Exhibit 10.3

 

 

 

 

 

JOINT VENTURE CONTRACT

 

 

 

among

 

 

 

SUZHOU THVOW TECHNOLOGY CO., LTD.

 

 

 

and

 

 

 

SES ASIA TECHNOLOGIES LIMITED

 

 

 

and

 

 

 

INNOVATIVE COAL CHEMICAL DESIGN INSTITUTE (SHANGHAI) CO., LTD.

 

 

 

 

 

for the RESTRUCTURING of

 

 

 

 

 

Jiangsu tianwo-ses Clean Energy tECHNOLOGIES CO., lTD.

 

 

 

 

 

 

 

Amended on August 18, 2017

 

 

 

ZHANGJIAGANG, PEOPLE’S Republic of China

 

 

 

 

TSEC JV Contract amended in August 18, 2017

 

 
 

 

TABLE OF CONTENTS

 

 

1. DEFINITIONS 2 2. PARTIES TO THE CONTRACT 6 3. ESTABLISHMENT OF THE COMPANY 7
4. PURPOSE AND SCOPE OF BUSINESS 7 5. TOTAL AMOUNT OF INVESTMENT AND REGISTERED
CAPITAL 8 6. TRANSFER OF EQUITY INTERESTS 10 7. REPRESENTATIONS AND WARRANTIES
OF THE PARTIES 11 8. RESPONSIBILITIES OF THE PARTIES 15 9. Environmental
PROTECTION 20 10. PURCHASE OF MATERIALS 20 11. Business Development and
Operation 20 12. BOARD OF DIRECTORS AND SUPERVISORS 21 13. MANAGEMENT
ORGANIZATION 26 14. LABOUR MANAGEMENT 29 15. ANNUAL OPERATING PLANS AND BUDGETS
30 16. TAXATION, THREE FUNDS AND PROFIT DISTRIBUTION 30 17. FINANCIAL AFFAIRS
AND ACCOUNTING 32 18. BANK ACCOUNTS AND FOREIGN EXCHANGE 34 19. CONFIDENTIALITY
34 20. DURATION OF THE COMPANY 35 21. EARLY TERMINATION 35 22. LIQUIDATION AND
DISSOLUTION 36 23. LIABILITY FOR BREACH OF CONTRACT 37 24. INSURANCE 38 25.
FORCE MAJEURE 39 26. APPLICABLE LAW 39 27. DISPUTE RESOLUTION 39 28.
MISCELLANEOUS 41

 

 
 

 

JOINT VENTURE CONTRACT

 

 

 

THIS JOINT VENTURE CONTRACT is entered into in accordance with the Law of the
People's Republic of China on Chinese-Foreign Equity Joint Ventures and the
Regulations for the Implementation of the Law of the People's Republic of China
on Chinese-Foreign Equity Joint Ventures (the “Joint Venture Law”) and other
relevant and currently effective Chinese laws and regulations, and is amended on
August 18, 2017 and entered into by the following three parties:

 

Suzhou Thvow Technology Co., Ltd., a company limited by shares established and
existing under the laws of the PRC whose registered address is No. 1 Linjiang
Road, , Jingang Town, Zhangjiagang City, Jiangsu Province, 215631, PRC
(“THVOW”);

 

AND

 

SES Asia Technologies Limited, a limited company established and existing under
the laws of Hong Kong Special Administrative Region of the PRC whose registered
address is 7/F, Bonham Centre, 79-85 Bonham Strand, Sheung Wan, Hong Kong
(“SESHK”);

 

AND

 

Innovative Coal Chemical Design Institute (Shanghai) Co., Ltd., a company
limited by shares established and existing under the laws of the PRC whose
registered address is 8/F, No. 717 Yishan Road, Shanghai, PRC (“ICCDI”).

 

THVOW, SESHK and ICCDI may hereinafter be referred to individually as a “Party”
or collectively as the “Parties”.

 

 

WHEREAS, the Parties intend to restructure Jiangsu Tianwo-SES Clean Energy
Technologies Co., Ltd. (the “Company”) with the primary objectives of:

 

lThree Parties’ cooperation in low quality coal, long flame coal pressured
gasification technology so as to set up the company;

 

lEstablishing the leading gasification technology in China;

 

lGenerating significant income and profit for the Parties;

 

lEventually listing the Company on the public markets (e.g. Chinese security
market, or Hong Kong security market or other security markets).

 

Considering the above factors and confirming that the Parties are completely
informed, in conformity with the principles of equality and mutual benefit, the
Parties hereby agree as follows:

 

TSEC JV Contract amended in August 18, 2017 1

 

 

1.DEFINITIONS

 

The following terms shall have the meanings set forth below:

 

“Affiliate”, with respect to a Party, shall mean any entity directly or
indirectly controlling, controlled by or under common control with such Party;
an entity shall be deemed to “control” another entity if the former possesses,
directly or indirectly, no less than 50% voting shares or registered capital, or
the power to appoint or elect the majority of directors or the actual control
rights of the latter.

 

“Articles of Association” shall mean the Articles of Association of the Company
dated as of the date of execution hereof between the Parties, and as may be
amended or restated from time to time by the Board appointed by the Parties.

 

“Basic Engineering Design Package” or “BEDP” shall mean a package of technical
document deliverables prepared, after delivery of the PDP, for the next step
engineering design, which shall comply with the China’s latest industrial
standards.

 

“Board” or “Board of Directors” shall mean the Board of Directors of the
Company.

 

“Business License” shall mean the business license to be issued to the Company
by the competent PRC State Administration for Industry and Commerce, including
the business license issued by the authorities, which may be amended from time
to time.

 

“Chairman” shall mean the chairman of the Board of Directors of the Company.

 

“China” or the “PRC”, for the purpose of this Contract, shall mean the People's
Republic of China.

 

“Company” or the “Joint Venture” shall mean Jiangsu Tianwo-SES Clean Energy
Technologies Co., Ltd. or any other name approved by the competent authority,
the equity joint venture company restructured by the Parties pursuant to the
Joint Venture Law, other relevant and officially promulgated laws and
regulations of the PRC, and this Contract.

 

“Confidential Information” shall mean technology and Know-How as well as trade
secrets, strategic business or marketing information, business projections,
secret processes and etc., including but not limited to processes, data,
formulae, material balance, control logic, programs, manuals, designs, sketches,
photographs, plans, drawings, specifications, reports, studies, findings,
non-patented inventions and ideas, any data relating to a patent that is not
disclosed in a granted patent, and other information relating to the production,
packaging, use, pricing, or sales and distribution, whether of a technical,
engineering, operational, business or economic nature, whenever provided by
SESHK (or its Affiliates), or by THVOW (or its Affiliates), or by ICCDI (or its
Affiliates) in connection with the establishment of the Company and any matters
related thereto, the implementation of and/or the conduct of the business
contemplated by this Contract and the other contracts contemplated herein.
Confidential Information, however, shall not include information which is now or
hereafter becomes part of the public domain through authorized publication, or
information which the receiving Party can demonstrate was in its possession,
prior to the effectiveness of the Contract, and which was legally obtained and
is not in violation of any agreement.

 

TSEC JV Contract amended in August 18, 2017 2

 

 

“Contract” shall mean this Joint Venture Contract and the Annexes attached
hereto.

 

“Critical Design Parameters” or “CDP” shall mean key SGT and SGT Proprietary
Equipment design parameters for a project on a case-by-case basis, which are
based on a specific basis for design for a project and are fundamental
technology parameters required to initiate the PDP.

 

“Detailed Engineering Design Package” or “DEDP” shall mean the detailed
engineering design package, which is prepared as a follow up to the BEDP.

 

“Director” shall mean a member of the Board of Directors.

 

“Effective Date” shall mean the day on which this Contract becomes effective and
approved by the competent examination and approval authority and the Parties.

 

“Establishment Date” shall mean the date on which the Business License of the
Company is issued.

 

“Examination and Approval Authority” shall mean the competent authority as is
duly authorized by law to approve this Contract.

 

“Restructuring Date” shall mean the date on which the Share Transfer Agreement
has become effective.

 

“Force Majeure” shall mean any (a) acts of God; (b) flood, fire, earthquake or
explosion; (c) war, invasion, hostilities (whether war is declared or not),
terrorist threats or acts, riot or other civil unrest; (d) government order or
law; (e) actions, embargoes or blockades in effect on or after the date of this
Contract; (f) action by any governmental authority; (g) national or regional
emergency; (h) strikes, labour stoppages or slowdowns or other industrial
disturbances; and (i) shortage of adequate power or transportation facilities.

 

“Foreign Exchange” shall mean any foreign currency which can be freely
exchanged, converted, or traded in the open international currency market.

 

“General Manager” shall mean the general manager of the Company.

 

“GTI” shall mean the Gas Technology Institute of the United States.

 

“Improvements” shall mean any improvements within the SGT (including new
inventions and designs) created, invented, developed or discovered by a Party or
the Company after the Establishment Date with respect to the SGT process and SGT
Proprietary Equipment.

 

“Joint Venture Term” shall mean the duration of the Company as provided for in
Article 20 hereof.

 

TSEC JV Contract amended in August 18, 2017 3

 

 

“Labour Contract” shall mean the individual labour contract to be entered into
between the Company and any of its employees, excluding Seconded Personnel.

 

“Management By-laws” shall mean the Company’s By-laws that are approved at the
first Board of Directors Meeting.

 

“Management Personnel” shall mean the General Manager, Vice General Manager,
Chief Financial Officer, Marketing Director, Chief Accountant, Chief Technology
Officer, Chief Mechanical Engineer and such other senior personnel positions
that are designated as Management Personnel positions by the Board from time to
time.

 

“Pressurized Fluidized Bed”shall mean the gasification reactor or system, at any
pressure above atmospheric pressure, that converts SGT Feed stock into syngas by
reaction of SGT Feedstock with air, enriched air, or oxygen (with or without the
addition of steam, carbon dioxide or other diluents gases) in a fluidized bed
(including bubbling bed and fast fluidized bed) wherein SGT Feedstock is fed and
syngas is produced.

 

“Process Design Package” or “PDP” shall mean a process design package prepared,
on the basis of the existing PDP provided by SESHK and its Affiliates, for a
specific customer project for which a PSA has been executed, and which shall
comply with China’s latest industrial standard.

 

“Project Sublicense Agreement” or “PSA” shall mean the agreement to be entered
into by the Company as licensor, from which a technology license must be
obtained from the Company for the normal operation of a Project in the
Territory. The form of the PSA as set out in Annex3 shall be a reference and
subject to any necessary changes as requested by the customer, as long as the
technology will be protected during the implementation of such Project.

 

“Renminbi” or “RMB” shall mean the lawful currency of the PRC.

 

“Restructuring Agreement” shall mean the agreement entered into by and between
the Parties in August 18, 2017 for the restructuring of the Company.

 

“Seconded Personnel” shall mean the employees of each Party or of any of its
Affiliates, who will be seconded for providing full time services to the
Company. The costs of such Seconded Personnel shall be borne by the Company.

 

“Services” shall mean any engineering or design services related to the SGT,
modularization services, procurement services, construction management services,
plant commissioning and start-up services, plant operations and maintenance
services and any other services beyond this scope that are authorized by a
unanimous vote of the Board.

 

“SES Gasification Technology” or “SGT” shall include the collection of SES
Intellectual Property, Know-How, trade secrets and methods developed by SESHK
and its Affiliates for its advanced fluidized bed gasification technology. The
SGT has been extensively developed since 2004 and was initially based upon the
U-Gas® technology licensed by SEST and its Affiliates from GTI, and which has
been further developed through additional improvements, Know-How and patents
developed by SESHK’s Affiliates through industry experience of SESHK’s
Affiliates from developing, designing and operating projects in China and from
designs by or for SESHK and its Affiliates in their development of projects
globally. The SGT is one of the most advanced gasification technologies, which
has been commercialized through the construction and operation of industrial
projects to be reliable, environmentally-friendly, economically feasible,
sustainable and in conformity with China’s energy independence policy and energy
strategies. SGT is a part of the equity contribution of SESHK as described in
the TUCA. Prior to the Establishment Date, SESHK has full rights and
authorization of the SGT to be contributed to the Company. And any Improvement
developed by the Company after the Company is established belong to the Company,
subject to the terms of the TUCA.

 

TSEC JV Contract amended in August 18, 2017 4

 

 

“SES Shanghai” shall mean SES New Energy Technologies (Shanghai) Co., Ltd.
(埃新斯新能源技术（上海）有限公司).

 

“SEST” shall mean Synthesis Energy Systems Technologies, LLC, a wholly owned
subsidiary of Synthesis Energy Systems, Inc. and the licensor of the SGT license
right to SESHK, which authorizes SESHK as the licensor in the TUCA.

 

“SGT Feedstock” shall have the meaning as defined in the Technology Usage and
Contribution Agreement as set forth in Annex 4.

 

“SGT Know-How/Know-How” shall mean all commercial and technical information,
including trade secrets, pertaining to the SGT, and/or THVOW’s manufacturing of
the SGT proprietary equipment, including, but not limited to, theses, designs,
drawings, blueprints, specifications, test data, charts, fabrication techniques,
materials of construction, and formulations, graphs, operating and test
procedures, shop practices and instruction manuals.

 

“SGT Proprietary Equipment” shall mean the Gasifier Reactor, Gasifier Heat
Recovery Steam Generator, Cyclones, Filtration, Bottom Char Cooling and Removal
System, Gasifier Coal Feeding System; Metering/Measuring System; Gasifier
Control and Safety System logic etc., subject to adjustment per the requirements
of customer.

 

“Share Transfer Agreement” shall mean the agreement entered into by and between
the Parties in August 18, 2017 for the transfer of certain equity ownership in
the Company from SESHK to ICCDI.

 

TSEC JV Contract amended in August 18, 2017 5

 

 

“Sub-license Royalty To GTI” shall mean ***% of the license fee to be paid to
GTI, pursuant to the legally effective agreement between SEST and GTI, from the
license fee received under any sub-license Project by the Company.

 

“Technology Usage and Contribution Agreement” or “TUCA” shall mean the
authorization agreement for the use of technologies related to SGT, and
agreement related to SGT and performance guarantee as described in TUCA which
shall be contributed to the Company as SESHK’s capital contribution, and which
shall be in accordance with Annex 4.

 

“Territory” shall mean China, Indonesia, the Philippines, Vietnam, Mongolia and
Malaysia as set forth in the TUCA.

 

“United States Dollars” or “US$” shall mean the lawful currency of the United
States of America.

 

“Working Personnel” shall mean all employees of the Company other than
Management Personnel and members of the Board.

 

“Yima Plant” shall mean the project/plant operated and managed under the joint
venture of YMCIG-SES New Energy Company Ltd..

 

“ZZ Plant” shall mean project/plant operated and managed under the joint venture
of Synthesis Energy Systems (Zaozhuang) New Gas Company Ltd.

 

2.PARTIES TO THE CONTRACT

 

The Parties to this Contract are as follows:

 

(a)THVOW, a duly incorporated company with its registered office address at No.
1 Linjiang Road, Jingang Town, Zhangjiagang City, Jiangsu Province, 215631, PRC

 

The legal representative of THVOW is:

 

Name: CHEN, Yuzhong

 

Position: Chairman

 

Nationality: Chinese

 

(b)SESHK, a duly incorporated company under the laws of Hong Kong Special
Administrative Region with its registered office address at 7/F, Bonham Centre
79-85 Bonham Strand, Sheung Wan, Hong Kong.

 

The duly authorized representative of SESHK is:

 

Name: Robert Wayne RIGDON

 

 

*** This information has been omitted in reliance upon Rule 24b-2 under the
Securities Exchange Act of 1934, as amended and has been filed separately with
the Securities and Exchange Commission.

TSEC JV Contract amended in August 18, 2017 6

 

 

Position: Director

 

Nationality: USA

 

(c)ICCDI, a duly incorporated company with its registered office address at 8/F,
No. 717, Yishan Road, Shanghai, PRC.

 

The legal representative of ICCDI is:

 

Name: LIAO, Bing

 

Position: Chairman

 

Nationality: Chinese

 

 

3.ESTABLISHMENT OF THE COMPANY

 

3.1Establishment of the Company

 

In accordance with the Joint Venture Law and other relevant and currently
effective PRC laws and regulations, the Parties hereby agree to establish the
Company pursuant to the terms of this Contract. The Company shall be a legal
person under the laws of the PRC subject to the protection and jurisdiction of
PRC law.

 

3.2Name and address of the Company

 

The name of the Company shall be Jiangsu Tianwo-SES Clean Energy Technologies
Co., Ltd. in English and 江苏天沃综能清洁能源技术有限公司 in Chinese, or other name as approved
by the competent authority.

 

The legal address of the Company shall be in Room 801-3, Petrochemical Trading
Building, Zhangjiagang tax free area.

 

3.3Limited Liability Company

 

The Company shall be a limited liability company established in accordance with
the Law of the People's Republic of China on Chinese-Foreign Equity Joint
Ventures and the Regulations for the Implementation of the Law of the People's
Republic of China on Chinese-Foreign Equity Joint Ventures and other relevant
and currently effective Chinese laws and regulations.

 

3.4No Agency Relationship

 

Neither Party is the agent of the other Parties nor does either Party have any
power to assume or to create any obligation or responsibility, express or
implied, on behalf of the other Parties in the other Parties’ names.

 

TSEC JV Contract amended in August 18, 2017 7

 

 

4.PURPOSE AND SCOPE OF BUSINESS

 

4.1The Purpose of the Company

 

With the desire to strengthen the economic and technical cooperation between the
Parties, the purpose of the Company will be to use advanced and available
techniques and scientific management methods to improve the SGT, develop new
products, and enable competitiveness in quality and price in the international
market; to be compatible with the needs of the Chinese clean coal chemical
development, and to satisfy the gradually increasing market demand for clean
energy; enable economical and clean conversion of SGT Feedstock into syngas for
the production of a variety of high value products such as chemicals, power,
transportation fuels, direct reduced iron (DRI) steel, fertilizers, synthetic
natural gas (SNG) and industrial fuels through the efficient collaboration of
THVOW which, has a strong capability in coal chemical equipment manufacturing,
ICCDI’s capability on design, engineering and related services in China, and
SESHK’s advanced SGT which has been utilized in industrial gasification
projects. The Company aims to make the SGT the primary gasification technology
in the Territory, through its scientific business management.

 

 

4.2The Business Scope of the Company

 

The business scope of the Company is to obtain full exclusive authorization in
the Territory to provide SGT and related technologies, engineering services and
SGT sub-licensing rights, engineering design of the SGT, supply related
technologies and supply SGT Proprietary Equipment, to manufacture and sell SGT
Proprietary Equipment, to provide SGT EPC project services, and to develop and
improve the scope, pressure and capacity of the SGT, etc. The business scope
shall be subject to the business scope as shown on Business License.

 

 

5.TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL

 

5.1Total Amount of Investment

 

The total investment for the Company shall be RMB107,600,000 after
restructuring.

 

5.2Registered Capital and Capital Contribution

 

The actual ratios of capital contributed by the Parties are as below after
restructuring:

 

(a)THVOW contributed cash in the amount of RMB53,800,000 to the registered
capital of the Company, representing fifty percent (50%) of the total paid-in
capital of the Company.

 

TSEC JV Contract amended in August 18, 2017 8

 

 

(b)SESHK contributed per the terms and conditions of the Technology Usage and
Contribution Agreement, which, according to the appraisal report (Ping Bao Zi
[2014] 1002, as attached in Annex 5), has a value equal to RMB 53,800,000 as its
capital contribution to the Company, representing fifty percent (50%) of the
total paid-in capital of the Company. With the execution of the Share Transfer
Agreement and the Restructuring Agreement by and between SESHK, ICCDI and THVOW,
SESHK shall sell 25% of the total paid-in capital of the Company to ICCDI for
RMB11,150,000. After the restructuring, the capital contributed by SESHK shall
represent 25% of the total paid-in capital of the Company.

 

(c)With the execution of the Share Transfer Agreement and the Restructuring
Agreement by and between SESHK, ICCDI and THVOW, ICCDI shall purchase from SESHK
25% of the total paid-in capital of the Company for RMB11,150,000. After the
restructuring, the capital contributed by ICCDI shall represent 25% of the total
paid-in capital of the Company.

 

After the restructuring, the respective equity ownership percentages of the
Parties in the Company are: THVOW 50%, SESHK 25% and ICCDI 25%.

 

5.3Additional Financing

 

In accordance with Article 12.6, the Company may obtain additional funds through
loans from domestic or foreign financial institutions on terms and conditions
approved by the Board of Directors and the Parties. The Company may also obtain
loans or guarantees from the Parties or their Affiliates on terms and conditions
to be determined by the relevant parties; provided, however, that no Party shall
be obligated to lend funds to the Company or to guarantee a loan to the Company
from a third party or financial institution or if a guarantee is required, each
Party shall, in principle, undertake its share in such guarantee in a proportion
equal to its Equity Interest in the Company. In the event that a Party does
agree to lend funds to the Company or to guarantee a loan to the Company from a
third party or financial institution, such Party shall be entitled to be paid
interest on the loan at such rate or guarantee fees in such amount that such
Party would have been entitled to be paid as if such Party were not a party to
this Contract and as if the transaction were a negotiated arm's length financing
from a third party. The Company may mortgage or otherwise grant a security
interest in its assets, as permitted by law, to be mortgaged or secured in order
to obtain loans.

 

5.4Timing of Capital Contributions

 

According to the terms of the Restructuring Agreement and the Share Transfer
Agreement, and with respect to capital contributions by the Parties, the Parties
shall have fulfilled their respective capital contribution obligations to the
Company on the Restructuring Date.

 

TSEC JV Contract amended in August 18, 2017 9

 

 

5.5Capital Contribution Certificate

 

Within thirty (30) days after the Parties have made their capital contributions,
the Company shall engage an independent accountant registered in China to verify
such contributions, with verification expenses borne separately by the Parties.

 

Before the issuance of a verification report by such independent accountant, the
Company shall issue to each contributing party an interim capital contribution
certificate signed by the Chairman evidencing that the contribution was made.
Upon receipt of the final certificate of verification from the independent
accountant, the Company shall promptly issue a final capital contribution
certificate to each Party setting forth the aggregate amount of such Party's
contribution(s). The final capital contribution certificates shall be signed by
the Chairman of the Company.

 

5.6Increase or Reduction of Registered Capital

 

Any increase or reduction in the registered capital of the Company shall be
subject to unanimous approval by the Board of Directors of the Company and
submitted to the competent Examination and Approval Authorities for approval.
Upon receipt of such approval, the Company shall register the increase or
reduction in the registered capital with the appropriate administration for
industry and commerce.

 

6.TRANSFER OF EQUITY INTERESTS

 

6.1Encumbrance of the Investment

 

Except as otherwise contemplated in this Contract, neither Party may mortgage,
pledge, charge or otherwise encumber its equity interests in the Company, its
rights and obligations under this Contract and other interests in the Company
(“Equity Interests”) without the prior written consent of the other Parties,
which shall not be unreasonably withheld.

 

6.2Valuation

 

Any Party who desires to sell or otherwise transfer its Equity Interests in the
Company shall bear the cost of any valuation of the Company. The Parties shall
render all assistance and provide all such documentation and other information
to the appraiser as such appraiser may consider necessary.

 

6.3Transfer of Equity Interests

 

(a)Within 36 months after the effective date of the Share Transfer Agreement,
for any ownership portion of the Company offered for sale by ICCDI or THVOW,
SESHK has the priority to purchase such additional ownership in the Company
based on the price at the Company’s restructuring (Price: RMB 446,000 for every
1% of the ownership interests) subject to the limit that the total ownership
percentages in the Company held by SESHK shall not exceed 50%.

 

TSEC JV Contract amended in August 18, 2017 10

 

 

(b)Either Party shall not transfer, sell, or dispose, in whole or in part, its
Equity Interests to any third party without agreement in writing by the other
Parties.

 

6.4Continued Implementation of Contract

 

Prior to the Transfer of a Party’s Equity Interests, the Parties shall continue
to perform their obligations under this Contract.

 

6.5Effect of Transfer

 

The Transfer of a Party’s Equity Interest shall not release such Party from its
liability to pay any sums of money accrued, due and payable, or to discharge its
then-accrued and unfulfilled obligations to the Company or the other Parties.

 

7.REPRESENTATIONS AND WARRANTIES OF THE PARTIES

 

7.1Representations and Warranties of THVOW

 

THVOW hereby represents and warrants to SESHK and ICCDI as follows:

 

(a)       THVOW is a listed company duly organized and validly existing under
the laws of the PRC and is in compliance with all conditions required to
maintain its status as an enterprise legal person under the laws of the PRC.

 

(b)      THVOW has submitted to SESHK and ICCDI a valid, true and complete copy
of its current business license.

 

(c)      THVOW has taken all appropriate and necessary actions to (i) empower
its legal representative or such other duly authorized representative whose
signature is affixed hereto to sign this Contract and all of the agreements
contemplated herein to which it is a party, (ii) authorize the execution and
delivery of this Contract and all of the agreements contemplated herein to which
it is a party, and (iii) authorize the performance and observance of the terms
and conditions of this Contract and all of the agreements contemplated herein.

 

(d)      THVOW has obtained all licenses, permits, consents, approvals and
authorizations necessary for the valid execution and delivery of this Contract
and all of the agreements contemplated herein to which it is a party; provided,
however, that this Contract shall be subject to the approval of the Examination
and Approval Authority or other authority before the it may become effective.

 

(e)      Upon the approval of the Examination and Approval Authority, this
Contract shall constitute the legal, valid and binding obligation of THVOW and
is enforceable against THVOW in accordance with the terms herein.

 

TSEC JV Contract amended in August 18, 2017 11

 

 

(f)      THVOW's execution, delivery and performance of this Contract or any of
the other agreements contemplated herein will not violate any of the
constitutional documents, any other agreement or obligation of THVOW or its
Affiliates, or currently effective law, regulation or decree of China that may
be applicable to any aspect of the transactions contemplated hereunder.

 

(g)      All information supplied to SESHK and ICCDI by THVOW in relation to
this Contract, including information concerning the business and financial
status of THVOW and any relevant assets, inventories and outstanding contractual
arrangements with their respective suppliers and customers, is true and correct
in all material respects, whether any of the same has been verified or audited
by an independent third party or not.

 

(h)      THVOW is in compliance in all material respects with all applicable
laws, including in connection with the operation of its business. THVOW has not
received written notice of any material violation of any law, or any potential
legal liability, relating to the operation of its business.

 

(i)       THVOW is not in default under, and, to the knowledge of THVOW, no
condition exists that with notice or lapse of time or both would constitute a
default or could give rise to a right of early termination, cancellation or
accelerated termination under, any license, permit, consent, approval or
authorization held by THVOW prior to the expiration of its terms.

 

(j)       THVOW is not the subject of any existing, pending, threatened or
contemplated (i) bankruptcy, insolvency or other debtor’s relief proceeding, or
(ii) litigation, claim, action, suit or other judicial or administrative
proceeding, which could adversely affect THVOW’s right or ability to enter into
this Contract or to consummate the transactions contemplated herein.

 

(k)      THVOW agrees that the Company shall be liable for the payment of the
Sub-license Royalty To GTI under the sub-license Project.

 

7.2Representations and Warranties of SESHK

 

SESHK hereby represents and warrants to THVOW and ICCDI as follows:

 

(a)       SESHK is a company duly organized, validly existing and in good
standing under the laws of Hong Kong Special Administrative Region.

 

(b)      SESHK has submitted to THVOW and ICCDI a valid, true and complete copy
of its certificate of incorporation.

 

(c)      SESHK and its Affiliates have taken all appropriate and necessary
corporate actions to (i) empower its duly authorized representative whose
signature is affixed hereto to sign this Contract and all of the agreements
contemplated herein to which it is a party, (ii) authorize the execution and
delivery of this Contract and all of the agreements contemplated herein to which
it is a party, (iii) authorize the performance and observance of the terms and
conditions of this Contract and all of the agreements contemplated herein.

 

TSEC JV Contract amended in August 18, 2017 12

 

 

(d)      SESHK has obtained all consents, approvals and authorizations necessary
for the valid execution and delivery of this Contract and all of the agreements
referred to herein to which it is a party; provided, however, that this Contract
shall be subject to the approval of the Examination and Approval Authority or
other authority before it may become effective.

 

(e)      Upon the approval of the Examination and Approval Authority, this
Contract shall constitute the legal, valid and binding obligation of SESHK and
is enforceable against SESHK in accordance with the terms herein.

 

(f)SESHK's execution, delivery and performance of this Contract or any of the
other agreements contemplated herein will not violate any of its constitutional
documents, any other agreement or obligation of SESHK, or currently effective
law, regulation or decree of the PRC that may be applicable to any aspect of the
transactions contemplated hereunder.

 

(g)      All information supplied to THVOW and ICCDI by SESHK in relation to
this Contract, including information concerning the business and financial
status of SESHK and any relevant assets, inventories and outstanding contractual
arrangements with their respective suppliers and customers, is true and correct
in all material respects, whether any of the same has been verified or audited
by an independent third party or not.

 

(h)      SESHK is in compliance in all material respects with all applicable
laws, including in connection with the operation of its business. SESHK has not
received written notice of any material violation of any law, or any potential
legal liability, relating to the operation of its business.

 

(i)       SESHK is not in default under, and, to the knowledge of SESHK, no
condition exists that with notice or lapse of time or both would constitute a
default or could give rise to a right of early termination, cancellation or
accelerated termination under, any license, permit, consent, approval or
authorization held by SESHK prior to the expiration of its terms.

 

(j)SESHK is not the subject of any existing, pending, threatened or contemplated
(i) bankruptcy, insolvency or other debtor’s relief proceeding, or (ii)
litigation, claim, action, suit or other judicial or administrative proceeding,
which could adversely affect SESHK’s right or ability to enter into this
Contract or to consummate the transactions contemplated herein.

 

TSEC JV Contract amended in August 18, 2017 13

 

 

(k)      SESHK warrants that its contribution of the SGT rights to the Company,
pursuant to the TUCA is exclusive within the Territory and no other entities
and/or individuals, including SESHK and its Affiliates (excluding the existing
ZZ Plant and Yima Plant), shall conduct any SGT operational business relating to
sub-licensing, PDP, SGT Proprietary Equipment and services (excluding projects
developed for equity investment by SESHK or its Affiliates, provided, however,
that such projects shall meet the conditions of the relevant terms of the TUCA
and the Restructuring Agreement). During the Joint Venture Term, if SESHK or its
Affiliates conducts SGT operational business relating to sub-licensing, PDP, SGT
Proprietary Equipment within the Territory that result in breach of the above
and the terms in the related agreements, THVOW’s actual losses shall be
compensated pursuant to the relevant legal requirements, and if any profits are
realized as a result of such breach, such profits shall be paid from SESHK to
THVOW unconditionally.

 

(l)        SESHK warrants that the exclusive usage rights of the SGT which it
has granted to the Company are legitimate and continuously existing. During the
Joint Venture Term, if the Company loses such continuing SGT usage rights due to
reasons attributable to a breach by SESHK of its warranties under this Contract,
THVOW’s actual losses shall be compensated pursuant to the relevant legal
requirements.

 

(m)     SESHK warrants to provide the Company with all of the SGT Know-How and
technical data described in Annex 2 hereto. For the 0.2MPa and 1.0MPa Projects
similar to the ZZ Plant and Yima Plant (new technology excluded) SESHK shall be
responsible for the various SGT technology performance guaranteed parameters
under the PSA for the Project. SESHK warrants to make sure the Company has the
capability to produce the PDP design and guarantee performance for SGT (similar
to ZZ Plant and/or Yima Plant), and SESHK will bear the costs where support and
assistance by SESHK and its Affiliates and/or partners are needed. After the
Company has completed two Projects (similar to ZZ Plant and/or Yima Plant) and
once these Projects have achieved their required technical performance
guaranteed parameters, SESHK shall not be required to continue providing such
warranties or support or assistance

 

7.3       Representations and Warranties of ICCDI

 

ICCDI hereby represents and warrants to SESHK and THVOW as follows:

 

TSEC JV Contract amended in August 18, 2017 14

 

 

(a)ICCDI is a company duly organized and validly existing under the laws of the
PRC and is in compliance with all conditions required to maintain its status as
an enterprise legal person under the laws of the PRC.

 

(b)ICCDI has submitted to SESHK and THVOW a valid, true and complete copy of its
current business license.

 

(c)ICCDI has taken all appropriate and necessary actions to (i) empower its
legal representative or such other duly authorized representative whose
signature is affixed hereto to sign this Contract and all of the agreements
contemplated herein to which it is a party, (ii) authorize the execution and
delivery of this Contract and all of the agreements contemplated herein to which
it is a party, and (iii) authorize the performance and observance of the terms
and conditions of this Contract and all of the agreements contemplated herein.

 

(d)ICCDI has obtained all licenses, permits, consents, approvals and
authorizations necessary for the valid execution and delivery of this Contract
and all of the agreements contemplated herein to which it is a party; provided,
however, that this Contract shall be subject to the approval of the Examination
and Approval Authority or other authority before the it may become effective.

 

(e)Upon the approval of the Examination and Approval Authority, this Contract
shall constitute the legal, valid and binding obligation of ICCDI and is
enforceable against ICCDI in accordance with the terms herein.

 

(f)ICCDI 's execution, delivery and performance of this Contract or any of the
other agreements contemplated herein will not violate any of the constitutional
documents, any other agreement or obligation of ICCDI or its Affiliates, or
currently effective law, regulation or decree of China that may be applicable to
any aspect of the transactions contemplated hereunder.

 

(g)All information supplied to SESHK and THVOW by ICCDI in relation to this
Contract, including information concerning the business and financial status of
ICCDI and any relevant assets, inventories and outstanding contractual
arrangements with their respective suppliers and customers, is true and correct
in all material respects, whether any of the same has been verified or audited
by an independent third party or not.

 

(h)ICCDI is in compliance in all material respects with all applicable laws,
including in connection with the operation of its business. ICCDI has not
received written notice of any material violation of any law, or any potential
legal liability, relating to the operation of its business.

 

TSEC JV Contract amended in August 18, 2017 15

 

 

(i)ICCDI is not in default under, and, to the knowledge of ICCDI, no condition
exists that with notice or lapse of time or both would constitute a default or
could give rise to a right of early termination, cancellation or accelerated
termination under, any license, permit, consent, approval or authorization held
by ICCDI prior to the expiration of its terms.

 

(j)ICCDI is not the subject of any existing, pending, threatened or contemplated
(i) bankruptcy, insolvency or other debtor’s relief proceeding, or (ii)
litigation, claim, action, suit or other judicial or administrative proceeding,
which could adversely affect ICCDI’s right or ability to enter into this
Contract or to consummate the transactions contemplated herein.

 

(k)ICCDI agrees that the Company shall be liable for the payment of the
Sub-license Royalty To GTI under the sub-license Project.

 

 

8.RESPONSIBILITIES OF THE PARTIES

 

 

8.1Responsibilities of THVOW

 

In addition to its other obligations under this Contract, THVOW

 

shall have the following responsibilities:

 

(a)       Making its cash contributions to the registered capital of the Company
in accordance with relevant provisions of this Contract;

 

(b)      Actively assisting the Company in obtaining all necessary approvals,
grants, consents, permits, and licenses for the establishment of the Company,
including but not limited to, assisting in the attaining of a business license
providing a term of validity and scope of business acceptable to both Parties as
well as licenses, permits and approvals from the competent authorities and all
other required government approvals;

 

(c)       Assisting the Company to obtain the most preferential tax reductions
and exemptions and other investment incentives otherwise available to or for the
Company under national, provincial or local laws and regulations, if any; and
actively assisting the Company to obtain PRC central government endorsement of
the SGT technology.

 

(d)      Assisting the Company in the purchase of equipment, supplies and raw
materials and auxiliary materials manufactured inside the Territory;

 

(e)Assisting the Company in arranging for the transportation of imported
equipment and materials (if any);

 

TSEC JV Contract amended in August 18, 2017 16

 

 

(f)Manufacturing SGT Proprietary Equipment and other equipment for SGT Projects
and selling such equipment to the Company. THVOW shall also ensure that all the
equipment to be provided to the Company are fully compliant with PRC law and
have all approvals and permits required under PRC law, and are in good condition
in all material aspects. A separate equipment sales agreements shall be executed
(see Annex 6);

 

(g)      Assisting the Company in applying for and procuring documents and/or
licenses, and in carrying out all customs procedures and formalities, for the
import of machinery, equipment, materials, supplies and office equipment;

 

(h)Assisting with the entry visas and working permits for expatriates who will
provide services to the Company;

 

(i)Assisting the Company in the smooth transfer of employees recruited by the
Company from THVOW and with the recruitment of other qualified Management
Personnel and Working Personnel;

 

(j)Assisting SESHK’s Affiliate in completing the performance acceptance test of
the Yima Plant in a timely manner;

 

(k)Assisting the Company to license and sell SGT Proprietary Equipment for a
high-pressure gasifier of no less than 3.0MP(a) at the lowest capital cost
possible, including the financing of a lump sum turn-key solution for a SGT
gasification island;

 

(l)Undertaking non-disclosure obligations and liabilities under this Contract
and the TUCA; and

 

(m)     Handling other matters entrusted to it from time to time by the Company
and as agreed by THVOW.

 

8.2 Responsibilities of SESHK

 

In addition to its other obligations under this Contract, SESHK shall have the
following responsibilities:

 

(a)Making its contributions to the registered capital of the Company in
accordance with relevant provisions of this Contract;

 

(b)Performing its obligations under this Contract;

 

(c)SESHK commits to the smooth transfer of its key personnel into the Company,
so as to ensure that the SGT could can be completely and continuously
implemented by the Company (the Company has the right to select the personnel
from SES Shanghai who are appropriate for the Company per Section 14.2); in
principle,

 

TSEC JV Contract amended in August 18, 2017 17

 

 

the Company will execute the employment contracts with the said personnel with
remuneration no less than their previous amounts;

 

(d)Providing the Company with access to SESHK’s global marketing and sales
information, and assistance in preparing the marketing and sales plan for the
Company as per conditions mutually agreed by the Parties;

 

(e)Ensuring that SESHK will be responsible for supplying a complete and workable
SGT for projects similar to the ZZ Plant and Yima Plant, and that the Company
does not need to make additional payment for the use of SGT by the Company,
except for the ***% Sub-license Royalty To GTI.

 

(f)Providing the Critical Design Parameters free of charge for every Project
which implements SGT;

 

(g)Assisting the Company in the purchase of equipment, supplies and raw
materials and auxiliary materials manufactured outside the Territory;

 

(h)Assisting the Company in the smooth transfer of SES Shanghai’s employees
recruited by the Company to the Company. Prior to the establishment of the
Company, ZCM has the right to select the personnel from SES Shanghai who are
appropriate for the Company per Section 14.2), and assisting with the
recruitment of other qualified Management Personnel and Working Personnel;

 

(i)Assisting the Company to obtain access to lab and bench-scale coal testing
services at the ZZ Plant or other operating facilities which SESHK and its
Affiliates control, free of charge, provided that the Company provides
sufficient free coal to run the ZZ Plant at full capacity for five (5) or more
days;

 

Ensuring that the Company obtains free access to all the coal testing data,
currently and in the future, of various coals from SESHK and its affiliate and
GTI (if any)

 

(j)Providing engineering design reviews for the benefit of the Company as
described in the TUCA;

 

(k)Providing SGT related documents as described in Annex 2 pursuant to the
Contract; if SESHK is found to have deliberately provided false information, or
conceal any technology or SGT Know-How described in Annex 2, it shall indemnify
the Company for any losses pursuant to the relevant legal requirements;

 

(l)Handling other matters entrusted to it by the Company and as unanimously
agreed upon from time to time.

 

*** This information has been omitted in reliance upon Rule 24b-2 under the
Securities Exchange Act of 1934, as amended and has been filed separately with
the Securities and Exchange Commission.

TSEC JV Contract amended in August 18, 2017 18

 

 

8.3 Responsibilities of ICCDI

 

In addition to its other obligations under this Contract, ICCDI shall have the
following responsibilities:

 

a)     Making its cash contributions to the registered capital of the Company in
accordance with relevant provisions of this Contract;

 

b)     Actively assisting the Company in obtaining all necessary approvals,
grants, consents, permits, and licenses for the establishment of the Company,
including but not limited to, assisting in the attaining of a business license
providing a term of validity and scope of business acceptable to both Parties as
well as licenses, permits and approvals from the competent authorities and all
other required government approvals;

 

c)     Assisting the Company to obtain the most preferential tax reductions and
exemptions and other investment incentives otherwise available to or for the
Company under national, provincial or local laws and regulations, if any; and
actively assisting the Company to obtain PRC central government endorsement of
the SGT technology.

 

d)      Assisting the Company in the purchase of equipment, supplies and raw
materials and auxiliary materials manufactured inside the Territory;

 

e)Assisting the Company in arranging for the transportation of imported
equipment and materials (if any);

 

f)       Assisting the Company in applying for and procuring documents and/or
licenses, and in carrying out all customs procedures and formalities, for the
import of machinery, equipment, materials, supplies and office equipment;

 

g)Assisting with the entry visas and working permits for expatriates who will
provide services to the Company;

 

h)Assisting the Company in the recruitment of other qualified Management
Personnel and Working Personnel;

 

i)Assisting SESHK’s Affiliate in completing the performance acceptance test of
the Yima Plant in a timely manner;

 

j)Assisting the Company to license and sell SGT Proprietary Equipment for a
high-pressure gasifier of no less than 3.0MP(a) at the lowest capital cost
possible, including the financing of a lump sum turn-key solution for a SGT
gasification island;

 

k)Undertaking non-disclosure obligations and liabilities under this Contract and
the TUCA; and

 

l)

 

TSEC JV Contract amended in August 18, 2017 19

 

 

m)      Handling other matters entrusted to it from time to time by the Company
and as agreed by ICCDI.

 

8.4 Non-Competition

 

(a)During the Joint Venture Term, the Company shall be the exclusive legal
entity within the Territory, subject to the provisions in the TUCA, for the
marketing and sale of any gasification technology that utilizes SGT Feedstock,
even though SESHK acknowledges and agrees that THVOW and/or ICCDI shall continue
to manufacture and sell within the Territory gasification equipment outside the
scope outlined in paragraph(c) below.

 

(b)After the termination of the Company, THVOW and/or ICCDI must obtain written
consent from SESHK for the development and marketing of any gasification
technology similar to the SGT utilizing the SGT; and after the expiration of the
Joint Venture Term, the Parties shall settle such matters according to mutual
agreement.

 

(c)THVOW and/or ICCDI shall have the right to bid on and manufacture any
equipment in the Territory if THVOW and/or ICCDI obtains SESHK’s prior written
consent to bid on and manufacture other Pressurized Fluidized Bed gasification
technology equipment.

 

(d)During the Joint Venture Term, THVOW and/or ICCDI shall sell only through the
Company, any proprietary equipment to the Projects that utilize the SGT within
the Territory (excluding the event where a customer only purchases an SGT
license and is not willing to purchase equipment from THVOW and/or ICCDI or the
Company). If the Company intends to develop any other gasification technology,
it shall be submitted to the Board for unanimous Board approval.

 

9.Environmental PROTECTION

 

The Company shall comply with currently effective environmental protection,
health and safety, and other compliance rules of the PRC imposed on the Company
during the operation and shall undertake any costs of bringing the Company's
operations (but not the individual operations of either Party hereto) into
compliance with any subsequent officially-promulgated environmental protection,
health and safety, and other compliance rules of the PRC imposed on the Company.

 

10.PURCHASE OF MATERIALS

 

In accordance with this Contract, the Company shall be entitled to purchase and
acquire necessary raw materials, tools, machines and equipment, parts, office
supplies and services for the establishment and operation of the Company, from
both the domestic and international market on a best value basis. THVOW will
assist the Company in obtaining raw materials, utilities services and on-site
support, per the above. All such raw materials, machines and equipment, and
parts shall be in compliance with the applicable quality standards of the
Company and PRC laws and regulations. The Company shall have the right to
utilize the service of THVOW, SESHK or any third party for purchase of, or may
directly purchase parts, materials and office supplies from overseas markets,
subject to approval by the Board of Directors of the Company. The Parities shall
use their best efforts to procure the lowest possible prices for the materials
to be purchased by the Company.

 

TSEC JV Contract amended in August 18, 2017 20

 

 

11.Business Development and Operation

 

11.1Development of Business

 

(a)The Company’s main focus shall be the marketing and sub-licensing of the SGT,
the sale of SGT Proprietary Equipment and other equipment, and the sale of
Services.

 

(b)In furtherance of paragraph (a) above, the Company shall develop specific
marketing materials and websites for each country in the Territory, promote the
SGT at industry conferences, make all reasonable efforts to have the PRC central
government endorse the SGT technology host events for prospective customers,
maintain prospects lists and organize all other activities typical of a
well-managed and aggressive sales and marketing effort.

 

11.2Business Implementation

 

(a)The Company will grant technology sublicenses, sell SGT Proprietary Equipment
and other related equipment, and provide Services to third parties in the
Territory.

 

(b)The Company will endeavour to further expand the scope of supply of equipment
from only SGT Proprietary Equipment to also including other gasification
upstream and downstream technology, equipment and pre-fabricating modularization
of equipment (if applicable).

 

11.3Engineering, Procurement and Construction

 

The Company will endeavour to expand the scope of supply of equipment and
engineering design with a key objective to eventually include turnkey
gasification island offerings with expansion to gas cleaning.

 

12.BOARD OF DIRECTORS AND BOARD OF SUPERVISORS

 

12.1Establishment

 

TSEC JV Contract amended in August 18, 2017 21

 

 

The Board of Directors of the Company shall be established by the Parties and
shall hold its first meeting within thirty (30) days of the Establishment Date.

 

12.2Composition and Term

 

The Board of Directors shall be composed of eight (8) Directors, of whom four
(4) shall be appointed by THVOW, two (2) by SESHK and two (2) by ICCDI. THVOW
shall appoint the Chairman of the Board, SESHK shall appoint the Deputy
Chairman. The tenure of Directors on the Board, including Chairman and Deputy
Chairman, shall be no more than three (3) years. Directors may be permitted to
serve another term if re-appointed. Any vacancy created in the Board of
Directors shall be filled by the Party which originally appointed the absent
Director causing the vacancy. Any Party may at any time remove for any reason
any or all of the individuals appointed by such Party as a Director and appoint
in lieu thereof another individual or individuals to serve the remainder of the
relevant term(s).

 

12.3Legal Representative

 

The Chairman of the Board shall be the legal representative of the Company and
shall act in accordance with the specific decisions, resolutions and
instructions of the Board of Directors. Whenever the Chairman is unable to
fulfil his/her duties to call and preside over a board meeting, the Deputy
Chairman has the right to act for and on his/her behalf.

 

12.4Authority

 

The Board of Directors shall be the highest authority of the Company and shall
make decisions on all major and important matters of the Company. The rules of
procedure governing the Board of Directors and its powers and responsibilities
are set forth in this Contract and the Articles of Association.

 

12.5Personal Liability of Directors

 

A Director, including the Chairman and Deputy Chairman, shall not have personal
liability for action he/she undertakes on behalf of the Company within the scope
of authority of this Contract, the Articles of Association or the Board
resolutions unless his or her action:

 

(a)           is outside the scope of the approval or authorization by this
Contract or the Board resolution; or

 

(b)           is in breach of Articles 147-151 of the Company Law of the PRC; or

 

(c)           is in breach of the laws and regulations of the PRC at the time.

 

Any Director, including the Chairman and Deputy Chairman, acting in violation of
this Contract or Board resolutions shall indemnify and hold harmless the Company
against all losses caused to or liabilities and expenses incurred by the
Company. The Company shall, to the extent permitted by law, indemnify any
Director for damages or losses incurred in good faith by such Director in the
performance of his or her obligations.

 

TSEC JV Contract amended in August 18, 2017 22

 

 

12.6Matters to be decided by the Board

 

Matters to be decided by the Board shall be approved by a simple majority vote
of the Directors except for the matters listed below which shall require a
unanimous vote of Directors:

 

(a)Amendment to the Contract and the Articles of Association;

 

(b)Termination, liquidation or dissolution of the Company；

 

(c)Increasing, reducing or transferring the registered capital of the Company;

 

(d)Merger of the Company with another entity or separation of the Company;

 

(e)Any matters relating to the IPO or listing of the Company, including
transforming the Company to be a joint stock limited company;

 

(f)Capitalization, separation, liquidation, voluntary winding-up, or dissolution
of the Company, or commencement of any bankruptcy, liquidation or winding- up
procedures;

 

(g)Issuing any bond of the Company, borrowing, lending or guarantee of an amount
exceeding RMB 50,000,000 each or making of a restructuring or other arrangements
with creditors;

 

(h)Approval of the annual budget (i.e. the operating plan, forecasted revenues
and forecasted expenses) and final account, investment plan, and profit
distribution plan; approval of any capital expenditure, investment or other
purchase of tangible or intangible assets by the Company exceeding by ten
percent (10%) of the approved annual budget;

 

(i)Company’s redeeming, purchasing or otherwise buying the shares or debt from a
Party;

 

(j)Any transfer, sale, lease or other manner of disposition of, or the granting
of a mortgage, pledge or lien on any intellectual property;

 

(k)Approval of the participation by the Company in any project of any competitor
of SESHK’s existing or potential global partner;

 

(l)Entering into any related-party transaction that is not on an arm’s length
basis;

 

(m)Adopting the business plan setting forth the guidelines and procedures for
continuing the operation of the Company after substantial losses sustained by
the Company for four (4) out of eight (8) consecutive quarters;

 

TSEC JV Contract amended in August 18, 2017 23

 

 

(n)Deciding on the branding and/or trademarks of the Company;

 

(o)Deciding the policy and procedure for protecting Confidential Information;

 

(p)Other issues that are unanimously agreed by the members of Board to be
decided by the Board.

 

12.7Deadlock

 

In the event of a deadlock the Parties will follow relevant laws and will work
in good faith to try and resolve such deadlock.

 

12.8Board Meetings

 

The regular meetings of the Board of Directors shall be held at least two (2)
times per calendar year, with each regular meeting to be held no later than
twenty (20) days before closing of each half of that calendar year, unless
otherwise agreed by the Parties. Meetings of the Board of Directors shall
normally be held at the registered address of the Company at the date as set by
the Chairman, but may be held at the alternative location and/or date as
proposed by one Party if the other Party expresses no objection to such proposal
or, though expresses objection, fails to propose an alternative location and/or
date for the meeting within two (2) weeks of the originally proposed date by the
first Party, where the other Party shall be deemed to be in attendance and
counted for the purpose of the quorum.

 

12.9Interim Board Meeting

 

Within three (3) days after the receipt of the written proposal by at least
one-third (1/3) of the Directors requesting that an interim Board meeting be
held, either the Chairman or the Deputy Chairman shall send a written notice
calling an interim Board meeting. Interim Board meetings shall be held, in
principle, in the form of teleconference or video-conference.

 

12.10Notice of Meetings

 

The written notice shall be sent at least twenty (20) days prior to any Board
meeting specifying the agenda, time and place of the meeting. Such notice may be
waived by the unanimous consent of all Directors attending (in person or by
proxy) the meeting. A Board meeting shall be convened not less than twenty (20)
days or more than thirty (30) days from the date of the notice.

 

12.11Emergency Board Meeting

 

In extraordinary circumstances requiring immediate action by the Board and
otherwise as provided in this Contract, the Chairman or the Deputy Chairman may
call an emergency meeting of the Board. The Chairman shall send written notice
at least twenty-four (24) hours prior to any emergency meeting, specifying the
agenda, time and place of the meeting.

 

TSEC JV Contract amended in August 18, 2017 24

 

 

12.12Attendance

 

A Director may attend a Board meeting in person, by conference telephone or
designating another person by proxy to vote in his place. Such designation shall
be in writing and signed by the Director, and shall identify the meeting or
meetings at which the person may act as a proxy and any instructions that may be
applicable to the proxy. A Director may appoint another Director as his proxy. A
person acting as a proxy may do so for more than one (1) Director.

 

12.13Quorum for Meetings

 

The quorum for a Board meeting shall consist of two-thirds (2/3) of the
Directors present in person or by conference telephone or by proxy, with each
Party having at least one (1) Director present. However, if a proper notice to
convene a Board meeting has been given and if the Directors appointed by a Party
fail to attend the meeting by themselves or by proxy or by conference telephone,
and therefore a quorum is not present as aforesaid, such Board meeting shall be
adjourned and reconvened at the same location and time fifteen (15) days later.
If, at the reconvened Board meeting, these Directors still fail to attend by
themselves or by proxy or by conference telephone, the present Directors shall
vote in respect of the resolution(s) (the proposal of which shall have already
been set out in the enclosures of the notice of the Board meeting). Resolutions
passed in such manner shall have full legal effect.

 

12.14Voting

 

The Directors may vote on any matters by attending meetings in person, by
telephone conference or by proxy. Each Director, including the Chairman and
Deputy Chairman, shall have only one vote. Matters not requiring a unanimous
vote by the Board of Directors shall be decided by a simple majority vote of the
Directors at a meeting at which a quorum is present.

 

12.15Written Consent

 

The Board of Directors may conduct any business and make decisions and take
actions that could have been otherwise duly taken pursuant to a Board meeting by
means of a unanimous written consent in lieu of a meeting.

 

12.16Compensation and Expenses

 

The Company shall not pay any fee, remuneration or subsidy to any Director for
his/her attendance at a Board meeting. The Company shall reimburse a Director
for reasonable expenses incurred in respect of travelling, accommodations and
other living expenses to attend Board meetings.

 

TSEC JV Contract amended in August 18, 2017 25

 

 

12.17Minutes

 

Minutes shall be kept for each Board meeting and signed by all Directors present
at the Board meeting in person or by proxy. In order to facilitate the smooth
conduct of Board meetings, the Deputy Chairman shall appoint a “designee” for
the purpose of the Board meeting. The duties of such designee shall be to take
detailed minutes of the Board meeting, procure the proper signatures for the
adoption of such minutes, translate or arrange for the translation of documents
and dispatch documents relating to the Board meeting to the Directors. Minutes
of the Board meeting shall be maintained in both Chinese and English. Copies of
the minutes in both Chinese and English languages shall be sent to THVOW, ICCDI
and SESHK at the addresses set forth in Article 28.6 herein.

 

12.18Appointment of the Supervisors

 

(a)      The Company shall have two (2) Supervisors, one (1) of whom shall be
appointed by THVOW, and one (1) of whom shall be appointed by SESHK. The
chairman of the Board of Supervisors shall be appointed by THVOW. At the
execution of the Contract and the Articles of Association, one (1) Supervisor
shall be appointed at each time and each Party shall notify in writing the other
Party of the names of its appointee(s).

 

(b)      Each Supervisor shall be appointed for a term of three (3) years and
may serve consecutive terms if reappointed by the Party originally appointing
that Supervisor. A Supervisor shall serve and may be removed at the discretion
of the Party which appointed that Supervisor. If an office of a Supervisor is
vacated by the retirement, resignation, illness, disability or death of such
Supervisor or by the removal of such Supervisor by the Party which originally
appointed that Supervisor, the Party which originally appointed such Supervisor
shall appoint a successor to serve out such Supervisor's remaining term.

 

(c)      No member of the Board or Management Personnel may concurrently serve
as Supervisor.

 

12.19Powers of the Supervisors

 

(a)To supervise the management of the Company, the Supervisors may take the
following actions:(i) inspect accounting records, vouchers, books and statements
of the Company; (ii) supervise the duty-related acts of the Directors and
Management Personnel, to put forward proposals on the removal of any Director or
Management Personnel who violates any law, administrative regulation, the bylaw
or any resolution of the Board meeting; (iii) request the Board members and the
Management Personnel to rectify their conducts which are prejudicial to the
interest of the Company;(iv) propose to call interim shareholders’ meetings, to
call and preside over shareholders’ meetings when the Board of Directors does
not exercise the function of calling and presiding over Board meetings as
prescribed under the PRC Company Law; (v) attend meetings of the Board and to
make queries or suggestions regarding matters to be resolved by the Board; (vi)
conduct investigation in respect of any abnormal operation of the Company; (vii)
put forward proposals at Board meetings; and (viii) initiate actions against
Directors or Management Personnel according to Article 152 of the PRC Company
Law.

 

TSEC JV Contract amended in August 18, 2017 26

 

 

(b)      Each Supervisor shall serve the Company in such capacity without any
remuneration, but all reasonable costs incurred by the Supervisors in the
performance of their duties as Supervisor of the Company shall be borne by the
Company.

 

12.20Further Policies and Procedures

 

The Company shall abide by any other policies and procedures adopted by the
Board. The Parties shall take all appropriate actions to cause the Board of
Directors and board of Supervisors to adopt standards of conduct and business
practices in conformity with the laws and regulations of the PRC and such laws
and regulations which apply to SESHK’s operations outside the United States,
provided that they do not conflict with the laws and regulations of the PRC.

 

13.MANAGEMENT ORGANIZATION

 

13.1Establishment

 

(a)The Board of Directors shall establish a management organization comprised of
Management Personnel who shall be in charge of the day-to-day operations and
management of the Company. The management organization shall include and be
headed by one (1) General Manager. The General Manager shall establish the
management team subject to the approval of the Board. The General Manager shall
be nominated by ICCDI.

 

(b)The Management Personnel shall also consist of, three (3) Vice General
Managers, one (1) Chief Technology Officer, one (1) Chief Financial Officer, and
one (1) Chief Accountant. One (1) Chief Financial Officer and two (2) Vice
General Managers (including one in charge of marketing) shall be nominated by
THVOW. Another Vice General Manager, Chief Technology Officer, and the Chief
Accountant shall be nominated by SESHK. Material financial matters shall be
subject to the mutual decision of the Chief Financial Officer and the Chief
Accountant and shall be managed in accordance with the financial delegation of
authority of the management policies of the Company.

 

TSEC JV Contract amended in August 18, 2017 27

 

 

(c)      The candidates shall be officially appointed following approval by the
Board of Directors. Each Party agrees to cause the Directors appointed by it to
approve the other Parties’ nominees for the Management Personnel. The tenure of
the Management Personnel shall be no more than four (4) years, but they may be
permitted to serve subsequent terms. If it becomes necessary, due to dismissal
or resignation, to replace a member of the Management Personnel, the Party which
originally nominated such individual shall nominate a replacement to serve the
remainder of the relevant term.

 

13.2The General Manager shall be responsible for carrying out the decisions of
the Board of Directors and organizing and directing the day-to-day operations of
the Company. Specifically, the General Manager shall perform the following
duties:

 

(a)to implement the resolutions of the Board；

 

(b)to manage the Company to ensure the purpose of the Company is achieved, as
outlined in Article 4.1;

 

(c)to be responsible for the profits (or losses) of the Company;

 

(d)to draft the annual financial budget and annual accounts of the Company for
the Board’s approval;

 

(e)to stipulate the basic management rules and specific regulations of the
Company;

 

(f)to work on the rational and efficient allocation of Company resources (e.g.
capital resources, human resources, etc.);

 

(g)to oversee the dedicated business development personnel;

 

(h)to manage the personnel responsible for developing business;

 

(i)other matters as delegated by the Board.

 

13.3The Chief Financial Officer and the Chief Accountant shall be responsible
for the supervision and maintenance of proper records and forecasts of the
Company’s financial performance. The Vice General Manager shall be responsible
for assisting General Manager for the operations of the Company. The mechanical
engineer shall be the main interface with THVOW for equipment procurement and
shall be responsible for equipment mechanical specifications, materials
selection, engineering, fabrication techniques, and quality control which
include all shop and field inspections (pressure tests, all NDT methods and
related inspections) of materials and fabrication quality. The Chief Technology
Officer shall be responsible for technical support to technical pricing in
sales, marketing or customer proposals, process design and SGT performance,
PDPs, SGT Proprietary Equipment process specifications, all other gasification
system equipment process specifications, non-equipment engineering design
packages, technical proposals, operating instructions and all other process
related gasification-related matters. The Marketing Director shall be
responsible for the marketing and sales of SGT and SGT related equipment for the
Company.

 

TSEC JV Contract amended in August 18, 2017 28

 

 

13.4Indemnification to the Management

 

The specific powers and responsibilities of Management Personnel shall be
prescribed in the relevant provisions of the Articles of Association of the
Company. Except for gross negligence, no Management Personnel shall have any
personal liability for any acts performed in good faith, in the normal course of
their employment and within the scope of activities permitted to be engaged in
by such Management Personnel as set forth in this Contract and the Articles of
Association.

 

13.5Compensation

 

Matters such as salaries, wages, subsidies, benefits, insurance, allowances,
rewards and other compensation matters of Management Personnel, except for
Seconded Personnel, shall be stipulated in the Labour Contract between the
Company and such Management Personnel.

 

13.6Confidentiality and Non-Competition

 

Each member of the Management Personnel shall, as a precondition to employment
by the Company, execute a written agreement in form and substance acceptable to
the Board which shall contain provisions prohibiting the disclosure of
confidential information obtained during the course of employment with the
Company and prohibiting such personnel from competing with the business of the
Company.

 

Except for Seconded Personnel, all Management Personnel are forbidden from
concurrently serving or working in any other company, unit, entity or
organization whatsoever unless approved in writing by the Board.

 

13.7Management By-laws

 

The Company shall publish Management By-laws, which shall regulate coordination
of responsibilities within management, reporting and work procedures; areas of
responsibility, decision-making competency, any other issues decided by the
Board.

 

The said Management By-laws, as approved by the Board at the first Board
meeting, shall be provided in both Chinese and English.

 

14.LABOUR MANAGEMENT

 

14.1Enterprise Autonomy

 

The Company shall have all possible autonomy under the laws and regulations of
the PRC concerning the recruitment, employment, compensation, welfare benefits,
procurement of labour insurance, promotion, discipline and dismissal of Working
Personnel. The labour policies of the Company shall be determined in accordance
with applicable PRC labour law, labour contract law and regulations and the
relevant local rules on labour management in foreign investment enterprises.

 

TSEC JV Contract amended in August 18, 2017 29

 

 

14.2Employment

 

The Company shall have right to select from SES Shanghai. The Company and SESHK
will consult with each other on the remuneration of such SES Shanghai employees,
and execute a separate memorandum on the employment of such employees within ten
(10) working days of the execution of this Contract.

 

The qualification and number of Working Personnel shall be determined in
accordance with the operating needs of the Company as determined by the Board.
Each Working Personnel shall, as a condition to employment by the Company,
execute a Labour Contract with the Company, to the extent permitted by the
labour laws and regulations of the PRC. Working Personnel shall observe the
various rules and regulations of the business of the Company in fulfilling their
respective tasks.

 

Prior to the establishment of the Company, various SES Shanghai employees
provided services to the ZZ Plant and the Yima Plant. Should the ZZ Plant
require such services or support after the establishment of the Company, the
Company shall provide such services or support, as reasonably requested, at
cost. Should the Yima Plant require such services or support after the
establishment of the Company, the Company shall provide such services or
support, as reasonably requested, at a reasonable mark-up.

 

14.3Compensation Packages and Labour Protection

 

Matters such as compensation, wages, subsidies, benefits, insurance, allowances,
rewards, and other compensation matters of Working Personnel shall be stipulated
in the Labour Contract between the Company and each Working Personnel; the
provisions therein shall be in compliance with Applicable Law.

 

The Company shall conform to rules and regulations of the Chinese government
concerning labour protection. Working Personnel shall have the right to
establish a Labour Union in accordance with the applicable laws.

 

14.4Training

 

All candidates, except for the Management Personnel and the personnel taken over
from SES Shanghai to the Company, must satisfactorily complete the training
program(if any) specified in their Labour Contracts and a subsequent
probationary period of work before they will be officially considered employees
of the Company. An employee’s direct supervisor shall have right to decide, on
behalf of the Company, whether such persons have successfully completed their
probationary period and shall be granted employment, or that such persons shall
not be granted employment for whatever reasons, including lack of qualification
or otherwise. Any person to whom the Company does not offer employment after the
probationary period shall be given notice before dismissal.

 

TSEC JV Contract amended in August 18, 2017 30

 

 

15.ANNUAL OPERATING PLANS AND BUDGETS

 

15.1Preparation

 

The General Manager shall be responsible for the preparation of the annual
operating plans and budgets of the Company. The operating plan and budget for
the next fiscal year shall be submitted to the Board of Directors for
examination and approval prior to November 1of each year and shall include
detailed plans and projections regarding:

 

(a)capital expenditures of the Company;

 

(b)estimated revenues, expenditures and profits of the Company;

 

(c)staffing levels and plans for training personnel of the Company; and

 

(d)marketing and Project development plans and policies.

 

15.2Examination and Implementation

 

The Board of Directors shall complete its examination and approval of each
annual operating plan and budget for the next fiscal year prior to the end of
December 31st of each year. The Management Personnel shall be responsible for
the implementation of the annual operating plan and budget as approved by the
Board.

 

16.TAXATION, THREE FUNDS AND PROFIT DISTRIBUTION

 

16.1Tax Treatment

 

The Company shall pay taxes in accordance with relevant Chinese laws and
regulations and shall enjoy all preferential tax and customs treatment available
to it under the PRC law. In order to confirm the tax treatment applicable to the
Company, the Parties shall, immediately after the Establishment Date, procure
that the Company submit an application to the appropriate tax authorities of
China requesting confirmation of the tax and duty exemptions, reductions and
other preferences to be accorded to the Company.

 

Furthermore, with the Assistance of THVOW, the Company shall also apply for any
other reductions of or exemptions from relevant taxes and customs duties which
are now available or will become available to the Company under any of the laws
and regulations of the PRC.

 

16.2Statutory Common Reserve

 

After fully making up accumulated losses of previous years, if any, and payment
of taxes in accordance with the relevant laws and regulations of the PRC, the
Company shall allocate and reserve ten percent (10%) of its annual after-tax
profits as the Company's statutory common reserve. The Company may stop
allocating and reserving the profits if the aggregate balance of the common
reserve accounts for over fifty percent (50%) of the Company's registered
capital. After the Company has drawn statutory common reserve from the after-tax
profits, it may, upon a resolution made by the Board meeting, draw a
discretionary common reserve from the after-tax profits. The amount to be drawn
as statutory common reserve shall be decided by the Board annually in accordance
with the financial status of the Company and pursuant to the laws and
regulations of China.

 

TSEC JV Contract amended in August 18, 2017 31

 

 

16.3Profit Distribution

 

(a)After paying taxes in accordance with the law, making up losses and making
contributions to the statutory common reserve, the remaining earnings of the
Company shall be available for dividend distribution to the Parties. The Parties
hereby agree that as long as the Company has eighteen (18) months of working
capital reserved that the Company shall distribute to the Parties the profits in
that fiscal year above the amount required to maintain eighteen (18) months of
working capital. Distributable profits shall be distributed to the Parties
within thirty (30) days of a Board resolution stipulating the distribution of
such distributable profits to the Parties. Each Party shall procure that its
Directors shall vote in favour of a resolution of any Board member proposing the
distribution of the profits as outlined in this paragraph to the Parties. Such
profits shall be distributed to a Party according to such Party’s proportion of
its paid-in registered capital at the time such profits were earned.

 

(b)The Company shall not distribute dividends unless the losses of previous
fiscal year(s) have been fully made up. Remaining undistributed dividend from
previous years must be distributed together with that of the current year and
the Board of Directors shall authorise the payment of dividends from
undistributed dividends from previous years at any time so long as the Company
has eighteen (18) months of working capital reserved.

 

 

 

17.FINANCIAL AFFAIRS AND ACCOUNTING

 

17.1Accounting System

 

(a)The Company shall maintain its accounts in accordance with the regulations in
respect of the financial management and accounting system of foreign-invested
enterprises enacted by the Ministry of Finance of the PRC and any other
officially promulgated PRC laws and regulations and the provisions of this
Contract and the Articles of Association. The Chief Financial Officer and the
Chief Accountant, under the supervision of the General Manager, shall establish
the accounting system and procedures for the Company in accordance with the
enterprise accounting system and other relevant regulations. The accounting
system and procedures to be adopted by the Company shall be submitted to the
Board for approval. Once approved by the Board, the accounting system and
procedures shall be filed with the relevant local department of finance and the
tax authorities for record purpose.

 

TSEC JV Contract amended in August 18, 2017 32

 

 

(b)      The Company shall submit reports relating to the usage of foreign
investment in accordance with the laws and regulations on statistics and the
statistical system of the State and of the Municipality where it is incorporated
(if any) concerning the usage of foreign investment.

 

(c)The fiscal year of the Company shall start on January of the year and end on
December 31 of the same year. The first fiscal year of the Company shall
commence on the Establishment Date and end on December 31 of the same year. The
last fiscal year of the Company shall start on January 1 of the year of
termination and end on the date of termination.

 

17.2Books and Records

 

The Company shall keep true and correct records and accounts in accordance with
applicable PRC accounting laws. All accounting records, vouchers, books and
statements of the Company shall be made and kept in Chinese, however, on the
other hand, the Company shall provide financial reports to SESHK in English on a
quarterly basis in accordance with USGAAP.

 

17.3Inspection of Books and Records

 

Each Party shall have the right to examine and copy all books of account,
records, vouchers, contracts and documents of any kind that are necessary or
appropriate for monitoring the financial performance of the Company. Each Party
may make such examination and copies during the Company’s normal business hours,
provided that such examination and copying do not unreasonably interfere with
the business operations of the Company. Each Party may exercise such rights
through its agent or employee or by an independent accounting firm designated by
the Party (at its own cost).

 

17.4Accounting Unit

 

The currency of accounts of the Company shall be Renminbi. When foreign currency
transactions take place, the foreign currency amount will be converted into the
reporting currency for recording purposes. Any increase or decrease in the
balance of accounts relating to foreign currency transactions shall be
translated into the currency of account in accordance with the official Foreign
Exchange rate announced by the People’s Bank of China on the transaction date or
on the first day of the month when the transaction takes place.

 

TSEC JV Contract amended in August 18, 2017 33

 

 

17.5Reports

 

The Company shall prepare and provide to the Parties:

 

(a)      Within ninety (90) days after the last day of each fiscal year, the
balance sheet of the Company as of the end of such fiscal year and the related
profit and loss statement and statement of cash flows for the fiscal year then
ended, in each case audited as provided below.

 

(b)      Within thirty (30) days after the last day of each financial quarter,
the unaudited balance sheet of the Company as of the end of such quarter and the
related profit and loss statement (for such quarter and for the year-to-date).

 

(c)Within thirty (30) days after the last day of each month, (i) a profit and
loss statement for such month; and (ii) a forecast/outlook for the remainder of
the current fiscal quarter, which shall include, without limitation, the number
of personnel, revenue, cash balance and expenses.

 

17.6Audit

 

A qualified independent accounting firm, licensed in China, shall be engaged by
the Company as its auditor, which shall be the same auditor as engaged by THVOW,
to examine and verify the annual financial statements of the Company and shall
submit the audit report to the Board and the General Manager. Either Party shall
also have the right to appoint an accountant registered in China or abroad to
audit the accounts of the Company. The expense of the auditor shall be borne by
the Party appointing the auditors. Unless the result of any such auditor is
significantly different from that conducted by the Company’s auditor and are
accepted by the Board, the expense of such audit shall be borne by the Company.
The Company will permit such accountant to have access to the Company’s books
and records and Management Personnel and will provide such accountant with
office space and all other reasonable facilities to enable the accountant to
carry out the audit.

 

17.7Additional Reports and Provision of Returns

 

The Company shall provide, without charge, to any Party that may so request a
copy of each tax return and report that it is required to file with any
governmental entity in sufficient time prior to such filing to permit its review
by such Party prior to filing.

 

18.BANK ACCOUNTS AND FOREIGN EXCHANGE

 

The Company shall open RMB deposit accounts and Foreign Exchange deposit
accounts with authorized banks in China, and the procedures for issuing and
signing checks shall be implemented in accordance with the management policies
of the Company. The Company may also open Foreign Exchange deposit accounts with
foreign banks outside China as designated by the Board of Directors subject to
approval by the relevant government authorities.

 

TSEC JV Contract amended in August 18, 2017 34

 

 

19.CONFIDENTIALITY

 

(a)       Each of the Parties acknowledges and agrees that the disclosure of its
obligations under this Contract and the agreements and documents referred to
herein to which it is a party will involve the disclosure of Confidential
Information.

 

(b)       The Parties shall use all Confidential Information only for the
purposes specified in this Contract, the Annexes and the other agreements and
documents contemplated herein and therein to which it is a party, and shall not
disclose any Confidential Information to third parties without the prior written
consent of the Party providing such Confidential Information; provided, however,
that a Party may be permitted to disclose Confidential Information received by
it to its Affiliate(s) when such disclosure is necessary for such Party to carry
out its obligations under this Contract, the Articles of Association or the
other agreements referred to herein upon the execution of a non-disclosure
agreement (which shall hold the receiving party to the same standard of
confidentiality as the transmitting party) between such Affiliate(s) and the
Party providing the Confidential Information.

 

(c)       The Company, the Parties and their respective Affiliates that receive
Confidential Information shall make such Confidential Information available only
to those of their directors, managers and personnel whose duties necessitate
familiarity with such Confidential Information and shall cause such directors,
managers and personnel also to comply with the confidentiality obligations set
forth in Article 19(b).

 

(d)      The confidentiality obligations set forth in this Article 19 shall
survive the termination or expiration of this Contract.

 

(e)       The Parties acknowledge and agree that SESHK has entered into this
Contract under the condition that the SGT, the SGT Know-How and all other
relevant intellectual property will be protected by THVOW, ICCDI and the Company
and that THVOW, ICCDI and the Company shall protect all Confidential Information
related to the SGT, and SGT Know-How and ensure that all such information is not
transmitted to third parties and will be returned to SESHK at the end of the
Joint Venture Term or upon liquidation of the Company and shall not be used by
THVOW, ICCDI or the Company except as specifically authorized under this
Contract or under the TUCA.

 

TSEC JV Contract amended in August 18, 2017 35

 

 

(f)       This aforesaid confidentiality provisions under this Article 19 shall
not jeopardize, surpass, substitute or impact the Technical Non-disclosure
Agreement already entered into between THVOW and Synthesis Energy Systems, Inc.
on October 11, 2009.

 

20.DURATION OF THE COMPANY

 

The term of the Company established under this Joint Venture Contract and the
Articles of Association shall be twenty (20) years, commencing on the date of
issuance of the Company's Business License by the relevant administration for
industry and commerce (the “Joint Venture Term”).

 

One (1) year prior to the expiry of the Joint Venture Term, the Parties shall
enter into discussions regarding the extension of such term. If the Parties
agree to extend the Joint Venture Term, they shall enter into a written
extension agreement and apply to the Examination and Approval Authority for
approval no less than six (6) months prior to the expiration of the Joint
Venture Term. The Joint Venture Term may be extended only upon the execution of
the written extension agreement by the Parties and approval of the Examination
and Approval Authority.

 

21.EARLY TERMINATION

 

This Contract may be terminated in the event that any of the conditions or
events set forth below occurs:

 

(a)       There occurs a material breach of this Contract and such breach is not
cured by the breaching Party within sixty (60) days after receipt of written
notice of the breach from the non-breaching Party. In such case, the
non-breaching Party may give notice of termination to the breaching Party.

 

(b)      The Company, THVOW, ICCDI or SESHK materially violates or fails to
perform under the TUCA, and fails to timely rectify its breach or
non-performance in accordance with the TUCA, and as a result, the non-breaching
Party is entitled to terminate this Contract and the TUCA at its own discretion.

 

(c)       The Company is unable to achieve positive Net Income within 24 months
after its establishment or, after such initial 24 month period, does not achieve
positive Net Income in any two (2) consecutive years or sustains substantial
losses for four (4) out of eight (8) consecutive quarters and the Company is
unable to attain its business goals and, after consultation, the Parties are
unable to agree on a business plan to improve the economic situation of the
Company. In such case, either Party may give notice of termination.

 

TSEC JV Contract amended in August 18, 2017 36

 

 

(d)      Total or partial performance of this Contract is prevented by an Event
of Force Majeure lasting for more than ninety (90) days and, after consultation,
the Parties are unable to agree on a method to perform this Contract. In such
case, either Party may give notice of termination.

 

(e)       The Parties unanimously agree to terminate this Contract and agree on
the terms for the dissolution of the Company.

 

Where the TUCA is terminated pursuant to Article 21(b) or other provisions
herein, the Company shall be liquidated in accordance with Article 22.1.

 

In case this Contract is terminated early upon the occurrence of any of the
above circumstances, the Parties shall observe and abide by the requirements and
consequences as stipulated in Article 22.3.

 

22.LIQUIDATION AND DISSOLUTION

 

22.1Liquidation

 

Upon the adoption of a unanimous Board resolution to terminate this Contract
pursuant to Articles 12.6 and approval by the Examination and Approval Authority
to dissolve the Company, the Parties shall cause the Directors appointed by them
to adopt a resolution to liquidate the Company and establish a liquidation
committee. The composition, powers and functions of the liquidation committee,
formulation of liquidation procedures, and payment of liquidation proceeds shall
be set forth in the Articles of Association.

 

In the event of a liquidation of the Company, any of THVOW’s and ICCDI’s paid-in
registered capital contribution to the Company after deduction of the dividends
should be, or already received by THVOW and ICCDI before liquidation, shall be
returned to THVOW and ICCDI in priority within the existing liquid assets
(excluding the intangible assets); and SESHK shall not be entitled to such
funds; and any remaining cash current net assets shall be distributed to the
Parties according to the respective ownership percentage.

 

22.2Effect of Dissolution or Sale as a Going Concern

 

The dissolution of the Company or sale of the Company as a going concern, shall
not release a Party from its liability to pay any sums of money accrued, due and
payable to the other Party, or to discharge its then-accrued and unfulfilled
obligations including any liability to the Company or the other Party in respect
of any breach of this Contract pursuant to the provisions hereof.

 

Notwithstanding the foregoing, prior to the liquidation of the Company, SESHK
shall have (i) the right to take out from the premises of the Company any
materials relating to SGT provided by SESHK, including any proprietary property
provided to the Company pursuant to this Contract and any other documents,
drawings, data, or information in any form; and (ii) have the right of first
refusal to purchase any SGT-related intellectual property legitimately owned by
the Company on the same conditions that would be afforded to any reasonable
buyer. If the Company and SESHK cannot agree on such value then SESHK shall be
entitled to appoint an independent valuation form to appraise the value of such
SGT related intellectual property.

 

TSEC JV Contract amended in August 18, 2017 37

 

 

22.3Termination

 

(a)After the liquidation of the Company is completed and the Company has been
effectively dissolved, the Parties shall terminate this Contract and the
Articles of Association in writing via their respective authorized
representative(s).

 

(b)Upon termination of this Contract for whatever reason, the Company shall
return to SESHK the SGT related information injected as equity contribution from
SESHK and any material containing SGT information or SGT Know-How. Any
Improvement developed after the establishment of the Company shall be settled
pursuant to the terms of the TUCA. After the establishment of the Company, any
Know-How related materials developed by a Party, shall be returned to such
Party.

 

(c)Immediately after termination or expiration of this Contract, the Company and
THVOW/ICCDI shall no longer be entitled to use SGT or SGT Know-How, subject to
the terms of TUCA and above item of 22.2.(the technology developed by the
Company shall belong to the Parties and under such circumstance, a purchase to
the other parties can be done through consultation).

 

(d)Termination or expiration of this Contract shall constitute an automatic
termination of the Technology Usage and Contribution Agreement and, as a result,
a termination or expiration of any authorization to use SGT or SGT Know-How.

 

23.LIABILITY FOR BREACH OF CONTRACT

 

23.1Breach of Contract

 

If a Party fails to perform any of its material obligations under this Contract,
or if a representation or warranty made by a Party under this Contract is
materially untrue or inaccurate, the Party shall be deemed to have breached this
Contract.

 

23.2Failure to Pay Capital Contributions

 

Provided that each of the conditions in Article 5.4 has either been expressly
fulfilled or waived by the Parties, should one of the Parties fail to pay any
portion of its contribution to the registered capital of the Company at the time
and in the amounts stipulated in Article 5of this Contract, such Party shall be
deemed to be in breach of the Contract and, in addition to any liability it may
incur for such breach, such Party shall pay to the Company a late contribution
penalty at a monthly rate equal to the then applicable lending rate of the same
kind and duration which is published by the People’s Bank of China for Renminbi
loans on the amount of the contribution due and unpaid for as long as such
contribution is due and unpaid.

 

TSEC JV Contract amended in August 18, 2017 38

 

 

23.3Indemnity for Breach of Contract

 

(a)       If the Company suffers any loss, including but not limited to lost
profits, as a result of a breach of this Contract by either Party, then the
breaching Party shall indemnify and hold the Company harmless in relation to
such loss. If the non-breaching Party suffers any loss, including but not
limited to lost profits, as a result of a breach of this Contract by the
breaching Party, the breaching Party shall indemnify and hold the non-breaching
Party harmless in relation to such loss incurred by the non-breaching Party.

 

(b)       Unless it is otherwise agreed herein, in the event that any Party
fails to make its contributions to the registered capital of the Company, the
contributing party has the right to terminate the Contract.

 

23.4Continued Implementation of Contract

 

During the period of breach, the Parties shall in all other respects continue
their implementation of this Contract.

 

24.INSURANCE

 

The Company shall, at its own cost and expense and at all times during the
operation of the Company, procure and maintain full and adequate insurance
coverage in a manner prudent and advisable for the Company. The relevant
insurance policies may be obtained from any insurance company authorized to
provide such policies in the PRC. The types of insurance (which shall include
product liability insurance) and the value, duration and denomination of the
currency of the premiums and insurance proceeds shall be determined by the Board
of Directors based upon the recommendation of the General Manager based on the
practices of similar business in other countries and the actual circumstances in
the PRC.

 

25.FORCE MAJEURE

 

25.1Performance of Obligations

 

If any Party is prevented from performing any of its obligations due to an Event
of Force Majeure, the time for performance of the obligations under this
Contract specifically prevented from performance by such Event of Force Majeure
shall be extended by a period equal to the period of delay caused by such Event
of Force Majeure. A Party claiming inability to perform due to an Event of Force
Majeure shall take appropriate means to minimize or remove the effects of the
Event of Force Majeure and, within the shortest possible time, attempt to resume
performance of the obligation(s) affected by the Event of Force Majeure. If an
Event of Force Majeure occurs, no Party shall be responsible for any damage,
increased costs or loss which the other Parties may sustain by reason of such a
failure or delay of performance, and such failure or delay shall not be deemed a
breach of this Contract. All other obligations under this Contract and the time
for performance thereof shall remain unaffected.

 

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25.2Notice

 

The affected Party shall immediately notify the other Party of the occurrence of
any Event of Force Majeure and shall provide available evidence thereof. Should
the delay caused by any Event of Force Majeure continue for more than ninety
(90) consecutive days, the Parties shall settle the issue of further performance
of this Contract through friendly negotiations in accordance with Article 27(a)
and (b).

 

25.3Continued Implementation of Contract

 

During the period of an Event of Force Majeure, the Parties shall in all other
respects continue their implementation of this Contract.

 

26.APPLICABLE LAW

 

The laws or regulations of the PRC which are officially published and publicly
available shall apply to and govern the formation, validity, interpretation and
implementation of this Contract. In the event that there is no officially
published and publicly available law of China governing a particular matter
relating to this Contract, reference shall be made to the relevant provisions in
any treaty to which the PRC is a member or signatory. If there is no such
applicable treaty provision, then reference shall be made to general
international practices.

 

27.DISPUTE RESOLUTION

 

In the event of a dispute arising out of or relating to this contract, including
any question regarding its existence, validity or termination, the Parties shall
first seek settlement of that dispute by friendly consultation. Upon the
occurrence of a dispute, then any Party is entitled to send a notice to the
other Party (the “Reconciliation Notice”), to require the Parties to attempt to
solve this dispute matter through reconciliation within one (1) month after its
occurrence, during which time the Parties shall attempt in good faith to resolve
the disagreement and shall cause their respectively designated high level
representatives (the “Dispute Representatives”) to enter into a period of thirty
(30) days to negotiate to attempt to resolve the disagreement.

 

If the Dispute Representatives have not agreed upon the matter in issue within
thirty (30) days, any Party is entitled to request the joint appointment of an
internationally recognised independent expert in the area related to the matter
in issue (the “Expert”) to resolve the matter in dispute, provided that, in
making its determination, the Expert shall consider the interests of the
Company. Such Expert's determination shall be non-binding on the Company and the
Board. The Parties shall exert best endeavour in good faith to seek the
settlement of the dispute and enforce the decisions made by the Expert.

 

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If the Parties fail to jointly appoint such Expert or the Expert fails to reach
a determination related to the resolution at issue within ninety (90) days after
the occurrence of the dispute, either of the Parities shall be entitled to
submit the dispute to China International Economic and Trade Arbitration
Commission (“CIETAC”) for arbitration in Beijing, PRC.

 

(a)       There shall be three (3) arbitrators. THVOW shall select one (1)
arbitrator ICCDI and SESHK shall each select one (1) arbitrator as well. CIETAC
shall select the fourth arbitrator, (who shall not be a national of the PRC, the
Hong Kong Special Administrative Region, the Macao Special Administrative
Region, Taiwan or the United States), to act as the chief arbitrator. If a Party
does not appoint an arbitrator within the period required by CIETAC, the
relevant appointment shall be made by CIETAC.

 

(b)       The arbitration proceedings shall be conducted in English and Chinese.
The arbitration tribunal shall apply the arbitration rules of CIETAC in effect
on the date when the application for arbitration is submitted. However, if such
rules are in conflict with the provisions of this article, including the
provisions concerning the appointment of arbitrators, the provisions of this
article shall prevail.

 

(c)       Each Party shall cooperate with the other Party in making full
disclosure of and providing complete access to all information and documents
requested by the other Party in connection with such proceedings, subject only
to any confidentiality obligations binding on such Party.

 

(d)      The arbitral award shall be final and binding upon all Parties, not
subject to any appeal, and shall deal with the question of costs of arbitration
and all matters related thereto.

 

(e)During the period when a dispute is being resolved, the Parties shall in all
other respects continue their implementation of this Contract.

 

28.MISCELLANEOUS

 

28.1Public Information and Publications

 

No public statements shall be made by one Party on behalf of the other Parties
without its prior written consent.

 

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All marketing, advertising and promotional material relating to the Company
shall be subject to prepublication review and unanimous agreement by the
Parties.

 

28.2Language

 

This Contract is executed in both English and Chinese in twelve (12) original
counterparts in each language, each Party shall keep two (2) originals of each
language version, with the rest to be kept by the Company. Both language
versions shall be equally valid. However, Chinese version shall prevail when
there is inconsistency between two versions.

 

28.3Entire Agreement

 

This Contract and the other agreements contemplated herein constitute the entire
agreement among THVOW, ICCDI and SESHK with respect to the subject matters set
forth herein and therein and supersede all prior discussions, notes, memoranda,
negotiations, understandings and all the documents and agreements between them
relating to the same. All documents, agreements, understandings and
correspondence among the Parties prior to the execution of this Contract shall,
with the exception of any non-disclosure/confidentiality undertakings, become
null and void automatically when this Contract enters into effect.

 

28.4Amendment

 

Amendments to this Contract and the other agreements contemplated herein may be
made only by a written agreement in English and Chinese signed by duly
authorized representatives of each of the Parties and, unless prior approval
from the Examination and Approval Authority is statutorily required, will become
effective as soon as the amendments are filed with the Examination and Approval
Authority for record.

 

28.5Conflict or Inconsistency

 

The rights and obligations of the Parties established by and under this Contract
shall continue to exist throughout the Joint Venture Term and shall not be
prejudiced by the establishment of the Company, the adoption of the Articles of
Association or the execution of any of the agreements contemplated herein. In
the event of any conflict or inconsistency between this Contract on the one hand
and the Articles of Association or other agreements contemplated herein on the
other, the Articles of Association and other agreements contemplated herein
shall prevail.

 

28.6Notices

 

Notices or other communications required to be given by any Party or the Company
pursuant to this Contract shall be written in English and Chinese and may be
delivered personally, sent by registered airmail (postage prepaid) by a
recognized courier service, or sent by facsimile transmission to the address of
the other Party set forth below or such other address notified in lieu thereof.
The dates on which notices shall be deemed to have been effectively given shall
be determined as follows:

 

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(a)       Notices given by personal delivery shall be deemed effectively given
on the date of personal delivery.

 

(b)       Notices given by air courier shall be deemed effectively given on the
third business day of the delivery date (as indicated by the airway bill).

 

(c)        Notices given by facsimile transmission shall be deemed effectively
given on the first business day following the date of transmission.

 

For the purpose of notices, the addresses of the Parties are as follows:

 

THVOW: Suzhou Thvow Technology Co., Ltd.

 

No. 1 Linjiang Road, Jingang Town, Zhangjiagang City, Suzhou, Jiangsu Province,
215631, PRC

 

Attention:

 

Telephone No: 0512-5673-9008

 

Facsimile No.: 0512-5673-9009

 

ICCDI： Innovative Coal Chemical Design Institute (Shanghai) Co., Ltd.

 

8/F, No. 717, Yishan Road, Xuhui District, Shanghai

 

Attention: LIAO, Bing

 

Telephone No.: 021-34289000

 

Facsimile No.: 021-34289091

 

SESHK: SES Asia Technologies Limited

 

C/O Synthesis Energy Systems, Inc. Three Riverway, Suite 300, Houston, TX 77056,
USA.

 

Attention: Robert Wayne RIGDON

 

Telephone No: 001 (713) 579-0600

 

Any Party may at any time change its address for service of notice or
communication in writing delivered to the other Parties in accordance with the
terms hereof.

 

28.7Waiver

 

Unless otherwise provided for, failure or delay on the part of any Party to
exercise any right or privilege in this Contract shall not operate as a waiver
of such right or privilege nor shall any partial exercise of any right or
privilege preclude any further exercise thereof. Any waiver by a Party of a
breach of any term or provision of this Contract shall not be construed as a
waiver by such Party of any subsequent breach, its rights under such term or
provision, or any of its other rights hereunder.

 

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28.8Headings

 

The headings contained in this Contract are for reference only and shall not be
deemed to be a part of this Contract or to affect the meaning or interpretation
hereof.

 

28.9Approval

 

The formation of the Company will be submitted to related PRC approval authority
for approval in accordance with related legal procedures.

 

28.10Effectiveness

 

With the signature of each Party’s representative, which has been authorized by
such party’s board of directors, this Contract will come into effect on the day
after the Restructuring Agreement and the Share Transfer Agreement have come
into effect and upon government approval.

 

28.11Appendices

 

The appendices in various agreements that are not modified during this
restructuring of the Company shall remain effective to the Parties after the
restructuring.

 

 

 

[signature pages follow]

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Contract to be executed
as of the date first above written by their duly authorized representatives.

 

 

 

By:

 

___/s/ Liao Bing________________________

 

Suzhou THVOW Technology Co., Ltd.

 

Authorized Representative:

 

 

 

 

 

By:

 

______/s/ Fred Ma_____________________

 

Innovative Coal Chemical Institute (Shanghai) Co., Ltd.

 

Authorized Representative:

 

 

 

 

 

By:

 

___/s/ Chris Raczkowski__________________

 

SES Asia Technologies Limited

 

Authorized Representative:

 

 

 

 

 

 

 

 

 

 

 

 

 

TSEC JV Contract amended in August 18, 2017 45

 

 

Annex

 

 

 

 

 

1. Business Plan/Objectives

 

2. SGT Technology Material

 

3. Form of Project Sub-license Agreement

 

4. Technology Usage and Contribution Agreement

 

5. Appraisal Report for SESHK’s capital contribution

 

6. SGT Equipment Sales Framework Agreement

 

7. Representation Letter from SES and its affiliates for jointly undertaking the
obligations and responsibilities of SESHK.

 

   

 

 

 

 

 

 

 

 

TSEC JV Contract amended in August 18, 2017 46