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China TransInfo Technology Corp.: Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1

Loan Agreement 
(English Translation)

Bank of Beijing

Borrower: Beijing PKU Chinafront High Technology Co., Ltd.

Lender: Zhongguancun Haidianyuan Branch of Bank of Beijing Co., Ltd. 

Contract Data: June 21st, 2010 

Terms of Loan Agreement

	Borrower: Beijing PKU Chinafront High
      Technology Co., Ltd. 
	Legal representative/main principal: Shudong
      Xia 	  
	Title: Chairman 	  	  
	Address: 8th Floor, Vision Building, No.39,
      Xueyuanlu, Haidian District, Beijing 
	Zip Code: 100191 	Telephone No: 51691865 	Fax No: 51691864

	Lender (named Bank of Beijing ): Zhongguancun
      Haidianyuan Branch of Bank of Beijing Co.,Ltd. 
	Legal representative/main principal: Qing
      Zhao 	Position: President 
	Address: No.2 Beiyi Street, Haidian District,
      Beijing 	  
	Zip Code: 100080 	Telephone No.: 62699010 	Fax No: 62699132 

In accordance with laws and rules of the People’s Republic of
China and on the basis of observing fairness, through both parties’ negotiation,
this Agreement is concluded. 

A Related Agreement (fill in when applicable): 

This Agreement was signed by Zhongguancun Haidianyuan Branch
of Bank of Beijing acting as the Lender and Beijing PKU
Chinafront High Technology Co.,Ltd. acting as the Borrower. 

	B	 Amount and Period of the Loan:
	 	 
	B.1	Loan currency under this Agreement is RMB, loan
      amount is RMB 30,000,000
	 	 
	B.2	The term of this Agreement begins at the first
      withdrawal date and ends on 12 months after such date.
	 	
     

	B.3	The final maturity date of the loan is the date set
      forth in Section B.2.

	C	 Interest Rate ("√" means applicable, "x"
    means not applicable, following is the same.)  

C.1         If the loan currency under this Agreement is RMB, then the interest rate is executed
      based on the benchmark interest rate as of the date of first withdrawal:
      þinterest rate goes up [ 0%]
x interest rate floats down[ %]. The
      interest rate of this Agreement is floating in accordance with Section 2.4
      during the loan period. C.2 If the loan currency under this Agreement is
      foreign currency, the interest rate among months is decided by with the
      base on the HIBOR (applicable to Hong Kong dollars) or LIBOR (applicable
to other foreign currency), and the added basic point is not less than (_BP_), the specific details refers to the record in the loan certificate approved by Bank of Beijing.

1

C.3         The interest rate in the loan periods is floating accordingly with
Section 2.4 under this Agreement. 

	D	 Withdrawal Plan, Loan Usage, Account Supervision  
	 	 
	D.1	
      The Borrrower may withdraw the principal within 90 days from
      the Agreement date 

    

      The specific withdrawal plan as following: withdrawal of RMB 30,000,000
      before June 25th, 2010 

	D.2	
      The usage of the loan by the Borrower under this Contract:

    

      □ (a) Banks will be entrusted to take the lender to pay the
      loan funds. 

      □ (b) The loan shall be repaid individually by the Borrower in
      principal, the Borrower should report the loan payments to Bank of
      Beijing regularly (The repayment period is _______ ). 

      If there exists the below conditions, the banks will be entrusted to
      take the lender to pay the loan funds:  (i)signal amount (currency) exceeds _RMB_____(capital letter);
      (ii)Targeted payment and signal amount (currency) exceeds RMB
      (capital letter);()_______________________________.  

      þ (c) The Borrower shall pay all the loan principal individually, and
      should report to Bank of Beijing about the repayment of loan principal
      regularly (The repayment period is _______). 

	D.3	
      The loan shall be transferred to the account of the Borrower with Bank
      of Beijing having the Account No. 010 9144 8700 1201 0900 22129
      (The account can be changed with the consent between the Borrower and
      Bank of Beijing, the changed bank account should be written in the loan
      certificates.) The Borrower should use this bank account to pay and accept
      the inspection and supervision from Bank of Beijing.

    
	 	 
	D.4 	The Account No.010 9144 8700 1201 0900 22129 is opened by
      the Borrower in Zhongguancun Haidianyuan Branch of Bank of
      Beijing(Opening bank name) with Beijing PKU Chinafront High
      Technology Co.,Ltd. as the account name. This is a capital deposit
      account( changeable with the agreement of Bank of Beijing).The Borrower
      should provide capital deposit and account transactions information to
      Bank of Beijing regularly (The period is_________) and promise to
      cooperate with the supervision of Bank of Beijing.
	 	 
	D.5	
      Bank of Beijing shall inspect, monitor and manage the above account
      according to [ ] this Agreement ; Account monitoring agreement signed by
      the two Parties and this Agreement. 

    
	 	 
	E	
     Use of Loan 

      Supplemental Working Capital 

	2 

	F	
     Principal Repayment Plan

Repay all the principals before maturity date, amortization of
principal as per the below agreements during the loan period: 

	
    þ	Repaid at maturity date 
	 	 
	
    x	
      Equal monthly principal repayments, repayment of
      principal one time on the date of 21st every
  month

	 	 
	
    x 	
      Equal quarterly principal repayments, repayment of
      principal one time on the date 21st of the last month of each
      quarter 

	 	 
	
    x	Installment repayment as per the following plan, the
      loan certificate shall prevail approved by the agreement of Bank of
      Beijing 

	G 	
 Interest Repayment Plan 

    

Pay all interest at the final maturity date, amortization of
interest as per the following agreements during the loan period 

x Monthly interest payment on a exact date ( on the
21st date every month) 

þ Quarterly interest payment on a exact date ( on the
21st date of the last month of each quarter) 

x Interest payment on the next day of the corresponding day
of the past every month, corresponding day means the same day as of every month(referring to the last day if there exists no corresponding day as the past
at the current month) 

x Interest payment on the next day of the corresponding day
of the last month of every quarter, corresponding day means the same day as the
last month of each quarter (referring to the last day if there exists no
corresponding day as that of last month of every quarter at the current month)

□ (Only applicable to loan foreign currency) As per the
agreements of C.2 under this Contract, interest shall be paid terminally based
on the agreed interest period month that has chosen, interest payment date is
the next day from the withdrawal date to the end of corresponding date each period(referring to the last day of the current month if there exists no
corresponding day). 

3

	K 	 The Key Commitment of Financial Indicators of
      the Borrower: 
	 	 
	(a)	The ratio of tangible net assets(capital stock paid-up
      plus capital fund) to gross liabilities exceeds [ ] 
	 	 
	(b)	Minimum net assets not less than RMB( capital letter)
      [  ] 
	 	 
	(c)	Annual total pre-tax profit not less than RMB(capital
      letter) [  ] 
	 	 
	(d)	The ratio of current assets to current liabilities (ie
      current ration) not less than [  ] 
	 	 
	(e)	The ratio of profit before tax to interest income(
      interest coverage ratio) not less than [  ] 
	 	 
	 	 
	M	 Security ( subject to security documents)
    

	
    □	Warranty, guarantor’s name __________ 
		
	
    □	Pledge, pledgor’s name _________ 
		
	
    □	Mortgage guarantee, mortgagor’s name _________ 
		
	
    □	Others, can be found in the special convention column
      under this Agreement or related security documents. 
		
		
	N	 Expenses: 
		
	N.1	Compensation of prepayment principal = repayment
    principal x [ % ] (annual compensation rate)
    x number of years in
      advance 
		
	N.2	
The Borrower should pay loan arrangement fees RMB _______
(capital letter) to Bank of Beijing within ______ days after the Agreement
date (not late than the first withdrawal date). 

    
		
		
	U  	
Appendix (loan, loan certificate and the following
appendixes are the component parts of this Contract) 

    
		
	
    
 

    	
    
 

    
		

	W 	
      Notarization for Compulsory Enforcement

	 	 
	x	
      Endowing notarization agreement with compulsory
      enforcement and complete notarization within _____ days of the Agreement
      date

4

	
þ

    	
There is no need to have a mandatory notarization for this
Agreement.

    
	 	 
	
X

    	
Special Agreement:

    
	 	 
	 	 
	 	 
	 	 
	 	 
	Y 	
The Borrower hereby Acknowledges: 

    

The Bank of Beijing has reminded the Borrower to pay attention
to terms about related rights and obligations and fully demonstrated and
illustrated this Agreement, the amendments and supplements( if any) approved by
the two Parties have been written in the special convention column or
supplemental agreements; the Borrower can completely understand and agree with
all the content including terms of loan agreement, basic terms and contract
appendix after fully reviewing and negotiating with Bank of Beijing without
showing any questions or objections. 

	Z	Signatures of the Parties:

The Borrower (company seal): 

Legal representative or authorized representative: /s/ Shudong
Xia 

Bank of Beijing (company seal): 

Main principal or authorized representative: /s/ Qing Zhao 

5

Loan Agreement Basic Items

	1. 	
      Definitions

	 	 
	1.1 	
      In this AGREEMENT, the following terms shall have the
      respective definitions set forth in this Section
1.1.

This CONTRACT: includes the entire below documents: Terms of
Loan Agreement, Loan Agreement Basic Items, loan certificate signed by both
parties, other contract appendix listed in Section U and other documents legally
regulate both parties’ rights and obligation (include but not limited
supplementary agreement, letter of undertaking). 

Benchmark Loan Rate: refers to the RMB benchmark loan rate
announced by the People’s Bank of China of the same period (if this benchmark
loan rate of the same period has been canceled, refers to the interest rate
complying with laws announced by Bank of Beijing); benchmark loan rate of the
same period refers to the benchmark interest rate corresponding to the loan term
stipulated in Section B. 

LIBOR (HIBOR): refers to The London (Hong Kong) Interbank
Offered Rate released by Reuters or Bloomberg and other financial
telecommunication terminals at 11:00am London (Hong Kong) time on the same day,
if no rate data above available on that day, refers to the rate released on
latest day. 

Security Document: refers to any guaranty contract, security
terms, conditions letter created in security and signed or agreed by guarantor.

Trustee Payment: means Bank of Beijing shall transfer the loan
principal to the Borrower counterparties meeting the purpose of this AGREEMENT
through the Borrower’s account according to the withdrawal application and
payment order of the Borrower’s. 

Discretionary Payment: means the Borrower shall discretionarily
pay the loan to Borrower counterparties meeting the purpose of this AGREEMENT
after Bank of Beijing granting the loan to the Borrower’s account according to
the withdrawal application and payment order of the Borrower’s. 

Laws and Regulations: means applicable laws, administrative
regulations and the judicial interpretation of the Supreme People’s Court in the
territory of the People’s Republic of China except Hong Kong, Macao and Taiwan.

Finance Regulations: means the regulations, rules and orders
released and implemented by the People’ Bank of China, foreign exchange
authority and banking supervision authority. 

Business Day: refers to any days commercial banks opening
general corporate banking business in cities which Bank of Beijing located,
excluding legal festivals and holidays, weekends (Saturday and Sunday), but
including the weekend provisionally designated as working days by the
government. 

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1.2 In any documents under this AGREEMENT or created based on
this AGREEMENT, terms that have been defined in this AGREEMENT have the same
definition in those documents if no other clear explanations in those documents.

	2. 	
      Loan

2.1  The loan currency, amount and period in this AGREEMENT
      refer to Section B. The amount of each loan refers to the record in loan
      certificate; loan certificate is part of this
AGREEMENT.

2.2 The Borrower can drawdown during the period agreed in
Section D in this AGREEMENT. The change of drawdown plan needs approval from
Bank of Beijing, the un-drawdown amount within the loan after expiration time
will be canceled automatically. The Borrower has to meet below requirements
(except for the conditions Bank of Beijing decides to waive) when apply for
drawdown, otherwise, Bank of Beijing has no obligation to issue loan. 

1) Security document in Section M of this AGREEMENT has been
      agreed, signed and registered;

2)  The Borrower has set up the account and completed other
      related procedure reasonably required by Bank of Beijing, has submitted
      explanatory documents and evidence on capital expenditure purpose and
      capital expenditure plan, which reviewed by Bank of Beijing. If the
      AGREEMENT is under the credit line described in Section A, this AGREEMENT
      must retain enough facility to draw for the Borrower;

3) No violation of the AGREEMENT from the Borrower, no
violation of the security document from the guarantor; 

4) No significant negative impact on each Party when executing
this AGREEMENT from laws and regulations, financial regulation and governmental
credit policy, no forbiddance or limitation on loan issue and drawdown of this
AGREEMENT from laws and regulations, financial regulation and governmental
credit policy; 

5) Other conditions agreed in this AGREEMENT and designated by
laws and financial regulations.

2.3 Bank of Beijing should grant the loan within 3 business
days once the Borrower meets the requirements. Once the loan has been
transferred to the Borrower’s account, which will be regarded as the drawdown
and usage of the Borrower, that day will be recorded as the drawdown day and be
the record day to calculate loan interest rate based on the AGREEMENT. When this
drawdown executed from time to time, each withdrawal will be started to
calculate loan interest on the execution day based on the benchmark loan rate on
that day and the floating interest rate designated by Section C of this
AGREEMENT. 

7

The loan shall be used with the adoption of trustee payment of
Bank of Beijing, (i) The Borrower should submit complete business contract and related transaction
materials at least three days in advance (or other time limits reasonably
requested by Bank of Beijing), then Bank of Beijing shall verify whether all the
submitted materials comply with the AGREEMENT before issuing the loan. Bank of
Beijing shall record and transfer the loan to Borrower counterparties through
the Borrower’s account after Bank of Beijing’s agreement (there is no need to
provide voucher of clearing for another transaction for the Borrower). (ii) The
Borrower is responsible to loan delay or trustee payment delay causing by
submitting incomplete , not qualified or not timely documents or existing
reasonable disputed points. (iii) When there happens some accounts not the fault
of Bank of Beijing, such as the Borrower account status is not normal,
incomplete and inadequate transaction counterpart account information provided
by the Borrower or inter-bank payment systems or settlement systems, resulting
in failure payment or transaction to the transaction counterpart account when
the loan is transferred to the Borrower’s account, then the Borrower should bear
all the loss like handling charge settlement, loan interest, other loss and
delay. However Bank of Beijing should try and work hard to handle paid
procedures of Borrower transaction counterpart account or remain in the Borrower
account or pending subjects and inform the Borrower to handle procedures. 

The loan shall be used in a discretionary payment way by the
Borrower. The Borrower should provide loan usage plan according to the
requirement of Bank of Beijing, and report loan payment status regularly to Bank
of Beijing as per Section D under this AGREEMENT after loan origination. Bank of
Beijing has the rights to examine if the loan payments comply with the AGREEMENT
through ways like analyzing account, identifying funds transfer certificate and
field investigation while the Borrower should cooperate with it. 

Bank of Beijing has the right to monitor related account and
the usage of account funds through ways like rejecting checks sale, not dealing
with deposit and withdrawal, not opening online banking or phone bank. 

Bank of Beijing has the right to require to change the usage
pattern of the loan when facing Borrower credit decline, poor profit ability of
the main business, unusual usage of loan, the Borrower should accept and
cooperate with Bank of Beijing meanwhile. 

2.4 The loan of this AGREEMENT is floating interest rate loan;
the floating interest settlement shall be the following: (i) For RMB loan, the
interest of this AGREEMENT is applied on the benchmark loan rate at the same
time and the floating interest rate described in Clause C.1 of this AGREEMENT,
with the adjustment of the benchmark loan rate at the same period, the interest
will be calculated on multi-stage basis. (ii) For foreign currency loan, the
interest of this AGREEMENT is applied on the corresponding currency LIBOR
(HIBOR) interest rate on last second day of foreign currency market opening
business before the interest execution day plus floating benchmark rate (1% in
100 basic points) regulated in Section C in this AGREEMENT; above automatic
adjustment should not be regarded as revise to this AGREEMENT. When contract
interest rate converts to daily rate from annual rate, the Hong Kong currency
rate shall apply on 365 days for one year, other foreign currency rate and RMB
rate shall apply on 360 days for one year. 

8

2.5 The Borrower should guarantee the loan usage is accordance
with the loan usage descried in Section E, and guarantee the above usage will not violate any laws and
regulations and finance regulation, the Borrower warrants the loan will not be
applied to fixed assets, stock equity and other investments, not be applied to
any projects and business which are prohibited from using commercial bank loans
by laws, regulations and financial regulations. The Borrower needs to get
written approval from Bank of Beijing in the event of change of loan usage. The
Borrower warrants that the transaction documents, transaction counterpart status
information provided to Bank of Beijing are true, complete, legally effective
and are in accordance with the usage stipulated in this AGREEMENT. 

2.6 The Borrower should repay the loan principal as agreed on
Section F in this AGREEMENT, and repay the loan interest as agreed on Section G
in this AGREEMENT; each of the interest payment date (including) to the next
interest payment date (excluding) constitute a interest period (the first
interest period starts from the withdrawal day, the last interest period ends at
the day loan principal dues); the related interest should be repaid when each
installment of loan principals repaid, the entire loan principals, related
interests and other payables should be repaid on the last due date. In case of
legal holidays, the Borrower should deposit enough amounts at the account in
advance for Bank of Beijing to deduct it on that day or the first working day
extended accordingly, the interest will continue to be calculated during
extension period. 

2.7 To repay the loan on time, the Borrower should open and
maintain an account in Bank of Beijing as described in the beginning of this
AGREEMENT ( if account number suffers changes, the changed account number should
continue to apply this AGREEMENT), and deposit the related repayment amount at
the account for Bank of Beijing deduction, the Borrower can also make transfer
to Bank of Beijing account for repayment and notice related transfer reference
number to Bank of Beijing in time. Bank of Beijing has the right to deduct the
unpaid due amount from all accounts opened at business institutions of Bank of
Beijing, and inform the Borrower in bank statement and other types of notice
after deduction. 

2.8 Bank statement generated internally in Bank of Beijing
should be the valid evidence for loan issue and principal and interests
repayment if no other ample opposite evidence. 

	3. 	
      Prepayment and extension

3.1  The loan cannot be prepaid within withdrawal period. Both
      parties should negotiate to consent if the Borrower requires for prepayment after withdrawal period; the
Borrower must submit irrevocable written application to Bank of Beijing 30 days
in advance, to explain the loan principal amount of prepayment and left loan
principal payment plan; after Bank of Beijing’s review and agreement, the
Borrower should execute prepayment on prepayment date and pay prepayment
compensation regulated in Section N of this AGREEMENT to Bank of Beijing (the
prepayment annual number should be the result the actual days number from
prepayment date to agreed loan due date divided by 365, keep two digitals after
point), and repay the entire interests related to the prepayment principal and
repay other related payables, the left principal should be repaid subject to the
new plan agreed by Bank of Beijing (the latest repayment day should not be late
than latest due day), if no new repayment plans submitted by the Borrower or
agreed by both parties, reverse order repayment (prepayment amount shall be
firstly used for repaying latest due amount) shall be executed; the contract interest rate shall not
be impacted by the prepayment and the new repayment period agreed on the new
repayment plan. 

9

3.2 If the Borrower requires for extension, the Borrower must
submit written extension application to Bank of Beijing at least 30 days prior
to the maturity date, to explain repayment plan after extension, upon Bank of
Beijing’s approval and the Borrower’s satisfaction to related requirements of
Bank of Beijing, both parties sign extension agreement and go through extension
procedure based on the agreement. If disagree from Bank of Beijing regarding
extension or no extension agreement signed by both parties, the Borrower should
repay the loan based on the AGREEMENT. 

3.3 Bank of Beijing has the right to request the Borrower to
repay the loan in advance according to the recoup fund conditions (including but
not limited to funds the Borrower planned to repay returned in advance,
available liquidity of the Borrower’s are so sufficient that it can meet the
normal fund requirement after being repaid in advance). When receiving the early
prepayment notice from Bank of Beijing, the Borrower should repay the loan
quickly as per the requirements of loan principal and interest appointed by Bank
of Beijing. 

	4. 	
       Representations and Warranties

4.1 Each Party warrants and represents to the other Party:

(1) It has the qualification and ability to enter into and
perform this AGREEMENT, the signature represents the party has acquired the full
authorization and can represent the party to sign this AGREEMENT. 

(2) The execution and performance of this AGREEMENT does not
violate any regulations including organizational documents, laws, financial
regulations and other legal documents should be complied with; the Party has
obtained any necessary internal and external authorization, licensing and
registration procedures, and this AGREEMENT has the legally binding and law
enforcement power to the Party. 

4.2 The Borrower covenants and agrees to perform the duties
before the completion of this AGREEMENT:

(1) The Borrower is and will be legally and validly existing
and operating continuously, will promptly process annual inspection and other
legal procedures. The Borrower will provide faithful and complete financial and
operating conditions and other contract related material information to the Bank
of Beijing before execution of this AGREEMENT and each withdrawal application.

(2) Has adequate and legal repayment sources matches with the
repayment plan, has adequate debt paying capability. 

(3) Legally compliant operation and management, comply with
requirements of environmental protection laws and regulations, tax payment
requirements and other regulations; timely, legally and efficiently acquire the necessary approval and certified documents.

10

(4) Provide complete, true and effective materials to Bank of
Beijing timely, cooperate with Bank of Beijing and let Bank of Beijing proceed
loan payment management, post-lending management and related inspection, accept
and positively cooperate with the Bank of Beijing, let Bank of Beijing inspect
and supervise the Borrower’s financial and operational conditions as well as
loan usage under this AGREEMENT. It includes but not limits to: 

(i) As per the requirements of Bank of Beijing, the Borrower
should reasonably illustrate the capital flows of each loan and provide related
payment documents and payment basis, to certify it is compliant with this
AGREEMENT agreements. 

(ii) Provide audited complete financial statements(including
remarks), audit report to Bank of Beijing before the end of April, also provide
balance sheet, income statement, cash flow statement, and attested copies of the
financial statements at the first month of each quarter (should provide audited
complete statements and audit report if the Borrower has audited half-year or
quarterly financial statements) of the end of last quarter. 

(5) Adhere to the principles of honesty and trustworthiness,
all the application documents, financial statements and other documents and
information provided to Bank of Beijing should be true, complete, legal, and
effective. There is no fraud, material omissions and materially misleading. 

(6) If the Borrower plans to consolidate, divide, reduce its
registered capital, apply for rectification of business, being taken over,
dissolution, bankruptcy or other events impacting the existence of the principal
part or persist operation, or proceed stock transfer, invest abroad, substantial
increase in debt financing, the Borrower should notice in writing to Bank of
Beijing at least 30 days in advance and acquire the written consent of Bank of
Beijing. If the third party of the executive/judicial institutions command the
Borrower to close the business, be taken over, dissolved or bankrupted, suspend,
or cancel the business license of the main business or principal business, then
the Borrower should notice in writing to Bank of Beijing quickly( not later than
3 working days), and take measures to remedy. 

(7) the Borrower shall provide written notice to Bank of
Beijing as soon as possible but in no event later than five business days after
the Borrower changes its business registration, its top ten shareholders,
directors, chief financial officer or mailing address. 

(8) the Borrower shall inform and obtain prior written consent
from Bank of Beijing when it provides security interest to third party (or debt
undertaking and other arrangements with security function), or enter into
partnership or subcontracting with third party, or waive its materials
creditor’s rights, or acquisition and restructuring, or assign of its major
business or other enter into similar transactions with possibility of
undermining its debt repayment ability or other material and adverse events
affecting the debt paying ability. 

11

(9) the Borrower shall timely provide written notice to Bank of
Beijing for its related transactions with total amount reaching or exceeding ten
percent of its net assets which shall include the relationship of transaction
parties, transaction purpose and nature, transaction amount or relevant
proportion, pricing standards (including the transactions with notional amount
or without any price), and so on. The related parties and related transactions
shall be defined by the Chinese accounting standards applicable to the Borrower
or the international accounting standards. The Borrower shall not draw out its
registered capital or make fake transactions to fraudulently obtain bank loan or
facility, or to escape from debt by transferring its assets, or conducting
related transactions or other unjustifiable transactions to significant impair
its debt repayment ability. 

(10) the Borrower shall always comply with its warranties under
Section K and properly maintain relevant financial criteria within stipulated
scope (as calculated by the Chinese accounting standards applicable to the
Borrower or the international accounting standards). 

(11) the Borrower shall not distribute bonds or dividend to its
shareholders where its net profit is zero or minus after taxation, or profit
after tax is insufficient to compensate its accumulated losses, or its profit
before tax is insufficient to repay the next installment of loan principal and
interest. 

(12) the Borrower shall provide Bank of Beijing with agreed
security under Section M before the first drawdown date as the latest time
(specifically refer to the security documents), and the Borrower undertakes to
maintain the pledge ratio and mortgage ratio within the stipulated range in the
security documents (if any). The Borrower is fully aware of, agree with and
accept the clauses and contents of the security documents and guaranties that
relevant security interests provided to the Bank of Beijing under relevant
security documents are legally valid and enforceable. 

	5. 	
      Taxes and Expenses

The Borrower and the Bank of Beijing bear the stamp duty tax
individually and respectively under this AGREEMENT. The taxes levied by the
governmental bodies and administrative charges, notarization fees (if any) and
security fees (if any) shall be borne by the Borrower except for the taxes and
expenses statutorily borne by the Bank of Beijing. In addition, the Borrower
shall pay loan arrangement fee to the Bank of Beijing pursuant to Section N.2 of
this AGREEMENT. 

	6.	
Defaults and Remedies 

    

6.1 The occurrence of any one or more than one events below
constitutes the Borrower’s event of default. 

	
    (1)	
The Borrower fails to use the loan as stipulated or fails
to pay the loan or to pay the principal, interest or other payables in full or
in time as stipulated in this AGREEMENT.  

    
	 	 
	
    (2)	
    The loan application or application withdrawal documents or
other material representations or statements are fraud, untrue, materially
misleading, or the Borrower fails to (or expressly states or indicates by its act that it will not) properly fulfill
      its undertakings, warranties, obligations and duties under this
      AGREEMENT.

12

	
    (3)	
    Any guarantor fails to completely or properly fulfill its
      undertakings, guarantees, obligations or liabilities in the security
      documents, or the occurrence of other event of default under the security
      documents, or the mortgaged property/pledged property (if any) suffers
      damage or loss or title transfer or freezing/seizing/enforcement, or
      either the security documents or the Bank of Beijing’s security interest
      therein becomes invalid or be revoked/dissolved without the prior consent
      from the Bank of Beijing.
	 	 
	
    (4)	
    The Borrower’s any important financing, security,
      compensation or other debt liability could not be performed when due; or
      its major business or business permit is suspended or deregistered; or it
      goes into the procedure of business rectification or being taken over or
      dissolution or bankruptcy.
	 	 
	
    (5)	
    The Borrower’s financial or operation condition
      encounters significant negative change or generates unsound credit record,
      or is subject to any administrative penalties or disputes affecting its
      ability of repaying debts or performing this AGREEMENT, or there occurs
      other events seriously affecting the Bank of Beijing ‘s creditor’s rights
      or security interest.

6.2 When failing to make full repayment to any due principal
and/or interest and/or other payables, the Borrower shall pay the penalty
interest on the outstanding amount calculated by 50% in addition to the
contracted interest rate (the "Default Interest Rate") on daily basis. 

Where the Borrower’s usage of loan is in breach of this
AGREEMENT or the laws and financial regulations, it shall make full repayment of
the used principal and accrued interest immediately and also pay the penalty
interest on the misused portion of loan calculated by 100% adding to the
contracted interest rate (the "Misusage Default Interest Rate") on daily basis
during the misusage period. Where the loan is both overdue and in misusage, the
Misusage Default Interest Rate shall be applied. Such default interest shall not
prejudice other rights and remedies enjoyed by the Bank of Beijing. 

6.3 When the event of default occurs, the Bank of Beijing has
the right to exercise its remedial rights according to this AGREEMENT and/or any
laws, regulations and financial regulations, including but not limited to claim
for Borrower’s rectification, amendment of loan usage, ceasing of providing
drawdown, penalty interest, charging default interest, exercising security
rights, acceleration of loan partially or fully, urging repayment by public
announcement, loss compensation and for compensation on the costs and expenses
accrued from exercising its creditor’s right and security right (including but
not limited to litigation/arbitration fees, estimation/verification/auction
fees, attorney fee, evidence collection fee, travel cost and other reasonable
expenses generated). 

6.4 When the currency of money paid/compensated by the Borrower
or third party is different from the currency of money owed by the Borrower, the
Bank of Beijing could apply relevant exchange rate to make relevant conversion
to offset the debts. The exchange loss and cost shall be borne by the Borrower,
and the Borrower is obliged to cooperate with the Bank to conduct such
conversion. 

13

6.5 The Bank of Beijing shall use the money resumed to offset
the debts in the order as follows:

(1) the costs and expenses occurred from exercising creditor’s
right or security right and other expenses to the account of the Borrower; (2)
compensation and default penalty; (3) default interest; (4) loan interest; (5)
loan principal; (6) other payables of the Borrowers. However, the Bank of
Beijing is entitled to change the aforementioned order, and when the Borrower
owes several overdue debts to the bank, the Bank of Beijing could determine the
sequence of repayments to such debts. 

6.6 If a party encountered Force Majeure event and
provided the other Party with certificate of the Force Majeure event
issued by competent authority within five business days upon occurrence of such
event, it could be exempted from the default liability. For the avoidance of
doubt, although the Borrower’s default liability could be exempt due to the
Force Majeure, it is still obliged to pay the principal and
interest and the cost and expenses of the Lender’s exercising creditor right and
security right. 

	7.	
Applicable Law and Dispute Resolution 

    

7.1 This AGREEMENT is governed by PRC laws and regulations. All
disputes under this AGREEMENT or in relation shall be firstly settled by
friendly consultation; and, if not workable, then the dispute shall be submitted
to the People’s Court with the jurisdiction in the area where the Bank of
Beijing is domiciled. 

7.2 The matters of applicable law and dispute resolution
concerning the security interest shall be subject to written agreement in the
security documents. If no provisions in the security documents addressing such
matters, the PRC laws and regulations shall be applicable and dispute thereunder
shall be submitted to the People’s Court where the Bank of Beijing is domiciled.

	8.	
 Miscellaneous

    

8.1 This AGREEMENT is the specific business contract under the
related contract (if any) as described in Clause A. Any issue not stipulated in
this AGREEMENT is subject to relevant agreement in the related contract. If
there are any discrepancies, this AGREEMENT shall prevail. Where there is any
discrepancy between other clauses of this AGREEMENT and Clause X, Clause X shall
prevail. The appendixes listed in Clause U are parts of this AGREEMENT. Where
there is any discrepancy between the main part of this AGREEMENT and the
appendixes, the latter shall prevail. 

8.2 Any document or notice sent by a Party to the other Party
is subject to the following rules: (1) if delivery by itself or any its agent,
the date of signature on receipt by the receiving party shall be the delivery
date; (2) if mail or registered mail is adopted, the delivery date shall be the
third day upon sending day; (3) if other post method is adopted, the seventh day
shall be the delivery day following the sending day. If the delivery date
determined by aforesaid rules is distinct from the actual receipt or signature
day, the earlier day shall be the delivery day. To avoid misunderstanding, the
parties confirm that upon the request of the Bank of Beijing, the Borrower shall
cause its own person to make delivery to the authorized person of the Bank of Beijing. If any party changed its contact
information, it shall timely notify the other Party. Otherwise, the previous
contact method shall be deemed as effective by the other party. 

14

8.3 The Bank of Beijing may pass the information relating to
this AGREEMENT to the credit reference system or database maintained by relevant
governmental authority. 

8.4 Unless otherwise stipulated in this AGREEMENT, any Party
shall bear confidentiality obligation to the other Party with regard to the
commercial secrets obtained during the negotiation and performance of this
AGREEMENT and other nonpublic information informed confidentially by the other
Party before such information becomes public. One Party shall not disclose such
information to the public or any third party without written consent from the
other Party. But one Party’s disclosure as required by laws and regulations or
order from authority or stock exchange rules or to its auditor, financial/legal
adviser, or other agency for the purpose of this AGREEMENT (the party shall
require such persons receiving information to undertake confidentiality
obligation) shall not be regarded as breach of this AGREEMENT. 

8.5 The effectiveness of this AGREEMENT is independent from the
security documents, related contracts (if any) and any
agreement/contract/covenants. That any clause or content of this AGREEMENT
becomes revocable or invalid shall not affect the effectiveness of the other
clauses or contents of this AGREEMENT. 

8.6 This AGREEMENT is entered into between the Borrower and the
Bank of Beijing on the contract date and in the place of the domicile of the
Bank of Beijing and becomes effective upon the signatures by the parties’ legal
representatives or responsible persons or authorized signatories as well as
affixation of their company seals. The AGREEMENT is in three originals (more
originals will be executed for the notarization or security registration purpose
if in need). The Bank of Beijing holds two originals and the Borrower holds
another one. Each original shall be equally effective. If there is any security
provider, the Borrower shall be responsible to supply it a copy of this
AGREEMENT, but the failure of Borrower to do so shall not impact the Bank of
Beijing’s creditor right and security interest. 

(Intentionally left blank below)

15f8k062310ex10i_magnega.htm

Exhibit 10.1

 

 

 

Joint Venture Contract

 

 

between

 

 

DDI Industry International(Beijing) Co.,Ltd

and

 

 

Magnegas Corporation

&

HyFuels, Inc

for

 

 

the Establishment of

 

 

Magnegas Technology (Beijing) Co. Ltd

 

 

 

 

June 2010

  

1

  

 

Table of Contents

 

 

	1.	Definitions 	 1
	2.	Parties to Joint Venture Company 	 3
	3.	Establishment of the Joint Venture 	 6
	4.	Purpose and Business Scope 	 8
	5.	Total Amount of Investment, Registered Capital and Method of Contribution 	 8
	6.	Relevant Agreements 	 13
	7.	Responsibilities of the Parties 	 13
	8.	Board of Directors 	 15
	9.	Business Management 	 20
	10.	Financial Management 	 21
	11.	Foreign Exchange 	 23
	12.	Labor Management 	 24
	13.	Independent managing, Marketing of Products and Restrictions on Competition 	 25
	14.	The Joint Venture Term	 25
	15.	Termination and Liquidation 	 25
	16.	Liability for Breach of Contract 	 26
	17.	Force Majeure 	 27
	18.	Confidential Information 	 28
	19.	Governing Law 	 30
	20.	Dispute Resolution 	 30
	21.	Miscellaneous	 30
	Appendix I     Intellectual Property  Transfer/License Agreement	 35

 

  

2

  

 

In accordance with the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and the Regulations for the Implication of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and other relevant Chinese laws and regulations, DDI Industry International (Beijing) Co., Ltd  (“DDI”), Magnegas corporation (“MNGA”), and HyFuels Inc. (“HyFuels”) based upon the principle of equality and mutual benefit and through friendly consultations, agree to jointly set up a sino-foreign Equity Joint Venture in Beijing, the People’s Republic of China.

 

Each of DDI, MNGA and HyFuels is referred to hereinafter as a “Party” and collectively as the “Parties.”

 

The Parties hereby agree as follows:

 

1.   Definitions

 

In this Contract, unless the context otherwise specifies, the following terms shall have the meanings set forth below:

 

“Contract” means the Joint Venture Contract of the Joint Venture executed by the Parties and approved by the Examination and Approval Authority.

 

“AOA” means the articles of association of the Joint Venture executed by the Parties on the date hereof.

 

“Joint Venture” means the Chinese-foreign equity joint venture named “MagneGas Technology (Beijing) Co. Ltd”, established by the Parties in accordance with the provisions of this Contract and the Articles of Association.

 

“Board” means the board of directors of the Joint Venture.

 

“Examination and Approval Authority” means the Ministry of Commerce of the People’s Republic of China or its relevant local branch office that is allowed to examine and approve this Contract and the Articles of Association in accordance with the Law.

 

“AIC” means the State Administration of Industry and Commerce of the PRC or its local branches responsible for the registration of the Joint Venture as the context requires.

 

“Business License” means the business license of the Joint Venture issued by AIC following the approval of this Contract and the Articles of Association.

 

“Business Scope” means the business scope of the Joint Venture set forth in Section 4.2 hereof.

 

“Corporate Approvals” means all rights, licenses, permits, approvals, registrations, filings, waivers, consents and authorizations that are necessary for the Joint Venture to engage in the activities specified in the Business Scope and the other business activities contemplated under this Contract.

 

“Establishment Date” means the issue date of the Business License set forth in Section 3.6of this Contract.

 

“JV Products” means the products that will be produced and sold by the Joint Venture.

 

  

3

  

 

“Intellectual Property Transfer/License Agreement” means in accordance with this Contract, MNGA and HyFuels transfer all the patent, patent applications , drafts, logos, trademarks, service marks, domain names, trade names, any works of authorship or expression, any trade secrets, know-how, technology licenses, confidential information relating to the Joint Venture’s business, that are owned by MNGA and HyFuels for the MagneGas technology only as better described in the website www.magnegas.com now or in the future(partly as the contribution to the capital of the Joint Venture), to the Joint Venture or license to it, and sign the agreement.

 

“MNGA and HyFuels IP” means in accordance with this Contract and Intellectual Property Transfer/License Agreement, all the intellectual properties that transferred or licensed to the Joint Venture, the specific content is described in the Intellectual Property Transfer/License Agreement.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a company or entity whether through the ownership of voting securities, by contract or otherwise and includes: (i) ownership, directly or indirectly, of 50% or more of the shares in issue or other equity interests of such company or entity; (ii) possession, directly or indirectly, of 50% or more of the voting power of such company or entity; or (iii) possession, directly or indirectly, of the power to appoint a majority of the members of the Board or similar management body of such company or entity, and the terms “Controlling” and “Controlled” shall have meanings correlative to the foregoing.

 

“Affiliate” means any company, joint venture, enterprise, partnership, trust, unincorporated body, limited liability company, person, government or any of its department, or any other entity directly or indirectly controlling, controlled by or under common control with a Party.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the city of Beijing, the PRC or the city of New York, State of New York, USA are required or authorized by Law or administrative orders to be closed.

 

“Confidential Information” means any exclusive materials or other materials or information (such materials or information should be definite with security measure) provided by any Party or Affiliate, deemed as secret or confidential by any Party involved in this Contract, which includes but not limited to any technology, proprietary technology, trade secrets, marketing plans, commercial or financial information, charge, salary, procedures, handbook, design, demonstrations, drawings, prototypes, models, samples, devices, specifications, data, methods, research, discovery, invention, or intention or business policies or practices, whether conveyed verbally, in written or in any tangible or intangible form whatsoever (including electronically).

 

“Equity Interest” means the equity interest held by each Party in the Registered Capital.

 

“Law” means all officially published and publicly available and applicable laws, regulations, rules and orders of any governmental authority, judicial authority, securities exchange or other self-regulatory body, including any ordinance, statute or other legislative measure and any officially published and publicly available regulation, rule, treaty, order, decree or judgment.

 

  

4

  

 

 “Foreign Exchange Regulations” means the applicable Law of the PRC on foreign exchange.

 

“Benchmark Exchange Rate” means the middle price between the foreign exchange buying and selling prices announced by the People’s Bank of China.

 

“RMB” means Renminbi, the lawful currency of the PRC.

 

“US Dollars” or “US$” means United States Dollars, the lawful currency of the USA.

 

 

2.   Parties to Joint Venture Company

 

	
  

	
2.1 Parties to the Contract

 

(a)  DDI

Name: DDI Industry International(Beijing) Co., Ltd

Nature & Place of Registration: [A limited liability company registered in accordance with Law of PRC]

Legal Address: [Rm, B1613, Peking Times Square, No. 103, Huizhongli, Chaoyang District, Beijing, China, 100101], PRC

Legal Representative: Name: [XiaoHong Feng (Allen Feng)]

Position: [Chairman & President]

Nationality: Chinese

 

(b)  MNGA

 

Name: Magnegas Corporation

Nature & Place of Registration: A corporation registered in the state of Delaware

Legal Address: [150 Rainville Rd., Tarpon Springs, FL 34689]

Legal Representative: Name:[Dr. Ruggero Santilli]

Position: [CEO]

Nationality: American

 

(c)  HyFuels

 

Name: HyFuels Inc.

Nature & Place of Registration: A corporation registered in Florida. 

Legal Address: [

Legal Representative: Name:[Carla Santilli]

Position: [Director]

Nationality: American

 

  

5

  

 

2.2   Representations, Warranties and Undertakings

 

	
  

	
(a)  Each Party represents, warrants and undertakes to the other Party, with respect to itself, as follows: upon the date of execution of this Contract or capital contribution by each Party to the Joint Venture in accordance with this Contract (as the case may be),

 

	
(i)  

	
Such Party is a company duly organized, validly existing and in good legal standing as an independent legal person under the Law of the jurisdiction of its incorporation, and has the corporate power and lawful authority to conduct its business in accordance with its business license, articles of association, company rules or other similar corporate constitutional documents;

 

	
(ii)  

	
Such Party has the full right, power and authority to enter into this Contract and the Relevant Agreements to which it is a party, and to perform fully its obligations hereunder and thereafter;

 

	
(iii)  

	
This Contract has been duly authorized, executed and delivered by such Party and, assuming the due authorization, execution and delivery by the other Party and approval by the Examination and Approval Authority, constitutes the valid and binding obligation of such Party enforceable against such Party in accordance with its terms;

 

	
(iv)  

	
Neither the execution of this Contract or any Relevant Agreements, nor the performance of such Party’s obligations hereunder or thereunder will conflict with, or result in a breach of or constitute a default under any provisions of the business license, resolutions of the shareholders’ meetings or board meetings, certificate of registration, articles of association, company rules or similar constitutional documents of such Party, as the case may be, or any law, regulation, rule, authorization or approval of any government agency or authority or any contract or agreement to which such Party is a party or by which it is bound;

 

	
(v)  

	
Such Party is, has been and, during the JV Term, will continue to be in compliance in all material respects with all applicable Law of its jurisdiction of incorporation and is not aware of any circumstances that would be a breach of any such Law;

 

	
(vi)  

	
As of the date of this Contract, there is no lawsuit, arbitration or legal, administrative or other proceeding or governmental investigation pending or, to the best knowledge of such Party, threatened against such Party with respect to the subject matter of this Contract or that would negatively affect in any way such Party’s ability to enter into or perform this Contract, and if any such lawsuit, arbitration or legal, administrative or other proceeding or governmental investigation should come to the knowledge of such Party after the date of this Contract it shall promptly notify the other Party and provide the other Party with detailed information with respect to such matter;

 

  

6

  

 

	
(vii)  

	
Each Part has no labor dispute, strike, workers’ protest movement and the above threat to any aspects of the execution or fulfillment of this Contract and capacity of capital contribution;

 

	
(viii)  

	
Documents provided to the other Party concerning the Joint Venture are true, reliable and without serious misdirection and have no material negative effect on each Party’s capability in fulfilling all or part of their obligations under this Contract;

 

	
(ix)  

	
This Contract will have a legal binding force on each Party upon the effective date hereof;

 

	
(x)  

	
Each Party (the “Defaulting Party”) agrees to indemnify and hold the other Party (the “Non-defaulting Party") and the Joint Venture harmless against any and all claims, liabilities, losses, expenses and fees incurred by the Defaulting Party and arising out of or attributable to the debt of the Defaulting Party;

 

	
(xi)  

	
The Parties undertake to loyally fulfill other contracts, memorandum, and agreements concerning the Joint Venture, executed by each Party with the Joint Venture and between the Parties; and

 

	
(xii)  

	
Besides the loyal fulfillment of the obligations under this Contract, such Party shall actively fulfill other agreements between the Parties, ensure that the directors appointed by such Party will not abuse all their rights when performing their duties, and cause the Joint Venture to perform the duties the Joint Venture is bound to perform as agreed on by the Parties in other agreements.

 

	
  

	
(b)  MNGA and HyFuels further represent, warrant and undertake to the Joint Venture separately as follows: upon the date of execution of this Contract or capital contribution by each Party to the Joint Venture in accordance with this Contract (as the case may be),

 

	
(i)  

	
It is the sole legal owner and possess the right to transfer/license MNGA and HyFuels IP, possesses integrated ownership of the MNGA and HyFuels IP that will be licensed, transferred or authorized to the Joint Venture for use;

 

	
(ii)  

	
It has procured all approvals and authorizations as required by Law, relevant governing authorities, articles of association, resolutions of meetings of shareholders and board, and from assembly of employee representatives or the assembly of employees, and from the other parties of all contracts and agreements to which MNGA or HyFuels is a party (including MNGA or HyFuels loan issuing institutions) to set up with DDI the Joint Venture, and to transfer/grant a license to the Joint Venture that stipulated in the Intellectual Property Transfer/License Agreement;

 

	
(iii)  

	
MNGA and HyFuels IP are free of any mortgage, pledge, other encumbrance, the third party right, fine, outstanding payment, unpaid land granting fee and relevant tax and debt. MNGA and HyFuels IP are transferable without any restriction (including under the supervision of the customs for being entitled to any tariff preferential treatment) in accordance with Law and are in the normal condition adaptive to production and management;

 

  

7

  

 

	
(iv)  

	
MNGA and HyFuels comply with the American Law and the requirements of relevant governmental authorities with respect to fire prevention, occupational disease prevention and cure and labor safety; and MNGA and HyFuels IP are the same as what MNGA and HyFuels had described, and MNGA  shall offer the products to the DDI Affiliate pursuant the relating agreements;

 

	
(v)  

	
MNGA and HyFuels warrant that MNGA and HyFuels IP include all the manufacturing technology and techniques, quality inspection technology and techniques, and management or marketing skills, technology improvement and researching information  that are necessary to the independent operation and technology research of the Joint Venture; and MNGA or HyFuels shall train the staff of the Joint Venture to ensure the proper use of the MNGA and HyFuels IP;

 

	
(vi)  

	
MNGA and HyFuels shall warrant the independence of the Joint Venture and shall use this rights as shareholder properly pursuant to this Contract and AOA;

 

	
(vii)  

	
MNGA and HyFuels guarantee that the Joint Venture shall operate freely in the said Greater China Territory, and will undertakes to use commercially reasonable efforts to assist the Joint Venture in its business.

 

 

3.   Establishment of the Joint Venture

 

	
3.1  

	
Establishment of the Joint Venture

 

The Parties hereby agree to jointly establish the Joint Venture at Beijing, the PRC in accordance with the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, the Regulations for the Implementation of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, other applicable Law of the PRC, this Contract and the Articles of Association.

 

	
3.2  

	
Name and Legal Address

 

	
(a)  

	
The name of the Joint Venture shall be麦格尼磁分子技术(北京)有限公司in Chinese and Magnegas Technology (Beijing)Co. Limited in English.

 

	
(b)  

	
The legal address of the Joint Venture shall be: [To-be-determined], Beijing, the PRC.

 

	
3.3  

	
Application

 

This Contract and the Articles of Association shall be submitted by DDI to the Examination and Approval Authority for approval (the “Application”) promptly after all the following conditions have been fulfilled:

 

	
(a)  

	
The transactions contemplated under this Contract have been duly approved by the shareholders or directors of each Party by voting at a duly convened shareholders’ or board meeting in accordance with each Party’s respective constitutional documents;

 

  

8

  

 

	
(b)  

	
This Contract and the Articles of Association have been executed by the duly authorized representatives of the Parties hereto; and

 

	
(c)  

	
All the agreements relating to this Contract have been signed properly.

 

	
3.4  

	
Preliminary Approval

 

	
(a)  

	
Immediately after the Examination and Approval Authority issues the preliminary approval related to this Contract and the Articles of Association and any of their attachments or appendixes with respect to the Application (the “Preliminary Approval”), DDI shall notify MNGA of the same by facsimile with a copy of the Preliminary Approval to MNGA simultaneously, and MNGA will pass them to the HyFuels.

 

	
(b)  

	
If the Examination and Approval Authority requires any amendments to this Contract or the Articles of Association or any of their attachments or appendices with respect to the Application, the Parties shall promptly consult with each other and decide whether to make such amendments as required by the Examination and Approval Authority.  If the Parties agree to make such amendment as required, they shall execute an amended version of the relevant document, reflecting the amendments agreed by the Parties within sixty (60) days after the receipt of the Examination and Approval Authority’s notice of amendment, and DDI shall apply to the Examination and Approval Authority for the Preliminary Approval thereof within five (5) days after the execution of such amended version of such document.  The Parties shall try their best to agree with each other about the amendments.

 

	
(c)  

	
If the Parties accept both the format and content prescribed in the Preliminary Approval, DDI shall, within seven (7) days after issuance of the Preliminary Approval, apply to the Examination and Approval Authority for issuance of a Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC (the “Certificate of Approval”).

 

	
3.5  

	
Business License

 

The Parties shall, within five (5) days after the Examination and Approval Authority issues the Certificate of Approval, jointly file the counterparts of this Contract and the Articles of Association, and an application with the AIC, so as to register the Joint Venture as a limited liability company and obtain the Business License for the Joint Venture.

 

	
3.6  

	
Limited Liability

 

The Joint Venture shall be a limited liability company with enterprise legal person status. The liability of each Party with respect to the Joint Venture shall be limited to the amount it has subscribed to contribute to the registered capital of the Joint Venture (the “Registered Capital”) in accordance with Section 5.2 and each Party shall bear the loss, risk, liability and any other obligations in proportion to their shares in the Registered Capital. Unless otherwise agreed by the Parties in writing, besides the above obligations of contribution to the Registered Capital, each Party shall not be jointly and severally liable to the Joint Venture or the third party because of the Joint Venture’s activity. In no case shall either Party bear any loss, risk, liability or any other obligations caused by the other Party.

 

  

9

  

 

	
3.7  

	
Branch offices

 

Upon the approvals of the Board and the Examination and Approval Authority, the Joint Venture may set up branch offices and subsidiaries in the PRC.

 

 

4.   Purpose and Business Scope

 

4.1   Purpose

 

The Parties establish the Joint Venture with a view of new energy strategy; making use of MNGA and HyFuels MagneGas IP and the advantages of MNGA and HyFuels existing manufacturing technology, product market and personnel and factory premises; realizing mutual complement of advantages; make the JV Products competitive in quality, price, varieties and other aspects; raising benefit; and enabling the Parties to make benefits satisfactory to themselves. The Joint Venture will pursue IPO directly or indirectly in domestic or foreign security market when all the requirements are met.

 

4.2   Business Scope

 

The  Business Scope of the Joint Venture shall be the following:

 

Manufacturing, designing, researching, developing and sale of new energy refinery utilizing liquid wastes.

 

With the development of the Joint Venture and as demanded by the market, upon the approval of the Board and the Examination and Approval Authority and the registration with AIC, the Joint Venture can gradually extend its Business Scope.

 

4.3  Territory and Project Scale

 

	
(a)  

	
Due to the agreement among the Parties and the developing strategy of the Joint Venture, the Joint  venture’s exclusive operating territory will be limited in china main land, Taiwan, Hongkong,   Macao and Singapore, which defined as Greater China(“Greater China”) . Within Greater China, MNGA and HyFuels or their Affiliates, branches, companies they invested or licensed, shall not compete with the Joint Venture. The Parties shall negotiate about the markets outside the Great China.

 

	
(b)  

	
The initial scale of production of the Joint Venture after its establishment is estimated to be: [50 refineries per year].The development plan and implementation schedule of the Joint Venture shall be decided by the Board based on the Chinese domestic market conditions. In addition, the Joint Venture may expand or reduce production capacity, or increase or decrease product varieties based on the capacity of the Joint Venture, the Chinese domestic market demand and other factors as decided by the Board.

 

  

10

  

 

5.   Total Amount of Investment, Registered Capital and Method of Contribution

 

5.1  Total Amount of Investment, Registered Capital and Loans

 

(a)  The total amount of investment of the Joint Venture (the “Total Investment”) shall be US$4,660,000.

 

(b)  The Registered Capital of the Joint Venture shall be US$2,333,300.

 

(c)  The balance between the Total Investment and the Registered Capital, as needed from time to time, may be raised by the Joint Venture through loans as determined by the Board. If required by any financial institutions, the assets of the Joint Venture shall be mortgaged in accordance with Law as security for such loans.

 

	
5.2  

	
 Proportion of Investment and  Method of Contribution

 

  (a)   The contribution to the Registered Capital subscribed by DDI shall be equal to US $1, 750,000, representing 75% of the Equity Interest in the Joint Venture.  Subject to Section 5.4, DDI shall make its contribution to the Registered Capital in the form of: cash of RMB amounts to US$1,750,000.

 

  (b)   The contribution to the Registered Capital subscribed by MNGA shall be US $466,660, representing 20% of the Equity Interest in the Joint Venture. Subject to Section 5.4, MNGA shall contribute its capital by transferring its proprietary technology to the Joint Venture in accordance with the Intellectual Property Transfer/License Agreement attached hereto as Appendix II. The Parities agree that the value of the proprietary technology shall be US $466,660(the amount that the fair value of the proprietary technology exceed the agreed value will be placed to the account of capital reserve).

 

  (c)   The contribution to the Registered Capital subscribed by HyFuels shall be US $116,665, representing 5% of the Equity Interest in the Joint Venture. Subject to Section 5.4, HyFuels shall contribute its capital by transferring its proprietary technology to the Joint Venture in accordance with the Intellectual Property Transfer/License Agreement attached hereto as Appendix II. The Parities agree that the value of the proprietary technology shall be US $116,665(the amount that the fair value of the proprietary technology exceed the agreed value will be placed to the account of capital reserve).

 

  (d)  The ownership percentage will only be diluted through increased capital. The ratio/rate of dilution will be equal among all original owners.

 

5.3  Time Limit and Procedures of Contribution and Capital Verification

 

	
(a)  

	
Time Limit and Procedures of Contribution

 

The contributions shall occur within six (6) months following the Establishment Date after all the conditions set out in Section 5.4 have been satisfied.  On the date when the contributions occur:

 

	
(i)  

	
With respect to the contribution in cash set forth in Section 5.2, DDI shall remit cash of RMB amounts to US$1,750,000 in one payment to the designated account of the Joint Venture;

 

  

11

  

 

	
(ii)  

	
MNGA shall contribute the MNGA and HyFuels IP set forth in Section 5.2 to the Joint Venture in the form stipulated in the Intellectual Property Transfer/License Agreement as Appendix I hereto.

 

	
(iii)  

	
HyFuels shall contribute the MNGA and HyFuels IP set forth in Section 5.2 to the Joint Venture in the form stipulated in the Intellectual Property Transfer/License Agreement as Appendix I hereto.

 

	
(b)  

	
The Evaluation of MNGA and HyFuels IP

 

Since the contribution to the Joint Venture of MNGA and HyFuels is IP, the Joint Venture will organize the evaluation of those properties after setting up. Only and all the IP in the Appendix 1 of Intellectual Property Transfer/License Agreement will be evaluated. The fair value of the properties will be determined by the evaluation result. The evaluation department will be chosen by the Joint Venture from the certified candidates, and the Parities shall acknowledge the result unconditionally.

 

If the fair value of the MNGA and HyFuels IP as contribution to the registered capital is less than the amount of the registered capital they subscribed separately, the Parties will discuss and decide how to make up the difference. Before the Parties reach an agreement after the discussion, no party need to execute the contribution obligation.

 

The evaluation procedure will start within thirty (30) days and complete within three (3) month after the establishment of the Joint Venture.

 

	
(c)  

	
Capital Verification

 

	
(i)  

	
Within fifteen (15) days after each Party has made its respective capital contribution in accordance with Section 5.2 and 5.3 hereof, a certified public accountant registered in the PRC shall be engaged by the Joint Venture to verify the contributions made and issue a capital verification report to such effect.

 

	
(ii)  

	
Within fifteen (15) days after receipt of the capital verification report, the Joint Venture shall issue to each Party an investment certificate in the form set forth in the Regulations for the Implementation of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, signed by both Chairman and Vice-Chairman of the Board and stamped by the Joint Venture and shall file a copy of the same with the Examination and Approval Authority and/or AIC for record (if  applicable). General Manager shall keep all the copies of the capital verification report and the investment certificates that have been issued to the Parties in file for record.

 

5.4  Conditions of Capital Contribution

 

    Each Party shall not be obligated to make any contribution to the Registered Capital until each of the following conditions has been satisfied or waived in writing by other Parties:

 

	
(i)  

	
The Joint Venture shall have received all of the Corporate Approvals;

 

  

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(ii)  

	
Each Party’s representations, warranties and undertakings in Section 2.2are true,  valid and have been fulfilled;

 

	
(iii)  

	
Each Party shall have executed and delivered all of the Relevant Agreements to which it is a party, pursuant to Article 6 of this Contract;

 

	
(iv)  

	
All Parties shall have fulfilled all the conditions set in the Intellectual Property Transfer/License Agreement, and perform all relating obligations, or the obligations have been waived by other Parties;

 

	
(v)  

	
The fair value of the MNGA and HyFuels IP contributing to the registered capital is no less than the amount of the registered capital the subscribed, or the Parties have reached an agreement on how to make up the difference when the fair value is lower than the registered capital amount;

 

	
(vi)  

	
Each Party shall have not violated any provisions of this Contract.

 

The Parties shall make all reasonable efforts to ensure the fulfillment of each of the conditions set forth in Sections 5.4 promptly after the execution of this Contract within 6 month after the establishment of the Joint Venture. Such reasonable efforts shall include taking all measures necessary or required for obtaining the Business Approvals and Corporate Approvals (including delivery of notices, registration and filing) as soon as possible.

 

5.5  Increase and Reduction of Registered Capital

 

	
(a)  

	
The Joint Venture shall not increase or reduce the Registered Capital during the JV Term unless approved by the Board of the Joint Venture in accordance with Section 8.3(b)(iii) of this Contract and the Articles of Association and by the Examination and Approval Authority. The amount, method and percentage of any capital increase or reduction shall be negotiated by the Parties and decided by the Board. The contribution will be diluted equally when increasing Registered Capital.

 

	
(b)  

	
In case of any increase or reduction in the Registered Capital, the Parties shall make amendments to the relevant provisions of this Contract and, upon the approval of the Examination and Approval Authority, register such change with AIC. In case of additional subscription by either Party of the increased Registered Capital, the Joint Venture shall issue to such Party a new investment certificate evidencing the payment of the additional amount of contribution made by such Party as of the date of the issuance of the new investment certificate, and revoke the original investment certificate issued to such Party.

 

5.6  Transfer of Equity Interest

 

 (a) Transfer to Affiliated Transferee

 

	
(i)  

	
The Parties agree that either Party (the “Transferor”) may transfer all or any portion of its Equity Interest to an Affiliate that is controlled by the Transferor (the “Affiliated Transferee”), which shall not be subject to the restriction prescribed in Section 5.6(b); provided that the Affiliated Transferee must have good credit standing and be capable of fulfilling the Transferor’s obligations and liabilities under this Contract. The other Party shall deem this transfer to be valid and waive its right of first refusal to purchase such Equity Interest.

 

  

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(ii)  

	
If the Transferor transfers all or any portion of its Equity Interest to an Affiliated Transferee, the Transferor must notify the Board and the other Party thereof in writing with the statement of the name, legal address and legal representative of the Affiliated Transferee and information on the business and commercial activities of the Affiliated Transferee, including information on the financial status and economic health condition of the Affiliated Transferee and information on whether the Affiliated Transferee produces, markets, or sells any products competing with the Joint Venture. The other Party shall cause the directors appointed by it in the Board of the Joint Venture to approve such transfer.

 

	
(iii)  

	
If the Affiliated Transferee of the Equity Interest formed in accordance with Section 5.6 (a) in this Contract is no longer controlled by the Transferor, the Transferor and the Affiliated Transferee shall cause the Affiliated Transferee to transfer all Equity Interest held by the Affiliated Transferee back to the Transferor or another Affiliated Transferee of the Transferor.

 

	
(b)  

	
Transfer to Third Party, or to Affiliate other than the Affiliated Transferee or to other Shareholders (the “Transferee”)

 

	
(i)  

	
If a Party wishes to transfer all or any portion of its Equity Interest in the Joint Venture, such Party shall provide a written transfer notice (the “Transfer Notice”) to the other Party stating its wish to make such transfer, the Equity Interest it wishes to transfer, the price of such Equity Interest and other terms and conditions of transfer as well as the identity of the proposed transferee. The other Party shall have the right of first refusal to purchase such Equity Interest on the terms and conditions set forth in the Transfer Notice.

 

	
(ii)  

	
Within thirty (30) days of issuance of the Transfer Notice by the Transferor, the other Party shall deliver a written reply stating whether it elects to exercise the aforesaid right of first refusal. If the other Party fails to notify the Transfer that it is willing to purchase such Equity Interest within such thirty (30)-day period, it shall be deemed to have agreed on the Transferor’s transfer of the Equity Interest to the Transferee described in the Transfer Notice.

 

	
(iii)  

	
If the other Party states that it will not exercise its right of first refusal, the Transferor shall have the right to transfer the Equity Interest to and only to the proposed transferee described in the Transfer Notice at such price and on such terms and conditions that are not more favorable than those provided in the Transfer Notice sent to the other Party, otherwise another written Transfer Notice shall be resent to the other Party in accordance with the provisions of Section 5.6 (b). Each Party shall cause the directors appointed by it to agree on such transfer. The Transferor shall provide the other Party with a copy of the written agreement executed with the Transferee within fourteen (14) days after the same is executed by the Transferor and the Transferee.

 

	
(c)  

	
General provisions on transfer

 

  

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(i)  

	
During the term of this Contract, neither Party shall transfer any Equity Interest to any transferee who directly or indirectly through its Affiliate to produce, market or sell products competing with the JV Products.

 

	
(ii)  

	
Any Transferee of the Joint Venture’s Equity Interest shall bear relevant obligations and liabilities of the Transfer set forth herein.

 

	
(iii)  

	
The business and operation of the Joint Venture and the performance of this Contract shall not be influenced by such transfer.

 

	
(iv)  

	
The Transferor and the Transferee shall enter into an Equity Interest transfer contract with respect to the transfer of the relevant Equity Interest. The Parties shall thereafter amend this Contract and the Articles of Association to reflect the respective Equity Interest held by the Parties and the Transferee in the Joint Venture, subsequent to the completion of such Equity Interest transfer contract and to reflect changes in the composition of the Board in accordance with Section 8.2.

 

	
(v)  

	
The Parties shall and shall cause the Joint Venture to sign all such further documents and take all such further actions that may be reasonably required by the Transferor in order to make the Transferee become the legal and beneficial owner of the Equity Interest to be transferred due to such transfer.

 

	
(vi)  

	
The above transfer shall be carried out in accordance with the procedures stipulated by the Law of the PRC. Upon the approval of such transfer from the Examination and Approval Authority, the change in the Joint Venture shall be registered with AIC according to law.

 

	
(vii)  

	
After transferring all or part of its Equity Interest in the Joint Venture, the Transferor shall give the original investment certificate issued by the Joint Venture back to the Joint Venture to revoke such certificate. The Joint Venture shall issue a new investment certificate to the Transferor and /or the Transferee accordingly.

 

6.  Relevant Agreements

 

When Section 2.2 of this Contract is satisfied, each Party shall, prior to the date of its contribution to the Joint Venture, concurrently execute each of the following agreements (collectively, the “Relevant Agreements”) to which it is a party:

 

Appendix I: Intellectual Property Transfer/License Agreement between DDI, Joint Venture, MNGA and HyFuels, according to which, MNGA and HyFuels shall transfer/license its MNGA and HyFuels IP (part of the MGNA and HyFuels IP will contribute to the registered capital .

 

7.  Responsibilities of the Parties

 

	
7.1  

	
Responsibilities of DDI

 

DDI shall be responsible for performing the following duties in addition to the other responsibilities set forth elsewhere in this Contract:

 

	
(a)  

	
strictly performing its obligations under this Contract, the Articles of Association and each Relevant Agreements to which it is a party;

 

  

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(b)  

	
taking all necessary actions and measures to ensure that the representations, warranties, undertakings made in this Contract and the Articles of Association are true and valid as of the date of execution of this Contract or capital contribution by each Party to the Joint Venture in accordance with this Contract (as the case may be);

 

	
(c)  

	
filing all documents required for the establishment of the Joint Venture with the relevant governing authorities, obtaining all necessary Business Approvals for the establishment of the Joint Venture and assisting the Joint Venture in obtaining and maintaining in force throughout the JV Term all Corporate Approvals and agreements that are necessary for the Joint Venture to achieve its purposes and business objectives;

 

	
(d)  

	
appointing in a timely manner members of the Board as specified in Section 8.2;

 

	
(e)  

	
nominating in a timely manner candidates for Senior Management Staff as specified in this Contract and the Articles of Association;

 

	
(f)  

	
assisting the Joint Venture in obtaining financing deemed necessary by the Board(including the IPO in domestic or foreign security markets directly or indirectly);

 

	
(g)  

	
causing its directors to exercise their voting rights in accordance with this Contract and the Articles of Association;

 

	
(h)  

	
assisting the Joint Venture on matters related to the employees of the Joint Venture;

 

	
(i)  

	
if requested by the General Manager, and to such extent as is necessary and convenient, supporting and assisting the Joint Venture on its production activities; and

 

	
(j)  

	
assisting the Joint Venture on other matters as requested by the Board from time to time.

 

	
7.2  

	
Responsibilities of MNGA and HyFuels

 

MNGA and HyFuels shall be responsible for performing the following duties in addition to the other responsibilities set forth elsewhere in this Contract:

 

	
(a)  

	
in accordance with this Contract and the appendices in this Contract, contributing capital to the Joint Venture, and/or granting a license to the Joint Venture for the use of the MNGA and HyFuels IP, taking 25% percent of the Joint Venture shares, and paying relevant taxes that shall be paid by MNGA and HyFuels in accordance with the Law;

 

	
(b)  

	
strictly performing its obligations under this Contract, the Articles of Association and each Relevant Agreements to which it is a party;

 

	
(c)  

	
taking all necessary actions and measures to ensure that the representations, warranties, and undertakings in this Contract and the Articles of Association are true and valid upon the date of execution of this Contract or capital contribution by each Party to the Joint Venture in accordance with this Contract (as the case may be);

 

	
(d)  

	
appointing in a timely manner members of the Board as specified in Section 8.2;

 

  

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(e)  

	
 nominating in a timely manner candidates for Senior Management Staff as specified in this Contract and the Articles of Association;

 

	
(f)  

	
assisting in obtaining the Business Approvals for the establishment of the Joint Venture and necessary Corporate Approvals for the legal operation of the Joint Venture;

 

	
(g)  

	
assisting the Joint Venture in developing an advanced management and production system and setting up the Chinese R&D Centre;

 

	
(h)  

	
ensure the independence of the Joint Venture in operation and R&D;

 

	
(i)  

	
assisting the Joint Venture in obtaining financing deemed necessary by the Board(including the IPO in domestic or foreign security markets directly or indirectly);

 

	
(j)  

	
 causing its director to exercise their voting rights in accordance with this Contract and the Articles of Association;

 

	
(k)  

	
assisting the Joint Venture in obtaining all necessary visas, travel documents and/or work permits for its Chinese employees so as to enable them to come in and out of and stay in the United States or related countries for technical training, carrying out work responsibilities and conducting other activities on behalf of the Joint Venture as requested by the Board;

 

	
(l)  

	
assisting the Joint Venture on matters related to the employees (human resource) of the Joint Venture ;

 

	
(m)  

	
if requested by the General Manager, and to such extent as is necessary and convenient, supporting and assisting the Joint Venture in its production activities;

 

	
(n)  

	
if requested by the General Manager,  MNGA and HyFuels shall assist the Joint Venture on matters of market developments, granting the licensing of all materials, information, resources(including the images or honor of Dr. Santilli) related to the market development, and MNGA and HyFuels have the full right, power and authority to grant the licensing to the Joint Venture;

 

	
(o)  

	
Assisting the Joint Venture on other matters as requested by the Board from time to time.

 

	
(p)  

	
Dr. Santilli and/or his designees will be available to assist the JV to set up the initial refinery and manufacturing plant in China for a period of two weeks with all travel expenses paid by the JV.  Additional time contributed by Dr. Santilli and/or his designees will be available under a separate consulting agreement with all expenses paid by the JV.

 

8.   Board of Directors

 

	
8.1  

	
Establishment of the Board

 

The Board shall be established on the Establishment Date.

 

  

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8.2  

	
Composition of the Board; Appointment, Dismissal and Remuneration of Directors

 

	
(a)  

	
The Board shall consist of three (3) directors, two (2) of whom shall be appointed by DDI and the other one (1) shall be appointed by MNGA. The term of office for each director shall be [*] (*) years, renewable upon reappointment by the appointing Party. The term of the directors of the Board shall commence on the Establishment Date. There is no restriction on the number of times a director may be reappointed.

 

	
(b)  

	
The Board shall have one (1) chairman (the “Chairman”) .The Chairman shall be appointed by DDI.

 

	
(c)  

	
Either Party shall have the right, at any time, to remove and replace any director appointed by it before the expiration of his or her term. If a director is removed, becomes incapacitated, dies, resigns or otherwise ceases to be a director, the Party appointing such director shall appoint a new director to serve for the remainder of the term of office of such director. The appointment or dismissal of a director shall take effect fifteen (15) days following the delivery of a written notice by the Party implementing such appointment or dismissal to the other Party, where the former director should take charge of his own responsibility according to the Law, this Contract and the Articles of Association before the appointment or dismissal taking into effect.

 

	
(d)  

	
In the event that the number of the members of the Board is less than the quorum as a result that reelection is not conducted promptly after the expiration of the term of office for any director, the former director shall perform the duties of director according to the Law, this Contract and the Articles of Association before the new director taking the position.

 

	
(e)  

	
Any person who takes the position of a director will not be compensated by the Joint Venture, but he/she shall be paid if appointed as a Senior Management Staff at the same time.

 

	
(f)  

	
Director is not permitted to participate in daily operation of the Joint Venture unless he/she is also appointed as a Senior Management Staff at the same time and participates in the daily operation of the Joint Venture in the capacity of a Senior Management Staff.

 

	
(g)  

	
Both Parties agree to cause the Joint Venture to file any change in the directors appointed by either Party with the Examination and Approval Authority and/or AIC if the Law so requires.

 

	
(h)  

	
Each director shall: (a) comply with the Company Law of the People’s Republic of China, sincerely perform his own responsibilities as a director, comply with this Contract and the Articles of Association, and protect the interests of the Joint Venture, and shall not take advantage of their position and powers in the Joint Venture to seek personal gains; and (b) release the actual or potential interest of conflict between any matter or resolution and he/she or the party he/she acting for before proposing, discussing, or voting on the same at the Board meeting. The directors (including the legal representative of the Joint Venture) shall not bind the Joint Venture by contract or otherwise without the prior written consent of the Board.

 

  

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(i)  

	
Neither Party shall appoint a director who is prohibited from holding the position of director under the Company Law of the People’s Republic of China.

 

8.3  Functions and Powers of the Board

 

	
(a)  

	
The Board shall be the highest authority of the Joint Venture, deciding all important matters of the Joint Venture, and directing the overall management, supervision and control of the business of the Joint Venture; provided that the Board shall delegate authority over day-to-day operational and managerial matters to the General Manager as set forth in Section 9.2. The resolutions of the Board shall be adopted in accordance with this Contract, the Articles of Association and applicable Law.

 

	
(b)  

	
The unanimous consent of all directors of the Board shall be required for any decision made concerning the following matters:

 

	
(i)  

	
amendments to the Articles of Association of the Joint Venture;

 

	
(ii)  

	
suspension of the business operations, termination, liquidation or dissolution of the Joint Venture, filing a voluntary petition for bankruptcy or reorganization or consent to an involuntary petition for bankruptcy or reorganization, or effecting a recapitalization or reorganization in any form of transaction;

 

	
(iii)  

	
increase in or reduction of the registered Capital of the Joint Venture; and

 

	
(iv)  

	
amalgamation or merger of the Joint Venture with any other business or the division of the Joint Venture.

 

	
(c)  

	
Except as provided in Section 8.3(b) that the unanimous consent of all directors of the Board is required, the affirmative votes of at least two (2) directors, present at a duly convened meeting of the Board or a unanimous written resolution of all of the members of the Board shall be required before any decision is made concerning any single one of the following matters:

 

	
(i)  

	
leasing or swapping all or substantially all of the assets of the Joint Venture;

 

	
(ii)  

	
extending the JV Term;

 

	
(iii)  

	
changing the form of the Joint Venture;

 

	
(iv)  

	
amending this Contract or undertaking any new activity beyond the Business Scope;

 

	
(v)  

	
purchasing by the Joint Venture of shares, securities or ownership interest in any company, or acquiring all or substantially all of the assets of any company;

 

	
(vi)  

	
establishing, changing or closing any subsidiaries or branches of the Joint Venture;

 

	
(vii)  

	
making and deciding the Joint Venture’s Annual Plan;

 

	
(viii)  

	
approving the significant strategy and policies, development direction, and long-term and short-term development plan of the Joint Venture;

 

  

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(ix)  

	
determining the terms of employment and remuneration policy of the Senior Management Staff, including terms of employment and remuneration of CFO and Deputy General Manager;

 

	
(x)  

	
exercising other rights and duties authorized by the Articles of Association or the Law of the PRC.

 

	
(d)  

	
The following matters only requires affirmative vote of all directors appointed by the Party which is not an Interested Party and present at a duly convened meeting of the Board or written resolution made by all above-mentioned directors:

 

	
(i)  

	
Decisions on taking any legal action or proceedings against either the Interested Party or any of its Affiliates in connection with the breach by the Interested Party or any Affiliate of any Relevant Agreements to which it is a party or of any contracts entered into by the Interested Party or any of its Affiliate with the Joint Venture; or

 

	
(ii)  

	
The Joint Venture have transaction with the Interested Party or any of its Affiliates.

 

8.4  Legal Representative and Performance on Behalf of Legal Representative

 

	
(a)  

	
The Chairman shall be the legal representative of the Joint Venture. The Chairman shall have the powers and responsibilities set forth in this Contract and the Articles of Association, shall have the power of authority expressly authorized by the Board, and shall represent the Joint Venture for service of process.

 

	
(b)  

	
If the Chairman is temporarily unable to perform his or her duties for any reason, the remaining directors shall choose a director to perform the duties of the Chairman by simple majority vote. If the remaining directors are unable to agree as to which director shall perform the duties of the Chairman within ten (10) Business Days, the Party appointing the current Chairman shall have the right to choose the director who shall perform the duties of the Chairman during such time.

 

8.5  Board Meetings and Board Resolutions

 

	
(a)  

	
Regular meetings of the Board shall be held at least once a year and shall be convened and presided over by the Chairman. The Chairman shall send a written notice to all directors specifying the subject matter for discussion, date and venue of each regular meeting sixty (60) days prior to the scheduled date of such regular meeting, or a shorter period of time prior to such date upon the approval of the Chairman and the Vice Chairman in case of emergency.

 

	
(b)  

	
Interim meetings of the Board shall be convened by the Chairman at any time on his own motion or on the written request of any one third (1/3) directors (a “Interim Meeting Request”). The Chairman shall send a notice (the “Interim Meeting Notice”) of an interim Board meeting to all other directors within three (3) days after receipt of an Interim Meeting Request. Such meeting shall be convened no sooner than ten (10) days, and no later than fifteen (15) days, after the date of the Interim Meeting Notice.

 

  

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(c)  

	
Two-thirds (2/3) or more of all the directors shall constitute a quorum for any Board meeting. A director who is unable to attend a meeting in person may entrust in writing a proxy to attend and to vote at the meeting on his or her behalf. Such proxy shall have the same rights and powers as the director by whom he or she has been entrusted. Delivery of a proxy by facsimile shall be effective for this purpose. A proxy need not be a director of the Joint Venture. A director may be appointed as proxy for another director, and the same person may be appointed as proxy for more than one director. In the voting on a resolution of the Board, one person shall have one vote. A proxy shall have one vote for each director whom he represents, and shall also be entitled to cast one vote in his own behalf if he is, in addition, a director in his own right.

 

	
(d)  

	
Any director who wishes to add subject matters to the agenda of a regular Board meeting upon receipt of such meeting notice as specified in paragraph (a) shall notify the Chairman in writing at least three (3) Business Days prior to the date of the meeting.

 

	
(e)  

	
Board meetings shall ordinarily be held at the legal address of the Joint Venture, but may be held at any other location upon the approval of at least two-thirds (2/3) of all the directors.

 

	
(f)  

	
Board meetings shall be conducted in Chinese with simultaneous translation into English.  Minutes of the Board meetings shall be recorded in both English and Chinese. All resolutions of the Board shall be included in the minutes, which shall be kept by the Joint Venture for ten (10) years. Directors and proxies present at the meeting shall sign their names on the minutes for such meeting.

 

	
(g)  

	
Any action that may be taken at Board meeting may be taken without a meeting if all or 2/3 directors consent to such action in writing (as the case may be). For any such action to be taken in writing in accordance with this Section 8.6(g), a draft resolution shall be formulated by the Chairman and the Vice Chairman and circulated to all directors for review. All the directors, within three (3) days of receipt after such draft resolution, shall date, approve or disapprove, sign such draft resolution and return the same to the Chairman. All written resolutions shall be passed only by a unanimous affirmative vote of all the directors.

 

	
(h)  

	
Board meetings may be held by telephone, videoconference or any other means of contemporaneous communication so long as all directors taking part in a meeting so held are able to hear each other at all times. Participation by a director or his proxy at a meeting by such means shall be deemed to constitute presence of such director or his proxy in person at a meeting.

 

	
8.7  

	
Supervisor

 

	
  

	
(a)The Joint Venture shall have one (1) supervisor (“Supervisor”)who shall be elected by the Parties. Each term of office of the Supervisor shall be three (3) years. The Supervisor may, after the expiry of his/her term of office, hold a consecutive term upon re-election. If no reelection is timely carried out after the expiry of the term of office of the Supervisor, the original Supervisor shall, before the newly elected Supervisor assume his/her post, exercise the powers of the Supervisor in accordance with the laws, administrative regulations, as well as the Articles of Association.  The Directors and Senior Management Staff shall not concurrently work as the Supervisor.

 

  

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     (b)The Supervisor shall be empowered to perform the following functions:

 

(i)  to check the financial affairs of the Joint Venture;

 

(ii) to supervise the duty-related acts of the Directors and Senior Management Staff, to put forward proposals on the removal of any Director or Senior Management Staff who violates any law, administrative regulation, the Articles of Association or any Bard Resolutions;

 

(iii) to demand any Director or Senior Management Staff to make corrections if his/her act has injured the interests of the Joint Venture;

 

(iv) to initiate actions against Directors or Senior Management Staff in accordance with the Company Law; and

 

(v) other duties as provided for by the Articles of Association.

 

9.   Business Management

 

9.1  Establishment and Composition of the Management Organization of the Joint Venture 

 

	
(a)  

	
The Joint Venture shall establish a management organization under the Board in charge of daily business operation and management.

 

	
(b)  

	
 The management organization shall consist of: one (1) General Manager, several Deputy General Managers, and one (1) CFO in charge of Financial Department (collectively called “Senior Management Staff”).

 

9.2  Rights and Responsibilities of the General Manager

 

	
(a)  

	
Under the leadership of the Board, the General Manager shall be responsible for the day-to-day operations of the Joint Venture.

 

	
(b)  

	
The General Manager shall exercise the rights and responsibilities conferred upon by this Contract, the Articles of Association and/or the Board. The General Manager on behalf of the Joint Venture can perform the following rights and responsibilities without the Board approval:

 

	
(i)  

	
leading the Joint Venture’s production operations and management, and implementing relative resolutions of the Board in connection therewith;

 

	
(ii)  

	
supervising and overseeing the other members of the Senior Management Staff;

 

	
(iii)  

	
formulating the Joint Venture’s detailed rules and regulations;

 

	
(iv)  

	
appointing or dismissing management personnel other than those required to be appointed or dismissed by the Board or the Parties;

 

	
(v)  

	
determining the Joint Venture’s day-to-day internal management system, organization and standing rules;

 

	
(vi)  

	
other rights and responsibilities conferred upon by the Articles of Association or the Board.

 

  

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(c)  

	
In exercising the rights and responsibilities conferred upon by this Contract, the Articles of Association and/or the Board, the General Manager shall regularly and actively collaborate and consult with the Deputy General Managers and the other Senior Management Staff.

 

	
(d)  

	
After above-mentioned cooperation and consultation, the General Manager shall make a decision and be responsible for daily execution of such decision.

 

	
(e)  

	
The General Manager, the Deputy General Managers and the CFO shall have right to attend all meetings of the Board. If the General Manager, the Deputy General Manager(s) or the CFO has been appointed as a member of the Board, he or she shall have the right to vote at such Board meeting.

 

	
(f)  

	
The Party nominating the General Manager or the Deputy General Managers may replace such General Manager or Deputy General Managers by giving written notice to the Board. A successor shall then be nominated by the original nominating party in accordance with Article 9 and immediately appointed by the Board to complete remaining term of the dismissed General Manager or Deputy General Managers.

 

9.3  Appointment of Senior Management Staff

 

	
(a)  

	
General Manager and the Deputy General Manager shall be nominated by DDI, and appointed by the Board.

 

	
(b)  

	
CFO shall be nominated by DDI and appointed by the Board accordingly.

 

	
(c)  

	
Any Senior Management Staff may resign or quit his or her office by giving written notice one (1) month in advance to the Joint Venture. On such occasion, the Party originally nominating such Senior Management Staff shall nominate a successor to complete his or her remaining term.

 

	
(d)  

	
The Senior Management Staff are not permitted to simultaneously serve as an employee, an independent contractor, or a consultant in any other enterprises in the PRC, nor shall they engage (either himself or by any third party) in production, marketing, sales or export of any products in competition with the Joint Venture.

 

	
(e)  

	
Neither Party shall nominate Senior Management Staff who is prohibited from holding this position in the Joint Venture under the Company Law of the People’s Republic of China.

 

9.4  Foundationof the Chinese R&D Centre

 

The Joint Venture will set up the Chinese R&D Centre for technology development and research, including the research of the transferred or licensed technology. All the supports that the Chinese R&D Centre will get from MNGA and HyFuels for free. Meanwhile, the Chinese R&D Centre is a subsidiary of the Joint Venture, which is independent from MNGA and HyFuels, and all researching fruits will owned by the Joint Venture.

 

  

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10.  Financial Management

 

10.1  Financial Accounting System

 

	
(a)  

	
The Joint Venture shall establish an independent financial and accounting system and shall prepare financial statements in accordance with the Law and the particular circumstances of the Joint Venture, and, to the extent permitted by applicable Law of the PRC, those methods and principles that are consistent with the Generally Accepted Accounting Principles in the United States of America (the “US GAAP”) and the operating and financial procedures and requirements of the Parties.

 

	
(b)  

	
The Joint Venture’s financial management rules shall be formulated and adopted by the Board based on the recommendations of the General Manager and CFO, whereas all such rules shall be consistent with this Article 10.

 

10.2  Fiscal Year

 

The fiscal year of the Joint Venture (the “Fiscal Year”) shall be the calendar year. The first Fiscal Year shall commence from the Establishment Date of the Joint Venture and end on December 31 of the same year. The last Fiscal Year shall end on the date of dissolution of the Joint Venture.

 

10.3  Financial Reporting

 

	
(a)  

	
The Joint Venture shall use RMB as the base currency in its bookkeeping, and US Dollars may be used concurrently with RMB.

 

	
(b)  

	
All vouchers, and accounting records of the Joint Venture shall be prepared and kept in Chinese. Accounting reports and financial statements to be submitted to the Parties or the Board shall be prepared and kept in both Chinese and English.

 

	
(c)  

	
Within thirty (30) days after the end of each Fiscal Year, the Joint Venture shall submit its un-audited annual financial statements to the Parties. Within three (3) months after the end of each Fiscal Year, the Joint Venture shall submit to the Parties and relevant government financial departments its formal financial statements and audit report issued by a certified public accountant registered in PRC.

 

10.4  CFO

 

CFO in the Joint Venture shall:

 

	
(a)  

	
draft financial management rules of the Joint Venture and take charge of the financial management of the Joint Venture under the leadership of the General Manager;

 

	
(b)  

	
have unrestricted access to all the books and accounting records of the Joint Venture, whether historical or present;

 

	
(c)  

	
have the right to present opinions to the General Manger and/or the Board regarding whether business transactions are fair and justified for the Joint Venture and both Parties.

 

10.5  Approval of Final Accounts

 

Within seventy-five (75) days after the end of each Fiscal Year, the General Manager shall submit the following documents to the Board for approval: the financial statements, statements of financial status, and plans for profit distribution or loss make-up of the previous year.

 

  

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10.6  Profit Distribution

 

The Joint Venture shall adopt the following principles with respect to the distribution of profits:

 

	
(a)  

	
The remaining amount after payment of the enterprise income tax pursuant to the relating regulations shall be the after-tax profits for the current year.

 

	
(b)  

	
Payments to the Statutory provident funds.

 

	
(c)  

	
 The Joint Venture may not distribute profits until all losses from previous years have been made up.

 

	
(d)  

	
Amounts remaining following the fulfillment of the requirements set forth in paragraphs (a), (b) and (c) plus the profit brought forward from previous years shall be the distributable profits, which shall be distributed in full to the Parties decided by the Board.

 

	
(e)  

	
The Joint Venture shall remit such distribution into the bank accounts designated by the Parties within one (1) month after the Board makes its determination regarding profit distribution.

 

10.7  Bank Accounts and Loans

 

Based on business requirements and applicable Law, the Joint Venture may within the territory of the PRC open RMB account(s) and foreign exchange account(s) with Chinese or foreign financial institutions that are authorized by the relevant authorities to conduct foreign exchange business in the PRC, and apply for commercial loans in the PRC. The Joint Venture may also apply for borrowing foreign exchange or RMB loans in or outside China according to relevant Law.

 

10.8  Taxes

 

The Joint Venture shall pay taxes in accordance with relevant officially published Law. The Parties shall assist the Joint Venture in applying for obtaining all of the applicable tax exemptions, reductions, privileges and preferences that are now or in the future become available under the Law and under any applicable treaties or international agreements to which the PRC may now be or may hereafter become a party for the benefits of the Joint Venture, the Parties and all of their personnel.

 

10.9  Individual Income Tax

 

The employees of the Joint Venture shall pay their individual income tax in accordance with applicable Law governing individual income taxes. The Joint Venture shall act as the employees’ proxy in the deduction and payment of such income tax.

 

  

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11.  Foreign Exchange

 

11.1   Matters Relating to Foreign Exchange

 

All foreign exchange matters of the Joint Venture shall be handled in accordance with the provisions of the Foreign Exchange Regulations and relevant officially published Law.

 

11.2   Foreign Exchange Accounts

 

	
(a)  

	
The foreign exchange funds of the Joint Venture shall be transferable into and outside of the PRC and deposited in the foreign exchange account(s) established by the Joint Venture with approved financial institutions within or outside of the PRC in accordance with the Foreign Exchange Regulations. All foreign exchange payments of the Joint Venture shall be paid out of the above-mentioned foreign exchange accounts in accordance with the Foreign Exchange Regulations after the payment of any PRC taxes that may be applicable. Any fees or costs (other than taxes) relating to the remittance abroad of such payments shall be borne by the Joint Venture.

 

	
(b)  

	
In case of shortage in the foreign exchange reserve of the Joint Venture, subject to the compliance with relevant foreign exchange regulations, the Joint Venture may convert RMB into foreign exchange in a bank or foreign exchange trading institute permitted by the PRC Law. In case of shortage in RMB and surplus of foreign exchange, the Joint Venture may also convert foreign exchange into RMB. All expenses arising from the conversion shall be itemized under the operation and management expenses.

 

	
(c)  

	
The exchange rate applicable to conversion from RMB into foreign currency and vise versa shall be based on the Benchmark Exchange Rate on the date when the business  (paying interests, expenses, commissions, purchase or sales price, etc) occurs. The Board shall make a decision on the exchange rate in case that no Benchmark Exchange Rate is available.

 

12.  Labor Management

 

12.1   Labor Policies of the Joint Venture

 

	
(a)  

	
All matters related to the employment, transfer, dismissal, resignation, wages, welfare benefits, labor insurance, labor protection and labor discipline of labor management by the Joint Venture shall be handled in accordance with the applicable PRC Law and the labor management policies and procedures approved by the Board.

 

	
(b)  

	
The Joint Venture shall sign an individual labor contract with each of its employees. The form of the individual labor contract shall be filed with the local labor department for the record if required by applicable Law.

 

	
(c)  

	
The Joint Venture has the right to directly recruit, appoint, and dismiss its staffs as per governing Law of the PRC, and all employees of the Joint Venture must be recruited by way of recruit examination.

 

  

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12.2  Staff Welfare

 

The Joint Venture shall be responsible for each employee’s social insurance premium (including without limitation pension, unemployment, maternity, work injury, medical treatment and housing funds) during his employment with the Joint Venture pursuant to the provisions of the PRC Law. The Joint Venture shall be free of any and all of the above-mentioned social insurance premium and other welfare expenditures including but not limited to housing subsidies occurred before the execution of labor contract with the employees.

 

12.3  Labor Protection, Environment, Health and Safety

 

The Joint Venture shall conduct regular examinations on the implementation of its labor protection, environment, health and safety policies and report the results of such examinations to the Board. The Joint Venture shall also carry out any necessary and appropriate improvements and corrections to comply with such policies.

 

13.   Independent managing, Marketing of Products and Restrictions on Competition

 

13.1   Independent Managing

 

All Parties agree, the Joint Venture shall remain independent from investors during its operation. MNGA and HyFuels shall not impact the Joint Venture by the advantage of manufacture, technology, management, staff, information, and marketing, and lead the Joint Venture to rely them in business.

 

13.2  Sales and Marketing

 

All JV Products and service are supplied exclusively by the Joint Venture in the home market of Greater China. The Joint Venture will cooperate with MNGA and HyFuels to develop the outside market.

 

13.3  Restrictions on Competition

 

All Parties hereby agree that the commercial activities of each Party cannot compete with the activities of the Joint Venture directly or indirectly through establishing joint ventures with any third party.

 

14.   The Joint Venture Term

 

14.1  Initial Term

 

The term of operations of the Joint Venture (as extended from time to time, the “JV Term”) shall initially be Fifty (50) years (the “Initial Term”), commencing from the Establishment Date.

 

14.2  Extension

 

Prior to the expiry of the JV Term, including the Initial Term or any extension thereof, the Parties may agree to extend such term, subject to the approval of the Examination and Approval Authority and the relevant requirements of Law. Negotiations for such extension shall begin not later than one (1) year prior to the expiration of the JV Term. If the Parties agree to extend the JV Term, an application for extension shall be filed with the Examination and Approval Authority not later than six (6) months prior to the expiration of the JV Term.

 

  

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15.   Termination and Liquidation

 

15.1  Termination as Agreed by Both Parties

 

The Parties may mutually agree in writing to terminate this Contract and dissolve the Joint Venture at any time.

 

The Parties may mutually agree in writing to terminate this Contract for the purpose of the Joint Venture’s IPO directly or indirectly, and the Parties shall sign the listed company AOA upon the requirements of the competent government authorities to substitute for this Contract.

 

15.2  Events of Termination

 

The Joint Venture shall be dissolved by the Board if any of the conditions or events (each an “Event of Termination”) set forth below shall occur and be continuing:

 

	
(a)  

	
Upon the motion of a director appointed by either Party, if the Joint Venture is the subject of proceedings for liquidation or dissolution required by Law or by a court or initiated by a creditor(s) of the Joint Venture;

 

	
(b)  

	
Upon the motion of a director appointed by another Party, if the one Party becomes bankrupt or insolvent or file a petition seeking protection under any bankruptcy, reorganization or insolvency Law;

 

	
(c)  

	
Upon the motion of a director appointed by either Party (the “Terminating Party”), should any governmental authority having authority over either Party or the Joint Venture promulgates any policy or Law or interpret any policy or Law in such a way that may cause significant adverse consequences to the Joint Venture or the Terminating Party, if the Terminating Party is unable to reach agreement with the other Party on amendments to this Contract as required to maintain the Terminating Party’s economic benefits;

 

	
(d)  

	
Upon the motion of a director appointed by the Party that has made its contribution or has not been obligated to make its contribution because the conditions precedent set forth in Section 5.4 have not been met or waived by the relevant Party, if any Party fails to make its contributions in accordance with the provisions of Section 5 of this Contract, where such failure is not remedied by the date that is ninety (90) days after the expiration of time limit for capital contribution set out in Section 5.3(a) of this Contract; provided that the conditions precedent for such contribution set forth in Sections 5.4(a) and 5.4(b) have been met or waived by the relevant Party;

 

	
(e)  

	
Upon the motion of a director appointed by either Party, if a relevant governing authority issues a binding order to cease operations because of serious violations by the Joint Venture of the PRC Law.

 

If a director makes a motion to dissolve the Joint Venture pursuant to an Event of Termination listed in this Section 15.2 or a right granted elsewhere in this Contract, each Party shall cause the other directors appointed by it to adopt a resolution in favor of the dissolution of the Joint Venture.

 

  

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15.3  Liquidation Procedures

 

The dissolution and liquidation of the Joint Venture shall be conducted in accordance with then applicable Law of the PRC and the provisions of this Contract and the Articles of Association.

 

16.   Liability for Breach of Contract

 

16.1  Breach of Contract

 

A Party shall be in breach of this Contract if:

 

	
(a)  

	
It fails to fully perform or illegally terminate performance of any obligation under this Contract or Relevant Agreements to which it is a party, and such breach has not been remedied or rectified within thirty (30) days after receipt of a written notice of such breach from the Joint Venture or the other Party;

 

	
(b)  

	
A representation, warranty or undertaking made by such Party herein is untrue, materially inaccurate or has not been realized;

 

	
(c)  

	
It fails to make its contributions to the Registered Capital prior to the expiration of time limit for capital contribution  as stipulated in Section 5.3 of this Contract, provided that all conditions precedent to making such contribution have been met or waived by the relevant Party;

 

	
(d)  

	
It fails to cause any director it appointed to vote for the approval of Equity Interest transfer of the Joint Venture in accordance with Section 5.6 under this Contract;

 

	
(e)  

	
It fails to sign Relevant Agreements with the Joint Venture pursuant to Article 6;

 

	
(f)  

	
It violates any other provisions of this Contract.

 

16.2   Liability for Breach of Contract

 

	
(a)  

	
If the Joint Venture or a Party suffers any cost, liability or loss, including lost profits of the Joint Venture but not including any other consequential losses of whatsoever nature, as a result of a breach of this Contract by any Party, the Party in breach shall indemnify and hold the Joint Venture and the non-breaching Party harmless in respect of any such cost, liability or loss, including interest paid or lost as a result thereof.

 

	
(b)  

	
Without limiting the generality of the foregoing, each Party (the “Indemnifying Party”) shall indemnify, defend and hold harmless the other Party and the Joint Venture (each, an “Indemnified Party”) from and against all claims, losses, liabilities, damages, deficiencies, judgments, assessments, fines, settlements, costs or expenses (including interest, penalties and fees, loss of profits by the Joint Venture, expenses and disbursements incurred by any Indemnified Party in any action or proceeding between the Indemnifying Party and any Indemnified Party or between any Indemnified Party and any third party, or otherwise) based upon, arising out of, relating to or otherwise in respect of any inaccuracy in or any breach of any representation, warranty, covenant or agreement of the Indemnifying Party or its Affiliate contained in this Contract, any Relevant Agreements or in any other documents delivered by the Indemnifying Party pursuant to this Contract.

 

  

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17.   Force Majeure

 

17.1  Definition

 

In case of any earthquakes, typhoons, floods, fires and other natural disasters, wars, riots and similar military actions, civil unrest, epidemics, embargoes, expropriation, injunctions or other restraints and actions of government (provided that the governing authority involved is not the department in charge of such Party or its Affiliate) (an “Force Majeure Event”), then the responsibilities and obligations of such Party that is prevented by such Force Majeure Event (the “Prevented Party”) shall be handled in accordance with the provisions of Section 17.2 hereunder.

 

17.2  Consequences of Force Majeure Event

 

	
(a)  

	
In case of an Force Majeure Event, the liabilities arising out of the Prevented Party’s failure to perform its obligations hereunder shall be released in whole or in part, provided that all of the following conditions are met: (i) the Force Majeure Event was the direct cause of the stoppage, impediment or delay encountered by the Prevented Party in performing its obligations under this Contract; (ii) the Prevented Party notifies the other Party in writing immediately after such Force Majeure Event occurs, but in no case shall be later than ten (10) Business Days after the occurrence thereof; (iii) the Prevented Party has made reasonable commercial efforts to mitigate the losses and take remedial measures.

 

	
(b)  

	
Subject to the conditions set forth in paragraph (a) above, and within the extent of the effect of an Force Majeure Event, the Prevented Party shall not be liable for any damages, losses or increase in costs which the other Party may sustain due to its non-performance or delayed performance caused by such Force Majeure Event, and such non-performance or delayed performance shall not be deemed a breach of this Contract.

 

	
(c)  

	
In case of an Force Majeure Event, the Parties shall, based on the effect of such event on the performance of this Contract, discuss and decide whether to revise this Contract and whether the Prevented Party should be partially or fully released from performing its obligations hereunder.

 

18.   Confidential Information

 

18.1  Confidentiality

 

	
(a)  

	
Any Party that receives any Confidential Information during the JV Term (the “Receiving Party”) shall:

 

	
(i)  

	
keep the Confidential Information confidential;

 

	
(ii)  

	
not disclose the Confidential Information to any third party other than with the prior written consent of the Party that disclosed such Confidential Information, as the case may be, or in accordance with Sections 18.1(b); and

 

  

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(iii)  

	
not use the Confidential Information for any purpose other than the performance of its obligations under this Contract or in accordance with Section 18.1(a).

 

	
(b)  

	
The Receiving Party may disclose the Confidential Information only to its designated employees, attorneys, accountants, auditors, investment consultants, or other professional consulting persons (the “Recipients”) whose duties require such disclosure for the implementation of this Contract. The Receiving Party shall take all reasonable precautions, including the execution of confidentiality contracts with each such recipient or the inclusion of confidentiality clauses in the individual employment contract with each such recipient, to prevent such recipient from using Confidential Information for their personal benefit and to prevent any unauthorized disclosure of such Confidential Information to any third party.

 

	
(c)  

	
Each Party shall use its best efforts to ensure that the Joint Venture shall comply with all of the Receiving Party’s confidentiality obligations herein as if the Joint Venture were a party to this Contract, including the inclusion of confidentiality clauses in all employment contracts between the Joint Venture and its Recipients.

 

18.2  Exceptions

 

The provisions of Section 18.1 shall not apply to:

 

	
(i)  

	
Confidential Information that is or becomes generally available to the public other than as a result of disclosure by, or at the direction of, a Party, any of its Recipients in violation of this Contract;

 

	
(ii)  

	
disclosure to the extent required under applicable Law or the rules of any stock exchange applicable to a Party or any of its Affiliates; provided that such disclosure shall be limited solely to the extent required by applicable Law or the rules of any such stock exchange and, to the extent practicable, the Party that is the proprietor of the Confidential Information subject to such disclosure shall be given an opportunity to review and comment on the contents of the disclosure before it is made;

 

	
(iii)  

	
 disclosure to the extent required by applicable Law or judicial or regulatory process or in connection with judicial or arbitration process regarding any legal action, suit or proceeding arising out of, or relating to, this Contract; provided that the Party required to make the disclosure promptly notifies the other Party, as applicable, so that the Joint Venture or such other Party may seek an appropriate protective order, and if no such protective order is obtained, the disclosing Party will only furnish that portion of the Confidential Information that it is advised by counsel is legally required and will exercise all commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information; and

 

  

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(iv)  

	
use of Confidential Information concerning the Joint Venture by the Receiving Party after the termination of this Contract in accordance with the provisions hereof where the Receiving Party is legally permitted to continue to operate, whether directly or indirectly, and whether or not in cooperation with any other third party or any other Party, the business of the Joint Venture.

 

18.3  Publicity

 

Neither Party shall make any announcement about the Joint Venture, this Contract or the other Party in relation to the Joint Venture, this cooperation or the business of the Joint Venture without the prior written consent of the other Party. Either of the Parties may at any time make announcements that are required by applicable Law or the rules of any stock exchange applicable to such Party or any of its Affiliates, so long as the Party so required to make the announcement, promptly upon learning of such requirement, notifies in writing the other Party of such requirement and discusses with the other Party in good faith the exact wording of any such announcement and takes precautionary measures to prevent disclosure of Confidential Information to the maximum extent permitted.

 

19.    Governing Law

 

	
  

	 	
All activities of the Joint Venture shall abide to all applicable Law of the PRC and shall be governed and protected by such Law.

 

20.    Dispute Resolution

 

20.1  Consultation

 

Any dispute, controversy or claim arising out of or relating to this Contract, or the performance, interpretation, breach, termination or validity hereof (a “Dispute”), shall be resolved through friendly consultation. Such consultation shall begin immediately after one Party has delivered to the other Party a written request for such consultation stating specifically the nature of the Dispute (a “Dispute Notice”). If the Dispute has not been resolved within thirty (30) days following the date on which such Dispute Notice is received, either Party may submit the Dispute to China International Economic and Trade Arbitration Commission (the “Arbitration Commission”) for arbitration.

 

20.2.  Continued Performance of this Contract

 

During the period when a Dispute is being resolved, except for the matter being disputed, the Parties shall in all other respects continue to perform their obligations under this Contract.

 

21.    Miscellaneous

 

21.1   The Articles of Association and  the Joint Venture’s Name and Documents

 

	
(a)  

	
The Articles of Association have been completed in accordance with the various principles stipulated in this Contract and the PRC Law. If there is any inconsistency between this Contract and the Articles of Association, this Contract shall govern.

 

  

32

  

 

	
(b)  

	
Upon the termination of this Contract due to the expiration of the JV Term, the dissolution of the Joint Venture or other reasons,, neither Party may continue to use the Joint Venture’s name as that of any other companies it invests in.

 

	
(c)  

	
After the dissolution of the Joint Venture, the originals of all documents and account books shall be kept by DDI.

 

21.2   Survival

 

The agreements of the Parties contained in Sections 2.2, 15, 16 17, 18,19 and 20 shall continue to survive after the expiration or termination of this Contract and the dissolution of the Joint Venture.

 

21.3   Language

 

This Contract is executed in Chinese and English. The two language texts shall have equal validity and legal effect. Each Party hereby acknowledges that it has reviewed both language texts of this Contract and that they are the same in all material respects.

 

21.4  Notices

 

Notices or other communications required to be given by either Party pursuant to this Contract shall be provided in writing in both English and Chinese, and delivered by personal delivery, international courier service or facsimile to the other Party’s address set forth in Section 21.5 below, (or such other address or facsimile number as the addressee has by ten (10) days prior written notice specified to the other Party). Dates on which the notices shall be deemed as served shall be determined on the following principles:

 

	
(a)  

	
if by personal delivery, on the date of delivery;

 

	
(b)  

	
 if by international courier service on the seventh (7th) day after delivery to an internationally accepted courier service (as indicated by the receipt issued by such courier service); and

 

	
(c)  

	
if by facsimile, upon receipt of the notice confirming the delivery.

 

22.5   Address and Fax Number for Notices

 

If to DDI:

Address:[**], China

Attention: [Xiaohong Feng]

Fax:      +86-10-64801238

_________________

 

If to MNGA:

Address: [**]

Attention: [**], President

Fax:       [**]

 

  

33

  

 

If to HyFuels:

Address: [**]

Attention: [**], President

Fax:       [**]

 

 

21.6  Entire Agreement

 

This Contract (including the attachments, appendices and schedules hereto) and the Relevant Agreements constitute the sole and entire agreement between the Parties on the subject matter contained herein, and shall supersede all previous agreements, contracts, understandings and communications, either written or oral, between the Parties on the subject matter.

 

21.7  Good Faith

 

The Parties shall use their best efforts to implement the terms of this Contract and carry out their respective responsibilities hereunder in good faith and in accordance with Law.

 

21.8  Waiver

 

No waiver of any provision of this Contract shall be effective unless set forth in a written instrument signed by the Party waiving such provision. No failure or delay by a Party in executing any right, power or remedy under this Contract shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy. Without limiting the foregoing, no waiver by a Party of any breach by any other Party of any provision hereof shall be deemed to be a waiver of any subsequent breach of that or any other provision hereof.

 

21.9  Severability

 

In the event any one or more of the provisions contained in this Contract is held under any applicable Law of the PRC to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

21.10 Non-assignment

 

This Contract shall be binding upon and shall inure to the benefit of both Parties and their respective successors and permitted transferees. Unless otherwise permitted herein, neither Party shall assign any of its rights and obligations hereunder to any third party without the other Party’s prior written consent.

 

21.11 Counterparts

 

This Contract and any amended versions hereof or any other agreements delivered pursuant to this Contract may be executed in one or more counterparts. All of these counterparts shall constitute the same agreement, and shall take effect upon each Party’s execution of one or more of such counterparts and delivery to the other Party (unless otherwise stipulated in such agreement).

 

  

34

  

 

This Contract shall be executed in eight (8) English and eight (8) Chinese counterparts. One counterpart of each language text shall be retained by each Party, two counterparts of each language text shall be submitted to the Examination and Approval Authority and one counterpart of each language text shall be submitted to AIC. Two counterparts of each language text shall be retained in the records of the Joint Venture and, if required, shall be provided to other governmental authorities.

 

21.12 Amendment

 

Amendments to this Contract may only be made by a written agreement signed by each Party in both Chinese and English texts, each of which shall have equal validity and legal effect, and which shall be submitted to the Examination and Approval Authority (or its successor) for approval before they can become effective.

 

[The remainder of this page is left intentionally blank.]

 

  

35

  

 

The Parties hereto have caused this Contract to be executed as of the signing date written by their duly authorized representatives [All the Signatures shall be witnessed by the public notary].

 

 

DDI:

 

DDI Industry International(Beijing) Co.,Ltd

 

Signed By: ___________________

Name: XiaoHong Feng (Allen Feng)

Title: Chairman and President

Date:

 

 

MNGA:

 

Magnegas Corporation

 

 

Signed by:                                                                                                                     

 

Name:                                                                       

 

Title:                                                                         

 

Date:

 

 

HyFuels:

 

HyFuels, Inc.

 

 

Signed by:                                                                

 

Name:                                                                        

 

Title:                                                                          

 

Date:

 

  

36

  

Appendix I     Intellectual Property  Transfer/License Agreement

 

 

 

 

 

 

 

 

37

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