Document:

Exhibit 4.03

 

CUSIP
NO. 5252M0GG6

ISIN NO. US5252M0GG65

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $2,000,000

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

AUSSIE BULL NOTES
 DUE JUNE 27, 2012

 

THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY.  UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM (A “CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY
OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITORY.

 

 

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the “Company,”
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to CEDE &
Co., or registered assigns, on the Maturity Date, an amount equal to the Redemption Amount.

 

The “Maturity Date” is June 27, 2012, or
if such day is not a Business Day, on the next following Business Day.

 

The “Valuation
Date” is June 20, 2012; provided that, upon the occurrence of a Disruption
Event with respect to a Basket Component, the Valuation Date for the affected
Basket Component may be postponed (as described below under “Disruption Events”).

 

The “Trade
Date” is June 26, 2008.

 

The “Issue
Date” is June 27, 2008.

 

The “Redemption
Amount” is the amount equal to the principal amount of each Note, plus the
Additional Amount, if any.

 

The “Additional
Amount” is an amount per Note equal to the principal amount of each note
multiplied by (a) the Basket Return, if the Basket Return is greater than
zero; or (b) 0.0%, if the Basket Return is less than or equal to zero.

 

The “Basket
Return” is the sum of the Weighted Index Return, the Weighted Currency Return,
the Weighted Copper Return and the Weighted Aluminum Return.

 

The “Reference
Index” is the S&P®/ASX 200 Index.

 

The “Index
Level” is the daily closing level of the Reference Index, as determined and
published by the Index Sponsor (subject to the occurrence of a Disruption
Event).

 

The “Initial
Index Level” is 5,307, which is the Index Level on the Trade Date.

 

The “Final
Index Level” is the Index Level on the Valuation Date (subject to the
occurrence of a Disruption Event).

 

The “Index
Sponsor” is Standard & Poor’s Australian Index Committee.

 

The “Weighted
Index Return” is the Index Weight times the Index Return.

 

The “Index
Weight” is 33.34%.

 

The “Index
Return” is a quotient, the numerator of which is the difference of the Final
Index Level minus the Initial Index Level and the denominator of which is the
Initial Index Level.

 

The “Reference
Currency” is the Australian Dollar (AUD).

 

2

 

The “Reference Exchange Rate” is the spot
exchange rate for the Reference Currency quoted against the U.S. dollar (USD)
expressed as number of USD per unit of the Reference Currency.

 

The “Initial
Currency Rate” is 0.9573, which is the Reference Exchange Rate on the Trade
Date, observed in accordance with the Settlement Rate Option.

 

The “Settlement
Rate” is the Reference Exchange Rate on the Valuation Date, observed in
accordance with the Settlement Rate Option (subject to the occurrence of a
Disruption Event).

 

The “Weighted
Currency Return” is the product of the Currency Weight times the Currency
Return.

 

The “Currency
Weight” is 33.34%.

 

The “Currency
Return” is a quotient,
the numerator of which is the difference of the Settlement Rate minus the
Initial Currency Rate and the denominator of which is the Settlement Rate.

 

The “Settlement
Rate Option” is the
USD/AUD official fixing rate, expressed as the amount of USD per one AUD, as
published by the WM Company and appearing immediately under the caption “Bid/Ask”
on the Reuters page USDAUDFIXM=WM (as substitute for 1FEE) to the right of
“AUD” at approximately 4:00 p.m., London time.

 

The “Reference
Commodities” are Aluminum and Copper together, and each a “Reference Commodity”.

 

“Aluminum” is High Grade Primary Aluminum.

 

The “Aluminum Price” is the official settlement price of Aluminum for
cash delivery, expressed as the U.S. dollar price per metric ton of Aluminum,
as made public by the Relevant Exchange for Aluminum (subject to the occurrence
of a Disruption Event).

 

The “Initial Aluminum Price” is $3,024.50,
which is the Aluminum Price on the Trade Date.

 

The “Final Aluminum Price” is the Aluminum Price on the Valuation Date.

 

The “Weighted Aluminum Return” is the sum of Aluminum Weight times
Aluminum Return.

 

The “Aluminum Weight” is 16.66%.

 

The “Aluminum Return” is a quotient, the numerator of which is the
difference of the Final Aluminum Price minus the Initial Aluminum Price and the
denominator of which is the Initial Aluminum Price.

 

“Copper” is Copper – Grade A.

 

3

 

The “Copper Price” is the official settlement price of Copper for cash
delivery, expressed as the U.S. dollar price per metric ton of Copper, as made
public by the Relevant Commodity Exchange for Copper (subject to the occurrence
of a Disruption Event).

 

The “Initial Copper Price” is $8,551.00,
which is the Copper Price on the Trade Date.

 

The “Final Copper Price” is the Copper Price on the Valuation Date.

 

The “Weighted Copper Return” is the sum of Copper Weight times Copper
Return.

 

The “Copper Weight” is 16.66%.

 

The “Copper Return” is a quotient, the numerator of which is the
difference of the Final Copper Price minus the Initial Copper Price and the
denominator of which is the Initial Copper Price.

 

The “Relevant Commodity Exchange”
is, for each Reference Commodity, the exchange set forth opposite such Reference
Commodity below, or its successor, or if the exchange set forth below is no
longer the principal exchange or trading market for a Reference Commodity or
options or futures contracts for such Reference Commodity, such other exchange
or principal trading market for the relevant Reference Commodity as determined
in good faith by the Calculation Agent which serves as the source of prices for
that Reference Commodity, and any principal exchanges where options or futures
contracts on that Reference Commodity are traded.

 

	
  Reference Commodity

  	
   

  	
  Relevant Commodity Exchange

  
	
   

  	
   

  	
   

  
	
  Aluminum

  	
   

  	
  London Metal
  Exchange (“LME”)

  
	
   

  	
   

  	
   

  
	
  Copper

  	
   

  	
  LME

  

 

If a
Disruption Event relating to one or more of the Reference Index, the Reference
Currency or the Reference Commodities (with respect to a Commodity Disruption
Event identified in clauses (A), (B) or (C) below) is in effect on
the scheduled Valuation Date, the Calculation Agent will calculate the Basket
Return using:

 

·                                          If the Reference Index,
the Reference Currency or a Reference Commodity did not suffer a Disruption Event
on the scheduled Valuation Date, the Final Index Level, the Settlement Rate,
the Final Copper Price or the Final Aluminum Price, as applicable, on the
scheduled Valuation Date, and

 

·                                          If any or all of the
Reference Index, the Reference Currency or a Reference Commodity did
suffer a
Disruption Event on the scheduled Valuation Date, the Final Index Level, the
Settlement Rate, the Final Copper Price and/or the Final Aluminum Price, as the
case may be, on the immediately succeeding Scheduled Index Trading Day,
scheduled 

 

4

 

Currency
Business Day or scheduled Commodity Trading Day, as applicable, on which no Disruption
Event occurs or is continuing with respect to the  affected Reference Index, Reference Currency
or Reference Commodity;

 

provided however that if a Disruption Event with respect to
one or more of the Reference Index, the Reference Currency or a Reference
Commodity has occurred or is continuing on each of the three Scheduled Index
Trading Days, scheduled Currency Business Days or scheduled Commodity Trading
Days, as applicable, following the scheduled Valuation Date, then (a) such
third Scheduled Index Trading Day, scheduled Currency Business Day or scheduled
Commodity Trading Day, as applicable, shall be deemed the Valuation Date for
the affected Reference Index, Reference Currency or Reference Commodity,
respectively; and (b) the Calculation Agent will determine, on such day, (i) in
the case of the Reference Index, its good faith estimate of the Final Index
Level, in accordance with the formula for and method of calculating the Index
Level last in effect prior to commencement of the Index Disruption Event, using
the closing price (or, if trading in the relevant securities has been
materially suspended or materially limited, its good faith estimate of the
closing price that would have prevailed but for such suspension or limitation
or non-trading day) on such third Scheduled Index Trading Day of each security
most recently included in the Reference Index, (ii) in the Case of the
Reference Currency, the Settlement Rate in accordance with the “Fallback Rate
Observation Methodology”, or (iii) in the case of a Reference Commodity,
the Final Copper Price or the Final Aluminum Price, as applicable, for the
affected Reference Commodity in its sole and absolute discretion, taking into
account the latest available quotation for the Final Copper Price or the Final
Aluminum Price, as the case may be, for the affected Reference Commodity and
any other information that in good faith it deems relevant.

 

If a
Commodity Disruption Event identified in clauses (D) or (E) below relating to one or both of
the Reference Commodities is in effect on the Valuation
Date, the Calculation Agent will determine the Final Copper Price or the Final Aluminum Price, as
applicable, for the affected Reference Commodity on the scheduled Valuation
Date in its sole and absolute discretion, taking into account the
latest available quotation for the Copper Price and/or the Aluminum Price,
as the case may be, for the affected Reference Commodity and any other
information that in good faith it deems relevant.

 

For
purposes of the above, “scheduled Valuation Business Day” means a day that is
or, in the judgment of the Calculation Agent, should have been, a Valuation
Business Day for the affected Basket Currency.

 

A “Disruption
Event” means, for the Reference Index, an Index Disruption Event, for the
Reference Currency, a Currency Disruption Event and for the Reference
Commodities, a Commodity Disruption Event.

 

An “Index
Disruption Event” means any of the following events, as determined in good
faith by the Calculation Agent:

 

(A)                              a suspension, absence or material limitation of
trading of stocks then constituting 20% or more of the level of the Reference
Index (or the 

 

5

 

relevant successor index) on the Relevant Equity Exchanges
(as defined below) for such securities at any time during the one hour period
preceding the close of the principal trading session on such Relevant Equity
Exchange;

 

(B)                                a breakdown or failure in the price and trade
reporting systems of the primary market of any relevant exchange as a result of
which the reported trading prices for stocks then constituting 20% or more of
the level of the Basket Index (or the relevant successor index) at any time
during the one hour period preceding the close of the principal trading session
on such relevant exchange are materially inaccurate;

 

(C)                                a suspension, absence or material limitation of
trading on any major securities exchange for trading in futures or options
contracts or exchange traded funds related to a Basket Index (or the relevant successor
index) at any time during the one hour period preceding the close of the
principal trading session on such exchange; or

 

(D)                               a decision to permanently discontinue trading in the
relevant futures or options contracts or exchange traded funds.

 

For the purpose of
determining whether an Index Disruption Event exists at any time, if trading in
a security included in the Reference Index is materially suspended or
materially limited at that time, then the relevant percentage contribution of
that security to the level of the Reference Index shall be based on a
comparison of (i) the portion of the level of the Reference Index
attributable to that security relative to, (ii) the overall level of the
Basket Index, in each case immediately before that suspension or limitation.

 

For the purpose of
determining whether an Index Disruption Event exists at any time:

 

(1)                                  a limitation on the hours
or number of days of trading will not constitute an Index Disruption Event if
it results from an announced change in the regular business hours of the
Relevant Equity Exchange;

 

(2)                                  limitations pursuant to
the rules of any Relevant Equity Exchange similar to NYSE Rule 80B
(or any applicable rule or regulation enacted or promulgated by any other
self-regulatory organization or any government agency of scope similar to NYSE Rule 80B
as determined by the calculation agent in its sole discretion) on trading
during significant market fluctuations will constitute a suspension, absence or
material           limitation of trading;

 

(3)                                  a suspension of trading in
futures or options contracts on the Reference Index by the primary securities
market trading in such contracts by reason of:

 

(i)    a
price change exceeding limits set by such exchange or market,

 

(ii)   an
imbalance of orders relating to such contracts, or

 

6

 

(iii)   a
disparity in bid and ask quotes relating to such contracts,

 

will, in
each such case, constitute a suspension, absence or material limitation of
trading in futures or options contracts related to the Reference Index; and

 

(4)                                  a suspension, absence or
material limitation of trading on any Relevant Equity Exchange or on the
primary market on which futures or options contracts related to the Reference
Index are traded will not include any time when such market is itself closed
for trading under ordinary circumstances.

 

For
purposes of the above, “Relevant Equity Exchange” for any security (or
combination thereof then underlying the Reference Index or any successor index)
means the primary organized exchange, quotation system (which includes bulletin
board services) or other market of trading for such security then included in
the Reference Index or any successor index.

 

A “Currency
Disruption Event” means any of the following events, as determined in good
faith by the Calculation Agent:

 

(A)                              the occurrence and/or existence of an event on any
day that has the effect of preventing or making impossible (x) the
delivery of USD from accounts inside the country for which the Reference Currency
is the lawful currency (such jurisdiction with respect to such Reference
Currency, the “Reference Currency Jurisdiction”) to accounts outside
that Reference Currency Jurisdiction;

 

(B)                                the occurrence of any event causing the Reference
Exchange Rate for the Reference Currency to be split into dual or multiple
currency exchange rates; or

 

(C)                                the Settlement Rate being unavailable for the
Reference Currency, or the occurrence of an event (i) in the Reference
Currency Jurisdiction for that Reference Currency that materially disrupts the
market for the Reference Currency or (ii) that generally makes it
impossible to obtain the Settlement Rate for the Reference Currency, on the
Valuation Date.

 

For
purposes of the above, “scheduled Currency Business Day” means a day that is
or, in the judgment of the Calculation Agent, should have been, a Currency
Business Day.

 

A “Commodity
Disruption Event” with respect to a Reference Commodity means any of the
following events, as determined in good faith by the Calculation Agent:

 

(A)                              the suspension of or material limitation on trading in the Reference
Commodity or futures contracts or options related to the Reference Commodity,
on the Relevant Commodity Exchange for that Reference Commodity;

 

7

 

(B)                                either (i) the failure of trading to commence, or permanent
discontinuance of trading, in the Reference Commodity, or futures contracts or
options related to the Reference Commodity, on the Relevant Commodity Exchange
for that Reference Commodity, or (ii) the disappearance of, or of trading
in, the Reference Commodity;

 

(C)                                the failure of the Relevant Commodity Exchange for the Reference
Commodity to publish the official daily settlement price of the Reference
Commodity for that day (or the
information necessary for determining the settlement price);

 

(D)                               the occurrence since the Trade Date of a material change in the
content, composition, or constitution of the Reference Commodity; or

 

(E)                                 the occurrence since the Trade Date of a
material change in the formula for or the method of calculating the settlement price of the Reference Commodity.

 

For the purpose of determining whether a Commodity
Disruption Event for a Reference Commodity has occurred:

 

(1)                                  a limitation on the hours in a trading day
and/or number of days of trading will not constitute a Commodity Disruption
Event if it results from an announced change in the regular business hours of
the Relevant Commodity Exchange for the Reference Commodity;

 

(2)                                  a suspension in trading in a Reference
Commodity on the Relevant Commodity Exchange for that Reference Commodity
(without taking into account any extended or after-hours trading session), by
reason of a price change reflecting the maximum permitted price change from the
previous trading day’s settlement price will constitute a Commodity Disruption
Event; and

 

(3)                                  a suspension of or material limitation on
trading on a Relevant Commodity Exchange for a Reference Commodity will not
include any time when the Relevant Commodity Exchange for that Reference
Commodity is closed for trading under ordinary circumstances.

 

For
purposes of the above, “scheduled Commodity Trading Day” means a day, as
determined in good faith by the Calculation Agent, on which trading is
generally conducted on the Relevant Commodity Exchange applicable to the
affected Reference Commodity.

 

A “Valuation
Business Day” means any day that is each of (a) a Scheduled Index Trading
Day for the Reference Index. (b) a Currency Business Day for the Reference
Currency, and (c) a Commodity Business Day
for the Reference Commodities.

 

8

 

A “Scheduled
Index Trading Day” means any day on which the
Reference Index (or any successor index) is published by the Index Sponsor (or
the publisher of such successor index) or otherwise determined by the
Calculation Agent.

 

A “Currency
Business Day” means any day that is not a Saturday, a Sunday or a day on which
banking institutions generally are authorized or obligated by law or executive
order to be closed (including for dealings in foreign exchange in accordance
with the market practice of the foreign exchange market) in London.

 

A “Commodity
Business Day” means a day, as determined in good faith by the Calculation
Agent, on which the Relevant Commodity Exchange for each Reference Commodity is
scheduled to be (or, but for the occurrence of a Commodity Disruption Event,
would have been) open for trading during its regular trading session
(notwithstanding the Relevant Commodity Exchange closing prior to its scheduled
closing time).

 

The “Fallback
Rate Observation Methodology” means
that the Reference Exchange Rate, Final Spot Rate or other rate, as specified
in the applicable pricing supplement, in respect of a basket currency will
equal the noon buying rate in New York for cable transfers in foreign
currencies as announced by the Federal Reserve Bank of New York for customs
purposes (the “Noon Buying Rate”) on the relevant Valuation Date or such other
date specified in the applicable pricing supplement. If the Noon Buying Rate is
not announced on that date, the Reference Exchange Rate, Final Spot Rate or
other rate for such Basket Currency will be calculated on the basis of the
arithmetic mean of the applicable spot quotations received by the Calculation
Agent at approximately 10:00 a.m., New York City time, on the Valuation
Business Day next succeeding the Valuation Date or such other date specified in
the applicable pricing supplement, for the purchase or sale for deposits in the
basket currency by the New York offices of three leading banks engaged in the
interbank market (selected in the sole discretion of the Calculation Agent)
(the “Reference Banks”). If fewer than three Reference Banks provide spot
quotations, then the Reference Exchange Rate, Final Spot Rate or other rate, as
applicable, will be calculated on the basis of the arithmetic mean of the
applicable spot quotations received by the Calculation Agent at approximately
10:00 a.m., New York City time, on the relevant date from two Reference
Banks (selected in the sole discretion of the Calculation Agent), for the
purchase or sale for deposits in the Basket Currency. If these spot quotations
are available from only one Reference Bank, then the Calculation Agent, in its
sole discretion, will determine whether that quotation is reasonable to be
used. If no spot quotation is available, then the Reference Exchange Rate,
Final Spot Rate or other rate, as applicable, for such Basket Currency will be
determined by the Calculation Agent in good faith and in a commercially
reasonable manner.

 

A “Business Day”, notwithstanding any
provision in the Indenture, is any day that is not is not a Saturday or Sunday
and that is not a day on which banking institutions in New York City generally
are authorized or obligated by law or executive order to be closed.

 

The “Calculation Agent” means Lehman Brothers
Inc.

 

Except as provided below, the Redemption Amount may, at the option of
the Company, be made by check mailed to the person entitled thereto at such
person’s address as it appears on the registry books of the Company.

 

9

 

Payment of the Redemption Amount will be made in immediately available
funds in accordance with the normal procedures of the Trustee (or any duly
appointed Paying Agent).

 

The Company will pay any administrative costs imposed by banks
in making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments hereunder, including, without limitation,
any withholding tax, will be borne by the Holder hereof.

 

References herein
to “U.S. dollars” or “U.S.$” or “$” or “USD” are to the coin or currency of the
United States as at the time of payment is legal tender for the payment of
public and private debts.

 

REFERENCE IS
HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE
HEREOF.  SUCH FURTHER PROVISIONS SHALL
FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

This Note shall
not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the
Indenture.

 

10

 

IN WITNESS
WHEREOF, Lehman Brothers Holdings Inc. has caused this instrument to be signed
by its Chairman of the Board, its President, its Vice Chairman, its Chief
Financial Officer, one of its Vice Presidents or its Treasurer, by manual or
facsimile signature under its corporate seal, attested by its Secretary or one
of its Assistant Secretaries by manual or facsimile signature.

 

	
  Dated: June 27,
  2008

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrew Yeung

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Cindy Buckholz

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

 

CITIBANK, N.A.

  as Trustee

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  

 

11

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

AUSSIE BULL NOTES
 DUE JUNE 27, 2012

 

 

Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I,
Aussie Bull Notes (herein called the “Notes”).  The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.  The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions or repurchase rights (if any), may be
subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided.

 

Section 2.  Principal Amount for Indenture Purposes.  For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding.

 

Section 3.  Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Additional Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Additional Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that herein above
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series Outstanding may on behalf of the holders of all the Securities of
such series waive any past 

 

 

default or Event of
Default under the Indenture with respect to such series and its consequences,
except a default in the payment of interest, if any, on the Additional Amount
or the principal amount, or premium, if any, on any of the Securities of such
series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

Section 4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
Additional Amount or the principal amount on this Note at the place, at the
respective times, at the rate, and in the coin or currency herein prescribed.

 

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

 

Section 6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons.  Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, in denominations of $1,000 or whole
multiples of $1,000, either at the office or agency to be designated and
maintained by the Company for such purpose in the Borough of Manhattan, New
York City, pursuant to the provisions of the Indenture or at any of such other
offices or agencies as may be designated and maintained by the Company for such
purpose pursuant to the provisions of the Indenture, and in the manner and
subject to the limitations provided in the Indenture, but without the payment
of any service charge, except for any tax or other governmental charges imposed
in connection therewith.  Notes of this
series are exchangeable for a like aggregate principal amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes of this series.

 

Section 7.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

 

If at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under the
Indenture, the Company shall appoint a successor Depository.  If a successor Depository for the Notes of
this series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, the Company will
issue, and the Trustee will 

 

 

authenticate and deliver,
Notes of this series in definitive form in an aggregate principal amount equal
to the principal amount of this Note.

 

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.

 

Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the person in whose name this Note is registered as the owner
hereof for all purposes, and neither the Company nor the Trustee nor any agent
of the Company or of the Trustee shall be affected by any notice to the
contrary.

 

Section 8. 
Events of Default.  If an
Event of Default with respect to Notes of this series shall occur and be
continuing, the amount that may be declared due and payable upon any
acceleration of the notes will be determined by the Calculation Agent for the
period from and including the Issue Date to but excluding the date of early
repayment and will equal, for each note, the Redemption Amount, calculated as
the date of early repayment were the Maturity Date. If a bankruptcy proceeding is
commenced in respect of Lehman Brothers Holdings, the claim of the beneficial
owner of a note for the period from and including the Issue Date to but
excluding the date of early repayment will be capped at the Redemption Amount,
calculated as though the date of the commencement of the proceeding were the
Maturity Date.

 

Section 9. 
No Recourse Against Certain Persons.  No recourse for the payment of the Additional
Amount or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any Indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

 

Section 10.  Defined Terms.  All terms used but not defined in this Note
are used herein as defined in the Indenture.

 

Section 11. 
GOVERNING LAW.  THIS NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.Exhibit 10.3

 

Euro Tech (Far East) Limited

(Subscriber)

 

 

Jin Xinlie, Zhou Jianlu,
Zhu Jinghua, Cheng Fusheng,

Zhang Huaqiang, Chen Jian,
Zhang Zhenjiang, Jiang Qinglong

(Management Shareholders)

 

 

Zhejiang JiaHuan Limited

(the Company)

 

 

Share Transfer and Subscription
Agreement

relating to the Company

 

1

 

This Share Transfer and Subscription
Agreement is made the 18th  day of July 2007
between:

 

1.             Zhejiang JiaHuan Limited, a company incorporated in
the People’s Republic of China and whose registered office is situate at No.188, Jiang Jun Road, Jian Hua City, Zhejiang Province
(hereinafter called ‘the Company’);

 

2.             Euro Tech (Far East) Limited, a company incorporated in
the Hong Kong Special Administration Region and whose registered office is
situate at 18th Floor, Gee Chang Hong Centre, 65 Wong Chuk Hang
Road, Hong Kong (hereinafter called ‘the
Subscriber’); and

 

3.             The following
persons: Jin Xinlie, Zhou Jianlu, Zhu Jinghua, Cheng
Fusheng, Zhang Huaqiang, Chen Jian, Zhang Zhenjiang, and Jiang Qinglong (hereinafter
called ‘the Management Shareholders’).

 

Whereas:

 

(A)          The Company is a company incorporated and registered
in the People’s Republic of China, with its registered office at No.188, Zhang Zhun Road, Jian Hua City, Zhejiang
Province.  At the date of signing of this
Agreement, the registered capital of the Company is RMB10,000,000.00.  All of the said capital is  fully paid and held by the individual  shareholders
(including the Management Shareholders)
and Zhejiang Province Technology Risk Investment Limited.  Details of the Company are set out in
Schedule 1 hereto.

 

(B)           The Company is a key
corporation in the Chinese
environmental business,
and a major national enterprise in high and innovative technology, specializing
in the research and development, manufacture
and sale of dust removal electric energy.

 

(C)           The Subscriber is a company established in Hong
Kong, with its registered office at 18th Floor, Gee Chang Hong
Centre, 65 Wong Chuk Hang Road, Hong Kong, and is a company listed on the US
NASDAQ.  It specializes in dealing with
all kinds of environmental protection products and equipments.

 

(D)          For further developing the business in Mainland
China, the Subscriber and the Company are agreeable that the Subscriber shall,
subject to the terms and conditions of this Agreement, invest in the Company
through equity transfer and subscription of

 

2

 

newly increased capital of the Company.  Each of the Management Shareholders, as an
original Shareholder of the Company, is agreeable to
procure the original Shareholders to transfer their
equity, and to procure the Company to increase its capital for subscription by the Subscriber.

 

1.             Interpretation

 

1.1           Unless otherwise specified in this Agreement, the
following expressions in this Agreement shall mean the following:

 

	
  “Financial
  Statements”

  	
   

  	
  Means
  the financial statements of the Company and its Subsidiaries made up to the
  Accounting Date and audited according to the international accounting
  standards, including balance sheets and profit and loss accounts of those
  companies;

  
	
   

  	
   

  	
   

  
	
  “Accounting
  Date”

  	
   

  	
  Means
  31 October 2006;

  
	
   

  	
   

  	
   

  
	
  “working
  day”

  	
   

  	
  Means
  a day when banks in the PRC are in business;

  
	
   

  	
   

  	
   

  
	
  “Completion”

  	
   

  	
  Means
  completion of the procedures for Equity
  Transfer and Equity Subscription in accordance with the provisions of
  Clause 7;

  
	
   

  	
   

  	
   

  
	
  “Completion
  Date”

  	
   

  	
  Means
  the date of Completion, namely the first working day after the completion of
  all of the remittance of the Subscription Price of RMB9,000,000.00 by the Subscriber, verification of such payment and
  modification of business registration, but in no event later than 14 working
  days after the remittance of the Subscription Price of RMB9,000,000.00 by the Subscriber to the account specified by the
  Company;

  
	
   

  	
   

  	
   

  
	
  “Before
  Completion”

  	
   

  	
  Means
  from the date of signing of this Agreement up to the Completion Date;

  
	
   

  	
   

  	
   

  
	
  “Conditions”

  	
   

  	
  Means
  the conditions set out in Clauses
  5 and 6;

  
	
   

  	
   

  	
   

  
	
  “Director(s)”

  	
   

  	
  Means
  the director(s) of the Company;

  
	
   

  	
   

  	
   

  
	
  “Hong
  Kong”

  	
   

  	
  Means
  the Hong Kong Special Administrative Region;

  
	
   

  	
   

  	
   

  
	
  “Parties”

  	
   

  	
  Means
  the signing parties to this Agreement, and a
  “Party” means any one of the Parties;

  
	
   

  	
   

  	
   

  
	
  “PRC”

  	
   

  	
  Means
  the People’s Republic of China, except Hong Kong;

  

 

3

 

	
  “RMB”

  	
   

  	
  Means
  the lawful currency of the PRC;

  
	
   

  	
   

  	
   

  
	
  “Shareholders”

  	
   

  	
  Means
  the original shareholders of the Company as at the date of this Agreement,
  and after Completion, the original shareholders and the Subscriber;

  
	
   

  	
   

  	
   

  
	
  “Original Individual Shareholders”

  	
   

  	
  Means
  the individual Shareholders amongst the
  original Shareholders of the Company as
  at the date of this Agreement;

  
	
   

  	
   

  	
   

  
	
  “Equity Subscription”

  	
   

  	
  Means
  the subscription of the New registered
  Capital of the Company;

  
	
   

  	
   

  	
   

  
	
  “New
  Capital”

  	
   

  	
  Means
  the newly increased registered capital of the Company, namely the amount of RMB1,250,000.00 registered capital increased by
  the Company on the Completion Date,
  which takes up 11.11% of the registered capital of the Company after the
  increase;

  
	
   

  	
   

  	
   

  
	
  “Subscription
  Price”

  	
   

  	
  Means
  the price for subscribing the New Capital
  as set out in Clause 4;

  
	
   

  	
   

  	
   

  
	
  “Equity Transfer”

  	
   

  	
  Means the transfer of 1,000,000 equity, which
  takes up 10% of the original registered capital of the Company, by the
  Original Individual Shareholders to the Subscriber;

  
	
   

  	
   

  	
   

  
	
  “Equity Transfer Form”

  	
   

  	
  Means the agreement for Equity Transfer to the
  Subscriber to be signed by each Original Individual Shareholder, in the form
  set out in Schedule 4;

  
	
   

  	
   

  	
   

  
	
  “Transfer Price”

  	
   

  	
  Means the price for Equity Transfer as set out in
  Clause 3;

  
	
   

  	
   

  	
   

  
	
  “Subsidiaries”

  	
   

  	
  Means
  those companies in which the Company holds their
  issues shares or equity, details of
  which are set out in Schedule 2;
  and

  
	
   

  	
   

  	
   

  
	
  “Warranties”

  	
   

  	
  Means
  the representations, warranties and covenants provided by the Company and
  Management Shareholders, as set out in Clause 8 and Schedule
  3.

  

 

	
  1.2

  	
   

  	
  In
  this Agreement (including the Recitals and Schedules), unless the context
  specifies otherwise:

  
	
   

  	
   

  	
   

  
	
  1.2.1

  	
   

  	
  References
  to Recitals, Clauses and Schedules are to the recitals, clauses and schedules
  of this Agreement;

  

 

4

 

	
  1.2.2

  	
   

  	
  The
  Recitals and Schedules are an integral part of this Agreement, and have the
  same force and effect as the contents of this Agreement.

  
	
   

  	
   

  	
   

  
	
  1.2.3

  	
   

  	
  References
  to laws and regulations include the laws or regulations as may from time to
  time be modified or reenacted.

  
	
   

  	
   

  	
   

  
	
  1.2.4

  	
   

  	
  Headings
  are for convenience only, and shall be disregarded when construing this Agreement;

  
	
   

  	
   

  	
   

  
	
  1.2.5

  	
   

  	
  References
  to the male gender shall include the female and neuter; and references to the
  singular shall include the plural, and vice versa;

  
	
   

  	
   

  	
   

  
	
  1.2.6

  	
   

  	
  References
  to any person shall include a natural person, body corporate (wherever established),
  body unincorporated, partnership and all governmental agencies, or any organization
  or partnership of any two of the above;

  
	
   

  	
   

  	
   

  
	
  1.2.7

  	
   

  	
  References
  to this Agreement or any other contract or document shall include this
  Agreement or other contract or document as may from time to time be revised,
  modified, renewed or supplemented.

  
	
   

  	
   

  	
   

  
	
  1.2.8

  	
   

  	
  References
  to any document being “mutually agreed” shall mean a document the contents of
  which have been approved by all the Parties and confirmed by each Party initialing
  on that document, and includes any document agreed in writing by each Party
  as a replacement or modification of the aforesaid document.

  
	
   

  	
   

  	
   

  
	
  1.2.9

  	
   

  	
  The
  ejusderm generis rule shall
  not apply to the construction of this Agreement. Hence, expressions such as “any
  other”, “including”, or “in particular” shall not limit the interpretation of
  the provisions herein.

  
	
   

  	
   

  	
   

  
	
  1.2.10

  	
   

  	
  All
  warranties, representations, covenants, indemnities, deeds and agreements
  made by more than one person shall be regarded as having been made by these
  persons jointly and severally.

  

 

	
  2

  	
   

  	
  Investment Plan

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Pursuant to the
  conditions of this Agreement, and in reliance on the representation and
  warranty by the Management Shareholders that the net asset value of the Company
  as

  

 

5

 

	
   

  	
   

  	
  at the Accounting Date
  and up to the Completion Date is not and will not be less than
  RMB53,674,838.00, the Subscriber agrees to invest RMB18,000,000.00 in the
  Company, of which RMB9,000,000.00 is for the acquisition of 1,000,000 equity
  (10% of the original registered capital) from the Original Individual
  Shareholders; and the remaining RMB9,000,000.00 is for the subscription of
  the New Capital of the Company. On completion of the aforesaid investment,
  the registered capital of the Company shall be modified to RMB11,250,000.00,
  and the Subscriber shall hold and has fully paid up 20% of the registered
  capital of the Company.

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  On Completion,
  according to the conditions of this Agreement, the Original Individual
  Shareholders shall complete the Equity Transfer with the Subscriber.
  Immediately thereafter, the Subscriber shall complete the Equity Subscription
  with the Company.

  
	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  The Company and the
  Management Shareholders warrant that after the Equity Transfer and increase
  of capital, they will procure the Company to complete all procedures for
  business registration modification in relation to the registered capital and
  change of shareholders as required and in accordance with the law and regulations.

  
	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  The newly increased
  capital shall be subscribed by the Subscriber on a fully paid basis in
  accordance with this Agreement, which shall after Completion rank pari passu
  and enjoy the same rights and benefits with the equity held by the original
  Shareholders (the commencement date when it shall enjoy the rights and
  benefits is the date when the Subscription Price is remitted to the account
  of the Company).

  

 

	
  3

  	
   

  	
  Transfer Price and its Payment

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  The Transfer Price for
  the purchase by the Subscriber of 1,000,000 equity from the Original
  Individual Shareholders shall be RMB9.00 for each share. The total amount
  payable to the Original Individual Shareholders by the Subscriber for
  purchasing the equity shall be RMB9,000,000.00.

  
	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  The amount of the
  Transfer Price shall be paid to the Original Individual Shareholders on
  Completion according to the amount of equity sold by each Original Individual
  Shareholder. The Subscriber shall enjoy the same rights and benefits with the
  equity as those held by the original Shareholders (the commencement date when
  it shall enjoy the rights and benefits is the date when the transferors
  receive the Transfer Price

  

 

6

 

	
   

  	
   

  	
  from the Subscriber).

  
	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  For the avoidance of doubt, the equity to be
  transferred by the Original Individual Shareholders to the Subscriber shall
  not include any “bonus equity for technical excellence”; and shall be at the
  ratio in which each holds equity in the Company. The total amount of equity
  to be transferred to the Subscriber shall be 1,000,000.

  

 

	
  4

  	
   

  	
  Subscription Price and Payment

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  The
  Subscription Price for the New Capital shall be RMB9,000,000.00. Of the
  Subscription Price, an amount of RMB1,250,000.00 shall be recorded as the
  registered capital of the Company. The surplus premium of RMB7,750,000.00
  shall be included as the capital reserve.

  
	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  The
  Subscriber shall pay the Subscription Price in full in one lump sum, that is,
  RMB9,000,000.00 shall be paid within 10 working days after this Agreement has
  been signed and the relevant Equity Transfer and Equity Subscription have
  been approved by the Foreign Economic and Trade Bureau, the Foreign Economic
  and Trade Department (if necessary) and other relevant departments.

  
	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Conditions Precedent

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  This
  Agreement shall be conditional on and shall not take effect unless all but
  not some only of the following conditions precedent are satisfied:

  
	
   

  	
   

  	
   

  
	
  5.1.1

  	
   

  	
  All
  consent of the Shareholders and Directors of the Company required for
  completing the Equity Transfer and Equity Subscription having been obtained.
  For this purpose, the Management Shareholders shall on or before the signing
  of this Agreement provide to the Subscriber a certified copy of resolutions of
  all of the Shareholders and Directors of the Company approving the transfer
  of 1,000,000 equity by the Original Individual Shareholders to the
  Subscriber, and authorizing the Company to increase its capital and approving
  the subscription of the New Capital by the Subscriber;

  
	
   

  	
   

  	
   

  
	
  5.1.2

  	
   

  	
  The
  Original Individual Shareholders have acknowledged in writing their waiver of
  all of their pre-emptive rights to purchase the equity to be transferred by
  other Shareholders pursuant to the Articles of the Company; and

  

 

7

 

	
  5.1.3

  	
   

  	
  All
  of the Original Individual Shareholders having executed the Equity Transfer
  Forms, and having delivered the Equity Transfer Forms duly executed to the
  Subscriber’s lawyers for custody until Completion.

  
	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Conditions for Completion

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Completion
  of the Equity Transfer and Equity Subscription shall be conditional upon fulfillment
  of all but not some only of the following conditions:

  
	
   

  	
   

  	
   

  
	
  6.1.1

  	
   

  	
  All
  Warranties remain true and accurate at Completion; and there does not exist
  any misrepresentation and no misrepresentation occurs in any material aspect,
  whether on Completion or at any time between the date of this Agreement and
  the Completion Date;

  
	
   

  	
   

  	
   

  
	
  6.1.2

  	
   

  	
  The
  Management Shareholders having delivered to the Subscriber on or before the
  Completion Date the latest financial statements of the Company made up to the
  closest possible date to the Completion Date, and such financial statements
  indicate that the net asset value of the Company as at the Completion Date is
  not less than RMB53,674,838.00;

  
	
   

  	
   

  	
   

  
	
  6.1.3

  	
   

  	
  The
  Shareholders and the Subscriber having not later than the Completion Date (or
  such other date as the Parties may mutually agree) signed a shareholders
  agreement mutually acceptable to all Parties; or having approved and adopted
  a new constitution of the Company mutually acceptable to all Parties by a
  valid Shareholders’ resolution; and

  
	
   

  	
   

  	
   

  
	
  6.1.4

  	
   

  	
  This
  Agreement and the relevant Equity Transfer and Equity Subscription having
  been approved by the relevant departments.

  
	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  The
  Subscriber may waive any or all of the above Conditions at any time by
  written notice to the Management Shareholders.

  
	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  The
  Original Individual Shareholders shall use their best endeavours to fulfil the
  above Conditions on or before the date stipulated by Clause 6.4.

  
	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  If
  the above Conditions cannot be fulfilled on or before the Completion Date,
  unless the Subscriber waives such Conditions in accordance with Clause 6.2,
  otherwise the

  

 

8

 

	
   

  	
   

  	
  Subscriber
  shall no longer have any obligation to purchase the equity to be transferred
  and to subscribe for the New Capital. All payments made by the Subscriber to
  the Company (as Completion has not taken place no payment is payable to the
  Original Individual Shareholders), including the Subscription Price mentioned
  in Clause 4.2, shall forthwith be repaid to the Subscriber in full. This
  Agreement shall also terminate and be of no further effect, except the provisions
  of Clause 1 (Interpretation); Clauses 5 and 6 (Conditions); Clause 12
  (Notice); Clause 13 (General); Clause 15 (Governing Law); and all claims for
  antecedent breach which shall all remain in effect.

  
	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  The
  agreement to waive any Condition by written notice from the Subscriber shall
  not mean or imply that the Subscriber does not rely on the Warranties. The
  Subscriber still proceeds with the Equity Transfer and Equity Subscription in
  reliance on the Warranties.

  
	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Completion

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Within
  3 working days after receipt of the Subscription Price, the Company shall
  issue a certificate in writing confirming receipt of the payment and
  acknowledging that the Subscriber holds 20% of the registered capital of the
  Company.

  
	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  On
  compliance with Clauses 5 and 6, procedures for Completion shall take place
  on the Complete Date at the place of registration of the Company to complete
  all (but not part only) of the matters prescribed in Clause 7.

  
	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  On
  Completion, the Original Individual Shareholders of the Company shall:

  
	
   

  	
   

  	
   

  
	
  7.3.1

  	
   

  	
  procure
  that the Original Individual Shareholders shall transfer a total of 1,000,000
  equity to the Subscriber; and for this purpose, the Original Individual
  Shareholders agree that the Subscriber’s lawyers may deliver the Equity
  Transfer Forms duly executed by the Original Individual Shareholders to the
  Subscriber for its execution;

  
	
   

  	
   

  	
   

  
	
  7.3.2

  	
   

  	
  procure
  that the Subscriber shall hold the New Capital issued by the Company, which
  together shall represent 20% of the total registered capital of the Company;

  
	
   

  	
   

  	
   

  
	
  7.3.3

  	
   

  	
  deliver
  to the Subscriber certified copies of (i) the resolutions of the
  Shareholders and Directors of the Company approving the Equity Transfer and
  approving and

  

 

9

 

	
   

  	
   

  	
  authorizing
  the increase of the New Capital and Equity Subscription thereof; and (ii) information
  relating to the change of Shareholders from the Industry and Commerce Bureau;
  and that in accordance with Clause 9.2, a person nominated by the Subscriber
  shall be appointed as a non-executive Director and supervisor of the Company;
  such Director shall not participate in the day-to-day management of the
  Company; and

  
	
   

  	
   

  	
   

  
	
  7.3.4

  	
   

  	
  after
  the Equity Transfer and Equity Subscription, the Subscriber shall hold 20% of
  the total registered and issued capital of the Company.

  
	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  On
  Completion, the Subscriber shall:

  
	
   

  	
   

  	
   

  
	
  7.4.1

  	
   

  	
  execute
  the Equity Transfer Forms duly executed by the Original Individual
  Shareholders, and deliver the same to the Company for recordal of the
  relevant Equity Transfer;

  
	
   

  	
   

  	
   

  
	
  7.4.2

  	
   

  	
  pay
  the Transfer Price to the Original Individual Shareholders in accordance with
  Clause 3;

  
	
   

  	
   

  	
   

  
	
  7.4.3

  	
   

  	
  deliver
  to the Company such documents as may be required to apply for the Equity
  Subscription; and

  
	
   

  	
   

  	
   

  
	
  7.4.4

  	
   

  	
  deliver
  to the Company a certified copy of the resolution of the board of directors
  of the Subscriber approving and authorizing the Equity Transfer and Equity
  Subscription herein.

  
	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Warranties

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  In
  this Clause 8, unless the context otherwise requires, all Warranties provided
  in respect of the Company shall be deemed to be repeated, and modified where necessary
  as to details, in relation to each of the Subsidiaries of the Company.

  
	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  The
  Management Shareholders warrant with the Subscriber that the copy Financial
  Statements provided by the Company to the Subscriber are true and complete.
  (A copy of the Financial Statements is annexed hereto as Schedule 5).

  
	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  The
  Company and Management Shareholders warrant that they each have obtained all
  necessary approval and authorization for the signing of this Agreement; and
  that once

  

 

10

 

	
   

  	
   

  	
  signed,
  this Agreement will constitute legal, valid, binding and enforceable
  obligations on the part of the Company, the Original Individual Shareholders
  and the Management Shareholders.

  
	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  The Company and Management
  Shareholders covenant to not directly or indirectly engage or be interested
  in any way in any business or activity that competes or may compete with the
  Company’s business.

  
	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  The Management
  Shareholders warrant with the Subscriber that the all the representations,
  Warranties and covenants set out in Schedule 3 are true and accurate at all
  times. If any Management Shareholder discovers or becomes aware of any
  circumstances or matter that may reasonably cause any of the Warranties to
  become untrue or misrepresented or breached, he shall notify the Subscriber
  immediately.

  
	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  If any of the Warranties
  is found to be untrue or misrepresented in any aspect at any time, or if any
  Management Shareholder breaches any of the Warranties, the Company and/or the
  defaulting Management Shareholder shall indemnify the Subscriber from and
  against all losses that it may suffer by reason thereof. The said indemnity
  shall not prejudice any other right or remedy that the Subscriber may have
  according to this Agreement or the law.

  

 

	
  9

  	
   

  	
  Obligations Before and After Completion

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Before
  Completion, the Management Shareholders shall carry on the normal operations
  of the Company and its Subsidiaries, and shall consult the Subscriber and not
  without obtaining the prior written consent of the Subscriber carry out any
  dealings beyond the normal course of business of the Company. Unless pursuant
  to the express provisions of this Agreement, the following matters shall
  require the prior written consent of the Subscriber:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (A)

  	
   

  	
  allowing
  any other person to become a member of the Company or Subsidiaries, whether
  through subscription or transfer;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (B)

  	
   

  	
  selling,
  pledging or dealing with any undertakings or assets of the Company (sale of
  stock, borrowing or pledging with bank in the normal course of business
  excepted);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (C)

  	
   

  	
  distributing
  or declaring dividend out of any distributable profits after the Accounting
  Date;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (D)

  	
   

  	
  altering
  the Company’s constitution;

  

 

11

 

	
   

  	
   

  	
  (E)

  	
   

  	
  providing
  any warranty, surety, promise or other guarantee for any other person;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (F)

  	
   

  	
  carrying
  out any transaction or dealing which has a material effect on the financial
  status or outlook of the Company or Subsidiaries;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (G)

  	
   

  	
  appointing
  Director(s);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (H)

  	
   

  	
  dismissing
  Director or managerial personnel of the Company or Subsidiaries, or revising
  their remuneration or employment conditions; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (I)

  	
   

  	
  winding
  up the Company or Subsidiaries voluntarily.

  
	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  After
  Completion, the Subscriber shall have the right to appoint a non-executive
  Director and supervisor, who shall not participate in the day-to-day
  management of the Company. The Company shall be notified in writing of the
  person nominated on the signing of this Agreement, in order that the
  appointment may be made when completing the procedures for Completion set out
  in Clause 7.

  
	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  After
  Completion, if the Company will increase its capital or take in new
  shareholder, the Subscriber shall have the absolute first right to increase
  its equity at the same price so to maintain its 20% holding of the equity in
  the Company.

  
	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  After
  Completion, if the net asset value of the Company up to the Completion Date
  is not less than RMB53,674,838.00, the Subscriber agrees that a sum of
  RMB5,000,000.00 may be taken out and deducted from the distributable profits
  of the Company accrued from 1 January 2007 up to the Completion Date for
  payment of dividend.

  
	
   

  	
   

  	
   

  
	
  9.5

  	
   

  	
  After
  Completion, the Subscriber and other Shareholders of the Company shall
  negotiate the dividend policy of the Company for the financial year of 2007
  and thereafter from the point of view of the interest of the Company, and
  upon unanimous agreement shall make distribution of not less than 20% of the
  distributable profits.

  
	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Confidentiality and Announcement

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Unless
  with the prior written consent of all Parties, the terms and conditions of
  this Agreement, the Equity Transfer and Equity Subscription, and all related
  matters shall not be disclosed to any third party, including the public or
  the media (Chinese or English), save and except announcement or disclosure by
  the Original Individual Shareholders or the Subscriber as required by law or
  regulating authority.

  

 

12

 

	
  10.2

  	
   

  	
  All
  information relating to the other Parties that any Party may obtain in the course
  of negotiation of this Agreement and the Equity Transfer and Equity
  Subscription shall be kept confidential. All Parties shall be obliged to
  ensure that there will not be any disclosure, and unless with the prior
  written consent of the other Party, there shall not be any disclosure to any
  third party, except as required by law or regulating authority.

  
	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Costs

  
	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Each
  Party shall bear its own costs and expenses, including legal costs, for the
  preparation, signing, completion and execution of this Agreement and all
  documents incidental thereto.

  
	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Notices

  
	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  All
  notices issued pursuant to this Agreement shall be in writing and in Chinese,
  and be served by hand delivery, prepaid post (by airmail if address is
  overseas) or facsimile. A notice must state the name of the recipient and be
  sent according to the following address or facsimile number, or such other
  address or facsimile number as a Party may from time to time notify the other
  Parties.

  
	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  A
  notice shall be sent to the Parties as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
   

  	
  To
  the Management Shareholders:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:  No.188,
  Jiang Jun Road, Jin Hua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  0579-82321994

  
	
   

  	
   

  	
   

  	
   

  	
  Recipient:

  	
  Mr. Jin
  Xinlie

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
   

  	
  To
  the Subscriber:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:  18th
  Floor, Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  (852)2873
  4887

  
	
   

  	
   

  	
   

  	
   

  	
  Recipient:

  	
  Mr. Leung
  Tak Chun

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
  To
  the Company:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:  No.188,
  Jiang Jun Road, Jin Hua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  0579-82321994

  
	
   

  	
   

  	
   

  	
   

  	
  Recipient:

  	
  Mr. Jin
  Xinlie

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  A
  notice shall be deemed to be served in the following circumstances:

  

 

13

 

	
   

  	
   

  	
  (a)

  	
   

  	
  on
  delivery if by hand delivery;

  
	
   

  	
   

  	
  (b)

  	
   

  	
  5
  working days if by post; and

  
	
   

  	
   

  	
  (c)

  	
   

  	
  on
  transmission with correct answerback if by facsimile.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  General

  
	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Further
  Assurance:  All Parties agree to carry out (or
  procure to be carried out) all further steps or actions, and to execute and
  deliver (or procure to be executed and delivered) all further documents as
  may reasonably be required or ought to be carried out and/or executed by or
  in law or for fully and effectually completing the transactions contemplated
  by the terms of this Agreement.

  
	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Cumulative
  Remedies:  All rights, powers and remedies of
  any Party under this Agreement are cumulative and not mutually exclusive, and
  shall not prejudice any right, power or remedy not expressed herein but
  available in law. All such rights, powers and remedies may be exercised
  without limit as and when necessary.

  
	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Waiver:  The
  waiver, indulgence or delay in exercising of any right or remedy prescribed
  by law or this Agreement by any Party shall not be deemed a waiver of any
  other right or remedy. Any such waiver or delay shall not constitute any
  waiver or modification of any other right or remedy. Any single or partial
  exercise of any right or remedy shall not prevent any other or further
  exercise, or prevent the exercise of any other right or remedy.

  
	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Severance:  If
  any provision of this Agreement or part thereof shall be adjudged void or
  unenforceable, such provision or part thereof shall be deemed to have been
  severed from this Agreement, but without prejudice to the remaining provisions
  or remaining part of the relevant provision and shall not render the same
  void or unenforceable. All Parties shall use their best endeavours to replace
  the void or unenforceable provision with a valid and enforceable provision
  with the nearest possible effect to the void or unenforceable provision.

  
	
   

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Modification:  Any
  modification to this Agreement shall not be regarded as valid or become a
  part of this Agreement unless in writing and signed by all Parties. “Modification”
  shall include any form of change, supplement, deletion or replacement.

  

 

14

 

	
  13.6

  	
   

  	
  Assignment:  This
  Agreement shall be equally binding on all Parties hereto. Any Party may not,
  without the prior written consent of the other Parties, assign or pledge in
  any way, or otherwise deal with its rights and/or obligations under this
  Agreement in any other way. This Agreement is not assignable.

  
	
   

  	
   

  	
   

  
	
  13.7

  	
   

  	
  Relationship:  The
  Parties to this Agreement are independent contractors. Any Party is not and
  may not hold out as the agent or partner of any of the other Parties, and no
  Party shall have the right to bind or cause any legal liability for any other
  Party.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.8

  	
   

  	
  Time: Time shall
  be of the essence of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.9

  	
   

  	
  Survival: Notwithstanding
  the completion of the transactions contemplated by this Agreement, if any
  provision shall continue to be performed after Completion, such provision
  shall remain in full force and effect.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Constitution

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Subject
  to compliance with the relevant laws of the PRC, all Parties shall cooperate
  to amend the Constitution of the Company to provide for and to give force and
  effect to the conditions of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  Law and Jurisdiction

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  This
  Agreement and the Schedules shall be governed by the laws of the PRC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.2

  	
   

  	
  The
  Parties agree that the courts of the place of registration of the Company
  shall have jurisdiction over any question, dispute, lawsuit or legal
  proceedings caused by or arising out of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Termination of Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  this Agreement and the relevant Equity Transfer and Equity Subscription are
  not approved by the relevant departments for any reason beyond the scope of
  abilities of the Company and/or the Management Shareholders, this Agreement
  and the relevant Equity Transfer and Equity Subscription shall terminate immediately
  on the date of non-approval. If this Agreement shall not be approved by the
  relevant departments on 30 September 2007, then regardless of the
  reason, this Agreement shall 

  

 

15

 

	
   

  	
   

  	
  immediately
  terminate. The Parties may agree to extend such date to a date mutually
  acceptable to all Parties.

  

 

16

 

Schedule 1

 

Details of the Company

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Zhejiang
  JiaHuan Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  28
  April 1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registration
  No.

  	
  :

  	
  3307001000578

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  No.188
  Jiang Jun Road, Jin Hua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB10,000,000.00,
  divided into 10,000,000 ordinary shares
  of RMB1.00 each

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Registered
  Shareholders

  	
  :

  	
   

  

 

	
  Name of Shareholder

  	
   

  	
  Amount of Equity

  Contribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Jin Xinlie

  	
   

  	
  RMB1,000,000

  	
   

  
	
  Zhang Huaqiang

  	
   

  	
  RMB1,270,000

  	
   

  
	
  Chen Jian

  	
   

  	
  RMB790,000

  	
   

  
	
  Zhou Jianlu

  	
   

  	
  RMB710,000

  	
   

  
	
  Zhu Jinghua

  	
   

  	
  RMB700,000

  	
   

  
	
  Zhang Zhenjiang

  	
   

  	
  RMB680,000

  	
   

  
	
  Cheng Fusheng

  	
   

  	
  RMB670,000

  	
   

  
	
  Jiang Qinglong

  	
   

  	
  RMB530,000

  	
   

  
	
  Zheng Jun

  	
   

  	
  RMB430,000

  	
   

  
	
  Cai Tingbin

  	
   

  	
  RMB390,000

  	
   

  
	
  Ye Wenyao

  	
   

  	
  RMB250,000

  	
   

  
	
  Zhu Weihong

  	
   

  	
  RMB250,000

  	
   

  
	
  Wang Jinhui

  	
   

  	
  RMB250,000

  	
   

  
	
  Wang Minghua

  	
   

  	
  RMB240,000

  	
   

  
	
  Liu Yeuping

  	
   

  	
  RMB240,000

  	
   

  
	
  Zhu Yongjun

  	
   

  	
  RMB220,000

  	
   

  
	
  Dan Xiaolong

  	
   

  	
  RMB210,000

  	
   

  
	
  Song Rongqun

  	
   

  	
  RMB200,000

  	
   

  
	
  Wang Ronghua

  	
   

  	
  RMB200,000

  	
   

  

 

	
  8.

  	
   

  	
  Members
  of the Board of Directors : 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jin
  Xinlie, Zhou Jianlu, Zhu Jinghua, Zhang Huaqiang, Cheng Fusheng, Chen Jian,
  Wang Hejun

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Legal
  Representative :

  	
  Jin
  Xinlie

  

 

17

 

Schedule 2

 

Details of the Subsidiaries

 

I. Jinhua City Guo Xin Investment Limited

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Jinhua
  City Guo Xin Investment Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  3
  July 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registration
  No.

  	
  :

  	
  3307001901668

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  8th
  Floor, No.1223, Danxi Road, Jinhua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB12,700,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Registered
  Shareholder

  	
  :

  	
   

  

 

	
  Shareholder

  	
   

  	
  Amount of Equity

  Contribution

  	
   

  
	
  Jinhua
  City National Asset Management Limited

  	
   

  	
  RMB2,000,000

  	
   

  
	
  Jinhua
  City Guo Xin Enterprise Limited

  	
   

  	
  RMB1,500,000

  	
   

  
	
  Zhejiang
  JiaHuan Limited

  	
   

  	
  RMB1,500,000

  	
   

  
	
  Ji
  Weijun and others being 15 individuals

  	
   

  	
  RMB7,700,000

  	
   

  

 

	
  8.

  	
   

  	
  Members
  of the Board of Directors:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ji
  Weijun, Wang Guoqin, Cheng Lixian, Yan Zhhua, Jin Xinlie

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Legal
  Representative:

  	
  Ji
  Weijun

  

 

18

 

II.    Jinhua
Zhonghe Environmental Technology Limited

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Jinhua
  Zhonghe Environmental Technology Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  13
  August 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registered
  No.

  	
  :

  	
  3307002904306

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  2/F,
  YaTai Consolidated Building, No.697 Yongkang Street, Jinhua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB1,000,000.00.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Registered
  Shareholders

  	
  :

  	
   

  

 

	
  Shareholder

  	
   

  	
  Amount of Equity

  Contribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Zhejiang JiaHuan Limited

  	
   

  	
  RMB480,000

  	
   

  
	
  Yan Keping

  	
   

  	
  RMB260,000

  	
   

  
	
  Wang Ronghua

  	
   

  	
  RMB260,000

  	
   

  

 

	
  8.

  	
   

  	
  Members
  of the Board of Directors:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yan
  Keping, Wang Ronghua, Jin Xinlie

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Legal
  Representative :

  	
  Yan
  Keping

  

 

III.     Zhejiang
JiaHuan Xinyu Environmental Protection Limited

 

	
  1.

  	
   

  	
  Name

  	
   

  	
  Zhejiang
  JiaHuan Xinyu Environmental Protection Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  30
  April 2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registration
  No.

  	
  :

  	
  3307002906094

  

 

19

 

	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  No.333
  Xianhua North Street, Jinhua City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB5,000,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Registered
  Shareholder

  	
  :

  	
   

  

 

	
  Shareholder

  	
   

  	
  Amount of Equity

  Contribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Zhejiang JiaHuan Limited

  	
   

  	
  RMB3,500,000

  	
   

  
	
  Yan Yigao

  	
   

  	
  RMB500,000

  	
   

  
	
  Xu Chengfu

  	
   

  	
  RMB250,000

  	
   

  
	
  Xu Hongbin

  	
   

  	
  RMB250,000

  	
   

  
	
  Fu Wenxiao

  	
   

  	
  RMB250,000

  	
   

  
	
  Zhu Weijun

  	
   

  	
  RMB250,000

  	
   

  

 

	
  8.

  	
   

  	
  Members
  of the Board of Directors:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Zhu Jinghua, Zhang Huaqiang, Yan Yigao

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Legal
  Representative :

  	
  Zhu
  Jinghua

  

 

20

 

Schedule 3

 

The
Company and the Management Shareholders jointly and severally represent to,
warrant and covenant with the Subscriber as follows:

 

	
  1.

  	
   

  	
  About
  the Company and Subsidiaries

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  All details of the Company and the Subsidiaries set out in Schedules
  1 and 2 are completely true and correct.

  
	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  The
  Company and the Subsidiaries are all duly registered and incorporated in the
  PRC according to law, are limited liability companies valid and subsisting,
  and are independent legal entities.

  
	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  The
  Company and the Subsidiaries have at all times fully observed and complied
  with all laws and regulations applicable to them and their business. All
  documents, records or fees required by law have been filed and paid at the
  times and in accordance with the regulations prescribed by law. All consents,
  permits, certificates etc. necessary for their operation have been timely
  obtained in accordance with the requirements of law, and are kept valid.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Financial
  Status

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  All
  books and financial records have been prepared and kept according to proper
  operating methods and accounting standards; and accurately record all
  operating activities of the Company and the Subsidiaries.

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  The
  Financial Statements:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (I)

  	
   

  	
  correctly
  reflect the true financial and operating status of the Company and the
  Subsidiaries as at the Accounting Date, and the results of the relevant
  period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (II)

  	
   

  	
  include
  the true and complete picture of all liabilities and capital commitments
  undertaken by the Company and the Subsidiaries as at the Accounting Date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  All
  assets of the Company and the Subsidiaries have been truly and completely
  shown in the Financial Statements.

  

 

21

 

	
  2.4

  	
   

  	
  Since
  the Accounting Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (I)

  	
   

  	
  the
  Company and the Subsidiaries have been operating lawfully in the normal
  course of business, and their operation has not been suspended or altered;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (II)

  	
   

  	
  there
  is no material change to the trading condition or customer relation of the
  Company and the Subsidiaries as compared to the position disclosed by the
  Financial Statements; nor is there any material change to their financial
  conditions, financial status, outlook, asset or obligations; nor has any loss
  or damage to their operation or assets occurred.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  According
  to the Valuation Report No. JinAn Appraisal (2007) No.015 dated 28 June 2007
  and prepared by Jin Hua An Tai Asset Appraisal Limited Liability Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (I)

  	
   

  	
  the
  Subsidiary Zhejiang JiaHuan Xinyu Environmental Protection Limited has a net
  asset value of not less than RMB391,178.91 as at 30 April 2007;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (II)

  	
   

  	
  after
  appraisal, the actual value of the assets of the said Subsidiary is less than
  the book value of its assets after adjustment, but the difference shall not
  be more than RMB908,816.42; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (III)

  	
   

  	
  all
  of the assets and liabilities of the said Subsidiary have been completely and
  accurately set out in the said Valuation Report.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Equity

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Except as disclosed, there does not exist any agreement or
  arrangement for the issuance of any share option, or the right to any third
  party to subscribe for ordinary or preference shares or equity of the
  Company, or any encumbrance that may affect the shares or equity of the
  Company.

  
	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  The equity transferred by the Original Individual Shareholders to the
  Subscriber is owned by the Original individual Shareholders, the title
  thereof is good and is free of any encumbrance, pledge, difference or dispute.

  
	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  The Original Individual Shareholders are entitled to transfer the
  said equity without the consent of any third party; and there exists no
  agreement or arrangement that may prevent the complete and valid transfer of
  the said equity to the Subscriber.

  

 

22

 

	
  4.

  	
   

  	
  Competition

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  The
  Company and the Management Shareholders covenant not to directly or
  indirectly engage or be interested in any way in any business or activity
  that competes or may compete with the Company’s business.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Material
  Contracts

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  At
  the date of this Agreement or the Completion Date, there does not exist any
  contract that is outside of the normal course of business, or which contains
  unusual or onerous terms.

  
	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  There
  does not exist any circumstances or event that may cause the material
  contracts of the Company to be terminated, cancelled or not be enforced.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Except
  as has been disclosed, the Company or the Subsidiaries is not involved in any
  litigation, arbitration, administrative or criminal legal proceedings
  (whether as the plaintiff, defendant or third party). There does not exist
  any litigation or legal proceedings involving the Company or the Subsidiaries
  that are not yet concluded; or any circumstances or event that will cause or
  result in any dispute, litigation or legal proceedings for the Company or the
  Subsidiaries.

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Tax

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  The
  tax registrations of the Company and the Subsidiaries are in compliance with
  all applicable laws and regulations.

  
	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  At
  all times, the Company and the Subsidiaries have reported and paid all taxes
  timely and in accordance with law. There does not exist any circumstances or
  activities of tax theft, non-payment of tax or tax avoidance.

  
	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  All
  tax benefits and/or concessions, including the policy of “two free three
  discount half”, that the Company and Subsidiaries have been enjoying at all
  material times are in compliance with all applicable laws and regulations; and
  there are no circumstances that will give rise to or result in any breach of
  law or regulation, recovery of tax or tax penalty etc.

  

 

23

 

	
  8.

  	
   

  	
  Intellectual
  Property

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  The
  intellectual property of the Company or the Subsidiaries, including patent
  inventions, technical know-how, trade marks and copyrights etc., and whether
  registered or being registered or not yet registered, are all owned by the
  Company or the Subsidiaries; are legally valid and effective, and not
  obtained by the licence of any third party. The patent inventions, technical
  know-how, trade marks and copyrights etc. owned by the Company or the
  Subsidiaries may not be assigned or used by any third party without payment.

  
	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  The
  Company or the Subsidiaries has not committed any infringement; and has not
  received any claim or demand for infringement from any third party.

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Properties
  and Assets

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Except
  as disclosed in the Financial Statements, the Company does not own any other
  property or asset.

  
	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  All
  properties and assets of the Company are the sole and absolute property of
  the Company. The Company has obtained all relevant certificates of ownership
  and all other necessary documents and proofs in accordance with law. Except
  as disclosed, there does not exist any other charges or encumbrances.

  
	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  All
  taxes and fees payable in respect of the properties and assets of the Company
  have been fully paid in time in accordance with law.

  
	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  All
  relevant leases for properties leased by the Company are valid and
  subsisting. There does not exist any circumstances that will cause such
  contracts to be terminated, cancelled or not enforced. There does not exist
  any dispute, non-payment or other unfulfilled liabilities between the Company
  and the owners of the relevant properties.

  

 

24

 

Schedule 4

 

Equity
Transfer Form

 

Zhejiang JiHuan Limited

Equity Transfer Agreement

 

Transferor:

Identity
Card No.:

 

Transferee:      Euro Tech (Far East) Limited

Registered
Office:  18th Floor, Gee Chang Hong Centre, 65 Wong Chuk
Hang Road, Hong Kong

 

	
  1.

  	
   

  	
  Upon
  friendly negotiation, Transferor agrees to transfer the
             shares/equity he
  holds in Zhejiang JiaHuan Limited (the ‘Company’) to Euro Tech (Far East)
  Limited at the price of RMB1:9 (RMB9.00) (RMB9.00 each share/equity).
  Transferee agrees to purchase such shares/equity at the aforesaid price from
  the Transferor. Both parties agree to proceed with and complete the transfer
  in accordance with the terms, procedures and time contained in a Share
  Transfer and Subscription Agreement relating to the Company and signed
  between the Transferee and the Management Shareholders of the Company.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The
  transfer price shall be paid to the Transferor on completion according to the
  amount of equity transferred by the Transferor. Thereafter, Transferee shall
  enjoy the same rights and benefits with the equity held by the original
  shareholder. The commencement date when it shall enjoy such rights and
  benefits shall be the date when the Transferor receives the transfer price
  from the Transferee, that is the time of complete transfer of the equity is
  the date when the Transferor receives the transfer price from the Transferor.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Transferor
  warrants with the Transferee that the equity transferred to the Transferee is
  owned by the Transferor; the title is good, and free from any encumbrance,
  pledge, difference or dispute; that the transfer does not require the consent
  of any third party (and if such need exists, he must complete all relevant
  procedures for obtaining such consent before the transfer of equity); and
  that there exists no agreement or arrangement that may prevent the complete
  and valid transfer of the said equity to the

  

 

25

 

	
   

  	
   

  	
  Transferee.
  For the avoidance of doubt, the equity transferred by the Transferor to the
  Transferee does not include any “bonus shares for technical excellence”.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  If
  any dispute arises in relation to the signing or performance of this
  agreement, both parties shall negotiate for a resolution, failing which either
  party may seek to resolve the dispute through judicial means by commencing legal
  proceedings at the jurisdiction where the Transferor is located.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Transferor
  acknowledges that he waives any pre-emptive right to purchase the equity to
  be transferred by other shareholders of the Company or to subscribe for any
  new capital increased by the Company.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  This
  agreement shall be signed in quadruplicates. Transferor and Transferee shall
  each hold one part; the Company shall hold one part for record; and the
  remaining part shall be used for modification of business registration.

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  The
  place of signing of this Agreement shall be at Jin Hua City, Zhejiang
  Province. The agreement shall take effect upon signing by both the Transferor
  and Transferee.

  

 

 

	
  Date:

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed
  by Transferor

  	
   

  	
  Signed
  by Transferee

  
	
  Witness:

  	
   

  	
  Witness:

  

 

26

 

Schedule 5

 

Financial Statements

(attached)

 

27

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]