Equity Transfer Agreement
On
Beijing Fuhua Dadi Gas Co., Ltd.

 

 

Fudi Gas Investment Co., Ltd.
Beijing Century Dadi Gas Engineering Co., Ltd.
Beijing Gas Group Company

 
 

--------------------------------------------------------------------------------

 

Equity Transfer Agreement
On
Beijing Fuhua Dadi Gas Co., Ltd.
 
 

Transferor I: Fudi Gas Investment Co., Ltd. (Transferor I and Transferor II
collectively referred to as “Transferors”)
Legal Representative: Tian Jun   Position: President
Address: Room 1202, 12F, No.1 Building, No. 8 East Beichen Rd., Chaoyang Dist.,
Beijing
Tel: 010-84992988

Transferor II: Beijing Century Dadi Gas Engineering Co., Ltd.
 (Transferor I and Transferor II collectively referred to as “Transferors”)
Legal Representative: Yan Hua   Position: Chairman
Address: No. 51, Huandaobei, Qingchun Rd., Huairou Dist., Beijing
Tel: 010-89683473

Transferee: Beijing Gas Group Company
Legal Representative: Zhou Si   Position: Chairman
Address: No.22, Nanxiao St., Xizhimen, Xicheng Dist., Beijing
Tel: 010-66205575

Whereas:
1, Beijing Fuhua Dadi Gas Co., Ltd. (hereinafter referred to as “Fuhua Gas”) is
a limited liability company (joint venture) legally established and standing
under PRC law. It is engaged in gas supply, contracting pipeline engineering and
construction and installing gas applicances.
 
 
 

--------------------------------------------------------------------------------

 
 
2、The shareholders of Fuhua Dadi is Fudi Gas Investment Co.,Ltd.(Transferor I)
and Beijing Century Dadi Gas Co.,Ltd.(Transferor II). As of the execution of
this agreement,Transferor I and Transferor II hold respectively 60% and 40%
equities of Fuhua Dadi.
3、Transferee intends to purchase 60% and 40% equities of Fuhua Dadi respectively
held by Transferor I and Transferor II.
4、Transferor I is a foreign invested enterprise; Transferor II is a limited
liability company; Transferee is a limited liability company.
For the purpose of protecting lawful interests and rights of all parties hereof
and promoting the equity transfer and related issues going smoothly, on the
basis of equality, free will and mutual consultation, all the parties hereof
sign this agreement as following:

Article I   Consideration and Equity for Transfer
 
1、  
Determination of Consideration and Equity for Transfer

 
（1）Target Equity for Transfer
As of the execution date of this ETA, the registered capital of Fuhua Dadi is
RMB 30 Million. Transferor I, as a shareholder of Fuhua Dadi, actually paid RMB
18 Million, accounting for 60% of total registered capital of Fuhua Dadi;
Transferor II, as the other shareholder, actually paid RMB 12 Million,
accounting for 40% of total registered capital of Fuhua Dadi. Both Transferor I
and Transferor II agree to transfer their equities of Fuhua Dadi, respectively
40% and 60% to Transferee and Transferee agrees to purchase the equities as
mentioned above.
 
 
 

--------------------------------------------------------------------------------

 
 
（2）Assessment Value of Net Asset
Transferor I, Transferor II, and Transferee commonly affirm:
           The Audit Report issued on Nov.6, 2010 by Beijing Xingzhonghai
Accounting Firm regarding the Fuhua Dadi as of September 30 (Xingzhonghai No.
811[2010]) (shortly as “Audit Report”); and
The Asset Appraisal Report issued on Jan.12, 2011 by Beijing Liuhe Zhengxu Asset
Appraisal Co., Ltd. regarding Fuhua Dadi asset as of Sept. 30,2010 (Liuhe
Zhengxu No. 013[2010]) (shortly as “Asset Appraisal Report”).
Basing on the above Audit Report and Asset Appraisal Report, the total assets of
Fuhhua Dadi as of Sept.30,2010 is RMB 120.75 Million and the total liabilities
is RMB 50.41 Million and Net Asset is RMB 70.34 Million.
Referring to the appraisal result, Beijing Xingzhonghai Accounting Firm made
audit adjustment on the change of net asset occurred during the period from
Oct.1, 2010 to Dec.31, 2010.  In accordance with the result of audit adjustment,
during the above period, the net asset increase is RMB 3.24 Million.
   The Audit Report and Asset Appraisal Report shall be attached with this ETA.
 
（3）Consideration
 
 
 

--------------------------------------------------------------------------------

 
 
Referring to Asset Appraisal Report、audit adjustment result and the actual
percentage of capital contributions of Transferors, the consideration of 60%
equities of Fuhua Dadi transferred to Transferee by Transferor I is RMB 44.15
Million and the consideration of 40% equities of Fuhua Dadi transferred to
Transferee by Transferor II is RMB 29.43 Million.
The above considerations shall cover all interests and rights of the target
equities for transfer and shall include but not limited to the increase or
decrease of net asset of Fuhua Dadi during transition period provided in this
ETA.

Article II Equity Transfer and Payment Schedule

1、  
Equity Transfer Schedule

（1）Within 10 working days after executing this ETA, Transferors and Transferee
shall make preparations for the handover of Fuhua personnel、asset and related
material. The preparations shall include but not limited to the work handover
between management of Fuhua Dadi assigned by Transferors and personnel appointed
by Transferee, informing Transferee about the work mechanism, management system,
work procedure, daily operations and asset inspection by both Transferors and
Transferee referring to checklist of Asset Appraisal Report.
 
 
 

--------------------------------------------------------------------------------

 
 
（2） Within 10 working days after executing this ETA, Transferee shall pay 80% of
consideration to Transferors. Respectively, Transferor I shall be paid RMB 35.32
Million and Transferor II shall be paid RMB 23.55 Million.
（3）As soon as Transferee provides Transferors Payment Vouchers about the 80%
equity consideration, Transferors and Transferee shall begin the handover of
asset, related material and personnel of Fuhua Dadi.
（4）Within 10 working days after completing the AIC registration alteration,
Transferee shall pay the remaining 20% equity consideration to Transferors, and
respectively pay Transferor I RMB 8.83 Million and pay Transferor II RMB 5.88
Million.

2、Transferor I designates the bank account as below to accept the equity
transfer consideration paid by Transferee:
Bank Account: Fudi Gas Investment Co.,Ltd.
Opening Bank: Beijing Beichen Rd. Branch Bank of Industrial and Commercial Bank
of China
Account No.: 02000 418 090201 36247
Transferor II designates the bank account as below to accept the equity transfer
consideration paid by Transferee:
Bank Account: Beijing Century Dadi Gas Co., Ltd.
Opening Bank: Business Dept., Huairou Branch Bank of Beijing Rural Commercial
Bank
Account No.: 130100010300000611
 
 
 

--------------------------------------------------------------------------------

 

 
Article III Settlement of Claim and Debt

1、 As shareholders of Fuhua Dadi, Transferor I and its related company, Fudi Gas
Development Co., Ltd., and Transferor II provided loans to Fuhua Dadi and signed
Loan Agreement, according to which such loans shall become due by April 30,
2011.
As of Dec. 31, 2010, Fuhua Dadi has the balance of loan principal and interest
of RMB 10.913 Million due to Transferor I, the balance of principal and interest
of RMB 13,207,349.00 due to Transferor II and the balance of principal and
interest of RMB 7,795,000.00 due to Fudi Gas Investment Co., Ltd.

2、Considering Fuhua Dadi shall become the wholly-owned subsidiary of Transferee
after completing the equity transfer hereof, Transferors and Transferee, through
consultation, agree to repay Transferors the balance of principal and interest
mentioned above to the account designated by Transferors to accept equity
transfer consideration within 10 working days after completing AIC registration
alteration. Fudi Gas Development Co., Ltd., the related company of Transferor I,
agrees on the arrangement of this article and shall entrust Transferor I to
collect the principal and interest repaid by Fuhua Dadi. Letter of Entrustment
is attached.
 
 
 

--------------------------------------------------------------------------------

 
 
3、Transferor I and its related company, Fudi Gas Development Co., Ltd. and
Transferor II commonly agree that after Fuhua Dadi repays the above loan prior
to the due date as provided hereof, Fuhua Dadi, Transferor I and its related
company and Transferor II shall deem the balance of shareholder loan settled.
Transferor I and its related company, Fudi Gas Development Co., Ltd. and
Transferor II admit irrevocably that Fuhua Dadi shall be exempted of loan
interests occurred between Jan.1, 2011and April 30, 2011. All parties shall not,
in any form, recourse, assert and press for payment of any principal and
interest covered above with Fuhua Dadi.

Article IV  Representations and Guarantees

Transferor I and Transferor II represent and guarantee:
1、Transferor I and Transferor II lawfully own 60% and 40% equities of Fuhua
Dadi, to which all parties and any other third parties, AIC department shall not
lodge any objections. Both Transferor I and Transferor II have lawful entities
and shall have the right to transfer equities of Fuhua Dadi and undertake
obligations related to equity transfer. Each transferor shall guarantee to waive
the first right to purchase equities sold by the other transferor.
2、Transferors do not create any guarantee, mortgage, lien, and pledge on the
transferred equities, not involve interests and rights of any other third party.
And there shall not exist any material and legal barriers for causing failure of
this equity transfer and shall not exist any disputes、lawsuits、arbitration or
administrative punishments. In the meanwhile, Transferors guarantee that Fuhua
Dadi does not provide guarantees to a third party, not pledge its pipeline
assets or impose other right restrictions and not pledge its right of gas
charging or impose other right restrictions.
 
 
 

--------------------------------------------------------------------------------

 
 
3、All the documents, provided by Transferor I and Transferor II to Transferee
and Beijjing Xingzhonghai Accounting Firm and Beijing Liuhe Zhengxu Asset
Appraisal Firm, are complete, lawful and valid. All the statistical forms agree
to the true situation of target enterprises. There are no false information,
documents，materials provided to Transferee and no significant issues on Fuhua
Dadi concealed.
If Transferee found out any untrue reports on Fuhua Dadi assets, Transferee
shall inform Transferor I and Transferor II and within 5 business days after
issuing Authentication Report by a third party jointly appointed by Transferor
I, Transferor II and Transferee, Transferor I and II shall rectify the asset
shortage and related materials, otherwise Transferor I and II shall return
Transferee 60% and 40% of appraised value of untrue reported asset and pay
Transferee 5% of such appraised value as penalty.
 
 
 

--------------------------------------------------------------------------------

 
 
4、Except explicit disclosure in Audit Report and listed in this agreement, Fuhua
Dadi is free of other debts in any forms. If other debts exist and result in
losses to Fuhua Dadi, Transferee or related companies, Transferor I and
Transferor II shall undertake joint liabilities and be responsible for full
amount compensation to Fuhua Dadi, Transferee or its related companies.
5、During transition period, Transferor I and Transferor II guarantee that Fuhua
Dadi shall operate conforming to the prudence principle of gas industry and
important decisions, including but not limited to contracts or agreements newly
executed, or capital expenditure over RMB 200,000, shall be permitted upon the
consent of Transferee, under the precondition that the normal operation of Fuhua
Dadi shall not be impeded by Transferee.
The transition period refers to the period from Jan.1,2011 to the date
completing the AIC alteration registration of the equity transfer hereof.
6、Transferor I and Transferor II shall guarantee that there are no serious
defects in pipelines currently owned by Fuhua Dadi. If within 1 year after
completing the AIC alteration registration, any serious losses caused due to the
defects of the pipeline assets to Fuhua Dadi, Transferee or its related
companies, Transferor I and Transferor II shall undertake joint liabilities and
compensate Fuhua Dadi, Transferee or its related companies for all the losses
caused. But compensation shall be made based on the authentication report issued
by an independent party jointly appointed by Transferor I,II and Transferee.
 
 
 

--------------------------------------------------------------------------------

 
 
7、On the land use of 7 CNG Stations owned by Fuhua Dadi, Tansferor I and II
guarantee they have lawful land lease contract or land use right. Transferor I
and II shall not impact Transferee on the maintenance and repair, normal
management and lawful use of gas appliances and guarantee the buildings of 7 CNG
stations are lawfully owned and of clearly established ownership. If any
economic losses caused to Fuhua Dadi, Transferee or its related companies due to
the disputes arisen by land occupation, and building ownership of CNG gas
stations, Transferor I and Transferor II shall jointly undertake.
 
8、Transferor I and II guarantee they shall not operate any gas supply business
(except the existing liquefied gas business) in Huairou Dist upon the completion
of this equity transfer.
9、Transferor II guarantee that its shareholder change shall not impede this
equity transfer for obtaining the governmental approval.
10、Other covenants hereof for performing obligations by Transferor I and II;

Representations and Guarantees by Transferee:
1、Lawful entity; have right to purchase the equities of Fuhua Dadi and undertake
related obligations for equity purchase;
2、Ensure pay equity transfer consideration on time and in full amount;
3、Other covenants hereof for performing obligations by Transferee;
 
 
 

--------------------------------------------------------------------------------

 
 
4、Guarantee Fuhua Dadi shall perform the obligations for paying back in advance
loan and interest undertaken by Transferor I and its related companies and
Transferor II and under joint liabilities.

Article V Obligations

Obligations of Transferor I and II:
1、As agreed herein, Transferors shall hand over assets, related materials and
personnel of Fuhua Dadi to Transferee and in the meanwhile, all the directors,
supervisors and other senior management of Fuhua Dadi assigned by Transferor I
and II shall hand over all the documents,materials, certificates,seals and
ongoing work on their hands to the personnel designated by Transferee.
2、Transferor I and II shall cooperate with Transferee to work on examination and
approval and AIC alteration registration of Fuhua Dadi equity and sign off and
issue related legal documents.
Transferee’s Obligations:
1、Pay consideration on time and in full amount as provided in Article II hereof;
2、 Ensure all the on-post staff and workers as of the execution of this
agreement shall follow with their existing labor contract till the completion of
overall handover of Fuhua Dadi.
 
 
 

--------------------------------------------------------------------------------

 

 
Article VI Preconditions for Agreement Effectiveness

1、Transferee receives the written document that Transferor I agrees that
Transferor II transfers 40% equity of Fuhua Dadi and waives the first right to
purchase such equity; Transferee receives the written document that Transferor
II agrees that Transferor I transfers 60% equity of Fuhua Dadi and waives the
first right to purchase such equity.
2、Transferors and Transferee shall report to their respective decision-making
powers to approve the equity transfer hereof and issue written approvals
accordingly.
3、Approvals (not including AIC registration alteration formalities) from related
governmental authorities on the equity transfer hereof shall be obtained.
4、 Legal representative or personnel authorized by Transferors and Transferee
shall appropriately sign and seal on this agreement.

Article VII General Termination

In the event of any following cases, this agreement shall be terminated and
Transferor shall return Transferee consideration received:
1、Either party shall be prevented from the performance of this agreement due to
an event of Force Majeure such as state policies ( referred to law,
administrative regulations or local laws and rules of Beijing City)or war,
natural disaster, outside the reasonable control of that Party.
 
 
 

--------------------------------------------------------------------------------

 
 
2、AIC alteration of this equity transfer is not completed due to reasons caused
other than any parties hereof.
In the event the above case, with 30 business days after receiving a written
notice, Transferor shall return Transferee the consideration it received.

Article VIII Breach and Termination of Agreement

Besides the general termination, any parties of Transferors and Transferee shall
be regarded as breaching the agreement if they breach the statement and
guarantee provided in Article 4 or they don’t perform their respective
obligations of Article 5 and the observant party shall have the right to
terminate this agreement and the breaching party shall undertake the following
liabilities of breach of agreement and compensate the observant party all the
losses (direct loss, indirect loss and related expenditure for requiring
compensation) caused by breach of agreement:
1、When Transferor I and/or Transferor II breach this agreement, Transferee shall
have the right to terminate this agreement and require Transferor I and/or
Transferor II to return the consideration already paid and require them to pay
penalty equal to 5% of total consideration of equity transfer.
 
 
 

--------------------------------------------------------------------------------

 
 
2、Transferee shall undertake liabilities of breach of the agreement due to
delayed payment of the consideration.
Where Transferee doesn’t pay Transferor I and / or Transferor II consideration
of equity transfer as scheduled, Transferee shall pay Transferor I and/or
Transferor II the penalty of 0.03% of the remaining payment. Where Fuhua Dadi
doesn’t repay according to schedule Transferor I and its related company, Fudi
Gas Development Co., Ltd. and Transferor II the due amount of loan principal and
interest, Fuhua Dadi need to pay the penalty of 0.03% of the remaining amount of
principal and interest per day. If Fuhua Dadi is unable to pay such penalty,
Transferee shall have the obligation to pay.

Article IX Undertaking of Taxation

Taxes and other fees generated by this equity transfer shall be undertaken by
Transferors and Transferee in accordance with national laws and regulations.

Article X Confidentiality

Either party of this agreement shall keep confidential all the information
involved in this agreement and without the consent of obligees or mandatory
requirement, either party shall not provide or disclose to any third parties
unrelated to this agreement, otherwise undertake liabilities for breach of the
agreement.
 
 
 

--------------------------------------------------------------------------------

 

 
Article XI Settlement of Dispute

Any disputes arising from or in connection with this Agreement shall be settled
through friendly negotiation among the Parties. If the dispute cannot be
resolved by negotiation, then any Party may submit the dispute to China
International Economic and Trade Arbitration Committee located in Beijing for
arbitration according to and regulations in effect at the time of applying for
arbitration. The arbitration award shall be final and binding on all parties.

Article XII Other Issues

1、Transferee consents that under equal conditions, Fuhua Dadi and Beijing Gas
Huairou Co.,Ltd. shall engage preferentially Beijing Dadi Gas Engineering
Co.,Ltd in gas project construction.
2、Transferor II consents that after this agreement takes effect, Fuhua Dadi can
maintain or terminate the service contract or agreement reached with Transferor
II or its related party according to operation requirement.
3、On matters concerning equity transfer not mentioned herein，all the parties
hereof shall negotiate and sign a supplementary agreement that shall be equally
effective with this agreement.
4、Audit Report, Audited Adjustment Report by Beijing Xingzhounghai Accounting
Firm and Asset Appraisal Report by Beijing Liuhe Zhengxu Asset Appraisal Firm,
Name List of Fuhua Dadi personnel and Trust Letter of Payment Gathering issued
by Fudi Gas Development Co., Ltd. shall be attached as Annexes to this
agreement.
5、This agreement shall be in ten copies with equal legal effect, each signing
party shall retain two copies and Fuhua Dadi shall retain one copy. Others shall
be kept for submitting to governmental authorities for examination or file.

This page is blank below.

 
 

--------------------------------------------------------------------------------

 

(Signature Page)

Transferor I: Fudi Gas Investment Co.,Ltd.

Legal Representative or Authorized Representative

                           Date:
 
 

Transferor II:Beijing Century Dadi Gas Co.,Ltd.

Legal Representative or Authorized Representative

                                   Date:

 
 

--------------------------------------------------------------------------------

 

Transferee: Beijing Gas Group Company

Legal Representative or Authorized Representative

                                           Date:

Place: Beijing

 
 

--------------------------------------------------------------------------------