LETTEROF INTENT f

FAR EAST WIND POWER CORP., a Nevada corporation having an office at 11811 N. Tatum Blvd. Suite 3031, Phoenix, Arizona 85028, USA

 

 包括：

FAR EAST WIND POWER CORP., 一家办公地址为11811 N. Tatum Blvd. Suite 3031, Phoenix, Arizona 85028, USA的内华达州公司

TAITONG ENERGY LIMITED, a People’s Republic of China company having an office at Fuyuan County, Yunnan Province, China

 

1.

This LOI constitutes a binding agreement with regard to the various matters set forth herein and shall become effective as of the date set forth on the signature page hereto (the “Effective Date”).

2.

The Owner has applied for all of the government approvals, permits and authorizations required by the PRC law in relation to the development of the Project (“Project Approvals”) and set up the project company (“Project Company”). The Owner hereby stipulates that he is obligated to obtain the necessary approvals and permits for the Project and will work with a goal in mind, such that the Project Approvals（Economic Reform Commission’s Official Approval is called” LuTei” will be obtained by September 30, 2010.

3.

The Owner shall make available on a best efforts basis, documents, personnel, data, facilities, information, Project Approvals and materials, to the Company so that the Company can conduct due diligence on the Project.

4.

If the Company, after the due diligence, believes that the Owner has obtained all of Project Approvals, the Company or a wholly-owned subsidiary of the Company, and the Owner will enter into a definitive agreement containing substantially the same terms and provisions as set forth in this LOI (the “Definitive Agreement”). After the transaction contemplated under the Definitive Agreement is completed, the Project Company will be converted into a Sino-foreign equity joint venture company (“JV”) which is 51% owned by the Owner and 49% owned by the Company. The Owner and the Company’s investment amount in the JV will be determined according to PRC law and will be calculated upon final review of the capital investment into the Project Company prior to the JV being formed.

 

5.

The Company will enter into a shareholder loan agreement with the JV and provide shareholder loans to the JV (“Shareholder Loan”) up to USD 20,000,000. All funding to the JV from the Company will be considered to be Shareholder Loans and are hereby understood to be liabilities of the JV owed back and payable to the Company once the JV receives adequate bank financing from a PRC bank. The Company agrees that the total investment amount will be adjusted during the development phase of the Project in order to account for adjustments to the exchange rate in effect for the Chinese Renminbi at the time of each tranche of investment in USD which is expected to occur in direct wire payments from the Company or its designees, to the JV such that the total amount of Chinese Renminbi to be invested in the JV by the Company, irrespective of the exchange rate, will be determined as of the date of each foreign exchange transaction executed by the JV whereby the Company has funded the JV. Should the JV not receive adequate funding from a PRC bank in order to repay the Shareholder Loan to the Company, the Company will agree to a repayment schedule whereby the Shareholder Loan is repaid to the Company through monthly fixed payments equal to 1/60th of the outstanding Shareholder Loan as of the date of receipt of cash from a PRC bank over a 5 year period with interest at 10% per annum. Interest charged on the Shareholder Loan will be payable only once, as an additional lump sum amount to be paid along with the final payment, payment 60/60, against the Shareholder Loan

6.

The Owner agrees that after the construction of the Project is completed, it will continue to assist in procuring the JV to obtain approximately USD 80,000,000 bank loans [in equivalent RMB] to fund the Project (the “Bank Loan”). The Bank Loan will be obtained from a PRC bank. The Company hereby agrees that the amount of the Bank Loan will be adjusted during the development phase in order to account for adjustments to the exchange rate in effect for the Chinese Renminbi. The JV will pay off the balance owed to the Company once the Bank Loan proceeds are received.

7.

The JV will enter into an Equipment Purchase Agreement with an equipment supplier.  The total price of the equipment will be approximately [USD 45,000,000.  The cash payments to the equipment supplier will be staggered and will be deferred as much as possible such that the equipment supplier will be effectively financing the JV’s purchase of the equipment.  The JV will pay off the balance owed to the equipment supplier once the Bank Loan proceeds are received.

8.

Upon the Effective Date, Owner hereby grants the Company a right of first refusal to acquire Owner’s rights to develop a wind farm or wind park in Yunnan for additional installed capacity of up to 99MW.  The second and third stages will follow the first stage’s format and structure.

9.

The Owner shall obtain the necessary approval of its shareholders to the terms and conditions of this LOI.

 

10.

At the end of the first month that the Project begins to generate a cash profit, the JV’s Board of Directors will institute a monthly dividend disbursement to the Owner and the Company that will equal the maximum amount allowable to be disbursed to the Owner and the Company in accordance with PRC law. The amount of the dividend distribution to the Owner and the Company will then be determined based on the ownership percentages of the Owner and the Company, respectively. The Board of Directors will authorize monthly dividend distributions from the first month that the Project begins to generate a cash profit. No change in this policy will be made in subsequent months unless the JV encounters significant cashflow difficulties and both the Owner and the Company agree to suspend the monthly dividend distributions

11.

The Definitive Agreement shall contain various control provisions as described herein:

 

(a)

The Company will have majority control of the Board of Directors of the JV.

 

(b)

The Company will have the sole right to approve of all cash disbursements from the JV’s bank accounts. A system will be designed whereby the Owner will present the proposed cash disbursements to the Company in a formal letter each month and the Company will then determine if the cash disbursements will be approved, on an item by item basis.

 

公司应拥有批准从合资公司银行账户支出任何现金的唯一权利。应建立下列机制：所有权人每月以正式信函的方式向公司提交拟进行的现金支出，由公司逐项决定ą 59;否批准该等支出。

 

(c)

The Company will have the sole right to approve the construction plan for the wind farm. The Owner will be responsible for presenting this construction plan to the Company. The Company will also have the sole right to approve of any modifications to the construction plan.

 

公司应拥有批准风电场建设计划的唯一权利。所有权人应负责向公司提交建设计划。公司同时应拥有批准对该等建设计划进行修改的唯一权利。

 

(d)

The Company will have the sole right to approve of any equity or debt financing that the JV contemplates and subsequently executes.

 

公司应拥有批准合资公司拟进行和签署的任何股本或债务的融资安排的唯一权利。

 

(e)

The Company will have the sole right to approve of any changes in the capital structure and ownership of the JV such that no JV ownership can be transferred to other parties without the approval of the Company. Secondarily, the Owner hereby provides the Company with a right of first refusal should the Owner wish to sell the Owner’s ownership stake in the JV. However, in the event a third party presents a more attractive purchase offer to the Owner, the Company will have thirty (30) days to match the third party’s purchase offer or the Owner will then have the sole right to accept the offer by the third party. However, in no event will the control provisions described within this LOI, and more fully defined in the Definitive Agreement, be modified as a result of any potential sale of the Owner’s ownership in the JV.

 

公司应拥有批准合资公司资本结构和所有权结构发生任何变化的唯一权利，且未经公司同意，合资公司的股权不得向任何第三方转让。其次，所有权人在此同意，所 377;权人欲将其持有的合资公司股权出售时，公司享有优先购买权。但是，如果任何第三方向所有权人提出了更具吸引力的购买要约，公司将有三十（30）天的时间符合该第三方要约，如果公司未 ;能在此期限内符合第三方要约的要求，则所有权人有权接受该第三方要约。然而，在任何情况下，所有权人出售其在合资公司中的任何股权，均不得导致本意向书中有关控制的条款以及最终协议中最后予以详细规定的有关控制௚ 0;条款发生变化。

 

(f)

The Company will maintain the majority of the positions on the JV’s Board of Directors and therefore shall have the sole right to approve of the cash dividend distributions to the Company and the Owner. All cash dividend distributions shall be payable to the Company and the Owner or designees of the Company or the Owner on a pro rata basis in accordance with the ownership percentages effective on the date of the declaration of a dividend from the JV by the Company’s Board of Directors.

12.

The Definitive Agreement shall contain customary representation and warranties, covenants and indemnification provisions.

13.

In consideration of the time and effort the Company will incur to pursue this transaction, the Owner agrees that, from the date of execution of this LOI (or, if sooner, until such time as the parties agree in writing to terminate this LOI) until the equity transfer contemplated in Section 4 above is completed, neither the Owner nor its shareholders nor any person or entity acting on its behalf will in any way directly or indirectly (i) solicit, initiate, encourage or facilitate any offer to directly or indirectly purchase any part of the Project or assets related thereto, (ii) enter into any discussions, negotiations or agreements with any person or entity which provide for such purchase, or (iii) provide to any persons other than the Company or its representatives any information or data related to such purchase or afford access to the properties, books or records in relation to the Project and the Project Company to any such persons.  If the Owner, its shareholders or their representatives receive any inquiry or proposal offering to purchase the Project or any assets related thereto, the Owner will promptly notify the Company.

 

考虑到公司为推动该项交易即将投入的时间和精力，所有权人同意，从本意向书签署之日起直至上文第四条所述股权转让完成时（或者双方书面约定终止本意向书之日，以先发生的为准）为止，所有权人，其股东，以及代表其行事的任何人员或实体不会以任何方式直接或间接地(i)招揽、发起、鼓励或促进任何直接或间接收购项目或者项目的资产的要约，(ii)与准备进行该等收购的任何人员或实体进行任 ;何协商、谈判，或是订立协议，或者(iii)向公司或其代表以外的任何人提供有关该等收购的任何信息或资料，或是向任何该等人提供接触所有权人的财产、帐册或记录的机会。如果所有权人，其股东或代表收到提议收购项目或是项目的任何资产的任何询价或建议，所有权人将立即通知公司。

14.

No party hereto will make any disclosure or public announcements of the proposed transactions, the LOI or the terms thereof without the prior knowledge of the other parties, which shall not be unreasonably withheld, or except as required by relevant securities laws; provided, however, the Company may issue press releases in the ordinary course of business but will make no reference to the parties hereto unless their prior written consent is received.

15.

Each party agrees and acknowledges that such party and its directors, officers, employees, agents and representatives will disclose business information and information about the proposed transaction in the course of securing financings for the Company and the Project and that the parties and their representatives may be required to disclose that information under the continuous disclosure requirements of the Securities Exchange Act of 1934.

16.

This LOI shall be construed in accordance with, and governed by, the laws of the PRC, and each party separately and unconditionally subjects to the jurisdiction of any court of competent authority in the PRC, and the rules and regulations thereof, for all purposes related to this agreement and/or their respective performance hereunder.

17.

The parties shall prepare, execute and file any and all documents necessary to comply with all applicable federal and state securities laws, rules and regulations in any jurisdiction where they are required to do so.

18.

If any term or provision hereof shall be held illegal or invalid, this LOI shall be construed and enforced as if such illegal or invalid term or provision had not been contained herein.

19.

Unless otherwise stated herein, all references to currency in this LOI are references to the lawful currency of the United States of America.

20.

This LOI may be executed in counterparts, by original or facsimile signature, with the same effect as if the signatures to each such counterpart were upon a single instrument; and each counterpart shall be enforceable against the party actually executing such counterpart.  All counterparts shall be deemed an original copy.

21.

The delay or failure of a party to enforce at any time any provision of this LOI shall in no way be considered a waiver of any such provision, or any other provision of this LOI.  No waiver of, delay or failure to enforce any provision of this LOI shall in any way be considered a continuing waiver or be construed as a subsequent waiver of any such provision, or any other provision of this LOI.