Amendment To The
Equity Joint Venture Contract
DONGFENG
(SHIYAN) INDUSTRIAL COMPANY
DONGFENG MOTOR
CORPORATION
This AMENDMENT TO THE
EQUITY JOINT VENTURE CONTRACT (hereinafter referred to as this
Amendment ) is entered into on this 14
th
day of
March 2007, in Shanghai, People’s Republic of China
(hereinafter referred to as PRC ), in accordance with
the Joint Venture Law, the Joint Venture Regulations and other
relevant laws and regulations of the PRC, by and
between:
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(1)
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DONGFENG MOTOR CO., LTD.
(hereinafter
DFL ), a Sino-foreign equity joint venture with
limited liability duly organized and validly existing under the
laws of the PRC with its legal address at 84 Baiye Road, Wuhan
Economic Development Zone, Wuhan City, Hubei Province,
PRC;
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(2)
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DONGFENG (SHIYAN) INDUSTRIAL
COMPANY (hereinafter Dongfeng
Industry ), a company with limited liability duly
established and validly existing under the laws of the PRC whose
registered address is at No. 66 Gongyuan Road, Shiyan, Hubei
Province, PRC;
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(3)
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DONGFENG MOTOR
CORPORATION (hereinafter DFM ), a
state-owned enterprise with limited liability duly established and
validly existing under the laws of the PRC whose registered address
is at No. 1 Checheng Road, Shiyan, Hubei Province, PRC;
and
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(4)
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DANA MAURITIUS LIMITED
(hereinafter
DANA ), a one hundred percent (100%) wholly owned
subsidiary of DANA CORPORATION with limited liability established
and validly existing under the laws of the Republic of Mauritius,
with its legal address at Level 6, One Cathedral Square, Pope
Hennessy Street, Port Louis, Mauritius.
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Each of the parties shall
be referred to as a “ Party ” and
collectively referred to as the “ Parties
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(A)
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DONGFENG AXLE CO., LTD. (hereinafter
referred to as DAC ) is a limited liability company
incorporated in accordance with the laws of the PRC, whose original
shareholders were DFL, Dongfeng Industry and DFM.
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(B)
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DFL
and DANA CORPORATION entered into a Letter of Intent on
September 24 th , 2003, pursuant to which DFL and
DANA CORPORATION agree to set up an equity joint venture company
(hereinafter referred to as JVC ) in Xiangfan
Municipality, Hubei Province, PRC.
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(C)
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DFL
and DANA CORPORATION agree that the investment of DANA CORPORATION
in the JVC will be carried out by DANA.
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(D)
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DFL
and DANA entered into a joint venture contract (hereinafter
referred to as the JV Contract ), pursuant to which
the JVC will be established based on DAC as a Sino-foreign equity
joint venture, in which DFL and DANA would each hold a fifty
percent (50%) equity interest.
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(E)
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DFL
and DANA entered into a partial closing agreement (hereinafter
referred to as the PCA ), pursuant to which DANA will
purchase a 4% equity interest in the JVC by DFL for RMB 38,800,000
instead of holding a 50% equity interest as contemplated under the
JV Contract.
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(F)
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Upon further discussions between
DFL, DANA, Dongfeng Industry and DFM, the Parties have agreed to
jointly carry out the JVC’s business activities in accordance
with the terms and conditions of this Amendment which amended and
restated the JV Contract, adhering to the principles of equality
and mutual benefit.
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2
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1.
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Definitions and
Interpretation
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1.1
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Unless the context otherwise
requires, the defined words and expressions used in this Amendment
shall have the same meanings as those used in the JV
Contract.
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1.2
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Headings are inserted for
convenience only and shall not affect the construction of this
Amendment.
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2.
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Effect on the JV
Contract
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2.1
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The
JV Contract shall be amended as set out in Article 3 below.
Any reference to an article in the JV Contract shall, unless the
context otherwise requires, be construed as a reference to such an
article as the same has been amended or supplemented pursuant to
this Amendment, or may otherwise have been, or from time to time
be, amended, supplemented or novated.
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2.2
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This Amendment is supplemental to
and shall be construed as forming part of the JV
Contract.
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2.3
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Save as otherwise expressly provided
in this Amendment, the JV Contract shall continue in full force and
effect in accordance with its terms. Nothing in this Amendment
shall effect either Party’s liabilities under or in
connection with the JV Contract which have accrued prior to the
effectiveness of this Amendment.
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3.
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Amendment to the JV
Contract
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3.1
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The
following four (4) definitions shall be inserted in
Article 1 “DEFINITION”:
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Agreement
means the Partial
Closing Agreement entered into by and among DFL, Dongfeng Industry,
DFM and Dana on even date herewith pursuant to which the purchase
by Dana from DFL of the 4% equity interest in DAC will be
completed.
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Completion Date
shall have the meaning
as defined in the Agreement.
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DONGFENG means DFL, Dongfeng Industry and DFM
collectively, jointly and severally.
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Interim Period
means the three
(3) year time period starting from the date on which the
JVC’s new business license has been issued.
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3.2
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The
definition for “Articles of Association” shall be
revised and replaced with the following:
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“ Articles of
Association means the Articles of Association of the JVC
signed by the Parties as of the date of execution of the JV
Contract, together with the amendment to the Articles of
Association and any supplement and amendment made thereto from time
to time.”
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3.3
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The
definition for “Contract” shall be revised and replaced
with the following:
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“ Contract means
the Joint Venture Contract, together with its amendment and any
supplement and amendment made thereto from time to
time.”
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3.4
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The
definition for “Delegates” shall be revised and
replaced with the following:
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3
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“ Delegates mean
the General Manager, the Executive Deputy General Manger and the
Deputy General Managers delegated to the JVC by either Party or
other management and technical personnel to be delegated to the JVC
upon agreement by the Parties.”
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3.5
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The
word “means” in the definition “Commercial
Vehicles” and “Deputy General Manager and Deputy
General Managers” shall be deleted and replaced with
“mean”.
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3.6
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The
definition for “Party” and “Parties” shall
be revised and replaced with the following:
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“ Party means
DONGFENG (or DFL, Dongfeng Industry or DFM individually, as the
case may be) or DANA individually; and Parties means
DONGFENG and DANA collectively.”
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3.7
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The
definition for “SPA” shall be revised and replaced with
the following:
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“ SPA means the
Sale and Purchase Agreement for the acquisition by Dana of an
aggregate fifty percent (50%) of the registered capital of Dongfeng
Axle Co., Ltd. entered into among DFL, Dongfeng Industry, DFM and
Dana and dated March 10, 2005 as supplemented by the
Agreement.”
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3.8
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Article 2.1 “Chinese
Party” shall be revised and replaced with the
following:
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“The Chinese parties to this
Contract are:
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(a)
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Dongfeng Motor Co., Ltd. (
DFL )
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Dongfeng Motor Co., Ltd. or [Chinese
characters] in Chinese is a Sino-foreign equity joint venture with
limited liability duly organized and validly existing under the
laws of the PRC with its legal address at 84 Baiye Road, Wuhan
Economic Development Zone, Wuhan City, Hubei Province, PRC. The
legal representative of DFL is:
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Name:
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XU
PING
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Position:
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Chairman of the
Board
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Nationality:
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Chinese
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(b)
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Dongfeng (Shiyan) Industrial Company
( Dongfeng Industry )
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Dongfeng (Shiyan) Industrial Company
or [Chinese characters] in Chinese is a company with limited
liability duly established and validly existing under the laws of
the PRC whose registered address is at No. 66 Gongyuan Road,
Shiyan, Hubei Province, PRC. The legal representative of Dongfeng
Industry is:
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Name:
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LI
ZHENHUA
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Position:
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Chairman of the
Board
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Nationality:
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Chinese
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(c)
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Dongfeng Motor Corporation (
DFM )
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4
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Dongfeng Motor Corporation or
[Chinese characters] in Chinese is a state-owned enterprise with
limited liability duly established and validly existing under the
laws of the PRC whose registered address is at No. 1 Checheng
Road, Shiyan, Hubei Province, PRC. The legal representative of DFM
is:
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Name:
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XU
PING
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Position:
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General
Manager
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Nationality:
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Chinese”
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3.9
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In
Article 2.2, the name of “Robert E. Pollock” shall
be deleted and replaced with “Phillip A. Rotman
II”.
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3.10
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The
second sentence of Article 3.1 shall be revised and replaced
with the following:
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“The JVC shall be deemed to be
duly established on the date set forth in the JVC’s new
business license issued by the SAIC (the Establishment
Date ) evidencing that DFL, Dongfeng Industry, DFM and Dana
each holding a seventy-five and 23/100 percent (75.23%), ten
and 96/100 percent (10.96%), nine and 81/100 (9.81%) and four
percent (4%) equity interest in the JVC
respectively.”
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3.11
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References to “DFL” in
Article 19.1, Article 19.5, Article 19.6 and section
(ii) of Article 27.5(b) shall be deleted and replaced with
“DONGFENG”.
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3.12
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The
third sentence of Article 3.3 shall be revised and replaced
with the following:
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“The Parties, including
Dongfeng Industry and DFM, shall share the profits and, subject to
the above, bear the risks and losses in accordance with the ratio
of their capital contributions as set out in
Article 5.2.”
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3.13
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Section (iii) of
Article 4.2(b) shall be revised and replaced with
“pusher and tag”.
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3.14
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Article 5.1 shall be revised
and replaced with the following:
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“The total investment amount
of the JVC shall be Renminbi Seven Hundred and Eighty Million
(RMB780,000,000).”
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3.15
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Article 5.2 shall be revised
and replaced with the following:
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“The registered capital of the
JVC shall be Renminbi Five Hundred Million (RMB500,000,000), of
which DFL shall contribute Renminbi Three Hundred Seventy Six
Million and One Hundred Fifty Thousand (RMB376,150,000) accounting
for seventy five and 23/100 percent (75.23%), Dongfeng
Industry shall contribute Renminbi Fifty Four Million and Eight
Hundred Thousand (RMB54,800,000) accounting for ten and
96/100 percent (10.96%), DFM shall contribute Renminbi Forty
Nine Million and Fifty Thousand (RMB49,050,000) accounting for nine
and 81/100 percent (9.81%), and DANA shall contribute Renminbi
Twenty Million (RMB20,000,000) accounting for four percent
(4.00%).”
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3.16
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Article 5.3 shall be revised
and replaced with the following:
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“(a)
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DFL
shall contribute to the JVC seventy five and 23/100 percent
(75.23%) of the registered capital of DAC, which has been
subscribed and fully paid up by it as of the date hereof,
representing seventy five and 23/100 percent (75.23%) of
the
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registered capital of the
JVC.
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(b)
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Dongfeng Industry shall contribute
to the JVC ten and 96/100 percent (10.96%) of the registered
capital of DAC, which has been subscribed and fully paid up by it
as of the date hereof, representing ten and 96/100 percent
(10.96%) of the registered capital of the JVC.
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(c)
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DFM
shall contribute to the JVC nine and 81/100 percent (9.81%) of
the registered capital of DAC, which has been subscribed and fully
paid up by it as of the date hereof, representing nine and
81/100 percent (9.81%) of the registered capital of the
JVC.
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(d)
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DANA shall contribute to the JVC
four percent (4.00%) of the registered capital of DAC, which DANA
has acquired from DFL pursuant to the SPA (as supplemented by the
Agreement) and which has been subscribed and fully paid up by DFL
as of the date hereof, representing four percent (4.00%) of the
registered capital of the JVC.”
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3.17
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The
figure “50%” in Article 5.4(b) shall revised and
replaced with “4.00%”.
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In
the second paragraph, the word “the” before “DFL
Representations and Warranties” shall be deleted.
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3.18
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Article 5.5 shall be revised
and replaced with the following:
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“The obligations of DFL,
Dongfeng Industry and DFM with respect to their respective capital
contributions to the JVC shall be deemed fully discharged on the
Completion Date. DANA’s obligation with respect to its
capital contributions to the JVC shall be deemed fully discharged
on the date which DANA has made full payment for the 4% equity
interest in DAC in accordance with the terms and conditions of the
Agreement.”
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3.19
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Section (ii) and (iii) of
Article 5.6 (c) shall be revised and replaced with the
following:
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“(ii)
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Prior to the Completion Date, DANA
and DFL will, based on recommendation from DANA’s and
DFL’s financial team, set the targets for additional funding
from the Parties for the first 2 years after the JVC’s
new business license has been issued;
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(iii)
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Once the Board has decided that
additional funding from the Parties are required, Dana and DFL
shall provide funding to the JVC up to their pro rata shares of the
aforesaid target by any of the following options (A) a
shareholder loan to the JVC, (B) a parent guarantee supporting
JVC’s borrowing from any banks or financial institutions, or
(C) a standby letter of credit.”
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3.20
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Article 5.7 (a) shall be
revised and replaced with the following:
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“Subject to the provisions of
this Article 5.7, either Party may assign, sell or otherwise
dispose of all or part of its registered capital contribution to
the JVC to a third party, provided, however, that it first obtains
the written consent of the other Party and the approval of the
Approval Authority if required. “
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3.21
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The
following paragraph shall be inserted as
Article 5.7(f):
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“Notwithstanding any
provisions to the contrary, neither Dongfeng Industry nor DFM
shall
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transfer its
corresponding equity interest in the registered capital of the JVC,
in whole or in part, to any third party other than an
Affiliate.”
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3.22
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The
following paragraph shall be inserted as
Article 5.8(b):
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“For the purposes of this
Article 5.8 and only during the Interim Period, an Affiliate,
in relation to either Dongfeng Industry or DFM, shall mean DFL
only.”
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3.23
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The
phrase “or by the Chairman alone during the Interim
Period,” shall be inserted after the wording
“Vice-Chairman of the Board” in the second sentence of
Article 5.9.
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3.24
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Section (iv) of
Article 5.11 (a) shall be deleted and the sequencing of
the original section (v) to (xi) of Article 5.11
(a) shall be adjusted accordingly.
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3.25
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The
following shall be inserted as Article 5.11 (b):
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“All of the Ancillary
Contracts mentioned above have been executed on the same date this
Amendment is signed.”
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3.26
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The
original Article 5.11 (b) shall become Article 5.11
(c).
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3.27
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The
following paragraph shall be inserted as
Article 5.12:
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“ 5.12 Purchase of an
Additional 46% Equity Interest in the JVC
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Provided that Dana acquired the 4%
equity interest from DFL prior to 30 June 2007, after
April 1, 2008 but within the Interim Period, Dana will
purchase, and DFL, Dongfeng Industry and DFM will sell in one lump
sum an additional 46% equity interest in the JVC (the
Additional Equity Interest ), which is composed of a
25.23% equity interest in the JVC held by DFL, a 10.96% equity
interest in the JVC held by Dongfeng Industry, and a 9.81% equity
interest in the JVC held by DFM, if all of the following events
have occurred:
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(a)
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The
Additional Equity Interest will be free and clear from any
Encumbrance (as defined in the SPA);
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(b)
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All
of the requisite PRC governmental approvals and/or legal procedures
for the purchase by Dana of the Additional Equity Interest from
DFL, Dongfeng Industry and DFM have been obtained and/or
completed;
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(c)
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The
appraised value of the Additional Equity Interest is within 18%
plus or minus of RMB 446,200,000. Otherwise, the Parties will
discuss and find a solution that will be mutually acceptable to the
Parties.
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(d)
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Both the income method and the
replacement cost method will be used to appraise the value of the
Additional Equity Interest. Subject to Article 5.12(C) above,
the higher value derived from the appraisal using either of these
two methods will be the transaction price for the Additional Equity
Interest.
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At
the completion of the purchase by Dana of the Additional Equity
Interest as set out in this Article 5.12, this Contract shall
be further amended to incorporate all of the original terms and
conditions of the JV Contract, which have been amended by this
Contract, to reflect the then 50:50 equity ratio of the Parties in
the JVC. The Parties shall then execute the Final Closing Agreement
in accordance with the terms and conditions set forth in the
Schedule 1 attached hereto and take all necessary actions to
obtain approvals and give effect thereto.”
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**** indicates
where a confidential portion has been omitted
and filed separately with the Securities and Exchange
Commission
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3.28
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The
wording “new” shall be inserted before the wording
“business license” in Section (iii) of
Article 6.1 (a).
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3.29
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Article 6.1 (h) shall be
revised and replaced with the following:
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“assist expatriate personnel
of DANA CORPORATION or its Affiliates and the JVC in handling the
necessary procedures for entry visas, work permits and travelling
arrangements, and to assist the JVC in arranging appropriate
housing for expatriate employees of the JVC, and hotel
accommodations for foreign personnel on temporary assignment to the
JVC;”
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3.30
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The
wording “traveling” in Article 6.2 (f) shall
be revised and replaces with “travelling”.
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3.31
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The
last sentence of Article 8.6(b) shall be revised and replaced
with the following:
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“DFL shall remain liable for
any and all asbestos claims until ten (10) years after January
1, 2006, after which date DFL shall no longer be liable
therefor.”
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3.32
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Article 9.1 shall be revised
and replaced with the following:
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“DFL shall purchase from the
JVC and cause its Affiliates to purchase from the JVC subject to
QCDD the Commercial Vehicle, specialty vehicle and light vehicle
axle products required by them and which the JVC can supply, ****
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3.33
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The
wording “in the same matter as what the JVC has agreed under
the Long Term Supply Agreement” in Article 9.2(b) shall
be deleted.
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3.34
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Article 9.2(f) shall be
deleted.
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3.35
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Article 9.6 (a) shall be
revised and replaced with the following:
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“Both DANA and DFL undertake
that, as soon as the JVC has been established, the JVC shall start
to establish a R&D Center for the Products (the R&D
Center ), which belongs to the JVC and will be independent
of the Parties.”
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3.36
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Article 9.6 (e) shall be
revised and replaced with the following:
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“(e)
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Both DANA and DFL confirm the target
dates for the establishment of the R&D Center in stages as
follows:
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(i)
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Within 2 years after the
Completion Date, all initial hardware of the R&D Center shall
be set up; initial staffing shall be completed; and the R&D
Center shall be operational;
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(ii)
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By
2012, the basic functions of the R&D Center shall be
established; the focus of the R&D Center shall be to ensure
that the Products are competitive in the PRC market;
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(iii)
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Following 2012, the R&D Center
shall endeavor to become the industrial leader with regard to the
technical aspects of the Products. ”
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3.37
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The
wording “Parties” in Article 9.6 (f) shall be
revised and replaced with “DANA and DFL”.
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3.38
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The
first sentence of Article 9.11 shall be revised and replaced
with the following:
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8
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“The JVC board will
periodically review the progress of DANA CORPORATION in meeting its
objectives and obligations of providing technology, technical
support, and other support in connection with the JVC’s
establishment of the R&D Center, in accordance with the
provisions of this Contract, the Technology License Contract and
Technical Assistance Contract.”
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3.39
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The
wording “thirty” in Article 10.5 (c) shall be
deleted and replaced with “third”.
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3.40
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Article 11.1 shall be revised
and replaced with the following:
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“During the Interim Period,
the composition of the Board shall be based on the second paragraph
of Article 11.2(a) below.”
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3.41
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The
following shall be inserted as the second paragraph of
Article 11.2 (a):
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“Notwithstanding any
provisions to the contrary in the preceding paragraph, during the
Interim Period:
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(i)
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The
Board shall consist of eight (8) directors, among which, four
(4) directors, including the Chairman, shall be appointed by DFL,
one (1) director shall be appointed by Dongfeng Industry, one
(1) director shall be appointed by DFM and the other two
(2) directors shall be appointed by Dana; and
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(ii)
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the
JVC will not establish the position of Vice
Chairman.”
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3.42
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The
following sentences shall be inserted after Section (v) of
Article 11.3(a):
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“(vi)
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change or amend the profit
distribution policy set forth in Article 16.7; and
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(vii)
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any
investment in any other company.”
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3.43
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In
Article 11.3(c), section (ix) shall be deleted; section
(xvii) shall be deleted and replaced with the
following:
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“(xviii)
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the
matter set out in Article 9.11 above;”
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The
sequencing of the original Section (x) to (xvi) of
Article 11.3(c) shall be adjusted accordingly.
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3.44
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The
following shall be inserted as the last paragraph of
Article 11.3:
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“Notwithstanding any
provisions to the contrary, during the Interim Period, decisions of
the Board involving the aforementioned matters set out in this
Article 11.3(c) above shall require the approval of a simple
majority of all members of the Board present at the meeting (in
person or by proxy).”
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3.45
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Article 11.4(b) shall be
revised and replaced with:
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“If the Chairman grants
authorization or is unable to perform his or her responsibilities
due to health reasons only, the Vice Chairman, or, during the
Interim Period, a director authorized by the Chairman, may act in
his or her place to perform his or her
responsibilities.”
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3.46
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The
phrase “with at least one (1) director from DFL and Dana
respectively” shall be inserted in Article 11.5
(b) after the wording “Board
directors”.
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9
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3.47
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Section (iv) of
Article 11.5(c) shall be revised and replaced with the
following:
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“each director, including the
Chairman and Vice-Chairman (if such a position has been
established), shall have only one (1) vote with no deciding
vote in case of a tie.”
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3.48
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Article 11.5(d) shall be
revised and replaced with the following:
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“Upon the written request of
three (3) or more directors (which shall specify the matters
to be discussed), the Chairman (or the Vice Chairman, or, during
the Interim Period, a director authorized by the Chairman, if the
Chairman grants authorization or is unable to perform his or her
responsibilities due to health reasons only) shall convene an
interim meeting of the Board within three (3) months of the
written request for such interim meeting.”
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3.49
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Article 11.5(e) shall be
revised and replaced with:
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“If the Chairman of the Board
does not call a meeting according to Articles 11.4(a) and 11.5(d),
the Vice-Chairman or, during the Interim Period, a director
authorized by the Chairman, shall be entitled to call and preside
over the Board meeting.”
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3.50
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The
first sentence of Article 11.5(k) shall be revised and
replaced with:
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“If at any properly convened
Board meeting, no quorum is constituted because less than six
(6) directors are present in person or by proxy or because no
director appointed by DFL or Dana is present in person or by proxy,
the directors present at this Board meeting ( Original Board
Meeting ) shall call a second Board meeting ( Second
Board Meeting ).”
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3.51
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The
phrase “(if such a position has been established)”
shall be inserted both in the second sentence of Article 11.5
(m) and in the last sentence of Article 11.5
(p) after the wording “Vice-Chairman”.
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3.52
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The
following shall be inserted as the last sentence of
Article 12.1(a):
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“As a general matter, neither
Dongfeng Industry nor DFM will be involved in the daily management
and operations of the JVC.”
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3.53
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The
wording “advices” in the section (i) of
Article 12.1(c) shall be deleted and replaced with
“advice”.
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3.54
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The
following shall be inserted as the last paragraph of the
section(ii) of Article 12.1(d):
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“Notwithstanding any
provisions to the contrary, during the Interim Period:
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-
if the Board deems it necessary to engage a Deputy General Manager
in charge of finance, DFL will have the right to nominate the
candidate for such a position to be approved and appointed by the
B
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