EXECUTION COPY
Dated October 14 2004
UMW ACE (L) LTD.
WUXI LONGHUA PIPE CO., LTD.
KING PARTNER LIMITED
WUXI QUANHUA MATERIAL CO., LTD.
WUXI SEAMLESS OIL PIPE CO., LTD.
AND
XX. XXXX LONGHUA
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MASTER AGREEMENT
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relating to
WUXI SEAMLESS OIL PIPE CO., LTD.
LLINKS LAW OFFICE
OCTOBER 2004
CONTENTS
CLAUSE PAGE
1. INTERPRETATION.................................................................2
2. TRANSFER OF TARGETED EQUITY....................................................6
3. CONDITIONS PRECEDENT...........................................................7
4. UNDERTAKINGS...................................................................9
5. COMPLETION ...................................................................13
6. WARRANTIES ...................................................................18
7. ACCESS TO INFORMATION.........................................................19
8. CONFIDENTIALITY...............................................................19
9. ASSIGNMENT ...................................................................20
10. GOVERNING LAW AND SETTLEMENT OF DISPUTES......................................21
11. NOTICES ......................................................................21
12. COSTS ...................................................................23
13. ENTIRE AGREEMENT..............................................................23
14. SEVERABILITY..................................................................23
15. WAIVER ...................................................................24
16. LIABILITIES FOR BREACH........................................................24
17. LANGUAGE .....................................................................24
SCHEDULE 1 INFORMATION ON THE COMPANY.........................................27
SCHEDULE 2 TARGETED EQUITY/CONSIDERATION/BONUS................................28
SCHEDULE 3 WARRANTIES ........................................................29
SCHEDULE 4 PARTICULARS AND DIAGRAMS OF PROPERTIES (INCLUDING SIZE, TERM OF
LAND USE RIGHT, ETC.)..............................................39
SCHEDULE 5 PARTICULARS OF CERTAIN RECEIVABLES.................................40
SCHEDULE 6 AUDITED ACCOUNTS (ATTACHED)........................................41
SCHEDULE 7 PROJECTS ON THE NEW LAND...........................................42
SCHEDULE 8 LIST OF MAIN ASSETS................................................43
SCHEDULE 9 SUBSIDIARIES.......................................................44
SCHEDULE 10 INSURANCE LIABILITY INSURANCES AND PROPERTY INSURANCES.............45
SCHEDULE 11 MANAGEMENT ACCOUNTS................................................46
SCHEDULE 12 LICENSES...........................................................47
SCHEDULE 13 RECEIVABLES OUTSTANDING FOR MORE THAN 6 MONTHS....................48
SCHEDULE 14 RELATED PARTY CONTRACT.............................................49
THIS AGREEMENT is made on October 14, 2004 in Malaysia
BY AND AMONG:
(1) UMW ACE (L) LTD., a company incorporated and existing under the laws of
Malaysia, and its legal address at Xxxxxx Xxxxx, Xxxxx Xxxxxx, X.X. Xxx
00000, 00000 Xxxxxx X.X., Xxxxxxxx (the "TRANSFEREE");
(2) WUXI LONGHUA PIPE CO., LTD., a company incorporated and existing under the
laws of the PRC, and registered with the SAIC with its legal address at
Xx. 00, Xxxxxxxx Xxxx, Xxxx Xxx Xxxxxxxx, XXX("XXXXXXX");
(3) KING PARTNER LIMITED, a company with limited liability incorporated and
existing under the laws of British Virgin Islands, and its legal address
at BRITISH VIRGIN ISLANDS("KING PARTNER");
(4) WUXI QUANHUA MATERIAL CO., LTD., a company with limited liability
incorporated and existing under the laws of the PRC, and registered with
the SAIC with its legal address at Xx. 00, Xxxxxxxx Xxxx, Xxxx Xxx
Xxxxxxxx, XXX ("QUANHUA MATERIAL");
(5) XX. XXXX LONGHUA, a PRC citizen and nature person with controlling power
over Wuxi Seamless Oil Pipe Co., Ltd., whose ID Number is
000000000000000000 ("XX. XXXX"); and
(6) WUXI SEAMLESS OIL PIPE CO., LTD., a company with limited liability
incorporated and existing under the laws of the PRC, and registered with
SAIC with its legal address at Xx. 00 Xxxxxxxx Xxxx, Xxxx High and New
Technology Development District, Jiangsu Province, PRC ("THE COMPANY").
WHEREAS:
(A) The Company is a Sino-foreign equity joint venture which has a registered
capital of US$5,200,000, with Longhua holding 25%, King Partner holding
25% and Quanhua Material holding 1% of the registered capital.
(B) The business scope of the Company is production of oil pipes; sale of
products produced by the Company; processing trade with supplied and
imported materials as well as processing on commission.
(C) Xx. Xxxx has direct or indirect controlling power over the Company,
Longhua, King Partner, as well as Quanhua Material and is the legal
representative of the Company.
(D) The particulars of the Company are set out in Schedule 1.
(E) The Transferors wish to transfer and the Transferee wishes to purchase the
Targeted Equity (as defined below), subject to and in accordance with the
terms and conditions set out in this Agreement.
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(F) The Parties have agreed to make certain representations, warranties and
undertakings in accordance with the terms and conditions of this
Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement, in addition to terms defined above, the following terms
shall have the following meanings:
"AFFILIATE" means, in relation to any person, any other person,
corporation, partnership or other entity directly or indirectly
controlling or controlled by or under direct or indirect common control
with that person (the term "CONTROL" for the purpose of this definition
includes direct or indirect controlling through board representation, or
direct or indirect ownership of at least 30% of the voting rights of the
said entity) or relatives of a nature person. For the purpose of Clause
4.5, the Transferors and its shareholders, Xx. Xxxx Xx. Xxxx Quanhua
(Whose ID number is 000000000000000000) and Chi Cuixia are Affiliates to
one another;
"AMENDED BUSINESS LICENCE" means the amended business licence of the
Company to be issued by the SAIC following approval of the Joint Venture
Contract, the Articles and relevant documents regarding the Targeted
Equity transfer contemplated by this Agreement;
"APPROVAL AUTHORITY" means MOC, SAFE, SAIC and/or any other PRC
governmental departments which have the power to examine and approve the
Targeted Equity transfer contemplated by this Agreement;
"ARTICLES" means the amended articles of association of the Company to be
signed by Deqiang Chuangye, Wuxi Venture and the Transferee in accordance
with this Agreement;
"AUDITED ACCOUNTS" means the audited accounts and financial records of the
Company for the year of 2001, 2002 and 2003and (if any) the audited
accounts and financial records of the Company's Subsidiaries for the year
of 2001, 2002 and 2003 (as set out in Schedule 6 hereof);
"AUDITOR" means accounting firm of registered accountants designated by
the Transferee and appointed by the Company as its auditor from time to
time;
"BALANCE SHEET DATE" means the date of Management Account of the Company,
i.e., September 30, 2004;
"BANK GUARANTEE" means the on demand bank guarantee in form and substance
acceptable to the Transferee issued in favour of the Transferee by a bank
with international reputation and
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be recognized by the Transferee under which the Transferee shall be
entitled to draw certain amounts as per Clause 5.2;
"BONUS" means the amount payable by the Transferee to King Partner in
consideration of its contribution for the Targeted Equity transfer
contemplated by this Agreement, and its obligations and responsibilities
under this Agreement. Such Bonus amounts to total RMB 190,000,000, but is
subject to all conditions set forth under Clause 5.2.3.
"BUILDINGS" means the buildings and constructions owned by the Company on
the Site, the particulars and diagram of which are set out in Schedule 4
of this Agreement;
"BUSINESS DAY" means a day on which banks in Malaysia and Shanghai are
open for business (excluding Saturday, Sunday and public holidays);
"COMPLETION" means the completion of the sale and purchase of the Targeted
Equity (after the Approval Authority approves the Targeted Equity
transfer) and the hand-over by the Transferors to the Transferee of the
relevant documents in accordance with Clause 5, at the time and place
specified in Clause 5.1;
"COMPLETION DATE" means the date as determined in accordance with Clause
5.4.3;
"CONSIDERATION" means the amount of consideration payable by the
Transferee to the Transferors for the transfer of the Targeted Equity in
accordance with Clause 2.2. Such consideration amounts to RMB 90,000,000
and to be paid to the Transferors respectively according to Clause 5.2.1;
"DEQIANG CHUANGYE" means Wuxi Deqiang Chuangye Investment Co., Ltd., a
company with limited liability incorporated and existing under the laws of
PRC, and registered with the SAIC with its legal address at Room 909,
Xincheng Mansion, Xx. 0 Xxxxx Xxxxxxxxxx Xxxx, Xxxx Xxx Xxxxxxxx, XXX;
"ENCUMBRANCE" means any mortgage, pledge, lien, option, right of first
refusal (excluding the statutory pre-emptive right between the current
shareholders of the Company as of the date hereof with respect to the
Company's equity) or any other kind of security interest or claim on any
asset or against a proprietary right;
"GOVERNMENTAL APPROVALS" means all the approvals and permits issued by PRC
government including departments of local government with respect to Joint
Venture Contract, the Articles and relevant documents regarding the
Targeted Equity transfer according to laws;
"HUAYI SPECIAL STEEL" means Tangshan Huayi Special Steel Co., Ltd., a
company with limited liability incorporated and existing under the laws of
PRC, and registered with the SAIC with the legal address at West to
Yanzhuang, Qianying Town, Fengnan District, Tangshan City, PRC;
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"INFORMATION TECHNOLOGY" means all computer systems, communications
systems, software and hardware owned, used or licensed by or to the
Company;
"INTELLECTUAL PROPERTY" and "INTELLECTUAL PROPERTY RIGHTS" shall include
patents, patent applications, utility models, trade marks, service marks,
registered designs, unregistered design rights, copyrights, technical
drawings, business names, database rights, internet domain names, brand
names, computer software programmes and systems, know how, inventions,
confidential information and other industrial or commercial intellectual
property rights whether registered or capable of registration and all
applications for registration or protection of the foregoing;
"JOINT VENTURE CONTRACT" means the amended Joint Venture Contract to be
concluded by the Transferee, Deqiang Chuangye and Wuxi Venture in
accordance with this Agreement;
"LICENCES" means licences, consents, orders, confirmations, permissions,
certificates, approvals and authorities necessary or desirable for the
carrying on of the business and operation of the Company;
"LITIGATION" includes any claim, legal action, proceedings, suit,
litigation, prosecution, or arbitration (other than as plaintiff in the
collection of debts arising in the ordinary course of its business) in
which the Company is involved;
"MANAGEMENT ACCOUNTS" means the financial accounts and books of the
Company and the Subsidiaries for the financial period ending on Balance
Sheet Date as provided to the Transferee (as set out in Schedule 11
hereof);
"MOC" means the Ministry of Commerce of PRC or its designated local
authorities;
"NEW LAND" means the land for a size of about 330,000 square meters whose
certificate(s) of land use right was granted in the year of 2004;
"PAYMENT DATE" means each of the days on which the Transferee shall make
the payment of the Consideration and/or the Bonus to the Transferors in
accordance with Clause 5.1 and Clause 5.2;
"PARTIES" means the parties to this Agreement;
"PBOC" means the People's Bank of China, the central bank of PRC;
"PRC" for the purposes of this Agreement means the Mainland of the
People's Republic of China;
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"PROFIT GUARANTEE" means the guarantee made by the Transferors and Xx.
Xxxx to Transferee that the Company will deliver a profit after tax
(audited) according to Clause 5.2.2 hereof.
"PROPERTIES" means the Site and the Buildings, the particulars and the
drawing of which are set out in Schedule 4 hereto;
"RENMINBI" OR "RMB" means the lawful currency of the PRC;
"SAFE" means the State Administration of Foreign Exchange of PRC or its
designated local authorities;
"SAIC" means the State Administration for Industry and Commerce of PRC or
its designated local authorities;
"SHENLI CO." means Shenli Oil Field Altiplano Drill Pipe Co., Ltd., a
company with limited liability incorporated and existing under the laws of
PRC, and registered with the SAIC with the legal address at First Class
Industrial Park, Economic Development District of Dongying City, PRC;
"SITE" means the site that the Company uses or has the right to use in its
business operation, the particulars and diagram of which are set out in
Schedule 4 of this Agreement;
"SUBSIDIARY(IES)" means any entity in which the Company has equity
interests and shall include without limitation Shenli Co., Huayi Special
Steel,. Wuxi Seamless Special Pipe Manufacturing Co., Ltd. and WSP Canada
Ltd.
"SOCIAL SECURITY FUNDS" means pension funds, housing funds, unemployment
insurance, medical insurance, work injuries insurance, procreation
insurance and any other social security funds as provided by PRC
authorities from time to time to which an employer in PRC is obliged to
make contributions for its employees;
"TARGETED EQUITY" means a total of 51% interest in the registered capital
of the Company (currently held by the Transferors) to be purchased by the
Transferee pursuant to this Agreement;
"TAXATION" means any and all applicable tax or taxes and fees charged and
collected by government authorities concerned, and "TAX" should be
construed accordingly;
"TRANSFERORS" means LONGHUA, KING PARTNER AND QUANHUA MATERIAL.
"US DOLLARS" OR "US$" means the lawful currency of the United States of
America; and
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"WUXI VENTURE" means Wuxi High and New Technology Venture Investment Co.,
Ltd., a company with limited liability incorporated and existing under the
laws of the PRC, and registered with the SAIC with its legal address at
Xx. 00 Xxxxxxxxxx Xxxx, Xxxx Xxx Xxxxxxxx, XXX.
1.2 HEADINGS
The headings of Clauses are inserted for convenience only and shall not
affect the construction of this Agreement.
1.3 REFERENCES
Words in the singular may be interpreted as referring to the plural and
vice versa. Words denoting the masculine include a reference to the
feminine and vice versa.
1.4 SCHEDULES
The Schedules comprise all schedules set out in the Table of Content of
this Agreement and form an integral part of this Agreement.
2. TRANSFER OF TARGETED EQUITY
2.1 Subject to the terms of this Agreement, the Transferors (each as to the
percentage of the Targeted Equity specified against its name in Schedule
2) agree to transfer and the Transferee agrees to purchase the Targeted
Equity, free from all Encumbrances and together with all rights and
obligations now or hereafter attaching or accruing thereto.
2.2 The total Consideration payable for the Targeted Equity shall be RMB
90,000,000, which shall be divided among the Transferors as set out in
Schedule 2 and paid to the Transferors in RMB or US Dollars (as chosen by
the Transferee in line with requirement of laws and regulations) in
accordance with Clause 5.2. If the payment is made in US Dollars, such
payment shall be able to be converted into an equivalent amount of RMB as
per the exchange as provided in Clause 5.2.1.
2.3 Provided that the Completion has taken place, King Partner's obligation of
having the Bank Guarantee issued by a bank in favour of the Transferee and
the Transferee's obligation of paying the Bonus to King Partner, in
accordance with Clause 5.2.3, shall be performed respectively.
2.4 If any amount, no matter as the Consideration or the Bonus, is payable and
remains unpaid by any Party to the other Party or Parties in respect of
any claim against that Party for any breach of this Agreement (or any
agreement entered into pursuant to this Agreement) or pursuant to
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any indemnity hereunder, the amount maybe deducted by the other Party by
means of adjustment to the Consideration and/or the Bonus which shall be
paid or collected by the other Party hereunder.
2.5 For the purpose of filing with the Approval Authority and registration for
the Targeted Equity transfer under this Agreement, Transferors, Xx. Xxxx
and the Transferee, as the case may be, shall further execute, reach,
agree and enter into relevant agreements according to the principals and
terms hereof, which includes without limitation the following:
2.5.1 Equity Transfer Agreement between Longhua and Transferee for
25% equity transfer from Longhua ;
2.5.2 Equity Transfer Agreement between King Partner and Transferee
for 25% equity transfer from King Partner; and
2.5.3 Equity Transfer Agreement between Quanhua Material and
Transferee for 1% equity transfer from Quanhua Material.
Notwithstanding anything concluded in the above-mentioned agreement to the
contrary, the terms and conditions provided hereof shall prevail unless
the mandatory laws and regulations provide otherwise. The Transferors and
Xx. Xxxx will ensure that Deqiang Chuangye and Wuxi Venture will promptly
executed documents needed to complete the transaction contemplated by this
Agreement.
3. CONDITIONS PRECEDENT
3.1 Completion of the transactions contemplated under this Agreement shall be
conditional upon the fulfilment of the following conditions (hereinafter
referred to as "Conditions Precedent"):
3.1.1 conditions in respect of the actions to be taken by each
Party:
(a) all the necessary corporate actions have been taken by each
Party;
(b) all the necessary resolutions have been passed by the board of
the Company, and the copies of those documents have been
provided to each Party;
(i) to approve the transaction contemplated by this
Agreement, the Articles and the Joint Venture Contract;
and
(ii) to approve the transfer of Targeted Equity to the
Transferee according to this Agreement, the Articles and
the Joint Venture Contract.
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(c) the consent from Deqiang Chuangye and Wuxi Venture for the
transaction contemplated by this Agreement to be obtained by
Transferors and Xx. Xxxx;
(d) the execution of Joint Venture Contract, the Articles and
other relevant document necessary for the Targeted Equity
transfer hereof (including without limitation the agreements
under Clause 2.5) by the Transferors and the Transferee;
(e) all the warranties made by the Transferors, the Company and
Xx. Xxxx under Schedule 3 remain to be true, accurate,
complete and not misleading on the date of this Agreement and
remain to be true, accurate, complete and not misleading in
material aspects according to the facts and situations
existing by then on the Completion Date and each Payment Date;
(f) the Company has obtained all consents (as necessary) from its
then creditors for the contemplated transaction under this
Agreement to the extent such consents are required.; and
(g) Confidential Agreements and Non-compete Agreements which shall
in all contents and forms satisfactory to the Transferee have
been entered into by and between the Company and the senior
management (as determined by the Transferors) of the Company.
3.1.2 conditions in respect of actions to be taken by governments;
(a) all Governmental Approvals have been obtained and any such
approvals do not materially alter the key terms of this
Agreement, the Joint Venture Contract or the Articles, and do
not impose additional obligations on each Party (unless
otherwise agreed by each Party in writing or required by
mandatory regulation of PRC laws);
(b) the Amended Business Licence with substantially the same
content as that stated in the Joint Venture Contract has been
issued to the Company; and
(c) pursuant to the currently effective laws and regulations, all
the facilities and projects under construction and/or to be
constructed of the Company, according to the actual
construction progress, have passed all acceptance procedures
required by the relevant government authorities relating to
other aspects (including but not limited to the environment
protection, fire control, labor safety and sanitation) and the
Company has obtained all licenses necessary for such
construction other than those listed in Schedule 12.
3.2 The Transferee may at its discretion waive, conditionally or
unconditionally, all or part of the Conditions Precedent in Clause 3.1 by
notifying the Transferors and Xx. Xxxx in writing (excluding conditions
relating to the Transferee under Clause 3.1.1, which can only be jointly
waived by the Transferors and Xx. Xxxx).
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3.3 If any Party is in material breach of the warranties made by that Party
under this Agreement or any other obligation hereunder, the other Party
which enjoys the protection from such warranties so breached may forthwith
terminate this Agreement and the Joint Venture Contract by notifying the
remaining Parties in writing.
3.4 Government Approvals may be applied only when the Conditions Precedent
under Clause 3.1.1(a), (b), (c) and (d) are confirmed in writing by each
Party to have been satisfied or waived according to Clause 3.2. Under this
circumstance, the Conditions Precedent under Clause 3.1.1(a), (b), (c) and
(d) shall be deemed to be satisfied and no longer enforceable. .
3.5 Each Party shall use all commercially reasonable efforts to ensure the
satisfaction of the Conditions Precedent provided in Clause 3.1. However,
each Party hereby confirms, that the Conditions Precedent provided in
Clause 3.1 are only set as a goal for each Party and shall not give rise
to any liability or claims on the part of any Party.
Notwithstanding the preceding paragraph, any agreement concluded by
Parties with respect to the costs and expenses incurred for the
satisfaction of the Conditions Precedent or other matters shall not be
subject to the preceding paragraph.
4. UNDERTAKINGS
4.1 As of the date of this Agreement to the Completion Date and except as
agreed by each Party, each of the Company, the Transferors and Xx. Xxxx
jointly and severally undertake and shall ensure and procure that:
4.1.1 the Company shall take all reasonable steps to preserve and
protect its assets;
4.1.2 prompt disclosure is made to the Transferee of all relevant
information which comes to the notice of the Company or any
Transferor or Xx. Xxxx in relation to any fact or matter
(whether existing on or before the date of this Agreement or
arising afterwards) which will constitute a breach of any
warranty made by the Transferors, the Company and Xx. Xxxx
under Schedule 3 if the warranties were to be repeated at the
time of the Completion by reference to the facts and
circumstances then existing;
4.1.3 no dividend or other distribution shall be declared, paid or
made by the Company;
4.1.4 no equity shall be issued or agreed to be issued by the
Company;
4.1.5 no loan capital shall be issued or agreed to be issued by any
the Company, excluding the issuance of loan capital which is
necessary in the ordinary course of business;
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4.1.6 no action is taken by the Company which causes any major
impediment or undue delay to the consummation of the
transactions contemplated by this Agreement, the Articles or
the Joint Venture Contract and the Company and the Transferors
shall not take any action which causes a breach of the
warranties made by the Transferors under Schedule 3;
4.1.7 the Company shall not enter into any contract of a material
value or any contract or commitment of a long term nature or
make any material expenditure (excluding material expenditures
provided under any contract already entered into and disclosed
to the Transferee in writing at the execution date of this
Agreement) unless it has notified the Transferee in writing
the particulars of such contract, commitment or material
expenditure, and has obtained consent from the Transferee.
Provided that the Transferee objects to such agreement and
such agreement has been concluded eventually, the Transferee
shall at its discretion terminate this Agreement, should the
Company enter into such contract or commitment or make such
material expenditure (for the purpose of this Clause,
"material" means more than one year in term or exceeding RMB
1,000,000 in amount). For the purpose of this Clause, the
Transferee shall appoint a designated person as the contact
person for receiving such notices from the Company;
4.1.8 the Company shall not take any action that may result in any
material change in its nature or scope of the operations;
4.1.9 the Company shall not agree to any variation or termination of
any existing contract (except automatic expiration as per the
term of the contract) to which it is a party and which may
have an adverse material effect upon its normal operations;
4.1.10 the Company shall not (whether in the ordinary course of
business or otherwise) acquire or dispose of, or agree to
acquire or dispose of any capital asset;
4.1.11 the Company shall not enter into any agreement, contract,
arrangement or transaction other than in the ordinary course
of business; and
4.1.12 the Company shall not change or agree to change any
constitutional documents (e.g. Articles of Accusation),
business plan and development strategy of any of the
Subsidiaries. Huayi Special Steel's Articles of Association
have not been further changed since its acquisition by the
Company.
4.2 If the Company fails to collect all the receivables (including accounts
receivable, notes receivable and other receivables) set out in Schedule 5
before the end of the next calendar year, the Transferors and Xx. Xxxx
shall jointly and severally be liable to purchase the uncollected
receivables and compensate the Company by paying to the Company a sum in
cash equal to the full face value of such receivables within one month
after the end of the next calendar year. In that case, rights to such
receivables shall pass to the Transferors and Xx. Xxxx (as the case may
be) and the Company shall assist to fulfil the relevant procedures, if
any.
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4.3 If the Company fails to withdraw investment in Shenli Co. before June 30
of the next calendar year, the Transferors and Xx. Xxxx shall jointly and
severally be liable to compensate the Company by paying to the Company a
sum in cash equal to the book value of such investment before July 30 of
the next calendar year.
If the Company incurs any obligation or liabilities because it is the
shareholder of Shenli Co., the Transferors and Xx. Xxxx will jointly
liable to reimburse the Company for any damage and/or loss resulting from
such obligations and liabilities.
4.4 If the Company is liable or threatened to be responsible to any third
party due to any suretyship or other arrangement under which the Company
provides guarantee for third party which are provided before the
Completion Date, the Transferors and Xx. Xxxx shall compensate and hold
the Company harmless from such liability.
4.5 At and after the Completion and before the later date of (i) fifteen years
anniversary of the Completion Date and (ii) the date as of Xx. Xxxx and
his Affiliate are no longer shareholders of the Company, Xx. Xxxx shall
not, engage in and shall ensure all his Affiliate not to engage in the
operation of any kind of enterprise(s) except the Company, whose
business(es) is (are) competitive to the business of the Company as of the
projects on the New Land have been completed, or have any shareholding in
any kind of enterprise(s) except the Company, whose business(es) is (are)
competitive to the business of the Company as of the time the projects on
the New Land have been completed, or be employed by any kind of
enterprise(s), whose business(es) is (are) competitive to the business of
the Company as of the time the projects on the New Land has been
completed, or assist any kind of enterprise(s) except the Company, to
compete with the Company.
4.6 The Transferee, the Transferors and Xx. Xxxx undertakes that they will not
take any action that will cause any major impediment or undue delay to the
consummation of the transactions contemplated by this Agreement.
4.7 Xx. Xxxx, Deqiang Chuangye and King Partner hereby further undertake that
after the Completion, they shall use all commercially reasonable efforts
to ensure that Deqiang Chuangye will purchase from Wuxi Venture the 5%
equity of the Company in line with the applicable laws and regulations.
The Transferee hereby agrees to such equity transfer.
4.8 Xx. Xxxx, Deqiang Chuangye and King Partner hereby further undertake that
they will ensure that Wuxi Venture will not in any means oppose any
listing plan relevant to the Company and will fully cooperate on the
implementation of such plan.
4.9 For the avoidance of doubt, in the event any of the Transferors, the
Company or Xx. Xxxx fails to perform its obligations in Clause 4, the
Transferee shall be entitled to deduct the loss or
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damage suffered by the Transferee due to such failure from the
Consideration and/or Bonus to be released to the Transferors and Xx. Xxxx
under Clauses 5.2.1 and 5.2.2.
4.10 At and after the Completion and before the later date of (i) fifteen years
anniversary of the Completion Date and (ii) the date the Transferee is no
longer a shareholder of the Company, the Transferee shall not, within the
territory of PRC Main land, engage in and shall ensure its Affiliate not
to engage in the operation of any kind of enterprise(s) except the
Company, whose business(es) is (are) competitive to the business of the
Company as of the time the projects on the New Land have been completed.
For the avoidance of doubt, the Transferee's investment and participation
in any business before the Completion Date (Pre-existing Business) shall
not be deemed as violating the above provision. However, such exception
does not apply to the additional business scope such Pre-existing Business
enters into after the Completion Date.
4.11 All Parties agree that any contract to be entered into before and after
the Completion between the Company and any other Party hereof or its
Affiliate shall be concluded on an arm length basis.
4.12 Longhua, Xx. Xxxx and the Company shall within one month after the date
hereof enter into agreement in all contents and forms satisfactory to the
Transferee stating that titles of Casing Pipe Manufacturing Production
Line of Longhua shall be transferred to the Company and all the
consideration of such transfer shall be paid by Xx. Xxxx; before such
Casing Pipe Manufacturing Production Line has been transferred to the
Company, the Company is entitled to use such Casing Pipe Manufacturing
Production Line for free; and Longhua shall provide processing service on
an exclusive basis to the Company at a price reflecting the real property
rent, labour cost, cost of electricity and water and other reasonable and
actual costs.
4.13 If the Transferee and/or the Transferee's Affiliate(s) and/or the
Transferee's directors and agents suffer(s) any loss and/or damage due to
the violation of PRC law by this agreement on the transactions
contemplated hereby, the Transferors and Xx. Xxxx will jointly liable to
indemnify the Transferee and/or the Transferee's Affiliate(s) and/or the
Transferee's directors and agents for losses and/or damages (including
attorney fees and other legal expenses) and hold the Transferee and/or the
Transferee's Affiliate(s) and/or the Transferee's directors and agents
harmless.
4.14 The Transferee has not reviewed the investment agreements/documents
related to the projects on the New Land. If the Transferee finds out
before the Completion Date that such investment agreements/documents are
not satisfactory, it will have the right to revoke this Agreement. If such
investment agreements/documents cause losses, damages or material adverse
effect on the Company or on the projects on the New Land, the Transferors
and Xx. Xxxx will jointly compensate the Company.
12
5. COMPLETION
5.1 Completion shall take place at Wuxi or such other place as the Parties may
agree, and at the time and date specified in this Clause.
5.2 Payment
5.2.1 Within 10 Business Days after the Completion, the Transferee
shall make the payment of total RMB 90,000,000 or in the US
Dollars equivalent calculated at the middle price of exchange
rate between US Dollars and RMB promulgated by the PBOC on the
date hereof to the bank accounts designated by each Transferor
and Xx. Xxxx according to the Schedule 2. The Transferors, Xx.
Xxxx and the Transferee shall each bear their own respective
bank charges and costs incurred.
5.2.2 The Transferors together with Xx. Xxxx hereby irrevocably and
unconditionally provide Profit Guarantee in favour of the
Transferee that the Company will deliver a profit after tax
(audited) of no less than RMB 50,000,000 for the fiscal year
ending on December 31 of 0000, XXX 100,000,000 for the fiscal
year ending on December 31 of 2005 and RMB 150,000,000 for the
fiscal year ending on December 31 of 2006, among which the
Transferee shall enjoy 51% through its equity participation in
the Company. Provided that the profit after tax of the Company
for any year could not meet the above requirement under the
Profit Guarantee, the Transferors and Xx. Xxxx would be
jointly liable to compensate the Transferee immediately the
amount X calculated as in the following formula:
X = (Target Profit - Actual Profit Of the Relevant Year)x51%
In the above formula, "Target Profit" means RMB 50,000,000 for
the fiscal year ending on December 31 of 0000, XXX 100,000,000
for the fiscal year ending on December 31 of 2005 (provided
that any amount of after tax profit for the year of 2004
exceeding RMB 50,000,000 shall be deducted from such Target
Profit for year 2005) and RMB 150,000,000 for the fiscal year
ending on December 31 of 2006 (provided that any amount of
after tax profit for the year of 2004 and 2005 exceeding RMB
150,000,000 shall be deducted from such Target Profit for year
2006); Actual Profit of a year means profit after tax
(audited) as determined pursuant to this Agreement.
For the purpose of this Clause, the Auditor shall be appointed
within 5 days after December 31 of each year of 2004, 2005 and
2006. Such Auditor shall do the auditing of the Company for
the fiscal year of 2004, 2005 and 2006 to determine the profit
after tax of the Company.
5.2.3.1 Within 10 Business Days after the Completion, the Transferee
shall make the payment of the Bonus of RMB 37,000,000 in the
US Dollars equivalent calculated at the middle price of
exchange rate between US Dollars and RMB promulgated by the
PBOC on the
13
date hereof to King Partner. King Partner and the Transferee
shall each bear its own respective bank charges and costs
incurred.
5.2.3.2 The Transferee agrees that, if after the Completion Date, the
Company can show by clear evidence that it will deliver a
profit after tax (audited) of no less than RMB 50,000,000 for
the fiscal year ending on December 31 of 2004, the Transferee
shall make the payment of total RMB 25,000,000 in the US
Dollars equivalent calculated at the middle price of exchange
rate between US Dollars and RMB promulgated by the PBOC on the
date hereof to King Partner before the end of 2004.
Provided that the actual profit after tax of the Company for
the fiscal year of 2004 could not meet the above requirement
of RMB 50,000,000, the Transferors and Xx. Xxxx would be
jointly liable to compensate the Transferee immediately the
amount X calculated as following formula:
X = (RMB 50,000,000- Actual Profit After Tax Of the Fiscal
Year Of 2004)x51%
5.2.3.3 All Parties agree that the Transferee and King Partner shall
coordinate with the issuing bank to the effect that the Bonus
of amount of RMB 128,000,000 in the US Dollars equivalent
calculated at the middle price of exchange rate between US
Dollars and RMB promulgated by the PBOC on the date hereof
shall be payable to King Partner at the same time when King
Partner has the Bank Guarantee (as the surety of the Profit
Guarantee under Clause 5.2.2) issued to the following effect:
(i) The issuing bank shall irrevocably and unconditionally
guarantees to the Transferee the due and punctual
payment of the amount payable to the Transferee in
respect of the Profit Guarantee as and when the same
shall become due and payable and agrees that it will on
first written demand of the Transferee, pay immediately
to the Transferee for account of the Transferee,
provided that the maximum aggregate liability of the
issuing bank shall be the US Dollars equivalent amount
to RMB 153,000,000 calculated at the middle price of
exchange rate between US Dollars and RMB promulgated by
the PBOC on the date hereof.
(ii) All payments to be made by the issuing bank shall be
made in US Dollars equivalent amount payable under the
Profit Guarantee by the Transferors and Xx. Xxxx as per
the demand certificate provided by the Transferee and
calculated at the middle price of exchange rate between
US Dollars and RMB promulgated by the PBOC on the date
hereof.
5.2.4 The Transferee agrees that it will issue a certificate to the
issuing bank within 15 Business Days after the profit after
tax of the Company has been determined as pursuant to this
Agreement to release the amount Y calculated as the following
formula under the Bank Guarantee.
14
5.2.4.1 If the profit after tax for the fiscal year of 2004 exceeds
RMB 50,000,000, then
Y=(Actual Profit - RMB 50,000,000) x 51% (converted into US
Dollars calculated at the middle price of exchange rate
between US Dollars and RMB promulgated by the PBOC on the date
hereof)
5.2.4.2 If there is/are actual profit(s) in 2005 and/or 2006, then
Y=Actual Profit x 51% (converted into US Dollars calculated at
the middle price of exchange rate between US Dollars and RMB
promulgated by the PBOC on the date hereof)
5.2.4.3 In the above formula, Actual Profit means profit after tax
(audited) as determined pursuant to this Agreement.
5.2.5 The Transferee shall pay interest to the Transferor for any
late payment calculated at the daily interest rate based on
the annual interest rate for commercial loans stipulated by
the PBOC for the corresponding period if the Transferee does
not perform its payment obligation under Clause 5.2. However,
such late payment interest shall be in no case counted after
the termination of this Agreement.
5.2.6 Except with the Transferors' and Xx. Xxxx'x prior written
notification to the Transferee for the any change of the bank
accounts, the receiving bank accounts designated by the
Transferors and Xx. Xxxx for any payment under this Agreement
are as follows:
For Longhua:
-------------------------------
For King Partner:
-------------------------------
For Quanhua Material:
-------------------------------
For Xx. Xxxx:
-------------------------------
5.3 The payment of the Consideration made in accordance with Clause 5.4 shall
constitute a full discharge for the Transferee of its obligations under
Clauses 2.2 and 2.3. After the Completion has taken place, the Transferee
shall enjoy all right to management, dividends and other shareholder's
right in accordance with its equity ratio (51%) in the Company. The
Company has not declared any dividends and all profits for the full year
of 2004 which shall be enjoyed by the Transferee in proportion to its
equity percentage after the transaction.
15
5.4 At or before the Completion, the Transferors, the Company and Xx. Xxxx
shall:
5.4.1 Deliver or make available to the Transferee:
(i) written confirmation that none of the Company, any
Transferor and Xx. Xxxx is aware of any matter or thing
which constitutes a breach of any of the warranties and
undertakings made by the Company, the Transferors and
Xx. Xxxx under this Agreement ; and
(ii) originals of all the Governmental Approvals in relation
to the Joint Venture Contract, the Articles and relevant
documents regarding the Targeted Equity transfer
including but not limited to the certificate of approval
issued by MOC and the Amended Business Licence issued by
SAIC.
5.4.2 Notify the Transferee within 5 days upon it is known by them
that all the Conditions Precedent provided in Clause 3 (except
for conditions relating to the Transferee under Clause 3.1.1)
has been satisfied.
5.4.3 Jointly issue certificate in favour of the Transferee stating
that all the Conditions Precedent provided in Clause 3 (except
for conditions relating to the Transferee under Clause 3.1.1)
has been satisfied according to this Agreement (Unless the
Condition Precedent provided in Clause 3 are not fully
satisfied, the date the Transferee receives such notice shall
be the Completion Date. Otherwise, the Completion Date shall
be the date the Conditions Precedent are satisfied or
waived.).
5.5 Subject to Clause 5.7, if any Transferor, the Company and Xx. Xxxx fails
or is unable to satisfy the Conditions Precedent under Clause 3.1
(excluding any Conditions Precedent relating to the Transferee under
Clause 3.1.1) or to perform any obligation required to be performed by it
pursuant to Clause 5.4 within 3 months after the date of this Agreement or
before any other deadline that the Parties may otherwise agree, the
Parties shall negotiate in a friendly manner. If the consensus cannot be
reached within 15 days, the Transferee shall not be obliged to complete
the equity transfer and may, in its absolute discretion, and by written
notice to the Transferors, the Company and Xx. Xxxx:
5.5.1 elect to terminate this Agreement and the Joint Venture
Contract without liability; or
5.5.2 elect to complete this Agreement on that date, to the extent
that the Company's each of the Transferors and Xx. Xxxx is
able to do so (including to satisfy the Conditions Precedent),
or the Transferee may (i) specify a later date on which the
relevant Transferor shall be obliged to complete its
outstanding obligations; or (ii) exempt certain outstanding
obligations and specify a later date on which the other
outstanding obligations shall be completed; or (iii) exempt
all of the outstanding obligations; or
16
5.5.3 elect to defer the completion of this Agreement to such other
date as it may specify in such notice, in which event the
provisions of this Clause 5.5 shall apply, mutatis mutandis,
if the relevant Transferors, the Company or Xx. Xxxx fail and
are unable to perform any such obligations on such later date.
5.6 Subject to Clause 3.2 and Clause 5.7, if the Transferee fails or is unable
to satisfy the Conditions Precedent under Clauses 3.1 that is related to
the Transferee within 3 months after the date of this Agreement or before
any other deadline that the Parties may otherwise agree, the Parties shall
negotiate in a friendly manner. If the consensus cannot be reached within
15 days, the Transferors shall not be obliged to complete the equity
transfer and may, in its absolute discretion, and by written notice to the
Transferee:
5.6.1 whether or not the Governmental Approvals have been obtained,
elect to terminate this Agreement and the Joint Venture
Contract without liability; or
5.6.2 elect to complete this Agreement on that date, to the extent
that the Company and each of the Transferors is able to do so,
or the Transferee may (i) specify a later date on which the
Transferee shall be obliged to cause the Conditions Precedent
aforementioned to be satisfied; or (ii) waive certain
outstanding Condition Precedent aforementioned and specify a
later date on which the other outstanding Condition Precedent
shall be satisfied; or (iii) waive all of the outstanding
Conditions Precedent aforementioned; or
5.6.3 elect to defer the completion of this Agreement by to such
other date as it may specify in such notice, in which event
the provisions of this Clause 5.6 shall apply, mutatis
mutandis, if the Transferee fails and is unable to perform any
such obligations on such later date.
5.7 Nothing in Clauses 5.5 or 5.6 shall affect any rights according to this
Agreement or antecedent breaches of the obligations of any Party.
5.8 All Parties shall take actions to ensure and cause the Company to appoint
members of the Board and senior management of the Company in accordance
with the arrangement as follows,
(i) the Board of the Company shall consist of 9 directors, among
which, 5 directors shall be appointed by the Transferee and 4
directors shall be appointed by Deqian Chuangye under the
instruction of Xx. Xxxx;
(ii) the Chairman of the Board shall be Dato' Xx. Xxxxx Xxxxx Bin
Harun ( unless the Transferee appoints other person) and the
Vice Chairman of the Board shall be Xx. Xxxx;
(iii) the Company shall appoint Xx. Xxxx as and Xx. Xxxx shall
accept the appointment to take the position of General Manager
of the Company and four Vice General Managers shall be
appointed by the Board to assist Xx. Xxxx'x work;
17
(iv) among those four Vice General Managers, two Vice General
Managers responsible for Finance, Purchasing and Human
Resource shall be nominated by the Transferee and the other
two Vice General Managers shall be nominated by Xx. Xxxx; and
(v) all senior management of the Company (that is, General Manager
and Vice General Managers) shall seek the Board's approval
after the nomination by its respective nominating party.
All the Parties agree, despite that Wuxi Venture is also a shareholder of
the Company, the above arrangement shall be applicable and Xx. Xxxx shall
procure and ensure such arrangement to be agreed by Wuxi Venture.
6. WARRANTIES
Unless agreed otherwise by Parties (if any. However, any matter that comes to
the knowledge of the Transferors and Xx. Xxxx before the date of this Agreement
must be disclosed on or before the date of this Agreement):
6.1 The Transferors, Xx. Xxxx and the Company each represents and warrants to
the Transferee in the terms set out in this Agreement (including Schedule
3). The Transferee represents and warrants to the Transferors in
accordance with the applicable terms and conditions under this Agreement
(including Schedule 3).
6.2 Each Party acknowledge that the other Parties have entered into this
Agreement in reliance on the warranties and undertakings made by the
relevant Parties under this Agreement. Each of the warranties shall be
construed as a separate warranty and (save as expressly provided to the
contrary) shall not be limited. or restricted by reference to or inference
from the terms of any other warranty or any other term of this Agreement.
6.3 The warranties made by each Party under Schedule 3 shall be deemed to be
given at the date of this Agreement and remain effective on the Completion
Date and each Payment Date with reference to the facts and circumstances
then existing.
6.4 Each Party undertakes to notify the other Party in writing promptly if it
becomes aware of any fact or matter (whether existing on or before the
date of this Agreement or arising after the date of this Agreement) which
would subject any warranty made by such Party under this Agreement (if the
warranties were repeated with reference to the facts and circumstances
then existing) to any material adverse effect arising in any respect.
6.5 Each Party agrees that in the event that any of the warranties made by
such Party under this Agreement proves to be misleading or untrue then it
shall indemnify and keep indemnified the other Party against any losses,
damages, costs, expenses, liabilities or claims (including those incurred
in defending or settling any claim alleging such liability) that the
Transferee may suffer as a result thereof, and including (without
limitation) any losses relating to its equity interest in the Company, so
as to avoid damages on the part of the other Party.
18
7. ACCESS TO INFORMATION
7.1 As from the date of this Agreement and prior to the Completion, the
Transferor and Xx. Xxxx shall cause the Company to and the Company shall
give the Transferee and any persons authorized by it such access to the
premises and all books, title deeds, records, accounts and other
documentation of the Company, as well as the Subsidiaries of the Company
as the Transferee may reasonably request, the Transferee shall be
permitted to take copies of any such books, deeds, records, accounts and
other documentation and shall cause the directors and employees of the
Company to be instructed to give promptly all such information and
explanations to any such persons as aforesaid as may be requested by it or
them.
7.2 The materials obtained or known by each Party and any persons authorized
by it pursuant to the above clause shall only be used for the purposes of
transfer of the Targeted Equity and shall not be disclosed to any
non-related third person without the prior written consent of the
disclosing Party.
8. CONFIDENTIALITY
8.1 None of the Parties shall make any public announcement concerning this
Agreement, any other or subsequent documents executed by the Parties in
relation to the transfer of the Targeted Equity as set out in this
Agreement without the prior written approval of the Parties
8.2 Subject to Clause 8.3, each of the Parties shall treat as confidential and
not disclose or use any information received or obtained as a result of
entering into this Agreement (or any agreement entered into pursuant to
this Agreement) which relates to:
8.2.1 the provisions of this Agreement and any agreement entered
into pursuant to this Agreement;
8.2.2 the negotiations relating to this Agreement (and such other
agreements); or
8.2.3 the business, financial or other affairs of any other Party
(including future plans and targets).
8.3 Clause 8.1 and Clause 8.2 shall not prohibit disclosure or use of any
information if and to the extent:
19
8.3.1 the disclosure or use is required by law, any regulatory body
or the rules and regulations of any recognised stock exchange;
8.3.2 the disclosure or use is required to vest the full benefit of
this Agreement in each Party;
8.3.3 the disclosure or use is required for the purpose of any
judicial proceedings arising out of this Agreement or any
other agreement entered into under or pursuant to this
Agreement or the disclosure is reasonably required to be made
to a Taxation authority in connection with the Taxation
affairs of the disclosing party;
8.3.4 the disclosure is made to professional advisers of the Parties
provided that such professional advisers comply with the
provisions of Clause 8.2 in respect of such information as if
they were a party to this Agreement;
8.3.5 the information becomes publicly available (other than by
breach of this Agreement);
8.3.6 the other Party has given prior written approval to the
disclosure or use; or
8.3.7 the information is independently developed.
9. ASSIGNMENT
None of the Parties shall be entitled to assign the rights and obligations of
any provision of this Agreement without the prior written approval of the other
Parties. The Transferors and Xx. Xxxx shall not, and shall ensure that the
Company shall not negotiate or enter into any binding document with any third
party in connection with equity investment in Company or similar equity
cooperation after signing this Agreement and before the Completion.
10. GOVERNING LAW AND SETTLEMENT OF DISPUTES
10.1 Governing Law
This Agreement shall be governed and interpreted by PRC law.
10.2 Choice of Arbitration
10.2.1 The Parties shall strive to settle any dispute arising from or
in connection with this Agreement through friendly
consultations. In case no settlement can be reached through
consultations within 60 days of the date of notification by
one Party to the other Parties, then such dispute, including a
dispute as to the validity or existence of this Agreement,
20
shall be resolved by arbitration at China International
Economic and Trade Arbitration Commission ("CIETAC") in
Shanghai pursuant to the CIETAC Arbitration Rules.
10.2.2 The arbitral award shall be final and binding upon the Parties
and shall be enforceable in accordance with its terms.
10.2.3 Any arbitration expense shall be paid by the losing Party or
as stated in the arbitral award of the arbitral tribunal. If
it becomes necessary for a Party to enforce an arbitral award
by legal action of any kind, the defaulting Party shall pay
all reasonable costs and expenses and reasonable attorney's
fees, including, but not limited to, any cost of additional
litigation or enforcement that shall be incurred by the Party
seeking to enforce the award.
10.2.4 During the period when a dispute is being resolved, the
Parties shall in all respects other than the issue(s) in
dispute continue their performance of this Agreement.
11. NOTICES
11.1 All notices shall be written in English and may be delivered either by
hand, registered airmail or fax to the following addresses or fax numbers
(as the case may be):
UMW ACE (L) LTD.
Address: 3rd Floor, The Corporate, Xx 00, Xxxxx Xxxx (00/0), Xxxx Xxxx
Xxxxxxxxxx Xxxxxx, 00000 Xxxx Xxxx, Xxxxxxxx Xxxxx Xxxxx,
Xxxxxxxx.
Telephone: 00603-5519 1911
Facsimile: 00603-5519 3890
LONGHUA
Address: Xx. 00 Xxxxxxxx Xxxx, Xxxx Xxx Xxxxxxxx, XXX
Telephone: 0000-0000000
Facsimile: 0510-5221271
KING PARTNER
Address: BRITISH VIRGIN ISLANDS
Telephone: 0000-0000000
Facsimile: 0510-5057618
QUANHUA MATERIAL
Address: Xx. 00 Xxxxxxxx Xxxx, Xxxx Xxx Xxxxxxxx, XXX
00
Telephone: 0000-0000000
Facsimile: 0510-5214259
XX. XXXX
Address: No.38 Zhujiang Road, Wuxi High and New Technology Development
District, PRC, Jiangsu Province, PRC
Telephone: 00000000000
Facsimile: 0510-5226351
WUXI SEAMLESS OIL PIPE CO., LTD.
Address: Xx. 00 Xxxxxxxx Xxxx, Xxxx High and New Technology Development
District, Jiangsu Province, PRC
Telephone: 0000-0000000
Facsimile: 0510-5218960
11.2 Any notice, correspondence or document to be served or given under Clause
11 may be:
11.2.1 personally delivered against written receipt, in which case it
shall be deemed to have been delivered at the relevant address
with proof of a written receipt if it is delivered no later
than 17:00 hours at the place of delivery on a Business Day;
or if it is delivered later than 17:00 hours at the place of
delivery on a Business Day or at any time at the place of
delivery on a non-Business Day, at 09:00 hours at the place of
delivery on the next Business Day; or
11.2.2 sent by pre-paid courier services, in which case it shall be
deemed to have been delivered five Business Days after the
date of posting; or
11.2.3 sent by pre-paid priority airmail from or to any place outside
the PRC, in which case it shall be deemed to have been
delivered ten Business Days after the date of posting; or
11.2.4 sent by facsimile, in which case it shall be deemed to have
been delivered after transmission subject to confirmation of
uninterrupted transmission by a transmission report and oral
confirmation of receipt (which shall be noted and initialled
by the sender in writing), but if any notice by facsimile is
sent after 17:00 hours at the place of receipt on any Business
Day or at any time on a non-Business Day at the place of
receipt, such notice shall be deemed to have been delivered at
09:00 hours at the place of receipt on the next Business Day.
11.3 During the term of this Agreement, any Party shall have the right to
change its address or fax number for receiving notices at any time, upon
notice in writing to each of the other Parties.
22
12. COSTS
Each Party shall bear its own costs incurred in connection with the negotiation,
preparation and enforcement of this Agreement, unless otherwise agreed by each
Party.
13. ENTIRE AGREEMENT
This Agreement and all the agreements and/or documents referred to herein or
incorporated by express reference, constitute the entire agreement between the
Parties with respect to the subject matter of this Agreement, and supersede all
previous oral and written agreements, contracts, understandings and
communications of the Parties in respect of the subject matter of this Agreement
(other than the Joint Venture Contract and the Articles) including, without
limitation, the Minutes of the Meeting conducted on August 25, 2004.
14. SEVERABILITY
If any provision of this Agreement is held to be invalid or unenforceable, then
such invalid part shall be given no effect and shall be deemed not to be
included in this Agreement but without invalidating any of the remaining
provisions of this Agreement (unless provided for by mandatory laws and
regulations). The Parties shall then use all reasonable endeavours to replace
the invalid provisions by a valid substitute provision the effect of which is as
close as possible to the intended effect of the invalid provision.
15. WAIVER
15.1 No failure or delay by any Party in exercising any right or remedy
provided by law under or pursuant to this Agreement shall impair such
right or remedy or operate or be construed as a waiver or variation of it
or preclude its exercise at any subsequent time and no single or partial
exercise of any such right or remedy shall preclude any other or further
exercise of it or the exercise of any other right or remedy. Knowledge of
a Party of any failure of other Parties does not result in a waiver.
15.2 The rights and remedies of the Parties under or pursuant to this Agreement
may be exercised in any circumstances.
15.3 Any waiver can only be made in writing and be expressly stated as to the
events, matters and provisions relevant to the waiver.
23
16. LIABILITIES FOR BREACH
The Parties shall strictly abide by this Agreement. In the event of a breach of
this Agreement, the breaching Party shall be liable to the performing Parties
for damages incurred as a result of such breaching Party's breach of contract.
17. LANGUAGE
This Agreement shall be written in both English and Chinese. Both the Chinese
and English shall be given equal weight in the interpretation of this Agreement.
This Agreement is executed in Malaysia by the duly authorised representatives of
the Parties in eight original copies in both English and Chinese version.
24
UMW ACE (L) LTD.
/s/ Dato'Xx. Xxxxx Xxxxx Bin Harun
----------------------------------
Authorised Representative: WITNESSED BY
Name: Dato'Xx. Xxxxx Xxxxx Bin Harun /s/ Zulkifly Xx Xxxxxxx /s/ Xxx Koe Xxxxx
----------------------- -----------------
Title: ______________ Zulkifly Xx Xxxxxxx Xxx Koe Xxxxx
/s/ Zhang Jun
----------------------------------
Authorised Representative: WITNESSED BY
Name: Zhang Jun /s/ Zulkifly Xx Xxxxxxx /s/ Xxx Koe Xxxxx
Title: ---------------------- -----------------
Zulkifly Xx Xxxxxxx Xxx Koe Xxxxx
WUXI LONGHUA PIPE CO., LTD.
/s/
----------------------------------
Authorised Representative: WITNESSED BY
Name: /s/
Title: ----------------------
Name:
KING PARTNER LIMITED
/s/
----------------------------------
Authorised Representative: WITNESSED BY
Name:
Title: /s/
----------------------
Name:
WUXI QUANHUA MATERIAL CO., LTD.
/s/
----------------------------------
Authorised Representative: WITNESSED BY
Name:
Title: /s/
----------------------
Name:
WUXI SEAMLESS OIL PIPE CO., LTD.
/s/
----------------------------------
Authorised Representative: WITNESSED BY
Name:
Title: /s/
----------------------
Name:
25
XX. XXXX LONGHUA
/s/
----------------------
Signature WITNESSED BY
/s/
--------------
Name:
26
SCHEDULE 1
INFORMATION ON THE COMPANY
1. Date of Establishment: September 17, 1999
2. Place of Establishment: Wuxi
3. No. of Business License: Qi Xxx Xx Xx Xx Zong Zi No. 004300
4. Legal Address: Xx. 00 Xxxxxxxx Xxxx, Xxxx High and
New Technology Development District,
Jiangsu Province, PRC
5. Legal Representative: Xx. Xxxx Longhua
6. Directors: Piao Longhua, Piao
Shenhua, Xxxx Xxxxxx, Xxxx Xxxxxxx,
Li Changhe, Xxxx Xxxxxxx, Xxxx
Xxxxxxx
7. Registered Capital: US$ 5,200,000,
fully injected into the Company
8. Shareholders: Deqiang Chuangye (44%)
Longhua (25%)
Wuxi Venture (5%)
King Partner (25%)
Quanhua Material (1%)
27
SCHEDULE 2
TARGETED EQUITY/CONSIDERATION
(1) TRANSFERORS (2) PERCENTAGE OF THE (3) CORRESPONDING (4) CONSIDERATION
EQUITY IN THE REGISTERED CAPITAL TO
COMPANY TO BE BE SOLD
SOLD
Longhua 25% US$ 1,300,000 RMB 44,117,647
King Partner 25% US$ 1,300,000 RMB 44,117,647(paid in US$)
Quanhua Material 1% US$ 52,000 RMB 1,764,706
28
SCHEDULE 3
WARRANTIES
A. WARRANTIES OF THE TRANSFERORS, THE COMPANY AND XX. XXXX
For the purpose of this Agreement, the Transferors, the Company and Xx. Xxxx
(collectively in this Schedule 3 referred to as "WSP Related Parties") represent
and warrant to the Transferee as follows and shall be jointly and severally
responsible for such warranties made by itself, as well as the other party.
1. AUTHORITY AND CAPACITY OF THE TRANSFERORS
1.1 Incorporation and Authority to enter into this Agreement
The Transferors and the Company are companies duly
incorporated and registered and validly existing under the
laws of PRC. Each of the WSP Related Parties has the legal
power and authority to enter into and perform this Agreement
and any other documents (the "Relevant Documents") to be
executed by the WSP Related Parties pursuant to or in
connection with this Agreement which when executed will
constitute valid and binding obligations on such WSP Related
Parties, in accordance with their respective terms.
1.2 Each of the WSP Related Parties has taken all necessary
corporate actions, including without limitation all relevant
shareholders' resolutions and/or board resolutions, to
authorise each of the WSP Related Parties respectively
entering into and performance of this Agreement and any other
documents pursuant to or in connection with this Agreement.
Such actions remain in full force and effect.
1.3 The signatory whose name appears under the name of each of the
WSP Related Parties on the execution page of this Agreement is
respectively a duly authorised signatory of such Party.
2 NO BREACH
The execution of, and the performance by the WSP Related Parties of their
obligations under, this Agreement and any Relevant Documents will not:
2.1 result in a breach of any provision of the articles of
association or other constitutional documents of any WSP
Related Party; or
2.2 result in a breach of or give any third party a right to
terminate or modify, any agreement, licence or other
instrument or result in a breach of any order, judgment or
decree of any court or governmental agency (except for the
loan referred to under Clause 3.1.3 and other matters agreed
by the Transferee).
29
2.3 The Transferors are entitled to sell and transfer to the
Transferee the full ownership of the percentage of the
Targeted Equity set opposite their names in Schedule 2 on the
terms of this Agreement without the consent of any third party
(except for Government Approvals and consents already
obtained).
3. ACCURACY AND ADEQUACY OF INFORMATION DISCLOSED TO THE TRANSFEREE
All information contained in this Agreement and all other information
which has been given or made available by the WSP Related Parties or any
of their agents, employees or professional advisers in the course of the
negotiations leading to this Agreement or in the course of any due
diligence or other investigation carried out by or on behalf of the
Transferee prior to entering into this Agreement is complete and accurate
in all respects and not misleading.
4. ACCOUNTS AND RECORDS
4.1 The Company have prepared the Audited Accounts as set out in
Schedule 6 and the Management Accounts in accordance with PRC
laws and in accordance with accounting principles, standards
and practices generally accepted at the date of this Agreement
in the PRC so as to give a true and fair view of the assets,
liabilities and state of affairs of the Company (including the
depreciation of the fixed assets).
4.2 Other than those listed in Schedule 13, none of the credits
and/or receivables which occurs before the Balance Sheet Date
(i.e., September 30,2004) owned by the Company has been
outstanding for more than six months from its due date for
payment. All such credits and/or receivables (including those
listed in Schedule 13) have not been released and will be
realised in the normal course of collection their full value
(unless otherwise agreed by the Transferee).
4.3 Borrowings
4.3.1 The amounts borrowed by the Company do not exceed any
limitation on its borrowings contained in its articles
of association or in any document binding upon it.
4.3.2 The Company has not had any outstanding loan capital,
or has engaged in any financing of a type which would
not be required to be shown or reflected in the
Audited Accounts or Management Accounts or borrowed
any money which it has not repaid.
4.4 Changes Since Balance Sheet Date (except as agreed by the
Transferee in writing)
Since the Balance Sheet Date as regards the Company:
30
4.4.1 no material adverse change have occurred as to its
supply and customer relations, its financial, trading
position or turnover;
4.4.2 its business has been carried on in the ordinary
course, without any interruption or alteration in its
business scope or manner, and thus remains as a going
concern;
4.4.3 its business has not been materially and adversely
affected by the loss of any important customer or
supplier. For these purposes, an important customer or
supplier in respect of the Company means one that in
either of the two years immediately preceding the
Balance Sheet Date whose transaction volumes with the
Company accounted for 5% or more of the turnover of
the Company;
4.4.4 no dividend or other distribution has been declared,
made or paid to its equity holders except as disclosed
in the Audited Accounts;
4.4.5 it has not increased or reduced or agreed to increase
or reduce any of its registered capital or create or
agreed to create any Encumbrance thereupon;
4.4.6 the Company has continued to pay its creditors in the
ordinary course of business;
4.4.7 except in the ordinary course of business, no contract
has been entered into and no obligation or liability
has been assumed by the Company other than this
Agreement and the transactions contemplated hereby;
4.4.8 the Company is not liable or is not required to repay
prematurely any loan capital or borrowed moneys;
4.4.9 the Company has not purchased, sold, transferred or
otherwise disposed of any fixed assets or any other
asset with value exceeding RMB 1,000,000 in a single
transaction, or withdraw, waive or released any debts
or claims, except in the ordinary course of business;
4.4.10 the Company has not waived or released any rights of a
materials or substantial value howsoever arising;
4.4.11 any capital expenditure incurred by the Company has
been set out in the Audited Accounts prepared
according to PRC's applicable accounting principles or
has been included in the unaudited accounts; and
4.4.12 no resolutions have been passed by the Company and
nothing has been done which would be likely to
materially reduce the net asset value of the Company.
31
0425099/AF/LC/ILWY/D8
4.5 Bank Accounts
The Company has provided to the Transferee full and accurate
details of each bank, or other financial institution at which
the Company has an account or safety deposit box (if any) and
the names of all persons authorised to draw thereon or have
access thereto.
5. LEGAL MATTERS
5.1 Compliance with Laws
The business and operation carried out by the Company now and
before has not violated PRC laws and regulations (including
without limitation Tax laws) and its internal constitutional
documents. The Company has not involved with any pending
decree, award, decision or judgment, or received any
notification from any court, tribunal, or governmental
authority of charges for its illegal activities brought by
others. To the knowledge of the Company, no formal
investigation has been carried out by any court, arbitrator or
government authority with respect to the Company (except for
routine inspection).
5.2 Licences and Consents
All the Licences, other than those listed in Schedule 12, have
been obtained in full force and effect, which have been and
are being complied with. None of the Licences has been
suspended, cancelled, modified or revoked (except for ordinary
expiration, in which case, if required under PRC laws and
regulations, a renewal of the Licenses has been secured).
5.3 Litigation
5.3.1 The Company has not received any formal written claim
for damages.
5.3.2 The Company is not involved in or to be involved as
plaintiff in any suit and litigation.
5.4 Inducements
To the knowledge of the WSP Related Parties, no director,
agent or employee of the Company has used any of the assets of
the Company unlawfully to obtain an advantage for any person.
32
5.5 Insolvency
No resolution, petition, awards, decree or other action has
been made with respect to the dissolution, bankruptcy,
winding-up, liquidation or other similar circumstance for the
Company concerned. The Company is solvent and able to pay its
debts as they fall due.
6. TRADING AND CONTRACTUAL ARRANGEMENTS (EXCLUDING CONTRACTS COMPLETED OR
TERMINATED)
6.1 Investment Commitments
Other than those listed in Schedule 7 and Schedule 9, no
investment commitment has been entered into or proposed by the
Company (except for this Agreement and relevant transaction).
6.2 Arrangements with Connected Persons
6.2.1 Save for the indemnity given to the former employees
of the Company and the relevant persons pursuant to
PRC statutory requirements and the agreement among the
Parties, there is no indebtedness nor any indemnity,
guarantee or security arrangement between the Company
and any current or former employee, current or former
director or any current or former consultant of the
Company or any person connected with any of such
persons (together "Connected Persons").
6.2.2 Unless otherwise listed in Schedule 14, the Company
has not before the date hereof entered into any
currently effective contract with any Connected
Person, nor entered into any currently effective
contract in which any Connected Person shall have an
interest (except for ordinary employment contract and
the contemplated transaction hereof). The related
party contracts listed in Schedule 14 have been
entered into on an arm length basis.
6.3 Effect of the Transfer of Targeted Equity
Neither the WSP Related Parties has the knowledge of the
following situations:
(i) To enter into, comply with, or complete this Agreement
will, or is likely to, cause the Company to lose any
right or privilege it presently enjoys (including tax
reduction or exemption); or
(ii) To enter into, comply with or complete this Agreement
will, or may cause any person who normally does
business with the Company not to continue to do so on
the same basis.
33
6.4 Contracts
6.4.1 The Company is not, or has never been, a party to any
contract, commitment or arrangement which:
(i) is outside the ordinary course of business;
(ii) is not wholly on an arm's length basis;
(iii) is not compliance with any applicable law and
regulation.
6.4.2 The Company is not or has never been a party to any
agreement that restrict its freedom to carry on its
business in any part of the PRC.
6.4.3 All the long term contracts (refer to the contract
with a term more than one year) entered into by the
Company at the date of this Agreement have been
delivered to the Transferee.
6.5 Compliance with Contracts
Each contract to which the Company is a party is valid, and to
the knowledge of the Company, all the other parties have been
complying with the terms of the contract and there is not any
reason to discharge or terminate the contract.
7. TAXATION
The Company has within the time limits prescribed by the relevant
legislation duly paid all Tax and governmental fees, and all the filed
information was and remains complete and accurate in all material respects
and all the returns and notices were and remain complete and accurate.
8. ASSETS
8.1 Title to Assets
All assets of the Company, including all assets listed in
Schedule 8 (List of Main Assets), all credits due to the
Company which are included in the Audited Accounts and the
assets at the Balance Sheet Date used or held by the Company
for the purposes of its business, were at the Balance Sheet
Date the absolute property of the Company.
8.2 Insurance
8.2.1 All the assets of the Company are covered by the
insurance as specified under Schedule10.
8.2.2 In respect of all such insurances, all premiums and
any related insurance premium taxes have been duly
paid to date and all the policies are in full force
and effect and no circumstance has occurred which
makes any of these policies void,
34
8.3 Absence of Undisclosed Liabilities
The Company has no liabilities other than (i) liabilities
expressly disclosed or provided for in the Audited Accounts;
(ii) liabilities incurred in the ordinary course of business
since the Balance Sheet Date; or (iii) liabilities disclosed
elsewhere in this Agreement.
9. INTELLECTUAL PROPERTY AND INFORMATION TECHNOLOGY
9.1 Ownership
All Intellectual Property and Information Technology that are
utilized or required in the business of the Company and all
registration applications related thereto (if any):
9.1.1 are all legally owned by the Company or lawfully used
with the consent of the owner under a licence; and
9.1.2 are valid, and to the knowledge of the Company, are
not under any infringement.
10. PROPERTY
10.1 The particulars of the Properties shown in Schedule 4 are true
and correct and shall include all Properties owned by the
Company.
10.2 The Company possesses good title to the Properties free and
clear of all claims or Encumbrances save as disclosed in
Schedule 4.
10.3 The structure and quality of the Properties are in full
conformity with the national standards, and all the Buildings
thereof are in good and substantial repair and condition.
10.4 None of the Properties is in violation of any law, ordinance,
regulation or directive of Wuxi, Jiangsu Province or the PRC
relating to industrial hygiene or the environmental conditions
on, under or about the Properties including, but not limited
to, soil and ground water conditions.
10.5 Neither the Company nor any third party has used, generated,
manufactured, stored or disposed of on, under or about the
Real Properties or transported to or from the Real Properties
any Hazardous Materials, and that no improvements on the
Properties, (including but not limited to the buildings and
facilities), or any materials used to construct any such
improvements, contain Hazardous Materials, except for those
necessary in the ordinary production and those used in
construction but which have been cleaned out of the said
areas.. The Hazardous Materials referred to in this Clause
shall mean any flammable explosives, radioactive materials,
hazardous wastes or substances, toxic wastes
35
or substances and other related materials and any substances
defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials" or
"toxic substances" under any applicable PRC, Jiangsu Province
or Wuxi laws or regulations.
11. ENVIRONMENTAL MATTERS
11.1 The Company has obtained all requisite Environmental Licenses
(all of which are valid and subsisting) and has kept complying
with all currently effective environmental law and the terms
and conditions stated on the Environmental Licenses. All the
operations or processes undertaken by the Company are in
conformity with the provisions of current effective
environmental laws. In this Agreement, "ENVIRONMENTAL LICENSE"
means any permit, license, authorization, consent or other
approval required under or in relation to any environmental
law necessary for the operation of business of the Company.
11.2 To the knowledge of the Company, no Environmental License may
be revoked, modified or suspended as a result of the Targeted
Equity Participation, unless as agreed by each Parties.
12. LAND GRANTING PROCESS AND PROJECT ON NEW LAND
12.1 Land granting process of the land use right on all Properties
(including C07-10, 13 and C01-03) purported to be owned by the
Company shall in any respect be in compliance with all
applicable laws and regulations and the Company shall not be
subject to any further payment obligation for any land
granting fee or other fees and costs other than the amount of
RMB 8,320,000. If additional fees, costs and charges need to
be paid by the Company to obtain the land use right, the
Transferors and Xx. Xxxx shall compensate the Company and hold
the Company harmless form any obligation and penalty due to
the land granting process.
12.2 The proposed project for pipe manufacturing (not exceeding
(phi)273mm) on the land of C07-10, 13 and C01-03 shall be
carried out in accordance with the Schedule 7 and the costs
and expenses for such projects (including the costs to acquire
the land use right) shall not exceed the amount of RMB
520,000,000 with detailed budget in the Schedule 7. Provided
that the actual costs and expenses of such projects exceed the
amount of RMB 520,000,000, the Transferors and Xx. Xxxx shall
be liable to compensate the Company for amount so exceeding.
36
13. SUBSIDIARY
13.1 The Subsidiaries listed in the Schedule 9 of the Company shall
be duly incorporated and validly existing. The equity
ownership by the Company of the Subsidiaries shall be legal
and free of any Encumbrance. The Company has no further
obligation to input additional capital into the Subsidiaries.
13.2 The Subsidiaries shall have full and legal rights to operate
and own the assets and properties of their business which
shall be free of any Encumbrance.
14. SOCIAL SECURITY FUNDS
14.1 The Company has fully paid all Social Security Funds for its
employee according to applicable laws and regulations and is
in compliance with any labour related laws and regulations.
The Transferors and Xx. Xxxx shall be liable to compensate and
hold the Company harmless from any labour and Social Security
Funds related liability.
37
B. WARRANTIES OF THE TRANSFEREE
1.1 Establishment and Authority and Capacity of the Transferee to Enter Into a
Contract
The Transferee is a company duly incorporated and registered and validly
existing under the laws of Malaysia. The Transferee has the legal power
and authority to enter into and perform this Agreement and any other
documents (the "Relating Documents") to be executed by the Transferee
pursuant to or in connection with this Agreement which when executed will
constitute valid and binding obligations on the Transferee, in accordance
with their respective terms.
1.2 No Breach
The execution and the performance by the Transferee of its obligations
under this Agreement and any Relating Documents will not:
(i) result in a breach of any provision of the articles of
association or other constitutional documents of the
Transferee; and
(ii) result in a breach of or give any third party a right to
terminate or modify, any agreement, licence or other
instrument or result in a breach of any order, judgment or
decree of any court or governmental agency.
38
SCHEDULE 4
PARTICULARS AND DIAGRAMS OF PROPERTIES
(INCLUDING SIZE, TERM OF LAND USE RIGHT, ETC.)
Please see attached documents
39
SCHEDULE 5
PARTICULARS OF CERTAIN RECEIVABLES
Please see attached documents
40
SCHEDULE 6
AUDITED ACCOUNTS
(ATTACHED)
Please see attached documents
41
SCHEDULE 7
PROJECTS ON THE NEW LAND
Please see attached documents
42
SCHEDULE 8
LIST OF MAIN ASSETS
Please see attached documents
43
SCHEDULE 9
SUBSIDIARIES
Please see attached documents
44
SCHEDULE 10
INSURANCE
LIABILITY INSURANCES AND PROPERTY INSURANCES
Please see attached documents
45
SCHEDULE 11
MANAGEMENT ACCOUNTS
(ATTACHED)
Please see attached documents
46
SCHEDULE 12
LICENSES NOT OBTAINED YET
Please see attached documents
47
SCHEDULE 13
RECEVIABLES OUTSTANDING FOR MORE THAN 6 MONTHS
Please see attached documents
48
SCHEDULE 14
RELATED PARTY CONTRACT
Please see attached documents
49
SUPPLEMENTARY AGREEMENT TO MASTER AGREEMENT
This supplementary agreement was entered into as of February 16, 2005 by and
among the following parties:
(1) UMW ACE (L) LTD., a limited liability company duly organized and existing
under the laws of Malaysia with the legal address of Xxxxxx Xxxxx, Xxxxx
Xxxxxx, X.X. Xxx 00000, 00000 Xxxxxx X.X., Xxxxxxxx (the "TRANSFEREE");
(2) WUXI LONGHUA STEEL PIPE CO., LTD., a limited liability company duly
organized and existing under the laws of China with the legal address
registered with INDUSTRIAL AND COMMERCIAL ADMINISTRATION BUREAU of Xx. 00
Xxxxxxxx Xxxx, Xxx Xxxxxxxx, Xxxx, X.X.X. ("LONGHUA");
(3) KING PARTNER LIMITED, a limited liability company duly organized and
existing under the laws of the British Virgin Islands with the legal
address of British Virgin Islands ("KING PARTNER");
(4) WUXI QUANHUA MATERIAL CO., LTD, a limited liability company duly organized
and existing under the laws of China with the legal address registered with
INDUSTRIAL AND COMMERCIAL ADMINISTRATION BUREAU of Xx. 00, Xxxxxxxx Xxxx,
Xxx Xxxxxxxx, Xxxx, X.X.X. ("QUANHUA MATERIAL");
(5) PIAO LONGHUA, a Chinese citizen of age who holds control rights over Wuxi
Seamless Oil Pipe Co., Ltd, with ID No.: 230602196206250415 ("XX. XXXX");
and
(6) WUXI SEAMLESS OIL PIPES COMPANY LIMITED, a limited liability company duly
organized and existing under the laws of CHINA with the legal address
registered with INDUSTRIAL AND COMMERCIAL ADMINISTRATION BUREAU of Xx. 00
Xxxxxxxx Xxxx, Xxxxx, Xxxx, X.X.X. (the "COMPANY").
Whereas:
(A) The above parties made a master agreement with regard to the COMPANY on
October 14, 2004 (the "MASTER AGREEMENT");
(B) At the request of the relevant party and as a full payment of the total
price for transfer of the TARGET EQUITY under the MASTER AGREEMENT, on
Dec. 29, 2004 the TRANSFEREE respectively paid an amount equal to USD
5,330,471.46 to KING PARTNER, an amount equal to USD 5,330,471.46 to
LONGHUA, and an amount equal to USD 213,218.87 to QUANHUA MATERIAL (for the
purpose of this SUPPLEMENTARY AGREEMENT, such payments are referred to as
"PAYMENT IN PART"), as the preconditions related to the COMPANY, the
TRANSFEROR and XX. XXXX under Clause 3.1 of the MASTER AGREEMENT (the
"PRECONDITIONS") were not fully satisfied prior to the date of PAYMENT IN
PART;
(C) LONGHUA, XX. XXXX and the COMPANY agreed on Jan. 21, 2005, that LONGHUA
shall transfer all the manufacturing machine equipments under its control
to the COMPANY upon the date that XX. XXXX and LONGHUA reach a mutual
agreement on
the transfer. XX. XXXX shall pay the consideration for such transfer, and
LONGHUA shall lease part of its workshop and space to the COMPANY at RMB
50,000 per month as the charge for usage; and
(D) After the MASTER AGREEMENT was signed, HUAYI SPECIAL STEEL, one of the
COMPANY's subsidiaries, has changed the relevant business plan (for purpose
of this SUPPLEMENTARY AGREEMENT, such changes refer to the following: HUAYI
SPECIAL STEEL shall rent instead of purchasing the asset that it planned to
purchase and the asset which Xxxxx Xxxxxx originally planned to invest into
the COMPANY as the registered capital contribution with a lease term of 5
years. After expiration of the 5-year term HUAYI SPECIAL STEEL shall
transfer the residual fixed assets to Xxxxx Xxxxxx for free); HUAYI SPECIAL
STEEL is undergoing restructuring (for purpose of this SUPPLEMENTARY
AGREEMENT, such restructuring refers the following: HUAYI SPECIAL STEEL
shall carry out capital reduction and transfer part of equity; after such
capital reduction and transfer of partial equity, Xxxxx Xxxxxx shall not be
shareholder of the COMPANY. The registered capital of the COMPANY shall
decrease to RMB 25,500,000, of which the COMPANY shall hold 80% of the
equity and XX. XXXX, on behalf of the COMPANY, shall hold the remaining 20%
of the equity).
EACH PARTY agrees as follows:
1. EACH PARTY agrees that PAYMENT IN PART:
(1) Shall be deemed as the TRANSFEREE has fully performed its obligation
under Clause 2.2 of the MASTER AGREEMENT and the TRANSFEREE has paid
in full the total price for the transfer; and
(2) Shall not be in any way understood or interpreted as any form of
waiver of the Preconditions or waiver of rights under the MASTER
AGREEMENT.
2. EACH PARTY agrees that all the following Preconditions have been satisfied
prior to the date of signing this SUPPLEMENTARY AGREEMENT:
(1) The COMPANY has approved, by resolution of the board of directors, the
MASTER AGREEMENT and transfer of the TARGET EQUITY in accordance with
the MASTER AGREEMENT;
(2) The COMPANY and the senior managing staff have signed confidentiality
agreements and non-competition agreements satisfactory in form and
substance to the TRANSFEREE; and
(3) The amended GOVERNMENT APPROVAL (namely the third draft) has been
filed and registered with the INDUSTRIAL AND COMMERCIAL ADMINISTRATION
BUREAU.
3. Each Party agrees that due to changes of HUAYI SPECIAL STEEL and its
restructuring, the Preconditions under the MASTER AGREEMENT (including
Clause 3.1.1(e) thereunder, Clause 13 in Appendix 3, and Appendix 9) with
regard to the COMPANY, the TRANSFEROR and XX. XXXX have not been satisfied
and the promises
made by the COMPANY, the TRANSFEROR and XX. XXXX under Clause 4.1.12 of the
Master Agreement have been broken (for purpose of this SUPPLEMENTARY
AGREEMENT, such unsatisfied Preconditions and breaches are collectively
referred to "NONCONFORMITY" ). For interests of the Parties,
(1) The TRANSFEREE hereby waives the right to request that the COMPANY,
the TRANSFEROR and XX. XXXX continue to satisfy the aforesaid
PRECONDITIONS and promises; and
(2) The COMPANY, the TRANSFEROR and XX. XXXX hereby commit to assume joint
and several liability for any loss, damage and compensation, expenses,
fees, debts or claims (including such loss, damages and compensations,
expenses, fees, debts or claims as occur during defense of or
settlement of claims for such liabilities) which the TRANSFEREE
directly or indirectly suffered for the NONCONFORMITY with regard to
HUAYI SPECIAL STEEL.
4. After signing the SUPPLEMENTARY AGREEMENT, the COMPANY, the TRANSFEROR and
XX. XXXX together shall issue a certificate to the TRANSFEREE, which
specifies that all Preconditions (except that under Clause 3.1.1 of the
MASTER AGREEMENT related to the TRANSFEREE) have been satisfied in
accordance with the MASTER AGREEMENT and this SUPPLEMENTARY AGREEMENT.
5. EACH PARTY agrees that the agreement signed by and between LONGHUA, XX.
XXXX and the COMPANY on January 21, 2005 has violated their obligations
under Clause 4.12 of the MASTER AGREEMENT (the "VIOLATIONS"). For interests
of each party,
(1) The TRANSFEREE hereby waives the rights under the MASTER AGREEMENT for
such VIOLATIONS and the corresponding remedies; and
(2) The COMPANY, the TRANSFEROR and XX. XXXX hereby commit to acquire
ownership rights of all the manufacturing equipment of LONGHUA by the
end of 2005.
6. EACH PARTY agrees that KING PARTNER, as the recipient to the BONUS under
the MASTER AGREEMENT, may instruct the TRANSFEREE to directly pay each
BONUS to Regalia Investments Holdings Ltd. ("Regalia"), as the
representative of KING PARTNER, a limited liability company organized and
existing under the laws of Malaysia, provided that King Partner issues an
authorization letter authorizing the TRANSFEREE to make payment to Regalia,
and a compensation commitment letter satisfactory to the TRANSFEREE. Under
such circumstances, each payment to Regalia made by the TRANSFEREE in
accordance with KING PARTNER's instructions shall be deemed as the
TRANSFEREE's full performance of its obligation to pay the corresponding
BONUS to KING PARTNER under the MASTER AGREEMENT.
7. Unless otherwise clearly stipulated under this SUPPLEMENTARY AGREEMENT, the
TRANSFEREE hereby retains all rights and remedies it may claim under the
MASTER AGREEMENT.
This SUPPLEMENTARY AGREEMENT shall form an integral part of the MASTER AGREEMENT
and all terms in bold and italic used in this SUPPLEMENTARY AGREEMENT without
definition shall have the same meaning as those defined in the MASTER AGREEMENT.
In case of nonconformity or discrepancy between this SUPPLEMENTARY AGREEMENT and
the MASTER AGREEMENT, this SUPPLEMENTARY AGREEMENT shall prevail.
This SUPPLEMENTARY AGREEMENT is signed by duly authorized representatives of
each Party with eight original copies both in English and in Chinese.
Signature Page
UMW ACE (L) LTD.
Witnessed by:
/s/ Dato' Xx Xxxxx Xxxxx bin Harun /s/ Meor Xxxxx Xxxxx bin Abd Ghani
------------------------------------ ----------------------------------
Authorized representative: Meor Xxxxx Xxxxx bin Abd Ghani
Name: Dato' Xx Xxxxx Xxxxx bin Harun
Title: Chairman
/s/ Xxxxx Xxx Beng Hoe
----------------------------------
Xxxxx Xxx Beng Hoe
/s/ Zulkifly bin Zakaria
------------------------------------
Authorized representative:
Name: Zulkifly bin Zakaria
Title: Director
WUXI LONGHUA STEEL PIPE CO., LTD.
/s/ (seal) Witnessed by: /s/
------------------------------------ ---------------------------------
Authorized representative:
Name:
Title:
KING PARTNER LIMITED
/s/ Witnessed by: /s/
------------------------------------ ---------------------------------
Authorized representative:
Name:
Title:
WUXI QUANHUA MATERIAL CO., LTD
/s/ (seal) Witnessed by: /s/
------------------------------------ --------------------------
Authorized representative:
Name:
Title:
WUXI SEAMLESS OIL PIPES COMPANY LIMITED
/s/ Witnessed by: /s/
------------------------------------ --------------------------
Authorized representative:
Name:
Title:
MR. LONGHUA PIAO
/s/ Witnessed by: /s/
------------------------------------ --------------------------
