Share Transfer Agreement ClO

Songyuan North East Oil Technical Services Co., Ltd, an enterprise duly incorporated in the PRC under the laws and regulations of the PRC, with its registered address at Zhanjiang Road Comprehensive Office, Qingnian Street, Songyuan Economic and Technological Development Zone;

松原市东北石油技术服务有限公司，是一家根据中国法律法规在中国注册成立的企业，其注册地址为松原市经济技术开发区青年大街湛江路综合写字楼；

three shareholders of Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd., whose name and shareholder percentages are stated in Appendix One.

苏尼特右旗盛源油气技术开发有限公司的三位股东，他们的姓名和持股比例见附件一.

(1)

Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd is a limited liability company duly incorporated in Sunite Right Banner, Inner Mongolia, PRC and existing in the PRC under the laws and regulations of the PRC by Party B. Its registered capital is RMB3, 000,000.00, and its registered address is A’er Shan Street at Xilin Road, Saihan Tala Town, Sunite Right Banner.(“Shengyuan Company”)

(2)

Party B has decided to transfer to Party A of its shares in Shengyuan Company for its own economic benefit.

1.1

Subject to the terms and conditions of this Agreement, each person of Party B agrees to transfer to Party A and Party A agrees to purchase from Party B 100% of the shares in Shengyuan Company legally held by Party B(“ Target Shares”).

1.2

Upon completion of the share transfer under this Agreement, Shengyuan Company shall be transformed into a limited liability company 100% held by Party A.

1.3

The Target Shares shall include all the rights and benefits attached to them and shall be free from any lien, pledge, other encumbrances, option, claim or other third party rights of any nature whatsoever ("Encumbrances").

1.4

As shareholders of Shengyuan Company, each person of Party B hereby consents and promises to waive the preemptive right of corresponding shares the other two persons transfer to Party A. Each person of Party B consents to issue an announcement of such waiver of preemptive right separately if required by any governmental authorities.

2.1

Unless otherwise agreed by the Parties, the rights and liabilities that are stated in the financial statements of Shengyuan Company and have been faithfully disclosed to Party A shall continue to be enjoyed and undertaken by Shengyuan Company, and the liabilities that are not shown in the financial statements of Shengyuan Company or have not been faithfully disclosed to Party A (including but not limited to contingent liabilities or potential liabilities incurred by guarantee or reasons whatsoever exposure Shengyuan Company to liabilities) shall be undertaken indivisibly by Party B (Party A shall be entitled to claim against any person of Party B for undertaking of such liabilities regardless of their shareholding percentage in Shengyuan Company).

3.1

The conditions precedent for Party A to perform its obligations under this Agreement shall be as follows:

 

3.1.1

The board of directors and/or shareholders meeting of Shengyuan Company shall have approved the transfer of the Target Shares from Party B to Party A in accordance with the Articles of Association of Shengyuan Company,;

 

3.1.2

Transfer of Target Shares from Party B to Party A shall have obtained all the approvals required by relevant governmental authorities in advance (if necessary);

 

3.1.3

Shengyuan Company shall have obtained all the qualification certificates, permit, approvals and licenses for production and operation. All those qualification certificates, permit, approvals and licenses are valid and shall be free from any reasons lead to withdrawal or revocation;

 

3.1.4

Shengyuan Company shall have obtained legitimate interest of its material assets and is free from disputes of ownership or use right;

 

3.1.5

The registered capital of Shengyuan Company has been fully paid up and each person of Party B has fully paid up his contribution to registered capital respectively.

 

3.1.6

The representations, warranties and undertakings made by Party B under this Agreement shall be true, complete and accurate as at the Completion Date (as defined below) and such representations, warranties and undertakings shall be effective as if they will have been made on the Completion Date; and

 

3.1.7

Party B shall have rendered to Party A its full support and assistance as may be reasonably required by Party A when conducting due diligence on Shengyuan Company, including but not limited to providing all the accounting books, records, contracts, technical information, personnel information, management information and other documents of Shengyuan Company for the legal counsels, accountants and other representatives appointed by Party A. The abovementioned due diligence shall include but not be limited to the due diligence to be conducted on the operational, legal, financial, technical and personnel matters of Shengyuan Company. The results of such due diligence shall be satisfactory to Party A.

3.2

Party A shall be entitled to waive at its sole discretion any or all of the conditions precedent set out in Clause 3.1 above at any time.

3.3

In the event that any of the conditions precedent set out in Clause 3.1 hereof is not satisfied and/or waived in accordance with Clause 3.2 hereof due to any reason, Party A shall be entitled (but not obliged) to terminate this Agreement by serving a written notice on Party B, upon which this Agreement shall be terminated on the date of such written notice.

4.1

Both Parties unanimously agree that the consideration for the transfer of 100% shares of Shengyuan Company shall be RMB 70,000,000 and shall be allocated according to the shareholding percentage of each person of Party B as stated in Appendix One.

4.2

Subject to Article 3 of this Agreement, Party A shall pay the full amount of share transfer price to each person of Party B within seven business days from the date of completion of share transfer registration with the local administration for industry and commerce.

5.1

Concurrently with the execution of this Agreement, Party B shall procure Shengyuan Company to prepare all application documents ("Transfer Documents") required for the share transfer application and registration (subject to the application documents list required by relevant government authorities). This Agreement and all the Transfer Documents shall be submitted to the examining and approving authority and/or corporate registration authority for approval and/or registration as soon as practicable by Party B and Shengyuan Company. The Parties shall use their best endeavours to complete as soon as practicable the execution of all the Transfer Documents, the applications for approvals and/ or registration of the share transfer.

5.2

Party B shall procure that Shengyuan Company shall keep relevant documents properly after share transfer approvals and/ or registration, revoke the investment certificates of each person of Party B after Party A has paid relevant share transfer price, issue new investment certificates to Party A, and amend the records relating to the shareholders and their capital contributions in the shareholders registration book. In respect of the matters in connection with the aforesaid approvals, registrations, safekeeping and changes, the Parties shall render the necessary assistance and shall not hinder or treat negatively the processing and completion of the abovementioned matters.

 

The share transfer shall be deemed to be completed on the date when all the approvals, filings and registrations are completed, and the competent registration authority has made decisions to allow the registration ("Completion Date")

 

股权转让于完成所有审批、备案、登记等手续，有关的公司登记机关做出准予登记的决定之日完成（“完成日”）。

7.1

Representations and Warranties of Party A

7.1.1

Legal Status and Capacity of Party A

7.1.2

Legality of Payment of Share Transfer Price

7.2

Representation and Warranties of Party B

7.2.1

General

 

(1)

Party B has full and independent legal status and legal capacity to execute, deliver and perform this Agreement and all the other documents in relation to the transactions contemplated under this Agreement without any prior consent or approval of any co-owner or other right holder.

 

(2)

Party B has full power and authority to execute and deliver this Agreement and all the other documents in relation to the transactions contemplated under this Agreement to which it will be a party.

 

(3)

Except for the approval, filing and registration in respect of the share transfer that are required to be obtained from the relevant governmental authority as at the date of execution of this Agreement, Party B has obtained all the necessary approvals and permits from the governmental authorities for its execution, delivery and performance of this Agreement. Party B confirms that it is not aware of any reason for the competent governmental authorities or any third parties not to approve the share transfer or any reason for Party A not able to operate business after Party A controls Shengyuan Company.

 

(4)

This Agreement and all the other documents that are related to the transactions contemplated hereunder and signed by Party B constitute lawful and binding obligations of Party B that are enforceable in accordance with their terms.

 

(5)

The execution and performance of this Agreement and the other documents that are related to the transactions contemplated hereunder by Party B will not

 

a.

violate any laws, regulations, government rules or any government orders or court judgments or awards that are binding on Party B or Shengyuan Company or any of their assets;

 

b.

violate any provisions under any of the contracts, agreements or documents to which Party B or Shengyuan Company is a party or binding on any of their assets; or

 

c.

violate the Articles of Association or any other constitutive documents of Party B and/or Shengyuan Company.

 

(6)

The information and materials on Shengyuan Company disclosed to Party A by Party B are true and accurate and not omissive or misleading. In addition to those that have been disclosed, Shengyuan Company does not have any other liabilities, and there is no other information or material that may affect the transactions hereunder.

7.2.2

Title to the Target Shares

 

（1）

Party B is the legal owner of the Target Shares

 

（2）

In respect of the Target Shares or any part thereof, there does not exist any Encumbrance or any agreement, arrangement or obligation that may lead to the creation of any Encumbrance.

7.2.3

Other representations and warranties of Party B and/or Shengyuan Company that are not exemplified in this Agreement but mentioned in any other written document.

8.1

Unless with the prior written consent of Party A, as the shareholder of Shengyuan Company, before the Completion Date, Party B shall not do or allow Shengyuan Company to do any action that may have adverse effect on the Target Shares and/or Shengyuan Company during the period from the date of execution of this Agreement to the Completion Date, including but not limited to waiver of any major rights or benefits of Shengyuan Company or causing any major liabilities or obligations to be undertaken by Shengyuan Company. In addition, unless with the prior written consent of Party A, Party B shall procure that Shengyuan Company shall observe the following during the period from the date of execution of this Agreement to the Completion Date:

 

8.1.1

to conduct its business in the ordinary manner and maintain good operation;

 

8.1.2

not to sign or undertake to sign any agreement of an amount of more than RMB[100,000.00];

 

8.1.3

not to sign or undertake to sign any agreement other than in the ordinary course of its business operation;

 

8.1.4

not to dispose of or undertake to dispose of any major assets of Shengyuan Company;

 

8.1.5

not to purchase or undertake to purchase any equity, shares or other interests in any other company or organization;

 

8.1.6

not to borrow any monies or undertake any other liabilities;

 

8.1.7

not to pay or agree to pay any unnecessary monies other than in the ordinary course of its business operation;

 

8.1.8

to take all reasonable steps to maintain and protect the assets which it has title or right to use (including but not limited to any intangible assets);

 

8.1.9

not to amend any accounting standard or policy of Shengyuan Company;

 

8.1.10

not to amend the Articles of Association of Shengyuan Company;

 

8.1.11

not to provide any guarantee for any third party;

 

8.1.12

not to create any Encumbrances on any of the Target Shares or assets of Shengyuan Company; and

8.2

Subject to Clause 8.1 hereof, as the shareholder of Shengyuan Company before the Completion Date, during the period from the date of execution of this Agreement to the Completion Date, Party B shall use its best endeavours to procure that the management of Shengyuan Company shall observe the following after the date of execution of this Agreement:

 

(1)

Shengyuan Company shall conduct the handover work in respect of its business operation with Party B, including but not limited to the handover of all assets, seals, legal documents and financial materials;

 

(2)

The authorized representatives of Party A may fully participate in the daily management and operation of Shengyuan Company, and in respect of any matters that have material effect on the business of Shengyuan Company, the management and relevant personnel of Shengyuan Company shall consult such authorized representatives; and at the request of Party A or its authorized representatives, Shengyuan Company shall provide company documents, information and personnel support for them.

9

9.1

If either Party ("Defaulting Party") fails to perform any of its obligations, undertakings or warranties hereunder, the other Party ("Non-defaulting Party") shall be entitled to demand that the Defaulting Party shall compensate the losses suffered by it and/or the company; and if the breach is material so that this Agreement is unable to continue to be performed, the Non-defaulting Party shall be entitled to terminate this Agreement by serving a written notice on the Defaulting Party and to demand that the Defaulting Party shall compensate the losses suffered by it.

9.2

If at the execution of this Agreement, Party B fails to faithfully inform Party A of the liabilities or contingent liabilities or responsibilities of Shengyuan Company before the share transfer or if Shengyuan Company incurs any new liabilities or responsibilities before the Completion Date due to breach of Clause 8 hereof, Party A or Shengyuan Company shall be entitled to demand Party B responsible for such liabilities or responsibilities, or shall be entitled to claim from Party B the losses and compensation suffered by it.

10.1

Any amendments of this Agreement shall be unanimously agreed by the Parties in writing after negotiations. The content of the Agreement shall prevail to the final amendment.

10.2

This Agreement shall be terminated upon occurrence of any of the following events other than any events agreed in this Agreement otherwise:

 

10.2.1

Party A is entitled to terminate the Agreement if Party B or Shengyuan Company breaches Clause 7 “Representations and Warranties” and Clause 8 “ Arrangement before the Completion Date”;

 

10.2.2

Failures to pass the relevant government authorities’ approvals, filing or registration on Party A’s acquisition of Shengyuan Company’s shares;

 

10.2.3

Any events such as bankruptcy, revocation of business licenses, suspension of business, liquidation of Shengyuan Company before the the Completion Date；

 

10.2.4

Party A’s termination or bankruptcy in accordance with the law;

 

10.2.5

Unanimous consent by Parties to terminate this Agreement;

 

10.2.6

Judicial authority’s verdict that rules the Agreement invalid;

 

10.2.7

Other events which shall terminate the Agreement according to laws or regulations.

11.1

The asset assessment fee, government examination and approval fee and other fees, costs and expenses in connection with the share transfer shall be borne by both Parties according to relevant laws and regulations and be borne by either Party respectively if no laws and regulations provide.

11.2

The Parties shall bear their own legal fees and relevant costs and expenses in connection with the negotiations, preparation, execution and performance of this Agreement.

12.1

Unless required by law or a competent court or with the consent of the Parties, neither Party shall disclose to any third party the content of this Agreement, or the information in connection with this Agreement, or any document, material or information obtained from the other Parties, or any document, material, information, technical secret or trade secret of Shengyuan Company. However, the confidentiality obligations under this Agreement shall not apply to disclosure under the following circumstances:

 

 

12.1.1

that are known to the public at the time of disclosure;

 

12.1.2

that may become known to the public after disclosure due to reasons other than a breach of the above mentioned undertakings;

 

12.1.3

that have been lawfully in the possession of the relevant Party before disclosure;

 

12.1.4

that are required to be disclosed by law, a court or governmental or regulatory authority which has jurisdiction;

 

12.1.5

that are required to be disclosed by its associated company that has been or purports to be listed pursuant to the requirements of the relevant security exchange; and

 

12.1.6

that are disclosed by any of the Parties to their respective legal and other advisors for the purpose of the transaction contemplated under this Agreement, provided that such advisors are informed of and agree to observe the obligations under this Agreement.

12.2

The abovementioned permitted disclosure shall not exceed the extent that is necessary. In addition, the disclosing Party shall take the necessary steps to procure that the third party that is to receive the abovementioned document, material and information shall comply with the provisions under this Clause;

12.3

The confidentiality obligations under this Clause 12 shall continue to be binding on the Parties after this Agreement is discharged or terminated.

13.1

A "Force Majeure Event" means any event that is unforeseeable and beyond the control of the Parties and if foreseeable the occurrence of which is unavoidable and the consequences of which are unable to be overcome and will hinder the performance of this Agreement by either Party, including but not limited to earthquake, typhoon, flood, fire, war, storm and changes in laws and policies.

13.2

If either Party is unable to perform its obligations due to a Force Majeure Event, such Party shall be relieved from performing such obligations to the extent that it is affected by the Force Majeure Event. The Party that is affected by the Force Majeure Event shall forthwith notify the other Parties and use its best endeavors to mitigate the effect of the Force Majeure Event.

14.1

This Agreement shall be governed by and construed in accordance with the laws of the PRC.

14.2

All disputes, controversies and claims in connection with this Agreement shall first be resolved by the Parties through amicable negotiations, which shall commence immediately upon the issuance of a written request for negotiations by either Party to the counter Party. If a dispute fails to be resolved through negotiations within sixty (60) working days from the issuance of the said request, at the request of either Party and by notifying the counter Party, such dispute shall be referred to the People’s Court where Party A registers for resolution litigation.

15.1

Without the prior written consent of the other Parties, neither Party shall transfer, assign, mortgage or otherwise dispose of all or any part of its rights or obligations under this Agreement, whether directly or indirectly.

15.2

This Agreement shall be binding on the respective successors and the assignees of all the rights or obligations of the Parties. The Parties shall procure that their respective successors and assignees shall agree to comply with all the provisions of this Agreement.

15.3

This Agreement is executed in six (6) original sets. The Parties shall each keep one (1) set, and the remaining sets shall be used for government examination and registration. All the original sets shall have equal legal effect.

15.4

This Agreement is made by the Parties after unanimous agreement on the Target Shares, and any amendment to it shall be made by signing a written supplemental agreement through negotiations. If there is anything not covered in this Agreement, the Parties shall enter into a written supplemental agreement.

 

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