Document:

CPA 17 2015 Q1 10-Q EXH 10.3

        
Exhibit 10.3
         

AMENDED AND RESTATED
ASSET MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED ASSET MANAGEMENT AGREEMENT, dated as of May 13, 2015, is between CORPORATE PROPERTY ASSOCIATES 17-GLOBAL INCORPORATED, a Maryland corporation (“CPA: 17”), CPA:17 LIMITED PARTNERSHIP, a Delaware limited partnership, of which CPA:17 is a general partner (the “Operating Partnership”), and W.P. CAREY & Co. B.V., a Netherlands company (the “Manager”).
W I T N E S S E T H:
WHEREAS, CPA: 17 has qualified as a REIT (as defined below), and is investing its funds in investments permitted by the terms of the prospectus pursuant to which it raised equity capital and Sections 856 through 860 of the Code (as defined below);
WHEREAS, the Parties hereto are parties to an existing asset management agreement, dated as of July 1, 2008;
WHEREAS, CPA: 17, the Operating Partnership and the Manager desire to amend and restate the existing asset management agreement in order that CPA: 17 and its subsidiaries, including the Operating Partnership, may continue to avail themselves of the experience, sources of information, and assistance of, and certain facilities available to, the Manager with respect to disposition opportunities and asset management, for properties located outside of the United States, and to have the Manager undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Directors of CPA: 17, all as provided herein; and
WHEREAS, the Manager is willing to render such services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
1.Definitions.  As used in this Agreement, the following terms have the definitions hereinafter indicated:
Acquisition Expense.  Acquisition Expense as defined under the Advisory Agreement.
Acquisition Fees.  The Acquisition Fees as defined under the Advisory Agreement.
Adjusted Investor Capital.  As of any date, the Initial Investor Capital reduced by any Redemptions, other than Redemptions intended to qualify as a liquidity event for purposes of this Agreement, and by any other Distributions on or prior to such date determined by the Board to be from Cash from Sales and Financings.

Adjusted Net Income.  For any period, the total consolidated revenues recognized in such period by CPA: 17, less the total consolidated expenses of CPA: 17 recognized in such period, excluding additions to reserves for depreciation and amortization, bad debts or other similar non-cash reserves; provided, however, that Adjusted Net Income for purposes of calculating total allowable Operating Expenses shall exclude any gain, losses or writedowns from the sale of CPA: 17’s assets.
Advisor.  CPA: 17’s external advisor.  As of the date of this Agreement, the Advisor is Carey Asset Management Corp.
Advisory Agreement.  The Amended and Restated Advisory Agreement, dated as of January 1, 2015, between CPA: 17 and the Advisor, as the same may be amended, supplemented, extended and renewed, and any successor advisory agreement.
Affiliate.  An Affiliate of another Person shall include any of the following: (i) any Person directly or indirectly owning, controlling, or holding, with power to vote ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; or (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.
Agreement.  This Asset Management Agreement.
Appraised Value.  Value according to an appraisal made by an Independent Appraiser, which may take into consideration any factor deemed appropriate by such Independent Appraiser, including, but not limited to, the terms and conditions of any lease of a relevant property, the quality of any lessee’s, borrower’s or other counter-party’s credit and the conditions of the credit markets.  The Appraised Value of a Property may be greater than the construction cost or the replacement cost of the Property.
Articles of Incorporation.  Articles of Incorporation of CPA: 17 under the General Corporation Law of Maryland, as amended from time to time, pursuant to which CPA: 17 is organized.
Asset Management Fee.  The Asset Management Fee as defined in Section 9(a) hereof.
Average Invested Assets.  The average during any period of the aggregate book value of the assets of CPA: 17 invested, directly or indirectly, in Properties and in Loans, before deducting reserves for depreciation, bad debts, impairments, amortization and all other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.

Average Market Value.  The aggregate purchase price paid by CPA: 17 for an Investment, provided that, if a later Appraised Value is obtained for the Investment, that later Appraised Value, adjusted for other net assets and liabilities that have economic value and are associated with that Investment, shall become the Average Market Value for the Investment.
Board or Board of Directors.  The Board of Directors of CPA: 17.  
Bylaws.  The bylaws of CPA: 17.
Cash from Financings.  Net cash proceeds realized by CPA: 17 from the financing of Investments or the refinancing of any indebtedness of CPA:17 secured by real estate located outside the United States.
Cash from Sales.  Net cash proceeds realized by CPA: 17 from the sale, exchange or other disposition of any of its assets located outside the United States after deduction of all expenses incurred in connection therewith.  Cash from Sales shall not include Cash from Financings.
Cash from Sales and Financings.  The total sum of Cash from Sales and Cash from Financings.
Cause.  With respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by the Manager that, in each case, is determined by a majority of the Independent Directors to be materially adverse to CPA: 17, or a breach of a material term or condition of this Agreement by the Manager and the Manager has not cured such breach within 30 days of written notice thereof or, in the case of any breach that cannot be cured within 30 days by reasonable effort, has not taken all necessary action within a reasonable time period to cure such breach. 
Closing Date.  The first date on which Shares were issued pursuant to an Offering.
Code.  Internal Revenue Code of 1986, as amended.
Competitive Real Estate Commission.  The real estate or brokerage commission paid for the purchase or sale of a property that is reasonable, customary and competitive in light of the size, type and location of the property.
Contract Sales Price.  The total consideration received by CPA: 17 for the sale of a Property.
CPA: 17.  As defined in the introductory paragraph, unless in the context of a particular reference, it is clear that such reference refers to Corporate Property Associates 17 — Global Incorporated together with its consolidated subsidiaries, including the Operating Partnership.  Unless the context otherwise requires, any reference to financial measures of CPA: 17 shall be calculated by reference to the consolidated financial 

statements of CPA: 17 and its subsidiaries, including, without limitation, the Operating Partnership, prepared in accordance with GAAP.
Cumulative Return.  For the period for which the calculation is being made, the percentage resulting from dividing (A) the total Distributions for such period (not including Distributions out of Cash from Sales and Financings), by (B) the product of (i) either (x) until such time as CPA: 17 has invested 90% of the net proceeds of CPA: 17’s initial Offering (excluding net proceeds from the sale of Shares pursuant to CPA: 17’s distribution reinvestment program), the average Adjusted Investor Capital for such period (calculated on a daily basis) or (y) from and after such time as CPA: 17 has invested 90% of the net proceeds of CPA: 17’s initial Offering (excluding net proceeds from the sale of Shares pursuant to CPA: 17’s distribution reinvestment program), the net proceeds from the sale of Shares (excluding net proceeds from the sale of Shares pursuant to CPA: 17’s distribution reinvestment program), as adjusted for Redemptions other than Redemptions intended to qualify as a liquidity event for purposes of this Agreement, and by any other Distributions on or prior to such date determined by the Board to be from Cash from Sales and Financings, and (ii) the number of years (including fractions thereof) elapsed during such period.  Notwithstanding the foregoing, neither the Shares received by the Advisor or its Affiliates for any consideration other than cash, nor the Distributions in respect of such Shares, shall be included in the foregoing calculation.
Directors.  The persons holding such office, as of any particular time, under the Articles of Incorporation, whether they be the directors named therein or additional or successor directors.
Distributions.  Distributions declared by the Board.
GAAP.  Generally accepted accounting principles in the United States.
Good Reason.  With respect to the termination of this Agreement, (i) any failure to obtain a satisfactory agreement from any successor to CPA: 17 or the Operating Partnership to assume and agree to perform CPA: 17’s or the Operating Partnership’s, as applicable, obligations under this Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by CPA: 17 or the Operating Partnership; provided that (a) such breach is of a material term or condition of this Agreement and (b) CPA: 17  or the Operating Partnership, as applicable, has not cured such breach within 30 days of written notice thereof or, in the case of any breach that cannot be cured within 30 days by reasonable effort, has not taken all necessary action within a reasonable time period to cure such breach.
Independent Appraiser.  A qualified appraiser of real estate as determined by the Board, who is not affiliated, directly or indirectly, with CPA: 17, the Manager or their respective Affiliates.  Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification.

Independent Director.  A Director of CPA: 17 who meets the criteria for an Independent Director specified in the Bylaws.
Individual.  Any natural person and those organizations treated as natural persons in Section 542(a) of the Code.
Initial Investor Capital.  The total amount of capital invested from time to time by Shareholders (computed at the Original Issue Price per Share), excluding any Shares received by the Manager, the Advisor or their respective Affiliates for any consideration other than cash.
Investment.  An investment made by CPA:17, directly or indirectly, in a Property, Loan or, subject to Section 4(b) Other Permitted Investment Asset.
Loan Refinancing Fee.  The Loan Refinancing Fee as defined in Section 9(b) hereof.
Loans.  The notes and other evidences of indebtedness or obligations acquired or entered into by CPA: 17 as lender which are secured or collateralized by personal property, or fee or leasehold interests in real estate or other assets, in each case located outside the United States, including but not limited to first or subordinate mortgage loans, construction loans, development loans, loans secured by capital stock or any other assets or form of equity interest and any other type of loan or financial arrangement, such as providing or arranging for letters of credit, providing guarantees of obligations to third parties, or providing commitments for loans.  The term “Loans” shall not include leases, which are not recognized as leases for Federal income tax reporting purposes.
Market Value.  The value calculated by multiplying the total number of outstanding Shares by the average closing price of the Shares over the 30 trading days beginning 180 calendar days after the Shares are first listed on a national security exchange.
Offering.  The offering of Shares pursuant to a Prospectus.
Operating Expenses.  All consolidated operating, general and administrative expenses paid or incurred by CPA: 17, as determined under GAAP, except the following (insofar as they would otherwise be considered operating, general and administrative expenses under GAAP): (i) interest and discounts and other cost of borrowed money; (ii) taxes (including state and Federal income tax, property taxes and assessments, franchise taxes and taxes of any other nature); (iii) expenses of raising capital, including Organization and Offering Expenses, printing, engraving, and other expenses, and taxes incurred in connection with the issuance and distribution of CPA: 17’s Shares and Securities; (iv) Acquisition Expenses, real estate commissions on resale of property and other expenses connected with the acquisition, disposition, origination, ownership and operation of Investments, including the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, maintenance, repair and improvement of 

property; (v) Acquisition Fees payable to the Advisor or any other party; (vi) Subordinated Disposition Fees payable to the Manager or any other party under this Agreement and the corresponding fees payable to the Advisor under the Advisory Agreement or to any other party; (vi) distributions paid by the Operating Partnership to the Special General Partner under the agreement of limited partnership of the Operating Partnership in respect of gains realized on dispositions of Investments; (vii)  amounts paid to effect a redemption or repurchase of the special general partner interest held by the Special General Partner pursuant to the agreement of limited partnership of the Operating Partnership; and (viii) non-cash items, such as depreciation, amortization, depletion, and additions to reserves for depreciation, amortization, depletion, losses and bad debts.  Notwithstanding anything herein to the contrary, Operating Expenses shall include the Asset Management Fee and any Loan Refinancing Fee, in each case payable under this Agreement and the corresponding fees payable under the Advisory Agreement and, solely for the purposes of determining compliance with the Two Percent/25% Guidelines, distributions of profits and cash flow made by the Operating Partnership to the Special General Partner pursuant to the agreement of limited partnership of the Operating Partnership, other than distributions described in clauses (vi) and (vii) of this definition.
Organization and Offering Expenses.  Organization and Offering Expenses as defined under the Advisory Agreement.
Original Issue Price.  For any share issued in an Offering, the price at which such Share was initially offered to the public by CPA: 17, regardless of whether selling commissions were paid in connection with the purchase of such Shares from CPA: 17.
Other Permitted Investment Asset.  An asset, other than cash, cash equivalents, short term bonds, auction rate securities and similar short term investments, acquired by CPA: 17 for investment purposes that is not a Loan or a Property but that is attributable to an investment or activities of CPA: 17 outside the United States and is consistent with the investment objectives and policies of CPA: 17.
Person.  An Individual, corporation, partnership, joint venture, association, company, trust, bank, or other entity, or government or any agency or political subdivision of a government.
Preferred Return.  A Cumulative Return of five percent computed from the Closing Date through the date as of which such amount is being calculated.
Property or Properties.  CPA: 17’s partial or entire interest in real property (including leasehold interests) located outside the United States and personal or mixed property connected therewith.  An investment which obligates CPA: 17 to acquire a Property will be treated as a Property for purposes of this Agreement.

Property Management Fee.  A fee for property management services rendered by the Advisor or its Affiliates in connection with assets of CPA: 17 acquired directly or through foreclosure.
Prospectus.  Any prospectus pursuant to which CPA: 17 offers Shares in a public offering, as the same may at any time and from time to time be amended or supplemented after the effective date of the registration statement in which it is included.
Redemptions.  An amount determined by multiplying the number of Shares redeemed by the Original Issue Price.
REIT.  A real estate investment trust, as defined in Sections 856-860 of the Code.  
Securities.  Any stock, shares (other than currently outstanding Shares and subsequently issued Shares), voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise or in general any instruments commonly known as “securities” or any certificate of interest, shares or participation in temporary or interim certificates for receipts (or, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire any of the foregoing), which subsequently may be issued by CPA: 17.
Shareholders.  Those Persons who at the time any calculation hereunder is to be made are shown as holders of record of Shares on the books and records of CPA: 17.
Shares.  All of the shares of common stock of CPA: 17, $.001 par value, and any other shares of common stock of CPA: 17.
Special General Partner.  W. P. Carey Holdings, LLC and any permitted transferee of the special general partnership interest under the agreement of limited partnership of the Operating Partnership.
Sponsor.  W.P. Carey Inc. and any other Person directly or indirectly instrumental in organizing, wholly or in part, CPA: 17 or any person who will control, manage or participate in the management of CPA: 17, and any Affiliate of any such person.  Sponsor does not include a person whose only relationship to CPA: 17 is that of an independent property manager and whose only compensation is as such.  Sponsor also does not include wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.
Subordinated Disposition Fee.  The Subordinated Disposition Fee as defined in Section 9(d) hereof.
Termination Date.  The effective date of any termination of this Agreement.
Two Percent/25% Guidelines.  The requirement, as provided for in Section 13 hereof, that, in any 12-month period ending on the last day of any fiscal quarter, Operating Expenses under this Agreement and the Advisory Agreement not exceed the 

greater of two percent of CPA: 17’s Average Invested Assets during such 12-month period or 25% of CPA: 17’s Adjusted Net Income over the same 12-month period.
2.    Appointment.  CPA: 17 hereby appoints the Manager to serve as its manager on the terms and conditions set forth in this Agreement, and the Manager hereby accepts such appointment.
3.    Duties of the Manager.  During the term of this Agreement, the Manager agrees, for and in consideration of the compensation set forth below, to supervise and direct the management and operation of the Properties on behalf of CPA: 17 and for the account of CPA: 17, in an efficient and satisfactory manner consistent with like quality properties and at all times maintain or contract for systems and personnel sufficient to enable it to carry out all of its duties, obligations and functions under this Agreement.  In performance of this undertaking, subject to the supervision of the Board and consistent with the provisions of the Articles of Incorporation and Bylaws of CPA: 17 and any Prospectus pursuant to which Shares are offered, the Manager shall, with respect to the Properties, either directly or by engaging an Affiliate:
(a)    demand, collect and receive (i) all rents, utility charges, common area charges, insurance charges, VAT payments and real estate and personal property tax and assessment charges, (ii) all other pass-through or bill-back charges, sums, costs or expenses of any nature whatsoever payable by tenants under the terms of any or all of the leases and any other agreements relating to all or any portion of the Properties, and (iii) all other revenues, issues and profits accruing from the Properties and any covenant calculations and insurance certificates;
(b)    calculate and administer rent calculations; maintain and review tenant covenant calculations; calculate and submit lender covenant calculations; and maintain letters of credits and security deposit information; 
(c)    serve as primary contact to all tenants, field inquiries and requests; process easements and landlord lien waivers; manage third party asset managers and coordinate loan closings with third party asset managers; inspect at-risk properties, oversee inspections by lenders and third-party property inspection firms, and coordinate site visits and reports; ascertain necessary repair and monitor deferred maintenance, and ensure tenant compliance; schedule and coordinate tenant improvement projects and leasing efforts; create expense budgets for vacant properties as needed and pro forma expense budgets for at-risk properties; assist in executing redevelopment strategies; provide or source technical expertise when necessary relating to building issues; formulate, structure and oversee redevelopment projects; and meet with tenants to discuss potential needs;
(d)    assess residual risk and long term viability on all Properties; perform credit analysis of tenant businesses and economic analysis of holding and selling Properties; maximize returns for CPA: 17 through early renewals or sales of Properties; manage bankruptcy process and monitor credit quality of portfolios; restructure leases as necessary; execute opportunistic mortgage refinancing; coordinate with annual third party appraisers in valuation 

process; and assess and manage market risks and risks associated with legal, tax, and corporate structure;
(e)    supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations of the Properties, including but not limited to, overseeing and training for international compliance functions and staffing; overseeing and ensuring tax, legal, and regulatory compliance; ensuring timely completion of all obligations by tenants; and ensuring smooth integration of new investments into asset management platform;
(f)    from time to time, or at any time reasonably requested by the Board or management of CPA: 17, make reports of its performance of services to CPA: 17 under this Agreement, including the State of the Assets and bi weekly status reports to be provided to CPA: 17’s management;
(g)    provide CPA: 17 with such accounting data and any other information requested by CPA: 17 concerning the investment activities of CPA: 17 as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the Securities and Exchange Commission and any other regulatory agency, including annual financial statements;
(h)    perform corporate secretarial work including, but not limited to, tracking of dates of required filings and annual general meetings for subsidiaries of CPA: 17; obtaining and coordinating all relevant materials needed for audit and/or statutory filing, including approvals of financial information, auditor’s representation letters, and minutes and resolutions; preparing financial analyses of recurring payments; maintaining information for compliance reports; organizing, planning, and presenting International State of the Assets meetings; and preparing International Asset Operating Committee Memos;
(i)    do all things necessary to assure its ability to render the services described in this Agreement;
(j)    obtain for, or provide to, CPA: 17 such services as may be required in disposing of Investments;
Notwithstanding anything to the contrary in this Agreement, CPA: 17 acknowledges that the Manager does not have an office in the United States and intends to conduct its business in a manner that will not cause Manager to be deemed to be engaged in a United States trade or business or have a permanent establishment in the United States.  
4.    Authority of Manager.
(a)    Pursuant to the terms of this Agreement (and subject to the restrictions included in paragraph (b) of this Section 4 and in Section 7 hereof), and subject to the continuing and exclusive authority of the Board over the management of CPA: 17, the Board hereby delegates to the Manager the authority to: (1) arrange for refinancing, or assess changes in the 

asset or capital structure of, and dispose of or otherwise deal with, Properties; (2) enter into leases and service contracts for Properties, and perform other property level operations; (3) oversee non-affiliated property managers and other non-affiliated Persons who perform services for CPA: 17; (4) undertake accounting and other record-keeping functions at the Property level; and (5) perform its duties set forth in Section 3.
(b)    The Manager shall be authorized to perform the services contemplated by this Agreement with respect to Investments other than Properties and Loans; provided, however, that if fees for such services will be different from the fees contemplated by Section 9 of this Agreement, such fees shall be approved in advance by a majority of the Independent Directors.
(c)    The prior approval of the Board, including a majority of the Independent Directors and a majority of the Directors not interested in the transaction will be required for: (i) transactions that present issues which involve conflicts of interest for the Manager or an Affiliate (other than conflicts involving the payment of fees or the reimbursement of expenses); (ii) the lease of assets to the Sponsor, any Director, the Manager or any Affiliate of the Manager; (iii) any purchase or sale of an Investment from or to the Manager or an Affiliate; and (iv) the retention of any Affiliate of the Manager to provide services to CPA: 17 not expressly contemplated by this Agreement and the terms of such services by such Affiliate.  In addition, the Manager shall comply with any further approval requirements set forth in the Bylaws.
(d)    The Board may, at any time upon the giving of notice to the Manager, modify or revoke the authority set forth in this Section 4.  If and to the extent the Board so modifies or revokes the authority contained herein, the Manager shall henceforth comply with such modification or revocation, provided however, that such modification or revocation shall be effective upon receipt by the Manager and shall not be applicable to transactions to which the Manager has committed CPA: 17 prior to the date of receipt by the Manager of such notification.
5.    Bank Accounts.  The Manager may establish and maintain one or more bank accounts in its own name.  The Manager may establish and maintain one or more bank accounts for the account of CPA: 17 or in the name of CPA: 17 and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of CPA: 17, provided that no funds shall be commingled with the funds of the Manager; and the Manager shall from time to time render appropriate accountings of such collections and payments to the Board and to the auditors of CPA: 17.
6.    Records; Access.  The Manager shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of CPA: 17, at any time or from time to time during normal business hours.  The Manager shall at all reasonable times have access to the books and records of CPA: 17.
7.    Limitations on Activities.  Anything else in this Agreement to the contrary notwithstanding, the Manager shall refrain from taking any action which, in its sole judgment made in good faith, would adversely affect the status of CPA: 17 as a REIT, subject CPA: 17 to regulation under the Investment Company Act of 1940, violate any law, rule, regulation or 

statement of policy of any governmental body or agency having jurisdiction over CPA: 17, its Shares or its Securities, or otherwise not be permitted by the Articles of Incorporation or Bylaws, except if such action shall be ordered by the Board, in which case the Manager shall notify promptly the Board of the Manager’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board.  In such event the Manager shall have no liability for acting in accordance with the specific instructions of the Board so given.  Notwithstanding the foregoing, the Manager, its shareholders, directors, officers and employees, and partners, shareholders, directors and officers of the Manager’s partners and Affiliates of any of them, shall not be liable to CPA: 17, or to the Directors or Shareholders for any act or omission by the Manager, its partners, directors, officers and employees, or partners, shareholders, directors or officers of the Manager’s partners except as provided in Sections 18 and 20 hereof.
(a)    Notwithstanding the foregoing, the Manager, its shareholders, directors, officers and employees, and partners, shareholders, directors and officers of the Manager’s shareholders and Affiliates of any of them, shall not be liable to CPA: 17, the Operating Partnership or to the Directors or Shareholders for any act or omission by the Manager, its shareholders, directors, officers and employees, or partners, shareholders, directors or officers of the Manager’s shareholders and Affiliates of any of them if the following conditions are met:
(a)    The Manager, its shareholders, directors, officers and employees, and partners, shareholders, directors and officers of the Manager’s shareholders and Affiliates of any of them have determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of CPA: 17;
(b)    The Manager, its shareholders, directors, officers and employees, and partners, shareholders, directors and officers of the Manager’s shareholders and Affiliates of any of them were acting on behalf of or performing services for CPA: 17; and
(c)    Such liability or loss was not the result of negligence or misconduct by the Manager, its shareholders, directors, officers and employees, and partners, shareholders, directors and officers of the Manager’s shareholders or Affiliates of any of them.
(b)    Notwithstanding the foregoing, the Manager and its Affiliates shall not be indemnified by CPA: 17 or the Operating Partnership for any losses, liabilities or expenses arising from or out of the alleged violation of federal or state securities laws unless one or more of the following conditions are met:
(a)    There has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee;
(b)    Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or

(c)    A court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of CPA: 17 were offered or sold as to indemnification for violation of securities laws.
(c)    CPA: 17 and the Operating Partnership shall advance funds to the Manager or its Affiliates for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:
(a)    The legal action relates to acts or omissions with respect to the performance of duties or services on behalf of CPA: 17;
(b)    The legal action is initiated by a third party who is not a Shareholder or the legal action is initiated by a Shareholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and
(c)    The Manager or the Affiliate undertakes to repay the advanced funds to CPA: 17, together with the applicable legal rate of interest thereon, in cases in which such Manager or Affiliate is found not to be entitled to indemnification.
(d)    Notwithstanding the foregoing, the Manager shall not be entitled to indemnification or be held harmless pursuant to this Section 7 for any activity which the Manager shall be required to indemnify or hold harmless CPA: 17 pursuant to Section 22.
(e)    Any amounts paid pursuant to this Section 7 shall be recoverable or paid only out the net assets of CPA: 17 and not from Shareholders.

8.    Relationship with Directors.  There shall be no limitation on any shareholder, director, officer, employee or Affiliate of the Manager serving as a Director or an officer of CPA: 17, except that no employee of the Manager or its Affiliates who also is a Director or officer of CPA: 17 shall receive any compensation from CPA: 17 for serving as a Director or officer other than for reasonable reimbursement for travel and related expenses incurred in attending meetings of the Board; for the avoidance of doubt, the limitations of this Section 8 shall not apply to any compensation paid by the Manager or any Affiliate for which CPA: 17 reimbursed the Manager or Affiliate in accordance with Section 10 hereof.
9.    Fees.
(a)    Asset Management Fee.  CPA: 17 shall pay to the Manager as compensation for the asset management services rendered to CPA: 17 hereunder an amount equal to 0.5% of the Average Market Value of a Long-Term Net Leased Property and 1.75% of the Average Equity Value of a Loan (each, an “Asset Management Fee”), calculated as set forth 

below.  The Asset Management Fee will be calculated monthly, beginning with the month in which CPA: 17 and the Manager execute this Agreement, on the basis of one-twelfth of the applicable Asset Management Fee for that month, computed as a daily average.  The Asset Management Fee shall be prorated for the number of days during the month that CPA: 17 owns an Investment.
(b)    Loan Refinancing Fee.  CPA: 17 shall pay to the Manager for all qualifying loan refinancings of Properties a Loan Refinancing Fee in the amount up to one percent of the principal amount of the refinanced loan.  Any Loan Refinancing Fee shall be due and payable upon the funding of the related loan or as soon thereafter as is reasonably practicable.  A refinancing will qualify for a Loan Refinancing Fee only if the refinanced loan is secured by Property and (i) the maturity date of the refinanced loan (which must have a term of five years or more) is less than one year from the date of the refinancing; or (ii) the terms of the new loan represent, in the judgment of a majority of the Independent Directors, an improvement over the terms of the refinanced loan; or (iii) the new loan is approved by the Board, including a majority of the Independent Directors and, in each case, the Loan Refinancing Fee is found, in the judgment of a majority of the Independent Directors, to be in the best interest of CPA: 17.
(c)    Property Management Fee.  No Property Management Fee shall be paid unless approved by a majority of the Independent Directors.
(d)    Subordinated Disposition Fee.  If the Manager provides a substantial amount of services in the sale of an Investment, the Manager shall be entitled to receive a subordinated disposition fee (the “Subordinated Disposition Fee”) at the time of such disposition, in an amount equal to the lesser of (1) 50% of the Competitive Real Estate Commission (if applicable) and (2) 3.0% of the Contract Sales Price of the Investment; provided, however, that  the Subordinated Disposition Fee in respect of Investments that are Loans shall equal 1.0% of the equity capital invested by CPA: 17 in the Investment.  The total real estate commissions and Subordinated Disposition Fees CPA: 17 pays to all Persons shall not exceed an amount equal to the lesser of:  (1) 6% of the Contract Sales Price of the Investment or (2) the Competitive Real Estate Commission.  Payment of Subordinated Disposition Fees and accrued interest thereon, will be subordinated to the Preferred Return and only paid if the Preferred Return of 5% has been achieved through the end of the prior fiscal quarter.  To the extent that Subordinated Disposition Fees are not paid on a current basis due to the foregoing limitation, the unpaid fees will be due and paid at such time as the limitation has been satisfied, together with interest from the time of disposition of the Investment to which they relate, at the rate of 5%.  The Manager shall present to the Independent Directors such information as they may reasonably request to review the level of services provided by the Manager in connection with a disposition and the basis for the calculation of the amount of the Subordinated Disposition Fees on a quarterly basis.  No payment of Subordinated Disposition Fees shall be made prior to review and approval of such information by the Independent Directors.
(e)    Loans From Affiliates.  CPA: 17 shall not borrow funds from the Manager or its Affiliates unless (A) the transaction is approved by a majority of the Independent Directors and a majority of the Directors who are not interested in the transaction as being fair, competitive and commercially reasonable, (B) the interest and other financing charges or fees received by the 

Manager or its Affiliates do not exceed the amount which would be charged by non-affiliated lending institutions and (C) the terms are not less favorable than those prevailing for comparable arm’s-length loans for the same purpose.  CPA: 17 will not borrow on a long-term basis from the Manager or its Affiliates unless it is to provide the debt portion of a particular investment and CPA: 17 is unable to obtain a permanent loan at that time or in the judgment of the Board, it is not in CPA: 17’s best interest to obtain a permanent loan at the interest rates then prevailing and the Board has reason to believe that CPA: 17 will be able to obtain a permanent loan on or prior to the end of the loan term provided by the Manager or its Affiliates.
(f)    Changes To Fee Structure.  In the event the Shares are listed on a national securities exchange, CPA: 17 and the Manager shall negotiate in good faith to establish a fee structure appropriate for an entity with a perpetual life.  A majority of the Independent Directors must approve the new fee structure negotiated with the Manager.  In negotiating a new fee structure, the Independent Directors may consider any of the factors they deem relevant, including but not limited to: (a) the size of the Asset Management Fee in relation to the size, composition and profitability of CPA: 17’s portfolio; (b) the rates charged to other REITs and to investors other than REITs by Managers performing similar services; (c) additional revenues realized by the Manager and its Affiliates through their relationship with CPA: 17, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether paid by CPA: 17 or by others with whom CPA: 17 does business; (d) the quality and extent of service furnished by the Manager; (e) the performance of the investment portfolio of CPA: 17, including income, conversion or appreciation of capital, frequency of problem investments and competence in dealing with distress situations and (f) the quality of the portfolio of CPA: 17 in relationship to the portfolio of real properties owned and managed by W.P. Carey Inc. for its own account.  The new fee structure can be no more favorable to the Manager than the current fee structure.  The Independent Directors shall not approve any new fee structure that is in their judgment more favorable (taken as a whole) to the Manager than the current fee structure.
(g)    Payment.  Compensation payable pursuant to this Section 9 shall be paid directly to the Manager; provided, however, that any fee payable pursuant to Section 9 may be paid, at the option of CPA: 17, after consultation with the Manager, in the form of: (i) cash, (ii) common stock of CPA: 17, or (iii) a combination of cash and common stock.  If no such notice is provided, the fee shall be paid in cash.  For purposes of the payment of compensation to the Manager in the form of stock, the value of each share of common stock shall be: (i) the Net Asset Value per Share as determined by the most recent appraisal of CPA: 17’s assets performed by an Independent Appraiser, or (ii) if an appraisal has not yet been performed, $10 per share.  If shares are being offered to the public at the time a fee is paid with stock, the value shall be the price of the stock without commissions.  The Net Asset Value determined on the basis of such appraisal may be adjusted on a quarterly basis by the Board to account for significant capital transactions.
10.    Expenses.  To the extent applicable, in addition to the compensation paid to the Manager pursuant to Section 9 hereof, the CPA: 17 shall pay directly or reimburse the Manager for the following expenses:

(i)    interest and other costs for borrowed money, including discounts, points and other similar fees;
(ii)    taxes and assessments on income of CPA: 17, to the extent paid or advanced by the Manager, or on Property and taxes as an expense of doing business, in each case attributable to Properties or non-United States activities;
(iii)    expenses of managing and operating Properties, whether payable to an Affiliate of the Manager or a non-affiliated Person;
(iv)    fees and expenses of legal counsel for CPA: 17 attributable to Properties;
(v)    fees and expense of auditors and accountants for CPA: 17 attributable to Properties;
(vi)    expenses related to the Properties and other fees relating to disposing of investments including personnel and other costs incurred in transactions relating to Properties where a fee is not payable to the Manager; and
(vii)    all other expenses the Manager incurs in connection with providing services to CPA: 17 hereunder including reimbursement to the Manager or its Affiliates for the cost of rent, goods, materials and personnel incurred by them based upon the compensation of the Persons involved and an appropriate share of overhead allocable to those Persons as reasonably determined by the Manager on a basis approved annually by the Board (including a majority of the Independent Directors).
No reimbursement shall be made for the cost of personnel to the extent that such personnel are used in transactions for which the Manager receives a separate fee.
Expenses incurred by the Manager on behalf of CPA: 17 and payable pursuant to this Section 10 shall be reimbursed quarterly to the Manager within 60 days after the end of each quarter, subject to the provisions of Section 13 hereof.  The Manager shall prepare a statement documenting the Operating Expenses of CPA: 17 within 45 days after the end of each quarter.
11.    Other Services.  Should the Board request that the Manager or any partner or employee thereof render services for CPA: 17 other than as set forth in Section 3 hereof, such services shall be separately compensated and shall not be deemed to be services pursuant to the terms of this Agreement.
12.    Fidelity Bond.  The Manager shall maintain a fidelity bond for the benefit of CPA: 17 which bond shall insure CPA: 17 from losses of up to $5,000,000 and shall be of the type customarily purchased by entities performing services similar to those provided to CPA: 17 by the Manager.
13.    Limitations on Expenses.

(a)    If the aggregate Operating Expenses under this Agreement and the Advisory Agreement during the 12-month period ending on the last day of any fiscal quarter of CPA: 17 exceed the greater of (i) two percent of the Average Invested Assets during the same 12-month period or (ii) 25% of the Adjusted Net Income of CPA: 17 during the same 12-month period, then subject to paragraph (b) of this Section 13, such excess amount shall be the sole responsibility of the Manager and CPA: 17 shall not be liable for payment therefor.  CPA: 17 may defer the payment or distribution to the Advisor and the Special General Partner of fees, expenses and distributions that would, if paid or distributed, cause Operating Expenses during such 12-month period to exceed the foregoing limitations; provided, however, that in determining which items shall be paid and which may be deferred, priority will be given to the payment of distributions to the Special General Partner over the payment to the Advisor of amounts due under this Agreement. 
(b)    Notwithstanding the foregoing, to the extent that the Manager becomes responsible for any such excess amount as provided in paragraph (a), if a majority of the Independent Directors finds such excess amount or a portion thereof justified based on such unusual and non-recurring factors as they deem sufficient, CPA: 17 shall reimburse the Manager in future quarters for the full amount of such excess, or any portion thereof, but only to the extent such reimbursement would not cause CPA: 17’s Operating Expenses to exceed the Two Percent/25% Guidelines in the 12-month period ending on any such quarter.  In no event shall the Operating Expenses paid by CPA: 17 in any 12-month period ending at the end of a fiscal quarter exceed the Two Percent/25% Guidelines.
(c)    Within 60 days after the end of any twelve-month period referred to in paragraph (a), the Manager shall reimburse CPA: 17 for any amounts expended by CPA: 17 in such twelve-month period that exceeds the limitations provided in paragraph (a) unless the Independent Directors determine that such excess expenses are justified, as provided in paragraph (a), and provided the aggregate Operating Expenses under this Agreement and the Advisory Agreement for such later quarter would not thereby exceed the Two Percent/25% Guidelines.  To the extent CPA: 17 is reimbursed for such excess expenses by the Advisor, CPA: 17 shall not also be entitled to reimbursement for such excess from the Manager.
(d)    In addition to the limitation on Operating Expenses set forth in paragraphs (a) through (c), beginning with the fiscal year ending December 31, 2015, CPA:17 and the Operating Partnership shall not be required to reimburse the Manager for personnel expenses pursuant to Section 10 that exceed: (i) with respect to transactional legal expenses for the Manager's in-house transaction legal group, the amounts set forth in Schedule A; and (ii) with respect to other personnel expenses in any fiscal year (or portion thereof, if this Agreement is terminated during a fiscal year), 2.4% of CPA:17's total revenues for the fiscal year ending December 31, 2015; 2.2% of CPA:17's total revenues (or portion thereof) for the fiscal year ending December 31, 2016; and 2.0% of CPA:17's total revenues (or portion thereof) for each fiscal year (or portion thereof) thereafter, with total revenues in each case being determined by CPA:17's proportionate share of total revenues of the relevant entities, as determined in accordance with Section 10. Furthermore, CPA:17 and the Operating Partnership shall have no 

obligation to reimburse the Manager for expenses associated with the Advisor's financial systems transformation project known as "Project Phoenix." 
(e)    All computations made under paragraphs (a) through (d) of this Section 13 shall be determined in accordance with GAAP applied on a consistent basis.
(f)    If the Special General Partner receives distributions pursuant to the agreement of limited partnership of the Operating Partnership in respect of realized gains on the disposition of an Investment, Adjusted Net Income, for purposes of calculating the Operating Expenses, shall exclude the gain from the disposition of such Investment.
14.    Other Activities of the Manager.  Nothing herein contained shall prevent the Manager from engaging in other activities, including without limitation direct investment by the Manager and its Affiliates in assets that would be suitable for CPA: 17, the rendering of services to other investors (including other REITs) and the management of other programs advised, sponsored or organized by the Manager or its Affiliates; nor shall this Agreement limit or restrict the right of the Manager or any of its Affiliates or of any director, officer, employee, partner or shareholder of the Manager or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association.  The Manager may, with respect to any investment in which CPA: 17 is a participant, also render service to each other participant therein.  Without limiting the generality of the foregoing, CPA: 17 acknowledges that the Manager provides or will provide services to other “Corporate Property Associates” or CPA(R) REIT funds, whether now in existence or formed hereafter, and that the Manager and its Affiliates may invest for their own account.  The Manager shall be responsible for promptly reporting to the Board the existence of any actual or potential conflict of interest that arises that may affect its performance of its duties under this Agreement.  
Neither the Manager nor any Affiliate of the Manager shall be obligated generally to present any particular investment opportunity to CPA: 17 even if the opportunity is of a character which, if presented to CPA: 17, could be taken by CPA: 17.
15.    Relationship of Manager and Company.  CPA: 17 and the Manager agree that they have not created and do not intend to create by this Agreement a joint venture or partnership relationship between them and nothing in this Agreement shall be construed to make them partners or joint venturers or impose any liability as partners or joint venturers on either of them.
16.    Term; Termination of Agreement.  This Agreement shall continue in force until December 31, 2015 or until 60 days after the date on which the Independent Directors shall have notified the Manager of their determination either to renew this Agreement for an additional one-year period or terminate this Agreement, as required by CPA:17’s Charter.  
17.    Termination by Company.  At the sole option the Board (including a majority of the Independent Directors), this Agreement may be terminated immediately by written notice of termination from CPA: 17 to the Manager upon the occurrence of events which would constitute Cause or if any of the following events occur:

(a)    If the Manager shall be adjudged bankrupt or insolvent by a court of competent jurisdiction, or an order shall be made by a court of competent jurisdiction for the appointment of a receiver, liquidator, or trustee of the Manager, for all or substantially all of its property by reason of the foregoing, or if a court of competent jurisdiction approves any petition filed against the Manager for reorganization, and such adjudication or order shall remain in force or unstayed for a period of 30 days; or
(b)    If the Manager shall institute proceedings for voluntary bankruptcy or shall file a petition seeking reorganization under the federal bankruptcy laws, or for relief under any law for relief of debtors, or shall consent to the appointment of a receiver for itself or for all or substantially all of its property, or shall make a general assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts, generally, as they become due.
Any notice of termination under Section 16 or 17 shall be effective on the date specified in such notice, which may be the day on which such notice is given or any date thereafter.  The Manager agrees that if any of the events specified in Section 17(a) or (b) shall occur, it shall give written notice thereof to the Board within 15 days after the occurrence of such event.
18.    Termination by Either Party.  This Agreement may be terminated immediately without penalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice of termination to CPA: 17 upon the occurrence of events which would constitute Good Reason or by CPA: 17 without cause or penalty (but subject to the requirements of Section 20 hereof) by action of a majority of the Independent Directors or by action of a majority of the Shareholders, in either case upon 60 days’ written notice.
19.    Assignment Prohibition.  This Agreement may not be assigned by the Manager without the approval of the Board (including a majority of the Independent Directors); provided, however, that such approval shall not be required in the case of an assignment to a corporation, partnership, association, trust or organization which may take over the assets and carry on the affairs of the Manager, provided: (i) that at the time of such assignment, such successor organization shall be owned substantially by an entity directly or indirectly controlled by the Sponsor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board of directors of the Manager shall deliver to the Board a statement in writing indicating the ownership structure and net worth of the successor organization and a certification from the new Manager as to its net worth.  Such an assignment shall bind the assignees hereunder in the same manner as the Manager is bound by this Agreement.  The Manager may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board.  This Agreement shall not be assigned by CPA: 17 without the consent of the Manager, except in the case of an assignment by CPA: 17 to a corporation or other organization which is a successor to CPA: 17, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as CPA: 17 is bound by this Agreement.

20.    Payments to and Duties of Manager Upon Termination.
(a)    After the Termination Date, the Manager shall not be entitled to compensation for further services hereunder but shall be entitled to receive from CPA: 17 the following:
(i)    all unpaid reimbursements of Operating Expenses payable to the Manager; 
(ii)    all earned but unpaid Asset Management Fees payable to the Manager prior to the Termination Date; 
(iii)    all earned but unpaid Subordinated Disposition Fees payable to the Advisor relating to the sale of any Property prior to the Termination Date; and
(iv)    all earned but unpaid Loan Refinancing Fees.
Notwithstanding the foregoing, if this Agreement is terminated by CPA: 17 for Cause, or by the Manager for other than Good Reason, the Manager will not be entitled to receive the sums in Section 18(a) above.
(b)    Any and all amounts payable to the Advisor pursuant to Section 20(a) and Section 20(c) that, irrespective of the termination, were payable on a current basis prior to the Termination Date either because they were not subordinated or all conditions to their payment had been satisfied, shall be paid within 90 days after the Termination Date.  All other amounts payable to the Advisor pursuant to Section 20(a) and Section 20(c) shall be paid in a manner determined by the Board, but in no event on terms less favorable to the Advisor than those represented by a note (i) maturing upon the liquidation of CPA: 17 or the Operating Partnership or three years from the Termination Date, whichever is earlier, (ii) with no less than twelve equal quarterly installments and (iii) bearing a fair, competitive and commercially reasonable interest rate (the “Note”).  The Note, if any, may be prepaid by the Operating Partnership at any time prior to maturity with accrued interest to the date of payment but without premium or penalty.  Notwithstanding the foregoing, any amounts that relate to Investments (i) shall be an amount which provides compensation to the Advisor only for that portion of the holding period for the respective Investments during which the Advisor provided services to CPA: 17, (ii) shall not be due and payable until the Investment to which such amount relates is sold or refinanced, and (iii) shall not bear interest until the Investment to which such amount relates is sold or refinanced.  A portion of the amount shall be paid as each Investment owned by CPA: 17 on the Termination Date is sold.  The portion of such amount payable upon each such sale shall be equal to (i) such amount multiplied by (ii) the percentage calculated by dividing the fair value (at the Termination Date) of the Investment sold by CPA: 17 divided by the total fair value (at the Termination Date) of all Investments owned by CPA: 17 on the Termination Date.  

(c)    The Manager shall promptly upon termination:
(i)    pay over to the Operating Partnership all money collected and held for the account of CPA: 17 pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;
(ii)    deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;
(iii)    deliver to the Board all assets, including Properties, and documents of CPA: 17 then in the custody of the Manager; and
(iv)    cooperate with CPA: 17 to provide an orderly management transition.
21.    Indemnification by CPA: 17. 
(a)    Neither CPA: 17 nor the Operating Partnership shall indemnify the Manager or any of its Affiliates for any loss or liability suffered by the Manager or the Affiliate, or hold the Manager or the Affiliate harmless for any loss or liability suffered by CPA: 17, except as permitted under Section 7.
(i)    The Manager or Affiliate has determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of CPA: 17;
(ii)    The Manager or the Affiliate was acting on behalf of or performing services for CPA: 17; and
22.    Indemnification by Manager.  The Manager shall indemnify and hold harmless CPA: 17 and the Operating Partnership from liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Manager’s bad faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard of its duties.
23.    Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

	
		
	To the Board, CPA: 17 and the Operating Partnership:
	Corporate Property Associates 17 Global - Incorporated

	 
	 

	 
	50 Rockefeller Plaza

	 
	New York, NY 10020

	 
	 

	To the Manager:
	W.P. Carey & Co. B.V.

	 
	50 Rockefeller Plaza

	 
	New York, NY 10020

	 
	 

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 21.
24.    Modification.  This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees.
25.    Severability.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
26.    Construction.  This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York.
27.    Entire Agreement.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.  This Agreement may not be modified or amended other than by an agreement in writing.
28.    Indulgences, Not Waivers.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
29.    Gender.  Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

30.    Titles Not to Affect Interpretation.  The titles of Sections and subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.
31.    Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
32.    Name.  W.P. Carey Inc. has a proprietary interest in the name “Corporate Property Associates” and “CPA®.” Accordingly, and in recognition of this right, if at any time CPA: 17 ceases to retain W.P. Carey & Co. B.V., or an Affiliate thereof to perform the services of Manager, CPA: 17 will, promptly after receipt of written request from W.P. Carey & Co. B.V., cease to conduct business under or use the name “Corporate Property Associates” or “CPA(R)” or any diminutive thereof and CPA: 17 shall use its best efforts to change the name of CPA: 17 to a name that does not contain the name “Corporate Property Associates” or “CPA(R)” or any other word or words that might, in the sole discretion of the Manager, be susceptible of indication of some form of relationship between CPA: 17 and the Manager or any Affiliate thereof.  Consistent with the foregoing, it is specifically recognized that the Manager or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service organizations having “Corporate Property Associates” or “CPA(R)” as a part of their name, all without the need for any consent (and without the right to object thereto) by CPA: 17 or its Directors.

IN WITNESS WHEREOF, the parties hereto have executed this Asset Management Agreement as of the day and year first above written.
CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INCORPORATED
By: /s/ Thomas E. Zacharias    
		
	Name:
	Thomas E. Zacharias

		
	Title:
	Chief Operating Officer

CPA: 17 LIMITED PARTNERSHIP
By: Corporate Property Associates 17 - Global Incorporated, its general partner

By: /s/ Thomas E. Zacharias    
		
	Name:
	Thomas E. Zacharias

		
	Title:
	Chief Operating Officer

W.P. CAREY & CO. B.V.
By: /s/ Kelly van Krieken    
		
	Name:
	Kelly van Krieken

		
	Title:
	Managing Director

By: /s/ Gawein Heymans    
		
	Name:
	Gawein Heymans

		
	Title:
	Managing Director

SCHEDULE A
Expense Reimbursements for Legal Transactions Group

	
		
	Transaction Type
	Flat Rate (per Transaction)

	Acquisitions
	0.25% of Total Investment Cost

	Asset Management Transactions:

	Financings 

	$20,000

	Lease Amendments – Simple
	$7,000

	Lease Amendments – Complex
	$50,000

	Dispositions
	$25,000

	Lines of Credit
	$100,000

	Other Corporate Matters
	$2,000

__________________________________
Note: The fees shown above are for the entirety of a transaction. Fees shall be allocated among
affiliated members of a joint venture based on percentage ownership.Exhibit 4.3

 

DATED MAY 30, 2014

 

BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD.,

 

BAOTING TIANWEI GROUP CO., LTD.

 

AND

 

YINGLI GREEN ENERGY HOLDING COMPANY LIMITED

 

JOINT VENTURE CONTRACT

 

CONTENTS

 

1.         DEFINITIONS

2.         PARTIES TO THE CONTRACT

3.         ESTABLISHMENT OF THE JV COMPANY

4.         PURPOSES AND SCOPE OF BUSINESS

5.         TOTAL INVESTMENT AND REGISTERED CAPITAL

6.         TRANSFER AND INCREASE OF REGISTERED CAPITAL AND SUBSCRIPTION RIGHT

7.         RESPONSIBILITIES OF THE PARTIES

8.         BOARD OF DIRECTORS

9.         SUPERVISORS

10.  OPERATION AND MANAGEMENT ORGANIZATIONS

11.  LABOR MANAGEMENT

12.  FINANCIAL AFFAIRS AND ACCOUNTING

13.  INSURANCE

14.  CONFIDENTIALITY

15.  JOINT VENTURE TERM

16.  TERMINATION AND DISSOLUTION

17.  FORCE MAJEURE

18.  DISPUTES RESOLUTION

19.  APPLICABLE LAW

20.  MISCELLANEOUS PROVISIONS

 

This Joint Venture Contract (the “CONTRACT”) is signed on May 30, 2014 in Baoding, Hebei, People’s Republic of China

 

BY AND AMONG

 

(1)         BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD. (“PARTY A”), a company limited by shares duly established and validly existing under the laws of the People’s Republic of China (the “PRC”) and having its legal address at No. 2222, West Tian Wei Road, Baoding, Hebei, and its mailing address at No. 2222, West Tian Wei Road, Baoding, Hebei; Tel: 0312-3308511; Fax: 0312-3230382;

 

 

AND

 

(2)         BAODING TIANWEI GROUP CO., LTD. (“PARTY B”), a company limited established and validly existing under the laws of the People’s Republic of China (the “PRC”) and having its legal address at No.158, North Chaoyang Road, Baoding, Hubei; Tel: 0312-3309001; Fax: 0312-3309000

 

AND

 

(3)         YINGLI GREEN ENERGY HOLDING COMPANY LIMITED (“PARTY C”), a legal person duly established and validly existing under the laws of the Cayman Islands and having its legal address at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681 GT, George Town Cayman, British West Indies, and its mailing address at No. 3055, Middle Fuxing Road, National High-tech Zone, Baoding, Hebei, PRC.

 

(Party A, Party B and Party C are hereinafter collectively referred to as the “PARTIES” and individually, a “PARTY”.)

 

WHEREAS

 

(1)         Baoding Tianwei Yingli New Energy Resources Co., Ltd. (the “COMPANY”) is a limited liability company duly established and validly existing under the laws of the PRC and having its legal address at No. 3055, Middle Fuxing Road, High-Tech Development District, Baoding, with the registered capital of RMB 3,375,220,000, among which, 25.99% owned by PARTY A and 74.01% by PARTY C;

 

(2)         PARTY A has entered into an Equity Purchase Agreement (EPA) with Party B in January 2014, according to the EPA, PARTY A has agreed to sell to Party B, and Party B has agreed to purchase from PARTY A, a 7% equity interest PARTY A holds in the Company;

 

NOW, THEREFORE

 

In consideration of the foregoing premises, in accordance with the Company Law of the People’s Republic of China, the Law of the People’s Republic of China on Sino-Foreign Equity Joint Venture Enterprises and its implementing regulations and other relevant PRC laws and regulations, adhering to the principles of equality and mutual benefit and through friendly consultations, the Parties hereby agree as follows:

 

1.                   DEFINITIONS

 

Unless the provisions of this Contract provide otherwise, the following terms shall have the meanings set forth below:

 

“AFFILIATE” means, in relation to either of the Parties, a company, individual or any other entity directly or indirectly controlling, controlled by, or under common control with, such a Party. For the purpose of this definition, “CONTROL”, when used with respect to any entity, means the power to control, or cause others to control, the operation or management of such an entity, whether through the ownership of registered capital, by contract or otherwise, or the power to appoint the manager or majority of the members of the board of directors, management committee or equivalent decision making body of such an entity.

 

“APPROVAL AUTHORITY” means the Ministry of Commerce of the PRC or its local counterpart in Hebei Province which is authorized by the Ministry of Commerce to examine and approve this Contract, the Articles of Association and any amendments or supplements hereto and thereto.

 

“ARTICLES OF ASSOCIATION” means the articles of association of the JV Company entered into by the Parties together with this Contract on the date hereof.

 

 

“BOARD” means the board of directors of the JV Company.

 

“BUSINESS LICENCE” means the JV Company’s business licence issued by the Registration Authority in connection with the conversion of the Company into the JV Company.

 

“EXERCISE NOTICE” shall have the meaning provided in Section 6.3.1.

 

“SWAPPED EQUITIES” shall have the meaning provided in Section 6.3.1.

 

“CHINA” or “PRC” means the People’s Republic of China.

 

“JOINT VENTURE TERM” means the term of the JV Company set forth in Section 15.1.

 

“MANAGEMENT PERSONNEL” means the General Manager, the Financial Director, the departmental managers and other personnel designated by the Board as Management Personnel.

 

“QUALIFIED STOCK EXCHANGE” means (i) New York Stock Exchange; (ii) Shanghai Stock Exchange, and (iii) any other international recognized stock exchanges or automated quotation system outside the PRC.

 

“REGISTRATION AUTHORITY” means the State Administration for Industry and Commerce of the PRC or its authorized local counterpart in Hebei Province in charge of the registration of the JV Company.

 

“RENMINBI” or “RMB” means the official currency of the PRC.

 

“U.S. DOLLARS” or “US$” means the official currency of the United States of America.

 

2.                   PARTIES TO THE CONTRACT

 

2.1            THE PARTIES

 

The Parties to this Contract are as follows:

 

(a)   Party A

 

Name: BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD.

 

Country of registration: China

 

Legal address: No. 2222, West Tian Wei Road, Baoding, Hebei

 

(b)   Party B

 

Name: BAODING TIANWEI GROUP CO., LTD.

 

Country of registration: China

 

Legal address: No.158, North Chao Yang Road, Baoding, Hubei

 

 

(c)   Party C

 

Name: YINGLI GREEN ENERGY HOLDING COMPANY LIMITED

 

Country of registration: Cayman Islands

 

Legal address: Century Yard, Cricket Square, Hutchins Drive, PO Box 2681 GT, George Town Cayman, British West Indies

 

2.2              REPRESENTATIONS AND WARRANTIES

 

2.2.1    Party A and Party B hereby represent and warrant that:

 

(a)   they are companies limited by shares duly established and validly existing under the laws of the PRC in good standing and have the full powers and authority to conduct the business within the scope of their business licences;

 

(b)   they have the authority to enter into and perform this Contract and the transaction contemplated by this Contract;

 

(c)   they have taken the requisite corporate actions to authorize the signing of this Contract and, the authorization and performance of this Contract and the transaction contemplated hereby do not and will not require any other company procedures of Party A or Party B unless otherwise provided in relevant laws, regulations and administrative rules of the PRC or the rules of Qualified Stock Exchanges. Upon approval by the Approval Authority, its obligations hereunder shall become valid and binding, and Party C shall have the right to require it to perform this Contract according to the terms hereof; and

 

(d)   the execution and performance of this Contract will not violate its articles of association, any of its outstanding commitments or obligations, contractual or otherwise, or any of the currently effective laws, regulations, decrees or policies of the PRC.

 

2.2.2    Party C hereby represents and warrants that:

 

(a)   it is a company duly established and validly existing under the laws of the Cayman Islands;

 

(b)   it has the authority to enter into and perform this Contract and the transaction contemplated by this Contract; and

 

(c)   it has taken the requisite corporate actions to authorize the signing of this Contract and, the authorization and performance of this Contract and the transaction contemplated hereby does not and will not require any other company procedures of Party C unless otherwise provided in relevant laws and regulations of the Cayman Islands or the Qualified Stock Exchanges. Upon approval by the Approval Authority, its obligations hereunder shall be valid and binding, and Party A and Party B shall have the right to require it to perform this Contract according to the terms hereof; and

 

(d)   the execution and performance of this Contract will not violate its articles of association, any of its outstanding commitments or obligations, contractual or otherwise, or any of the currently effective laws, regulations, decrees or policies of the Cayman Islands.

 

 

2.2.3    Each Party shall indemnify the other Parties and the JV Company against any and all losses that arise from any representations or warranties made by such Party in this Section that are proven to be untrue, incomplete, misleading or inaccurate in any material respect.

 

3.              GENERAL INFORMATION OF THE JV COMPANY

 

3.1              NAME, ADDRESS AND BRANCHES

 

3.1.1    The name of the JV Company shall be Baoding Tianwei Yingli New Energy Resources Co., Ltd. in English and (Chinese Characters) in Chinese.

 

3.1.2    The legal address of the JV Company shall be No. 3055, Middle Fuxing Road, National High-tech Zone, Baoding, Hebei, PRC.

 

3.1.3    The JV Company may, in accordance with its needs and upon approval by the Board and the Approval Authority, establish subsidiaries, branch offices or representative offices inside or outside the PRC.

 

3.2              LIMITED LIABILITY COMPANY

 

The organizational form of the JV Company shall be a limited liability company (Sino-Foreign JV). Unless otherwise agreed in writing, once a Party has paid in full its contribution to the registered capital of the JV Company, it shall not be required to provide any further funds to the JV Company, or on behalf of the JV Company to any third party, by way of contribution, loan, advance, guarantee or otherwise. If the Parties have fully paid in their subscribed capital contribution to the JV Company, creditors of the JV Company shall have recourse only to the assets of the JV Company and shall not seek repayment from either of the Parties.

 

3.3              LAWS AND DECREES

 

The JV Company shall be a legal person established under the laws of the PRC. The activities of the JV Company shall be governed and protected by the relevant published laws and regulations of the PRC.

 

4.                     PURPOSES AND SCOPE OF BUSINESS

 

4.1              PURPOSES OF BUSINESS

 

The business purposes of the JV Company are as follows:

 

(a)   The objective of the Parties in converting the Company into the JV Company is to improve the efficiency of production and operation of the Company and to actively participate in the development of the PRC new energy resource industry to a greater extent;

 

(b)   The Parties also desire that the JV Company improve the competitive position of its products on the domestic and international markets by improving product quality, continuously developing products that satisfy the needs of the JV Company’s customers and improving economic efficiency and thereby maximize economic returns to the Parties.

 

 

4.2              SCOPE OF BUSINESS

 

The business scope of the JV Company is as follows:

 

Development, production and sale of silicon solar cells and related products or accessories; exportation of self-produced products and technologies; importation of raw materials, instrument, mechanical equipment, components and accessories and technologies that are necessary for the JV Company’s operation (except goods that the state designates specific companies to deal with or prohibits import or export); processing with imported materials, processing and assembly with supplied materials and parts, and compensation trade; design, installation and construction of solar energy photovoltaic electricity plants. (Operation of any business within the business scope that the law or administrative regulations require relevant approvals shall not start before such approvals are obtained in accordance with the law.)

 

5.                     TOTAL INVESTMENT AND REGISTERED CAPITAL

 

5.1              TOTAL INVESTMENT

 

The amount of the total investment of the JV Company is 5.6 billion Renminbi (RMB5,600,000,000).

 

5.2              REGISTERED CAPITAL

 

The amount of the registered capital of the JV Company is 3.37522 billion Renminbi (RMB3,375,220,000).

 

5.3              CONTRIBUTIONS TO REGISTERED CAPITAL

 

The amount and percentage (the “CONTRIBUTION PERCENTAGE”) of the registered capital of the JV Company of each Party are as follows:

 

(a)   Party A contributed RMB 35,802,616, corresponding to 18.99% of the equity interest in the JV Company.

 

(b)   Party B contributed RMB 13,197,384, representing to 7% of the equity interest in the JV Company.

 

(c)   Party C contributed RMB 3,326,220,000 in equivalent U.S. Dollars, corresponding to 74.01% of the equity interest in the JV Company.

 

6.                     TRANSFER AND INCREASE OF REGISTERED CAPITAL AND SUBSCRIPTION RIGHT

 

6.1              TRANSFER OF REGISTERED CAPITAL

 

6.1.1

 

(a)   If either Party (the “TRANSFERRING PARTY”) desires to transfer all or part of its registered capital in the JV Company to any third party, the Transferring Party shall give the Board and the other Party (the “NON-TRANSFERRING PARTIES”) a written notice (the “TRANSFER NOTICE”) of its intent to do so;

 

 

(b)   The Transfer Notice shall:

 

(i)   specify the percentage of the registered capital of the JV Company that the Transferring Party intends to transfer (the “OFFERED SHARE PERCENTAGE”); and

 

(ii)   specify the price at which the Transferring Party intends to transfer the Offered Share Percentage (the “OFFERED SHARE PERCENTAGE PRICE”), the third party who desires to purchase the Offered Share Percentage (the “PROPOSED TRANSFEREE”), the method of payment, the terms and conditions of the payment, and other principal terms.

 

(c)   The Non-Transferring Party shall have a pre-emptive right to purchase the Offered Share Percentage. The Non-Transferring Party shall inform the Transferring Party in writing within thirty (30) days of receipt of the Transfer Notice whether it desires to purchase the Offered Share Percentage. If the Non-Transferring Party accepts the proposed sale offer of the Offered Share Percentage (the “OFFER”), such Non-Transferring Party shall purchase all of the Offered Share Percentage.

 

(d)   If the Non-Transferring Party accepts the Offer in writing (“WRITTEN ACCEPTANCE”) within the thirty (30) day period in sub-paragraph (c) above, the Parties shall use their best endeavors to procure the approval of the Approval Authority for the transfer of the Offered Share Percentage to the Non-Transferring Party and shall use their respective best endeavors to effect such transfer.

 

(e)   If the Transferring Party has not received any written acceptance of the Offer from the Non-Transferring Party by the end of the thirty (30) day period in sub-paragraph (c) above, the Non-Transferring Party shall be deemed to have given its consent to the transfer of the Offered Share Percentage by the Transferring Party to the Proposed Transferee and the Transferring Party may transfer the Offered Share Percentage to the Proposed Transferee within sixty (60) days after the expiration date of the thirty (30) day period in sub-paragraph (c) above.

 

(f)   If the Non-Transferring Party is deemed to have consented to the transfer by the Transferring Party to the Proposed Transferee pursuant to Section 6.1.1 (e), the Non-Transferring Party shall:

 

(i)   sign a statement consenting to the transfer and waiving its pre-emptive right of purchase;

 

(ii)   procure each of the directors it appoints to the Board to vote in favour of the board resolutions proposing the transfer, the amendments of the Articles of Association and the relevant ancillary agreements;

 

(g)   Any transfer by the Transferring Party to the Proposed Transferee pursuant to Section 6.1.1 (e) shall not be at a price lower than, or on terms more favourable than, those offered in the Transfer Notice.

 

(h)  Details of any purchase/transfer made in accordance with Section 6.1.1 (e) (and any amendment to this Contract (if any) required as a result thereof) shall be submitted by the JV Company to the Approval Authority for examination and approval. The Parties agree to use their respective best endeavors to procure the relevant approvals as soon as practicable. Upon receipt of the approval of the Approval Authority, the Parties shall procure the JV Company to register the change in ownership of the registered capital with the Registration Authority and issue new investment certificates to the Parties to reflect the adjusted shareholdings, upon cancellation of the existing investment certificates.

 

6.1.2    The Parties agree that the Transferring Party may transfer all or part of its shares in the registered capital of the JV Company to any of its Affiliates, and the Non-Transferring Party shall consent to such transfers. In such an event, the Transferring Party shall notify the Non-Transferring Party in written form of the proposed transfer. The Non-Transferring Party shall take all actions as may be necessary to effect such a transfer, including but not limited to signing the letters or contracts consenting to such a transfer and waiving any pre-emptive right of purchase as required by the Transferring Party, and shall procure that all of the directors it appoints to the Board vote affirmatively in favour of a Board resolution approving such a transfer.

 

 

6.1.3    Neither Party shall mortgage, pledge, charge or otherwise encumber all or part of its shares in the registered capital of the JV Company without the prior written consent of the other Party.

 

6.2              INCREASE OF REGISTERED CAPITAL

 

6.2.1    During the term of the JV Company, upon approval by the Board and the Approval Authority, the registered capital of the JV Company may be increased or decreased in accordance with the capital requirements of the JV Company’s business scale. Any increase or decrease of the registered capital of the JV Company shall be resolved unanimously by all the directors present at a meeting of the Board. All Parties promised to sign all the necessary legal documents (including but not limited to any amendments to the joint venture contracts and the Articles of Association concerning the increase of the registered capital) and take all necessary actions (including but not limited to procure the JV Company to carry out the approval and registration procedures concerning the increase of the registered capital).

 

Under the above circumstances, the Board shall have the JV Company valued by an independent asset valuer in accordance with the internationally accepted valuation method and the relevant laws and regulations of the PRC. Both Parties agree that the percentage of the equity interest held by Party C in the JV Company following the capital increase shall be calculated according to the following formula:

 

Percentage of Party C’s equity interest in the JV Company immediately after the capital increase = Percentage of Party C’s equity interest in the JV Company immediately before the capital increase + Amount of Party C’s contribution x (1 - Percentage of Party C’s equity interest in the JV Company immediately before the capital increase) / Fair market value of the JV Company.

 

The Parties hereby confirm that, upon the completion of the private placements by Party C, the “fair market value of the JV Company” in the above formula shall be the expected total value of the JV Company immediately following Party C’s contribution to the increased registered capital of the JV Company with the proceeds of private placements;

 

For the avoidance of doubt, the Parties hereby further confirm that the dilution of Party A and Party B’s equity interest in the JV Company as a result of Party C’s contribution to the increased registered capital in accordance with the above formula shall be proportional to the dilution of the equity interest in the JV Company held by Party C before the registered capital increase.

 

6.2.2    Unless otherwise agreed upon in writing, both Parties shall have the right to subscribe for the increased registered capital of the JV Company (the “INCREASED REGISTERED CAPITAL”) in proportion to their respective equity interests in the JV Company as of the date of the Board resolution. Each Party shall pay up its contribution to the Increased Registered Capital within thirty (30) days upon the issuance of the approval by the Approval Authority.

 

If either Party (the “WAIVING PARTY “) (i) waives its right to subscribe for all or part of the Increased Registered Capital it is entitled to by written notice to the Board, or (ii) fails to duly contribute its proportion of any part of the Increased Registered Capital within thirty (30) days upon the approval by the Approval Authority, the other party (the “SOLE CONTRIBUTING PARTY”) shall have the right (but not the obligation) to fully subscribe for all or part of the Increased Registered Capital waived or failed to be contributed by the Waiving Party. Under such circumstances, the Board shall have the JV Company valued by an independent asset valuer, in accordance with internationally accepted valuation method and the relevant laws and regulations of the PRC. Both parties agree that the percentage of the equity interest held by the Sole Contributing Party in the JV Company following the capital increase shall be calculated according to the following formula:

 

 

Percentage of the Sole Contributing Party’s equity interest in the JV Company immediately after the capital increase = Percentage of the Sole Contributing Party’s equity interest in the JV Company immediately before the capital increase +Amount of capital contribution made by the Sole Contributing Party x (1 - Percentage of the Sole Contributing Party’s equity interest in the JV Company immediately before the capital increase)/ Fair market value of the JV Company

 

The Parties hereby confirm that the “fair market value of the JV Company” in the above formula shall be the expected total value of the JV Company immediately after the Sole Contributing Party’s contribution to the increased registered capital of the JV Company.

 

Both Parties undertake to sign all necessary legal documents (including but not limited to the amendments to the joint venture contracts and the Articles of Association concerning the registered capital increase) and take all necessary actions to complete the increase of the registered capital under Section 6.2.2 (including but not limited to procure the JV Company to carry out the approval and registration procedures concerning the registered capital increase)

 

6.3              SUBSCRIPTION RIGHT

 

6.3.1    Both Parties agree that, subject to the conditions that (i) Party A and Party B or their Affiliates (the same applies below) obtains all necessary approvals from the Chinese government, Party A and/or Part B shall have the right to sell to Party C all the equity interest then held by Party A and/or Party B in the JV Company (the “SWAPPED EQUITY”) as consideration for, and in exchange of, Party C’s shares (the “SUBSCRIPTION RIGHT”).

 

6.3.2    Subject to the provision of this Section 6.3, relevant PRC laws, laws of the jurisdiction where Party C is located, laws of the jurisdiction where Party C’s shares are listed, laws of the jurisdiction where the Qualified Stock Exchange is located and the rules of such Qualified Stock Exchange, Party A and/or Party B may, within one month of the first date on which all of the conditions provided in Section 6.3.1 are satisfied, send to Party C a written notice (the “EXERCISE NOTICE”) requesting sale of the Swapped Equity as consideration for, and in exchange of, Party C’s shares. The Exercise Notice issued by Party C shall be accompanied by copies of all necessary approvals of the Chinese government for Party A and/or Party B to exercise the Subscription Right that have been obtained, legal opinions of Party A and/or Party B’s PRC counsel confirming that all necessary approvals of the Chinese government for Party A and/or Party B to exercise the Subscription Right have been obtained, and all other necessary documents.

 

6.3.3    Party A and/or Party B shall have the Swapped Equity held by Party A and/or Party B valued by an asset valuer reasonably accepted by Party C in accordance with the internationally accepted valuation methods and relevant laws and regulations of the PRC. The asset valuation result shall be acknowledged by both Parties and undergo the procedures required by the laws of the PRC (if any). Party A and/or Party B shall consult with Party C to determine the value of the Swapped Equity on the basis of the asset valuation result.

 

 

6.3.4    Concurrent with transfer of Swapped Equity by Party A and/or Party B to Party C in accordance with the Exercise Notice, Party C shall issue to Party A and/or Party B new common shares of Party C according to the following formula. The number of new common shares to be issued to Party A and/or Party B by Party C shall be:

 

Number of shares to be issued to Party A and/or Party B by Party C = the total number of shares of Party C at the time x (Percentage of the Swapped Equity in the JV Company/Percentage of the equity interest held by Party C in the JV Company)

 

For the avoidance of doubt, the Parties hereby further confirm that the percentage of equity interest held indirectly by Party A and/or Party B in the JV Company through Party C after Party A and/or Party B exercises the Subscription Right in accordance with this Section 6.3 is equal to the percentage of equity interest held directly by Party A and/or Party B in the JV Company immediately before the exercise of the Subscription Right.

 

6.3.5    After Party A and/or Party B issues the Exercise Notice, all Parties shall sign all the necessary documents (including but not limited to an equity purchase agreement between all Parties regarding the equity interest of the JV Company and a share subscription agreement among all Parties regarding issuance of new common shares), take all necessary actions and procure all necessary approvals from, consents of, registrations and filings with governmental and regulatory authorities, to make Party A and/or Party B the legal and beneficial owner of the shares issued by Party C and to make Party C the legal and beneficial owner of the Swapped Equity. All Parties agree that exercise of the Subscription Right shall be governed by the equity purchase agreement and share subscription agreement to be signed by the Parties at the time, but the share subscription agreement shall be consistent with the principles set forth in Section 6.3 hereof.

 

6.3.6    Upon execution of the agreements provided in Section 6.3.5 above, Party A and Party B shall work in cooperation with Party C to take all necessary procedures required by the laws of the PRC, including procedures for the conversion of the JV Company into a wholly foreign owned enterprise.

 

7.                     RESPONSIBILITIES OF THE PARTIES

 

7.1              RESPONSIBILITIES OF PARTY A, PARTY B and Party C

 

7.1.1    In addition to its other obligations under this Contract, Party A and Party B shall:

 

(a)                assist the JV Company in obtaining the approvals, permits and licences necessary for the establishment and operation of the JV Company;

 

(b)                assist the JV Company in procuring Renminbi by way of loans or otherwise as and when requested by the Board;

 

(c)                 assist the JV Company with the procedures for the import of necessary machinery and equipment, materials and supplies, and arrange the inland transportation thereof;

 

(d)                assist the JV Company in exploring the domestic market and procuring information to promote sales of the products of the JV Company in the domestic market;

 

 

(e)        assist the employees of the JV Company recruited outside China in obtaining entry visas and work permits and assist the personnel of the JV Company travelling abroad for training to go through the necessary procedures in China; and

 

(f)        assist the JV Company in opening Renminbi and foreign exchange bank accounts in China.

 

7.1.2    In addition to its other obligations under this Contract, Party C shall:

 

(a)   assist the JV Company in obtaining the approvals, permits and licences necessary for the establishment and operation of the JV Company; and

 

(b)   assist the JV Company in exploring the international market and procuring information to promote sales of the products of the JV Company in the international market.

 

8.                            BOARD OF DIRECTORS

 

8.1                     DIRECTORS AND CHAIRMAN

 

8.1.1           The Board shall consist of nine (9) directors, three (3) of whom shall be appointed by Party A and Party B in total, and six (6) of which shall be appointed by Party C. Each Party shall promptly notify the Board if it replaces its appointee(s) to the Board. During the term of this Contract, if the capital contribution percentages of the Parties change, the Parties shall amend this Contract accordingly, including, without limitation, making appropriate changes to the composition of the Board and the number of directors to be appointed by each Party as agreed upon by the Parties at that time.

 

8.1.2           Each director shall be appointed for a term of three (3) years and may serve consecutive terms if reappointed by the Party that originally appointed her or him. A director may be removed by her or his appointing Party. The term of appointment of the members of the initial Board shall commence on the issuance date of the Business Licence. If a seat on the Board is vacated due to retirement, resignation, illness, disability or death of a director or his removal by the Party that originally appointed her or him, the Party that originally appointed her or him shall appoint a successor to serve the term of such director.

 

All the directors of the JV Company shall act in accordance with the resolutions of the Board, and shall not engage in any action to jeopardize the interest of the JV Company.

 

8.1.3           A director appointed by Party C shall serve as the chairman of the Board. The chairman shall be the legal representative of the JV Company.

 

8.2                     POWERS OF THE BOARD

 

The Board shall be the highest authority of the JV Company, deciding all important matters of the JV Company.

 

8.3                     MEETINGS OF THE BOARD

 

8.3.1           Each director shall have one vote and the chairman of the Board shall have no casting vote. Meetings can be convened by directors through telephone or video, so long as the attendance of directors satisfies the quorum requirements and each director could be clearly heard during the meeting.

 

 

8.3.2           Each Board meeting requires a quorum of two-thirds (2/3) or more of all the directors of the JV Company attending the meeting in person (including attending via telephone or videoconference) or by proxy. Resolutions adopted at any Board meeting where the quorum is not satisfied are invalid. If the quorum is not satisfied at a duly convened Board meeting, the director presiding over the meeting shall postpone the meeting to a working day within seven (7) working days from the originally scheduled meeting date, and notify in writing all the directors of the postponement. If any director fails to attend or appoint a proxy to attend the postponed Board meeting, such director shall be deemed to be present at the meeting (but deemed to have waived his or her voting rights) and shall be included in calculating the quorum.

 

8.3.3           The Board shall convene at least one (1) meeting every quarter. The Board meetings shall be convened and presided over by the chairman of the Board or, in his absence, by the vice chairman or, in the absence of the vice chairman, by a director elected by half or more of the directors. A prior written notice of no less than five (5) days (which shall include notification as to time, place and the agenda of the meeting) shall be sent by telex, fax or registered mail to each director. Minutes of each Board meeting shall be sent to all the members of the Board and shall be signed by all the directors who have attended such a meeting

 

8.3.4           If a director is unable to attend a Board meeting, she or he shall appoint another person in writing to attend and vote at the meeting as her/his proxy.

 

8.3.5           Upon the written request of no less than one third (1/3) of all the directors of the JV Company, specifying the matters to be discussed, the chairman or, in his absence, the vice chairman or a director authorized by the chairman, shall convene an interim Board meeting at a convenient time and location. Such interim Board meeting shall be convened by no less than five (5) days’ prior written notice (which shall include notification as to time, place and the agenda of the meeting) sent by fax or registered mail to each director.

 

8.3.6           The minutes of the Board meetings and the resolutions adopted by the Board shall be recorded in the minute-book of the Board meetings of the JV Company which shall be kept at the JV Company’s legal address.

 

8.3.7           Resolutions in respect of the following matters shall only be adopted by a duly convened Board meeting, upon the unanimous affirmative vote of each and every director voting in person or by proxy at such meeting:

 

(a)                       amendment to the Articles of Association;

 

(b)                       merger with another entity or division of the JV Company or split-up;

 

(c)                        without prejudice to the power of either of the Parties to dissolve the JV Company in accordance with Section 16, termination or dissolution of the JV Company; and

 

(d)                       increase, reduction or transfer of the registered capital of the JV Company.

 

8.3.8           Matters other than those referred to in Section 8.3.7 shall be adopted by the affirmative votes of a simple majority of the directors present at a duly convened Board meeting in person or by proxy.

 

8.3.9           Notwithstanding any other provisions of this Contract, a written resolution may be adopted by the Board in lieu of a Board meeting provided that such resolution to be adopted is delivered to all the directors of the JV Company and affirmatively signed and adopted by each of them.

 

 

8.3.10    Directors shall serve without any remuneration for the performance of their duties, except that directors shall be reimbursed by the JV Company for their expenses incurred in attending Board meetings (including but not limited to costs relating to travel, food and lodging).

 

9.                            SUPERVISORS

 

9.1                     The Company shall have two (2) Supervisors. One supervisor should be appointed jointly by Party A and Party B, and the other by Party C. The directors and the management personnel shall not be appointed as Supervisors.

 

9.2                     Each supervisor shall be appointed for a term of three (3) years and may serve consecutive terms upon reappointment.

 

9.3                     Powers of the Supervisors include:

 

9.3.1           inspecting financial affairs of the Company;

 

9.3.2           supervising acts of directors and senior management personnel in the performance of their duties to the Company, and proposing to remove directors and senior management personnel who have violated laws, regulations, the Articles of Association or resolutions of the Board;

 

9.3.3           demanding directors and senior management personnel to correct any acts that harm the interests of the Company;

 

9.3.4           proposing to convene an interim Board meeting; and

 

9.3.5           other powers provided in the Articles of Association.

 

9.4                     The supervisors may attend Board meetings and make inquiries and suggestions concerning matters being resolved by the Board.

 

10.              OPERATION AND MANAGEMENT ORGANIZATIONS

 

10.1              OPERATION AND MANAGEMENT ORGANIZATIONS

 

10.1.1    The JV Company shall have one (1) General Manager who shall have overall responsibility for the daily operation and management of the JV Company. The General Manager shall be nominated by Party C and appointed by the Board and shall report to and be under the supervision of the Board. The term of office of the General Manager shall be three (3) years, and if re-nominated by Party C and re-appointed by the Board, the General Manager may serve consecutive terms.

 

10.1.2    The JV Company shall also have one (1) Financial Director and several departmental managers. The Financial Director shall be nominated by the General Manager and appointed by the Board. The departmental managers shall be appointed by the General Manager.

 

10.1.3    The Financial Director shall be responsible for the financial matters of the JV Company and shall report to the General Manager. The departmental managers shall be responsible for the operation of their respective departments, handle the matters delegated by the General Manager, and shall report to the General Manager from time to time.

 

 

10.1.4    A director of the JV Company may concurrently serve the office of the General Manager or hold another senior management position of the JV Company.

 

10.2              RESPONSIBILITIES OF THE GENERAL MANAGER

 

10.2.1    The General Manager of the JV Company shall have the following responsibilities:

 

(a)  to take charge of the operation and management of the JV Company and report to the Board;

 

(b)  to organize the implementation of the JV Company’s plans and the resolutions of the Board;

 

(c)  to prepare proposals for the establishment of the internal management organizations of the JV Company;

 

(d)  to formulate the rules and regulations for the operation and management of the JV Company;

 

(e)  to propose to the Board for the appointment or dismissal of the Financial Director;

 

(f)  to appoint or dismiss the Management Personnel other than those who should be appointed or dismissed by the Board;

 

(g)  to determine the wages, welfare and benefits and rewards and disciplines of the working personnel and decide on their employment and dismissal; and

 

(h)  other duties and powers conferred upon him by the PRC laws and regulations, the Articles of Association and the Board.

 

10.3              The General Manager shall submit to the Board for discussion and approval of:

 

(a)  the annual management report and accounts of the JV Company;

 

(b)  the annual budget and long term plans of the JV Company; and

 

(c)  other matters as may be required by the Board.

 

11.                     LABOR MANAGEMENT

 

11.1              PRINCIPLES

 

Matters relating to the recruitment, employment, dismissal, resignation, wages, welfare and other matters concerning the employees of the JV Company shall be handled in accordance with relevant PRC laws and regulations.

 

 

11.2              EMPLOYEES

 

11.2.1    The JV Company shall hire employees based upon the qualities of the candidates and in accordance with the demands of its operation and development. If the JV Company hires new employees through examinations or tests, only those candidates who make superior achievements in the examinations or tests will be hired.

 

11.2.2    The General Manager shall determine the number of employees based on the operational need of the JV Company.

 

11.3              DISCIPLINE

 

11.3.1    The General Manager shall have the right to take disciplinary actions, including giving a warning to, recording a demerit against, and reducing the wages of, those employees who violate the rules, regulations and labor discipline of the JV Company. Where a case is serious, the General Manager may dismiss such an employee. The General Manager shall also have the right to dismiss those of the employees who are found incompetent or unsuitable for their jobs.

 

11.3.2    Dismissal of employees by the JV Company shall be carried out in accordance with the provisions of the labor contracts, the rules and regulations of the JV Company and relevant PRC laws and regulations.

 

11.4              ANNUAL REVIEW

 

The annual adjustment of salaries and other related matters of the JV Company’s employees shall be decided by the Board and executed by the General Manager.

 

11.5              TRADE UNION

 

11.5.1    The employees of the JV Company shall have the right to establish a trade union and to participate in the activities of the trade union in accordance with the Trade Union Law of the People’s Republic of China. The trade union of the JV Company shall represent the interests of the JV Company’s employees.

 

11.5.2    The trade union shall operate in accordance with the laws of the PRC and support the operation of the JV Company. The trade union activities shall be held during hours other than the working time of the JV Company; otherwise, approvals of the General Manager shall be obtained before conducting such activities.

 

12.                     FINANCIAL AFFAIRS AND ACCOUNTING

 

12.1              ACCOUNTING SYSTEM

 

12.1.1    The JV Company shall adopt the internationally accepted accrual basis and debit and credit accounting system in the preparation of its accounts.

 

12.1.2    The JV Company shall establish accounting systems and procedures in accordance with the applicable PRC accounting principles. The JV Company shall also ensure that it prepares and produces accounts in accordance with the generally accepted accounting principles as applied by Party C in its own accounts (including but not limited to the US GAAP) so as to satisfy Party C’s reporting and management requirements.

 

12.1.3    The JV Company shall adopt Renminbi as its standard book-keeping base currency, but may also use U.S. dollar or other foreign currencies as supplementary book-keeping currencies.

 

 

12.1.4    Routine accounting records, vouchers, books and statements of the JV Company shall be made and kept in Chinese. Upon Party C’s request, English versions shall be provided.

 

12.2              ACCOUNTING YEAR

 

The accounting year of the JV Company shall begin on January 1 of each calendar year and end on December 31 of the same year. The first accounting period of the JV Company shall commence on the issuance date of the Business Licence and end on December 31 of the same calendar year.

 

12.3              ACCOUNTING REPORTS

 

The General Manager shall procure the preparation of an annual balance sheet, an income statement and a cash flow statement of the JV Company during the first three (3) months of each accounting year, for the immediately preceding accounting year. The General Manager shall submit the balance sheet and the income statement to the Board for approval after the same have been examined and audited by the auditors appointed by the Board.

 

12.4              AUDITING

 

12.4.1    The Board shall appoint a joint venture accounting firm registered in China (whose foreign party is an internationally reputable independent accounting firm) as the independent auditors of the JV Company. Such firm will perform the annual examination and audit of the financial statements of the JV Company, produce the relevant certificates and reports and assist in the production and counter-signing of the annual accounting statements and other documents, certificates or statements required by the PRC laws to be examined and certified by an accountant registered in China. The cost of employing the auditors shall be borne by the JV Company.

 

12.4.2    Each Party shall have the right to inspect the books of accounts and other financial records of the JV Company at any time during normal business hours and to take such copies thereof as it may require. Any such inspection shall be carried out at the cost of the Party requiring the same and without unnecessary disturbance to the business of the JV Company.

 

12.4.3    Each Party shall have the right to appoint accountants registered inside or outside China to undertake financial audit or examination of the JV Company’s financial statements at any time, and the other Party and the JV Company shall co-operate with such accountants. All expenses of such financial audit or examination shall be borne by the appointing Party.

 

12.5              BANK ACCOUNTS AND FOREIGN EXCHANGE MANAGEMENT

 

The JV Company shall open Renminbi bank accounts and foreign exchange accounts in currencies used by the JV Company. The JV Company’s foreign exchange transactions shall be handled in accordance with the regulations of the PRC relating to foreign exchange control.

 

12.6              BALANCING FOREIGN EXCHANGE

 

The Parties agree that the JV Company shall balance its foreign exchange income and expenditure by itself, using means permissible under the PRC laws.

 

 

12.7              PROFIT DISTRIBUTION

 

12.7.1    The JV Company shall, after accumulated losses of previous years have been fully made up and after payment of taxes in accordance with the relevant laws and regulations of the PRC, allocate a percentage of its annual after tax profits for contribution towards the reserve fund, enterprise development fund and employee bonus and welfare fund for staff and workers.

 

12.7.2    In any particular accounting year, the percentages of the JV Company’s annual after tax profits to be contributed to the above mentioned funds shall be decided by the Board.

 

12.7.3    Unless otherwise determined by the Board, after paying taxes in accordance with the laws and regulations and making contributions to the above mentioned funds, the remaining profits of the JV Company shall be distributed in proportion to the Parties’ respective actual contributions to the registered capital of the JV Company.

 

12.7.4    All Parties shall undertake its respective risks and losses based on its respective actual contributed percentage in the registered capital, to the extent of its respective contributed amount.

 

12.7.5    The JV Company shall not distribute profits unless the accumulated losses of previous accounting year(s) have been fully made up. Remaining undistributed profits from previous years can be distributed together with those of the current year.

 

12.7.6    All payments under this Section shall, at the request of the receiving Party, be remitted electronically or by telegraphic transfer to a bank account designated in advance by the receiving Party.

 

13.                     INSURANCE

 

13.1              The JV Company shall purchase all necessary insurance services at its own cost and expense during the term of the JV Company.

 

13.2              The types, amounts and currencies of insurance coverage shall be determined by the General Manager of the JV Company.

 

13.3              All items of insurance of the JV Company shall be taken out with an insurance company registered in China or, to the extent permitted under the PRC law, overseas.

 

14.                     CONFIDENTIALITY

 

14.1              During the term of this Contract and for a period of five (5) years from the date of termination or expiration of this Contract for any reason whatsoever, the Receiving Party of any Confidential Information shall:

 

(a)  keep the Confidential Information confidential;

 

(b)  not disclose the Confidential Information to any person without the prior written consent of the Disclosing Party; and

 

(c)  not use the Confidential Information for any purpose other than for the performance of its obligations under this Contract.

 

 

14.2              The obligations contained in Section 14.1 shall not apply to any Confidential Information which:

 

(a)  at the date of this Contract, is in, or at any time after the date of this Contract, comes into, the public domain other than through breach of this Contract by the Receiving Party;

 

(b)  can be shown by the Receiving Party to the reasonable satisfaction of the Disclosing Party to have been known by the Receiving Party before disclosure by the Disclosing Party to the Receiving Party; or

 

(c)  after the date of this Contract, comes lawfully into the possession of the Receiving Party from a third party.

 

14.3              For the purposes of this Section, “CONFIDENTIAL INFORMATION” means any information of a confidential nature disclosed (whether in writing, verbally or by any other means and whether directly or indirectly) by one Party (the “DISCLOSING PARTY”) to the other Party (the “RECEIVING PARTY”) whether before or after the date of this Contract, including but not limited to any information relating to the Disclosing Party’s operations, plans or intentions, know-how (including management know-how), trade secrets, market opportunities and business affairs.

 

14.4              The provisions of this Section shall survive the termination of this Contract and the dissolution or liquidation of the JV Company for a period of five (5) years.

 

14.5              The obligations contained in this Section shall not apply to:

 

(a)  disclosures made in accordance with relevant legal procedures, subpoenas, or requirements of laws and regulations or rules of a Qualified Stock Exchange;

 

(b)  for the purposes of this Contract, within the reasonable scope of disclosure, the Receiving Party’s disclosures of information to its employees, directors, consultants, lawyers, auditors, accountants or other staffs appointed by the JV Company in writing; and

 

(c)  other disclosures permitted in accordance with this Section.

 

15.                     JOINT VENTURE TERM

 

15.1              The Joint Venture Term shall commence on the issuance date of the Business Licence and expire on the date fifty (50) years after the issuance of the Business Licence unless extended pursuant to the provisions of Section 15.2.

 

15.2              Notwithstanding the provisions of Section 15.1, either Party to this Contract may propose an extension of the Joint Venture Term no later than twelve (12) months before expiration of the Joint Venture Term. If such proposal is accepted by the other Party and approved by the Board, then an application for approval to extend the Joint Venture Term shall be submitted to the Approval Authority one hundred and eighty (180) days prior to the expiration date of the Joint Venture Term. Upon such approval being granted, the JV Company shall proceed with registration formalities to extend the Joint Venture Term.

 

15.3              If the Joint Venture Term is not extended pursuant to this Section, the Parties shall procure that the Board unanimously agree to dissolve the JV Company.

 

 

16.                     TERMINATION AND DISSOLUTION

 

16.1              TERMINATION

 

Subject to other provisions of this Section, this Contract shall be terminated upon the expiration of the Joint Venture Term, unless extended pursuant to Section 15.2, or terminated in advance according to a written agreement between the Parties or Section 16.2.

 

16.2              EARLY TERMINATION

 

Either Party shall have the right to give written notice to the other two Parties of its desire to terminate this Contract prior to the expiration of the Joint Venture Term under the following circumstances:

 

(a)  if the JV Company or either Party of A, B and C becomes bankrupt, or is the subject of proceedings for liquidation or dissolution, or ceases to carry on business or becomes unable to pay its debts as they come due;

 

(b)  if the conditions or consequences of Force Majeure as defined in Section 17 prevail for a period in excess of six (6) consecutive complete calendar months and the Parties are unable to find an equitable solution pursuant to Section 17;

 

(c)  if the Business Licence or any extension or substitution thereof is terminated, cancelled or revoked; or

 

(d)  for any other reason provided in this Contract.

 

16.3              NOTIFICATION PROCEDURE

 

Within one (1) month after a Party gives the notice pursuant to Section 16.2, the Parties shall commence negotiations and endeavor to resolve the matter leading to such notice. In the event that the matter is not resolved to the satisfaction of the Parties within one (1) month after commencement of negotiations or either of the Parties refuses to commence negotiations within the period stated above, the notifying Party may give a written notice (the “DISSOLUTION NOTICE”) to the other two Parties of its desire to dissolve the JV Company.

 

16.4              LIQUIDATION PROCEDURES

 

16.4.1    The Parties shall procure that the Board unanimously agree to dissolve the JV Company and submit a dissolution application for approval by the Approval Authority if:

 

(a)  a Dissolution Notice is issued and no resolution is agreed upon by the Parties within thirty (30) days after the issuance of the Dissolution Notice; or

 

(b)  the Joint Venture Term expires and no extension of the term is agreed upon by the Parties.

 

16.4.2    The Board shall appoint a committee (the “LIQUIDATION COMMITTEE”) which shall have the power to represent the JV Company in all legal matters. The Liquidation Committee shall value and liquidate the JV Company’s assets in accordance with applicable published PRC laws and regulations and the principles set forth therein.

 

 

16.4.3    Each Party may appoint directors of the JV Company or professional advisers (such as accountants and lawyers qualified either in China or overseas), to be members of the Liquidation Committee. The number of members of the Liquidation Committee shall be the same as the Board members and the respective right to appoint members of the Liquidation Committee by each Party shall correspond to the respective right of such Party to nominate directors as set forth in Section 8.1. One of the members of the Liquidation Committee appointed by Party C shall be its chairman. The Board shall report the formation of the Liquidation Committee to the Approval Authority. The Liquidation Committee may appoint professional advisers to assist in the liquidation. The Liquidation Committee shall make decisions based on unanimous consent.

 

16.4.4    The Liquidation Committee shall conduct a thorough examination of the JV Company’s assets and liabilities, on the basis of which it shall develop a liquidation plan which, if approved by the Board, shall be executed under the Liquidation Committee’s supervision.

 

16.4.5    In developing and executing the liquidation plan, the Liquidation Committee shall make every effort to obtain the highest possible price for the JV Company’s assets. Considerations shall be given to sale of the JV Company’s assets by public auction open to domestic and foreign bidders with a view towards sales at international market prices.

 

16.4.6    The liquidation expenses, including remuneration to members of the Liquidation Committee, shall be paid out of the JV Company’s assets in priority to the claims of other creditors.

 

16.4.7    After the liquidation of the JV Company’s assets and the settlement of all its outstanding debts, the balance of its assets shall be paid over to the Parties in proportion to their respective contributions to the registered capital of the JV Company.

 

16.4.8    Following the completion of all liquidation procedures, the Liquidation Committee shall submit a final report approved by the Board to the Approval Authority for approval, submit the Business Licence to the Registration Authority and complete all other formalities for nullifying the JV Company’s registration, whereupon this Contract shall be terminated.

 

16.5              FOREIGN EXCHANGE

 

Any and all amounts payable to Party C by the Liquidation Committee pursuant to Section 16.4.7 shall be paid promptly to Party C in foreign exchange which shall be freely remitted out of China. Any expenses related to the conversion of Renminbi to foreign exchange shall be borne by Party C.

 

17.                     FORCE MAJEURE

 

17.1              “FORCE MAJEURE” means all events that are beyond the control of the Parties to this Contract, and which are unforeseen, or if foreseen, unavoidable, and which prevent either Party from performing all or a material part of its obligations. Such events shall include but are not limited to explosions, shipwrecks, acts of nature or fires, floods, sabotage, accidents and any other similar contingency.

 

17.2              If an event of Force Majeure occurs, to the extent that any contractual obligation of either of the Parties cannot be performed as a result of such an event, such contractual obligation shall be suspended while the Force Majeure subsists and the due date for performance thereof shall be automatically extended, without penalty, for a period equal to such suspension.

 

 

17.3                        The Party encountering Force Majeure shall promptly inform the other Party in writing and shall furnish appropriate proof of the occurrence and duration of such Force Majeure. The Party encountering Force Majeure shall also use all reasonable endeavors to terminate the Force Majeure.

 

17.4                        In the event of Force Majeure, the Parties shall immediately consult with each other to find an equitable solution and shall use all reasonable endeavors to minimize the consequences of such Force Majeure.

 

18.       DISPUTES RESOLUTION

 

18.1                        Any dispute or disagreement arising out of or in connection with this Contract, including any issue regarding the existence, interpretation, validity, termination or performance of this Contract, shall be submitted to and settled by the Hong Kong International Arbitration Centre (the “CENTRE”), applying the UNCITRAL Arbitration Rules then effective. Such Arbitration Rules (including any amendment thereto) shall be deemed as a part of this Contract. The arbitration venue shall be Hong Kong.

 

18.2                        Any award made by the arbitral tribunal of the Centre shall be final and binding on the Parties. Both parties shall execute the award. The refusal of one Party to execute the award authorizes the other Party to apply for enforcement to the courts that have jurisdiction over the issue in accordance with the provisions of applicable laws.

 

18.3                        No arbitration of any dispute or disagreement shall commence unless the Parties have attempted genuinely to settle the same amicably within a period of ninety (90) days after the issuance of a written arbitration notice by one Party to the other, which notice shall describe generally the nature of the dispute.

 

18.4                        The costs of arbitration shall be borne by the losing Party, unless otherwise determined by the arbitration award.

 

18.5                        When any dispute occurs and when any dispute is under arbitration, except for the matters under dispute, the Parties shall continue to fulfil their respective obligations and shall be entitled to exercise their rights under this Contract.

 

19.       GOVERNING LAW

 

The execution, validity, interpretation and performance of this Contract and the resolution of any of the dispute thereunder shall be governed by the PRC law but, in the event that there is no applicable PRC law governing a particular matter relating to this Contract, generally accepted standards and principles of international law and general international commercial practices shall be applied.

 

20.       MISCELLANEOUS PROVISIONS

 

20.1                        The failure to exercise or delay in exercising a right or remedy under this Contract shall not constitute a waiver of the right or remedy or a waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Contract shall prevent any further exercise of such a right or remedy or the exercise of any other right or remedy.

 

 

20.2                        This Contract shall become effective when it is approved by the Approval Authority.

 

20.3                        This Contract is written and executed in Chinese.

 

20.4                        The invalidity of any provision of this Contract shall not affect the validity of any other provision of this Contract.

 

20.5                        Any notice or other communication provided in this Contract shall be delivered personally or sent by fax as follows:

 

(a)  if to Party A, to:

 

Address: No. 2222, West Tian Wei Road, Baoding, Hebei Province

 

Fax number: 0312—3230382

 

Attention: Zhang Jicheng

 

(b)  If to Party B, to:

 

Address: No. 3688, North Xiang Yang Avenue, High-Tech District, Baoding, Hebei Province

 

Fax number: 0312—3309000

 

Attention:  Liu Xiaofei

 

(c)  if to Party C, to:

 

Address: No.3055, Middle Fu Xing Road, Baoding, Hebei Province

 

Fax number: 0312—3151881

 

Attention: Liu Conghui

 

or to any other address, fax number or person as either of the Parties may specify by notice in writing to the other.

 

20.6                        In the absence of evidence of earlier receipt, any notice or other communication shall be deemed to have been duly given:

 

(a)                                 if delivered personally, when delivered to the address referred to in Section 20.5;

 

(b)                                 if sent by fax, when a confirmation report of transmission is recorded by the sender’s facsimile machine;

 

(c)                                  if sent by air mail, ten (10) business days after posting it.

 

20.7                        This Contract constitutes the entire agreement between the Parties relating to the subject matters of this Contract and supersedes all previous agreements.

 

 

20.8                        If there is any conflict or inconsistency between the provisions of this Contract and the Articles of Association, this Contract shall prevail.

 

20.9                        No variation to this Contract shall be valid unless it is in writing and signed by all Parties or their representatives and approved by the Approval Authority.

 

20.10                 Except as expressly provided in this Contract, the rights and remedies contained in this Contract are cumulative and not exclusive of any rights or remedies provided by law.

 

20.11                 Nothing in this Contract shall be construed as creating a partnership between the Parties or constituting either Party as the agent of the other for any purpose whatsoever and none of the Parties shall have the authority or power to bind the others or to contract in the name of or create a liability against the others in any way or for any purpose.

 

20.12                 This Contract shall be executed in six (6) originals.

 

IN WITNESS WHEREOF each of the parties hereto has caused this Contract to be executed by its duly authorized representative on the date first set forth above.

 

BAODING TIANWEI BAOBIAN ELECRTIC CO., LTD.

 

	
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BAODING TIANWEI GROUP Co., LTD.

 

 

	
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YINGLI GREEN ENERGY HOLDING COMPANY LIMITED

 

 

	
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