attorneys need not be provided.
Information,
financial statements and other documents provided to the Investor or developed
pursuant to numbered paragraphs 1 and 2 above shall constitute “Confidential
Information”
for
the
purposes of this Agreement. The Investor agrees that it will keep confidential
and will not disclose, divulge, or use for any purpose any Confidential
Information obtained from the Company pursuant to the terms of this letter,
unless such Confidential Information (a) is known or becomes known to the public
in general (other than as a result of a breach of this Agreement by such
Investor), (b) is or has been independently developed or conceived by the
Investor without use of the Company’s Confidential Information, or (c) is or has
been made known or disclosed to the Investor by a third party without a breach
of any obligation of confidentiality such third party may have to the Company;
provided,
however,
that
the Investor may disclose Confidential Information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company; (ii) to any bona fide prospective purchaser of any securities from
the
Investor, if such prospective purchaser agrees to be bound by the provisions
of
this letter; and (iii) to any affiliate, partner, member, stockholder, or wholly
owned subsidiary of the Investor in the ordinary course of
business.
3. Subject
to the Company’s compliance with applicable laws and regulations, neither the
Company, nor any of its Subsidiaries, shall enter into any activities which
are
not in the ordinary course of business of such company, without the prior
written consent of the Investor. For the purposes of this paragraph, the term
“Ordinary
Course of Business”
means
the ordinary course of business presently engaged in by the Company and its
Subsidiaries as consistent with the past custom and practice of the Company
and
permitted under the all necessary licenses (including any arrangements with
respect to such licenses), consents, authorizations, approvals, orders,
certificates and permits duly obtained by company or its
subsidiaries.
4. The
rights described herein shall terminate and be of no further force or effect
at such time as the Investor (together with its affiliates) holds neither
(a) in aggregate 10% of the aggregate principal amount of Notes outstanding
nor
(b) at least 3 % of the Company’s issued and outstanding common stock on a fully
diluted basis.
The
confidentiality obligations referenced herein will survive any such
termination.
5. Any
dispute, controversy or claim arising out of or in connection with this
Agreement shall be settled through negotiation 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 at the Hong Kong International Arbitration Center (the
“HKIAC”)
under
the UNCITRAL Arbitration Rule. In the case of any conflict between the terms
of
this Agreement and the International Chamber of Commerce International
Arbitration Rules (“ICC
Rules”),
the
terms of this Agreement shall prevail. The arbitral tribunal shall consist
of
three arbitrators, with one appointed by the Executive, one appointed by the
Purchasers and a third neutral arbitrator to be appointed by the other two
party-appointed arbitrators, who shall not be a citizen of the PRC and who
shall
act as the chairman of the tribunal. The parties agree to the appointment of
arbitrators who are not on HKIAC’s Panel of Arbitrators. If either party fails
to appoint an arbitrator within the time specified in the ICC Rules or if the
two party-appointed arbitrators fail to jointly appoint the third neutral
arbitrator within the time specified in the ICC Rules, the Chairman of HKIAC
shall make such an appointment. The arbitration shall be conducted on a
confidential basis. All arbitration proceedings shall be held in English. 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.
2
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
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By:
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/s/
Xxxxx Xx
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Name:
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Title
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[SIGNATURE
PAGE TO CONDUCT OF BUSINESS AND INFORMATION RIGHTS AGREEMENT]
| ABAX LOTUS LTD. | |||
| By: |
/s/
Xxxx Xxxxx Xxxx
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| Name: | |||
| Title | |||
[SIGNATURE
PAGE TO CONDUCT OF BUSINESS AND
INFORMATION RIGHTS AGREEMENT]
INFORMATION RIGHTS AGREEMENT]
SCHEDULE
A
NAME
AND ADDRESS OF INVESTOR
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Abax
Lotus Ltd.
c/o
Abax Global Capital (Hong Kong) Limited
Suite
6708, 67/F Two International Finance Centre
0
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx SAR
Fax:
x000 0000 0000
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