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CHART INDUSTRIES INC | CEM INTERNATIONAL (ASIA) PTY., LTD. | CHART ASIA INC.

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Title: EQUITY INTEREST TRANSFER CONTRACT
Governing Law: Delaware Date: 8/12/2005
Industry: Scientific and Technical Instr. Sector: Technology

Exhibit 10.1

EQUITY INTEREST TRANSFER CONTRACT

between

CEM INTERNATIONAL (ASIA) PTY., LTD.

(Seller)

and

CHART ASIA INC.

(Buyer)

April 20, 2005

TABLE OF CONTENTS


			Page
1.	GENERAL PROVISIONS		1
	1.1	Definitions	1
	1.2	Terms Defined Elsewhere in this Contract	4
	1.3	Headings	5
	1.4.	Singular and Plural	5

2.	TRANSFER OF REGISTERED CAPITAL		6
	2.1.	Transfer of Equity Interest	6
	2.2.	Ownership	6
	2.3.	Transfer of Equity Interest Free of Encumbrances	6

3.	PURCHASE PRICE AND PAYMENT		6
	3.1.	Purchase Price	6
	3.2.	Fair Consideration	7
	3.3.	Fees and Expenses	7
	3.4.	Payment of the Purchase Price	7
	3.5.	Payment Method and Currency	7

4.	ACTIONS TO BE TAKEN PRIOR TO CLOSING		8
	4.1.	Board Approval	8
	4.2.	Approval of the Transfer by the Seller	8
	4.3.	Approval of the Transfer by the Buyer	8
	4.4.	Application for Approvals	8
	4.5.	Amendment of Business License	8
	4.6.	Covenants Regarding Conduct of the Business to the Closing Date	8
	4.7.	Covenants Regarding Operation of the Company	10
	4.8.	Covenants Regarding Settlement of Accounts and Debts before the Effective Date	11
	4.9.	Release of Security Interest	12
	4.10.	Customers Visits	12
	4.11.	Meeting ZhongQi Business	12
	4.12.	Termination of Employees	12
	4.13.	Audit the Accounts	12
	4.14.	Preparation of the Closing Financial Statements	12
	4.15.	Meetings and Operations	13
	4.16.	Technologies and Drawings	13
	4.17.	Audit CEM Special’s Accounts	13

5.	EFFECTIVENESS		13
	5.1.	Effective Date	13

6.	CLOSING DATE		15
	6.1.	Conditions in Connection with the Seller	15
	6.2.	Payment of the Purchase Price by the Buyer	17


	6.3.	Duties in Relation to Conditions or Actions in Sections 4, 5, and 6	18
	6.4.	Fulfillment by a Waiver	18
	6.5.	Failure of Sections 6.1 and 6.2	18

7.	REPRESENTATIONS, WARRANTIES AND COVENANTS		19
	7.1.	Representations and Warranties of the Parties	19
	7.2.	Representations and Warranties of the Seller	19
	7.3.	Further Representations, Warranties and Covenants of the Seller	31
	7.4.	Covenants of the Buyer	35

8.	INVESTMENT CERTIFICATES		35
	8.1.	Issuance of New Certificates	35

9.	CONFIDENTIALITY AND RESTRCTION ON PUBLICITY		35
	9.1.	Confidentiality Obligation of Both Parties	35
	9.2.	Confidentiality Obligation of the Company’s Excluded Employees	36
	9.3.	Exceptions	36
	9.4.	Information	37
	9.5.	Publicity	37
	9.6.	Security Measures	37
	9.7.	Provision of Assistance	38

10.	NON-COMPETITION		38
	10.1.	Prohibited Competition	38
	10.2.	Sales Agent and Distributor	39
	10.3.	Further Acknowledgement	40
	10.4.	Reasonableness	40

11.	TERMINATION		40
	11.1.	Termination	40
	11.2.	Survival After Termination	41

12.	LIMITS ON WARRANTY CLAIMS		41
	12.1.	Exclusion of Claims	41
	12.2.	Time limits for Warranty Claims	42
	12.3.	Small Warranty Claims	42
	12.4.	Maximum amount the Buyer may recover	42
	12.5.	Contingent Warranty Claims	43
	12.6.	Warranty Claims by Third Parties	43
	12.7.	Buyer must Pursue Third Party	44
	12.8.	Benefits Received	44
	12.9.	Mitigation	44

13.	INDEMNIFICATION		44
	13.1.	Indemnification	44
	13.2.	Indemnification by the Seller	44
	13.3.	Maximum Indemnification	46


14.	GOVERNING LAW AND DISPUTE RESOLUTION		46
	14.1.	Governing Law	46
	14.2.	Friendly Consultation	46
	14.3.	Place of Arbitration	47
	14.4.	Arbitration Proceedings	47
	14.5.	Preservation of Rights	47
	14.6	Consent to Jurisdiction	47

15.	NOTICE		47
	15.1.	Delivery of Notice	47

16.	MISCELLANEOUS PROVISIONS		48
	16.1.	Public Announcements and Releases	48
	16.2.	Entire Agreement	48
	16.3.	Appendices	49
	16.4.	Successors and Assigns	49
	16.5.	Waivers	49
	16.6.	Amendments	49
	16.7.	Provisions Severable	49
	16.8.	Counterparts	49
	16.9.	Communications	49
	16.10.	Further Assurances	50
	16.11.	Language	50

iii


Appendices

Appendix I		Asset Purchase Contract

Appendix II		Asset Sale Contract

Appendix III		Consultancy Services Contract

Appendix IV		Distributor Agreement

Appendix V		Excluded Employees

Appendix VI		Lease Agreement

Appendix VII		Technologies and Drawings

Appendix VIII		Excluded Technologies and Drawings

Appendix IX		Purchase Price Calculation

Appendix X		Intercompany Accounts Settlement Procedures

Appendix XI		Examples of Closing Transaction

EQUITY INTEREST TRANSFER CONTRACT

THIS EQUITY INTEREST TRANSFER CONTRACT (this “ Contract ”) is made this 20th day of April, 2005, between CEM International (Asia) Pty., Ltd., a company organized and existing under the laws of the State of Victoria, Australia, with its principal place of business at 63-65 Maffra Street, Coolaroo, the State of Victoria, Australia, (the “ Seller ”), and Chart Asia, Inc., a company organized and existing under the laws of Delaware, USA, with its principal place of business at 14101 W. Southcross Drive, Ste. 300, Burnsville MN 55337, USA (the “ Buyer ”). (The Seller and the Buyer are referred to collectively as the “ Parties ,” and each individually as a “ Party ”.)

WHEREAS, the Seller has adopted the articles of association (the “ Original Articles of Association ”) for the establishment of Changzhou CEM Cryo Equipment Co., Ltd. (the “ Company ”), a wholly foreign owned enterprise under the laws of the People’s Republic of China (the “ PRC ” or “ China ”) with its legal address at No. 128, West End, Pinggang, Qinye Road, Changzhou City, Jiangsu Province, PRC;

WHEREAS, pursuant to the Original Articles of Association, the Seller owns 100% equity interest in the registered capital of the Company;

WHEREAS, the Seller wishes to transfer to the Buyer and the Buyer wishes to accept from the Seller the Seller’s entire equity interest in the registered capital of the Company (the “ Seller’s Entire Interest ”) on the terms and conditions set forth in this Contract;

WHEREAS, upon the sale and transfer of the Seller’s Entire Interest in the Company to the Buyer, the Buyer shall own one hundred percent (100%) equity interest in the registered capital of the Company; and

WHEREAS, the Buyer will amend and restate the Original Articles of Association of the Company to reflect the transactions contemplated in this Contract (the “ Amended and Restated Articles of Association ”).

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

GENERAL PROVISIONS

1.1.	Definitions . In this Contract, the following words and expressions have the following meanings:

“ Affiliate ” means any person that directly or indirectly controls or is controlled by or is under common control with the other person. “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of registered capital or voting securities, by contract or otherwise, and includes, without limitation (i) ownership directly or indirectly of 50% or more of the shares in issue, registered capital or other equity interests of such person, (ii) ownership, directly or indirectly of 50% or more of the voting power of such person or (iii) the power directly or indirectly to appoint a

majority of the members of the board of directors or similar governing body of such person, and the terms “ controlled ” and “ controlling ” shall have correlative meanings.

“ Asset Purchase Contract ” means an asset purchase contract to be entered into between CEM Special and the Company on the Closing Date (as defined in Section 3.4), pursuant to which CEM Special shall purchase from the Company’s certain assets, in the form of attached hereto as Appendix I.

“ Asset Sale Contract ” means an asset sale contract to be entered into between CEM Special and the Company on the Closing Date, pursuant to which CEM Special shall transfer to the Company certain CEM Special’s assets, in the form of attached hereto as Appendix II.

“ Best Knowledge ” means the best knowledge of the officers or principals of a Party, based upon reasonable investigation.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks in the PRC, the United States of America, and the State of Victoria, Australia are required or authorized by law or executive order to be closed.

“ CEM International ” means CEM International Pty., Ltd., a company incorporated in Australia, which owns 100% interest in the Seller.

“ CEM Special ” means CEM (Changzhou) Special Equipment Co., Ltd., a wholly foreign owned enterprise established under PRC law in Changzhou, China.

“ Closing ” means that the completion of the sale and purchase of the Seller’s Entire Interest on the Closing Date in accordance with Section 6 herein.

“ Closing Balance Sheet ” means a balance sheet statement of the Company as of the Closing Date, which is part of the Closing Financial Statements.

“ Closing Financial Statements ” mean the financial statements of the Company ended or as of the Closing Date, as the case may be, including, without limitation, the balance sheet, income and cash flow statements of the Company, which shall be prepared in accordance with the GAAP of the PRC.

“ Consultancy Services Contract ” means a consultancy services contract to be entered into between CEM Special and the Company on the Closing Date, pursuant to which CEM Special shall provide certain services to the Company and second its employee, Mr. Jianwei Wu, to the Company in order to provide the services, in the form of attached hereto as Appendix III.

“ Cryogenic ” means temperatures lower than minus 145 degrees centigrade.

“ Disclosure Material ” means the written material relating to the Company and the business that has been disclosed to the Buyer or its advisers by or on behalf of the Seller on or before the Effective Date, whether as part of the Buyer’s due diligence investigation or otherwise.

“ Distributor Agreement ” means a sales agent and distributor agreement to be entered into between CEM International and the Buyer on the Closing Date, pursuant to which CEM International shall act as the Buyer’s sales agent and distributor in Australia and New Zealand for sales and distribution of certain products of the Buyer and the Company, in the form of attached hereto as Appendix IV.

“ EBITDA ” means earnings of the Company before interest, tax, depreciation and amortization.

“ E&Y ” means Ernst & Young Transactions Limited, an independent international accounting firm.

“ Encumbrance ” means an interest or power that (i) is reserved in or over an interest in an asset, including any retention of title; (ii) is created or arising in or over an interest in an asset under a bill of sale, mortgage, charge, lien, pledge, hypothecation, preferential right, trust or other similar instrument, device or power, or any other adverse right, title or interest of any nature, by way of security for the payment of a debt or the performance of any other obligation; and (iii) includes any agreement or arrangement (whether legally binding or not) to grant or create any of the above.

“ Excluded Employees ” mean the employees, including Mr. Jianwei Wu, whose employment relationships with the Company shall be terminated before the Closing Date, details of whom are attached hereto as Appendix V.

“ GAAP ” means the generally accepted accounting principles of the PRC.

“ Intellectual Property Rights ” mean all present and future intellectual and industrial property rights conferred by any law, including, without limitation, (i) patents, designs, copyright, rights in circuit layouts, plant breeder’s rights, trade marks, know how, brand names, domain names, inventions, moral rights, product names, trade secrets, the right to have confidential information kept confidential and other results of intellectual effort in the scientific, technological, bio-technological, industrial and commercial fields, whether or not registered or capable of registration; and (ii) any application or right to apply for registration of any of those rights; and (iii) all renewals and extensions of these rights.

“ Lease Agreement ” means a lease agreement to be entered into between the Company and CEM Special on the Closing Date, pursuant to which CEM Special shall lease certain land use rights, buildings and apartments to the Company, in the form of attached hereto as Appendix VI.

“ Purchased Assets ” mean the assets identified by the Buyer and to be transferred from CEM Special to the Company in accordance with the Asset Sale Contract.

“ Records ” mean all original and copy records, documents, books, files, reports, accounts, plans, correspondence, letters and papers of every description and other material regardless of their form or medium belonging or relating to or used by the Company including certificates of incorporation, minute books, statutory books and registers, books of account, tax returns, title deeds and other documents of title, customer lists, price lists, computer programs and software, and trading and financial records.

“ Renminbi ” or “ RMB ” means the lawful currency of China.

“ Technology Valuation Agreement ” means a technology valuation agreement dated September 15, 1995 between the Seller and Changzhou Energy Equipment Works pursuant to which the Seller contributed the Technologies and Drawings to the registered capital of the Company.

“ US$ ” or “ United States Dollar ” means the lawful currency of the United States of America.

“ Warranty Claim ” means any claim by the Buyer (or any person making a claim through or on behalf of the Buyer) against the Seller for breach of any of the Seller’s warranties in Section 7 or under the indemnity in Section 13.

“ ZhongQi Branch ” means the branch office of ZhongQi Business located at Wu Xing Town, Pinggang Village (South of Qinye Road).

“ ZhongQi Business ” means ZhongQi Business Auto Co., Ltd, a company established under PRC law.

1.2.	Terms Defined Elsewhere in this Contract . The following terms are defined in this Contract as follows:


“ Affiliate Agreements ”		Section 4.6(b)
“ Amended and Restated Articles of Association ”		Preamble
“ Arbitration Center ”		Section 14.3
“ Board of Directors ” or “ Board ”		Section 4.1
“ Buyer ”		Preamble
“ Caojia Factory Buildings ”		Section 7.3(o)
“ Certified Balance Sheet ”		Section 7.2(x)
“ Certified Balance Sheet Date ”		Section 7.2(x)
“ Certified Financial Statements ”		Section 7.2(x)
“ China ” or “ PRC ”		Preamble
“ China Field of Interest ”		Section 10.1(b)
“ Claims ”		Section 7.2(dd)
“ Closing Date ”		Section 3.4
“ Company ”		Preamble
“ Contract ”		Preamble
“ Deposit Amount ”		Section 3.1(a)
“ Design License ”		Section 7.2(d)
“ Effective Date ”		Section 5.1
“ Examination and Approval Authority ”		Section 4.4


“ Field of Interest ”		Section 10.1
“ Governmental Bodies ”		Section 7.2(cc)
“ Guanda ”		Section 7.3(o)
“ Guanda Workshop Rent Agreement ”		Section 7.3(o)
“ Hazardous Materials ”		Section 7.2(uu)
“ Indemnified Party ”		Section 13.1
“ Indemnifying Party ”		Section 13.1
“ Information ”		Section 9.4
“ Insurance Contract ”		Section 7.2(mm)
“ Laws ”		Section 7.2(cc)
“ Liabilities ”		Section 7.2(aa)
“ Manufacturing License ”		Section 7.2(d)
“ Orders ”		Section 7.2(cc)
“ Original Articles of Association ”		Preamble
“ Outstanding Receivables ”		Section 7.3(p)
“ Outstanding Warranty Obligations ”		Section 7.3(e)
“ Overdue Taxes ”		Section 7.3(m)(ii)
“ Parties ”		Preamble
“ Party ”		Preamble
“ Permits ”		Section 7.2(ff)
“ Permitted Person ”		Section 4.6(e)
“ Purchase Price ”		Section 3.1
“ Remaining Deposit Amount ”		Section 3.1(a)
“ Remaining Purchase Price ”		Section 3.1(a)
“ Restricted Term ”		Section 10.1
“ SAIC ”		Section 4.5
“ Seller ”		Preamble
“ Seller’s Entire Interest ”		Preamble
“ SGAQCIQ ”		Section 7.2(d)
“ Tax” or “Taxes ”		Section 7.2(gg)
“ Technologies and Drawings ”		Section 7.2(o)
“ Third Party ”		Section 12.6
“ Third Party Claim ”		Section 12.6
“ Undistributed Profits ”		Section 7.3(j)
“ Worldwide Field of Interest ”		Section 10.1(a)
“ Xinfeng Village Committee ”		Section 7.3(o)
“ Xinfeng Workshop Rent Agreement ”		Section 7.3(o)
“ Yunxiang Factory Buildings ”		Section 7.3(o)

1.3.	Headings . The headings in this Contract are inserted for convenience only and shall not affect the construction of this Contract.

1.4.	Singular and Plural . Words importing the singular also include the plural and vice versa where the context requires. Words importing the masculine also include other genders where the context requires.

2. TRANSFER OF REGISTERED CAPITAL

2.1.

Transfer of Equity Interest . Subject to the terms and conditions of this Contract, and for the consideration set forth in Section 3, on the Closing Date, the Seller shall transfer to the Buyer, and the Buyer shall purchase from the Seller the Seller’s Entire Interest, being 100% of the registered capital of the Company.

2.2.	Ownership . Upon the transfer to the Buyer of the Seller’s Entire Interest in the registered capital of the Company, the Buyer shall own one hundred percent (100%) equity interest in the registered capital of the Company.

2.3.

Transfer of Equity Interest Free of Encumbrances . The Seller shall transfer to the Buyer in accordance with this Contract, free from any Encumbrances, the Seller’s Entire Interest together with any and all benefits and rights including, without limitation, dividend or voting rights attached or accrued to them on or after the Effective Date, and undistributed profits rights attached or accrued to them before, on or after the Effective Date.

3. PURCHASE PRICE AND PAYMENT

3.1.

Purchase Price . Subject to the terms and conditions of this Contract, the total purchase price to be paid by the Buyer to the Seller shall be United States Dollars Eleven Million Five Hundred Nineteen Thousand Five Hundred and Ninety (US$11,519,590) (the “ Purchase Price ”), the calculation of which is attached hereto as Appendix IX. Further, the Parties agree that:

(a)

fifty percent (50%) of the Purchase Price that is United States Dollars Five Million Seven Hundred Fifty-Nine Thousand Seven Hundred and Ninety-Five (US$5,759,795) shall be deposited by the Buyer on the Effective Date in an interest-bearing bank account opened with the Hong Kong Shanghai Banking Corporation in Hong Kong and held by it as an escrow account (the “ Deposit Amount ”). The Deposit Amount shall include a five percent (5%) of the Purchase Price that is deposited with the purpose of ensuring any shortfall that is more than Renminbi 119,000 as a result of failing to collect accounts receivables purchased from the Seller during the 180-day period that commences from the Closing Date in accordance with Section 7.3(p). The Buyer shall pay such five percent (5%) of the Purchase Price to the Seller within five (5) Business Days after expiration of such 180-day period if the event of the shortfalls as set forth in this Section 3.1(a) does not occur. Subject to Section 6 of this Contract, the remaining Deposit Amount being forty-five percent (45%) of the Purchase Price held by the Hong Kong Shanghai Banking Corporation (the “ Remaining Deposit Amount ”) will be paid to the Seller together with any interest accrued thereon on the Closing Date in accordance with the escrow arrangements with the Hong Kong Shanghai Banking Corporation, and the other fifty percent (50%) of the Purchase Price being United States Dollars Five Million Seven Hundred Fifty-Nine Thousand Seven Hundred and Ninety-Five (US$5,759,795) (the “ Remaining Purchase Price ”) will be paid by the Buyer to the Seller on the Closing Date; and

(b)

the calculation of the adjustment of the Purchase Price is set forth in Appendix IX hereto. The Seller covenants that the amount of the net assets in the Company on the Closing Date will not be less than the amount of the net assets as set forth in the Certified Balance Sheet at December 31, 2004, and if the amount of the net assets in the Company on the Closing Date is, after taking into account the profit under Section 3.1 (c), less than the amount of the net assets as set forth in the Closing Balance Sheet, then the Seller covenants that it shall make up the shortfall; and

(c)

the Seller agrees that the Purchase Price shall be reduced by an amount equal to the profit of CEM Special from January 1, 2005 to the Closing Date. The Seller shall pay such an amount to the Buyer within 30 days after the Closing Date by wire transfer to the bank account designated by the Buyer in writing, unless CEM Special has incurred a loss during the same period as set forth above, then there will be no reduction in the Purchase Price.

3.2.

Fair Consideration . The Parties acknowledge and agree that the Purchase Price pursuant to Section 3.1 constitutes fair and equitable consideration for the transfer of the Seller’s Entire Interest and any and all obligations to be performed by the Seller hereunder, including, without limitation, the non-competition obligations as set forth in Section 10.

3.3.

Fees and Expenses . All taxes, fees and expenses that may be imposed in the PRC by PRC government authorities in connection with the transactions contemplated hereby shall be the sole responsibility of the Party required by officially published laws and regulations of the PRC to bear such taxes, fees and expenses, and if one Party has paid any taxes, fees or expenses required to be paid by the other Party according to such laws and regulations, the Party required to pay such taxes, fees or expenses shall promptly reimburse the other Party after receipt of notice thereof from such Party. All charges incurred in connection with the payment of the Purchase Price shall be borne by the Buyer and all charges incurred in connection with the receipt of the Purchase Price from the Buyer shall be borne by the Seller.

3.4.

Payment of the Purchase Price . The Buyer shall pay the Deposit Amount to an interest-bearing bank account opened with the Hong Kong Shanghai Banking Corporation on the Effective Date, and the Buyer shall pay the Remaining Purchase Price to the Seller on a date no later than ten (10) Business Days after the Effective Date or on such date as may otherwise be agreed to in writing by the Parties hereto (either such date, the “ Closing Date ”).

3.5.

Payment Method and Currency . Subject to Sections 3.1 and 3.4, the Remaining Deposit Amount shall be paid by the Hong Kong Shanghai Banking Corporation to the Seller on the Closing Date by wire transfer to the bank account designated by the Seller in writing. The Buyer shall pay the Remaining Purchase Price to the Seller on the Closing Date by wire transfer to the bank account designated by the Seller in writing. The Buyer shall pay the Purchase Price in United States Dollars.

4. ACTIONS TO BE TAKEN PRIOR TO CLOSING

4.1.

Board Approval . Promptly after the execution of this Contract, the Seller shall cause its members appointed by it on the board of directors of the Company (the “ Board of Directors ” or the “ Board ”) unanimously to adopt a resolution approving this Contract (including all appendices hereto), the transfer of the Seller’s Entire Interest in the Company pursuant to this Contract, and the amendment and restatement of the Original Articles of Association contemplated hereby.

4.2.	Approval of the Transfer by the Seller . Promptly after the execution of this Contract, the Seller shall obtain all internal approvals of the Sellers for this Contract and the transfer of the Seller’s Entire Interest pursuant to this Contract.

4.3.

Approval of the Transfer by the Buyer . Promptly after the execution of this Contract, the Buyer will use all commercially reasonable efforts to obtain all necessary approvals of the Buyer for the Contract and the acquisition of the Seller’s Entire Interest pursuant to this Contract, including, without limitation, approval of Chart Industry Inc.’s board of directors and the consent of the senior lenders for both the Term Loan or the Revolver Credit Agreement.

4.4.

Application for Approvals . Promptly after the execution of this Contract, the Board’s approval of the matters set forth in Section 4.1 and the approvals of the matters set forth in Sections 4.2 and 4.3, the Seller shall, and the Seller shall cause the Company to, apply to the Company’s original examination and approval authority (the “ Examination and Approval Authority ”) for approval of this Contract, the transfer of the Seller’s Entire Interest and the Amended and Restated Articles of Association.

4.5.

Amendment of Business License . After the approvals of the Examination and Approval Authority for the transfer of the Seller’s Entire Interest and this Contract are obtained, the Parties shall promptly cause the Company to handle the procedures for the modification of its registration with the relevant local State Administration for Industry and Commerce (“ SAIC ”) and the amendment of the Company’s business license to reflect the matters set forth herein.

4.6.	Covenants regarding Conduct of the Business to the Closing Date . From the date of this Contract until the Closing Date, the Seller covenants that:

(a)

except as contemplated by this Contract, the Seller shall, and the Seller shall cause the Company to, refrain from taking any action that would cause any significant corporate action to be taken by the Company, without receiving the prior written consent of the Buyer, which consent must not be unreasonably withheld;

(b)

the Seller shall not itself, nor shall it permit any of its Affiliates to, amend, supplement or otherwise modify any contracts, agreements and commitments or understandings, in each case written or oral, relating

to the Company, its business or assets to which the Seller or any of its respective Affiliates is a party or by which any of them are bound (the “ Affiliate Agreements ”), nor will any of them enter into any additional contract, agreement, commitment or understanding obligating them to the Company, or obligating the Company to them, without receiving the prior written consent of the Buyer;

(c)

the Seller shall not, and the Seller shall cause the Company not to, acquire, merge with, or consolidate with, or agree to acquire, merge with, or consolidate with, any business entity, or amend its articles of association (or similar corporate documents), without the prior written consent of the Buyer, which consent must not be unreasonably withheld;

(d)

the Seller shall, and the Seller shall cause the Company to, promptly advise the Buyer of the occurrence of any event or condition that materially and adversely affects the transactions contemplated by this Contract or the assets or business of the Company or the imposition of any lien, pledge, or encumbrance on any of the Seller’s equity interest in the Company;

(e)

the Seller shall, and the Seller shall cause the Company to give the Buyer and any person who has the Buyer’s written authority (“ Permitted Person ”), during business hours and consistent with the normal operation of its business, access to the locations owned by the Company and to the documents, books and Records relating to the business of the Company, to the extent necessary to enable the Buyer to make a thorough investigation of the business, to make a physical examination of the Company’s assets and business, to conduct environmental examinations and to examine its documents, books and records;

(f)

the Seller shall, and the Seller shall cause the Company to, give the Buyer and any Permitted Person access during normal business hours to any premises at which the Company carries on its business or activities, allow the Buyer and any Permitted Person to observe the conduct of the business and activities of the Company, supply to the Buyer and such Permitted Person any information or document in its possession or control reasonably requested by the Buyer concerning the Company or its business, assist the Buyer and such Permitted Person, at the Buyer’s request, in gaining knowledge with respect to the Company and its affairs and business, and allow the Buyer and such Permitted Person to investigate the truthfulness and accuracy of the Seller’s representations and warranties set forth in Section 7;

(g)

the Seller shall, and the Seller shall cause the Company to, use its respective best efforts to obtain all consents, approvals and waivers required to permit the transactions contemplated by this Contract, including without limitation, the consents and approvals of the Examination and Approval Authority and other relevant and necessary governmental authorities;

(h)

the Seller shall, and the Seller shall cause the Company to, use its respective best efforts to cause the conditions set forth in Sections 4, 5 and 6 to be satisfied on or prior to the Effective Date or the Closing Date as specified in that section, and shall not take any other action inconsistent with its obligations hereunder or that could hinder or delay the consummation of the transactions contemplated by this Contract; and

(i)

the Seller shall discontinue and refrain from any negotiations, discussions, or communications with any persons or entities other than the Buyer relating to the possible acquisition of the Seller’s Entire Interest or the business or any assets of the Company. The Seller shall not solicit, directly or indirectly, offers from any persons or entities other than the Buyer relating to the possible acquisition of the Seller’s Entire Interest or the business or assets of the Company, and the Seller shall not provide to any persons or entities other than the Buyer access to the Company’s properties, books, Records, financial statements, contracts and documents.

4.7.

Covenants regarding Operation of the Company . Between the execution date of this Contract and the Closing Date, the Seller covenants that the Seller shall cause the Company to operate its business in the ordinary course of business and consistent with past procedures heretofore followed in connection with such operation and otherwise in a commercially reasonable manner and in compliance with this Contract. Without limiting the foregoing:

(a)

the Seller agrees that it shall not, and it shall not permit the Company to, without the prior written approval of the Buyer:

(i)

enter into or consent to the entering into of any contract binding on the Company, except in the ordinary course of business operations of the Company;

(ii)

modify or extend, renew or terminate, any contract binding on the Company (including contracts evidencing, securing and otherwise relating to indebtedness of the Company), except otherwise expressly set forth in this Contract, or except in the ordinary course of business operations of the Company;

(iii)

incur any additional indebtedness, or enter into any agreement that would constitute an Encumbrance on, otherwise mortgage or encumber, the Company or its assets;

(iv)

dispose of , agree to dispose of, or otherwise transfer the Company or its assets, except otherwise expressly set forth in this Contract;

(v)

engage any new employees, terminate the employment of any employees or alter the terms of employment of any employee, except otherwise expressly set forth in this Contract; and

(vi)

declare or pay any dividend.

(b)

the Seller shall cause the Company to:

(i)

uses its best efforts to maintain the profitability and value of the Company’s business, and protect and maintain each of its assets; and

(ii)

keep and perform in all material respects all of the material obligations to be performed by the Company under all existing contracts.

4.8.

Covenants regarding Settlement of Accounts and Debts before the Effective Date . The Seller covenants that it shall cause the Company to, before the Effective Date, to collect payments owned in full from, or make payments owed in full to the Seller or its Affiliates (other than CEM Special), or otherwise fully settle any and all accounts arising or accruing as a result of any outstanding debts, transactions and dealings with the Seller or any of the Seller’s Affiliates (other than CEM Special). The Seller also covenants that it shall cause the Company to, before the Effective Date, fully settle any and all outstanding debts including any interests accrued thereon owed by the Company to any third parties including, without limitation, the loans borrowed by the Company under the loan contract dated July 30, 2004 between the Company and the Bank of Communications Changzhou Branch, Guanghua Street Sub-Branch, the loans borrowed by the Company under a banking facility letter dated June 13, 2002 issued by Australia and New Zealand Banking Group Limited, Shanghai Branch, and the loans borrowed by the Company under a banking facility letter dated June 18, 2004 issued by Australia and New Zealand Banking Group Limited, Shanghai Branch, except for outstanding debts owed by the Company or owed to the Company as a result of trade credits extended by, or extended to, suppliers and customers of the Company other than the Seller or its Affiliates, in the ordinary course of the business operations of the Company. The Seller covenants that it shall cause the Company to, before the Effective Date, fully pay off any and all outstanding loans borrowed by the Company and owed to the Bank of Communications Changzhou Branch, Guanghua Street Sub-Branch pursuant to the loan contract dated July 30, 2004 between the Company and the Bank of Communications Changzhou Branch, Guanghua Street Sub-Branch. The Seller covenants that it shall cause the Company to fully transfer to CEM Special, and that it shall cause CEM Special to fully accept the transfer of, before the Effective Date, any and all outstanding loans borrowed by the Company under a banking facility letter dated June 13, 2002 issued by Australia and New Zealand Banking Group Limited, Shanghai Branch, and borrowed by the Company under a banking facility letter dated June 18, 2004 issued by Australia and New Zealand Banking Group Limited, Shanghai Branch. The Seller represents and warrants, and it shall cause the Company to

represent and warrant, as of the Effective Date, that the Company shall have obtained the consent from Australia and New Zealand Banking Group Limited, Shanghai Branch to the transfer from the Company to CEM Special of any and all loans borrowed by the Company from such bank. The Seller covenants that it shall provide to the Buyer on and before the Effective Date evidence proving such consent of Australia and New Zealand Banking Group Limited, Shanghai Branch and the successful transfer from the Company to CEM Special of all the loans borrowed by the Company from such bank.

4.9.

Release of Security Interest . Further to Section 4.8, after the Company has paid off all loans owed to the Bank of Communications Changzhou Branch, Guanghua Street Sub-Branch before the Effective Date, the Seller covenants that it shall cause the Company to use its best efforts to handle the registration procedures with the relevant land and building authorities so as to lift the security interest, which was granted to such bank, over the land use rights and buildings owned by the Company before the Effective Date.

4.10.

Customers Visits . The Seller covenants to the Buyer that the Seller shall, and the Seller shall cause the Company to, before the Closing Date, introduce the Buyer or its authorized representatives to the Company’s three customers, and arrange for meetings between the Buyer or its authorized representatives and these three customers. The three customers are Praxair, Linde and Air Liquide.

4.11.

Meeting ZhongQi Business . The Seller covenants to the Buyer that the Seller shall, and the Seller shall cause the Company to, before the Closing Date, introduce the Buyer to the management of ZhongQi Business, and arrange for meetings between the Buyer and the management of ZhongQi Business.

4.12.

Termination of Employees . The Seller covenants that it shall cause the Company before the Closing Date to terminate the employment relationship between the Company and the Excluded Employees of the Company. After the termination, CEM Special will hire such Excluded Employees. In connection with the termination of the Excluded Employees set forth in this Section 4.12, the Seller covenants that it shall, and it shall cause the Company to, before the Closing Date, fully settle the payment of any amount due to the Excluded Employees before the Closing Date upon the termination of their employment relationship with the Company, whether arising under any agreement, any legislation, any award, or otherwise, in respect of accrued salary, wages, holiday pay and sick leave, accrued entitlements to long service leave, and any other remuneration or entitlement arising out of employment or its termination with the Company before the termination date.

4.13.

Audit the Accounts . The Seller covenants that it shall cause the Company to audit the financial statements as set forth and in connection with Section 7.2(x) below, and deliver such audited financial statements to the Buyer no later than the Closing Date.

4.14.

Preparation of the Closing Financial Statements . The Buyer covenants that it shall cause the Company to prepare the Closing Financial Statements in accordance with the GAAP of the PRC, and have the Closing Financial Statements audited within 25 days after the Closing Date.

4.15.

Meetings and Operations . In addition to any other rights that the Buyer have under this Contract, after the Effective Date, the Buyer shall have the right to attend any meetings of the Company and to attend to all matters in relation to the business operations of the Company, and the Seller shall, and the Seller shall cause the Company to, take any or all actions as the Buyer may reasonably require from time to time, and render full cooperation and support to the Buyer so as to effectuate the Buyer’s rights under this Section 4.15.

4.16.

Technologies and Drawings . Subject to Section 7.2(o), the Seller covenants that it shall, and it shall cause the Company to, before the Effective Date, handle any and all registration formalities in respect of the ownership of all the Technologies and Drawings (as defined in Section 7.2(o)) with the relevant governmental authorities or any other agencies in order that the Company shall be the sole registered owner of all the Technologies and Drawings.

4.17.

Audit CEM Special’s Accounts . The Seller covenants that it shall cause CEM Special to audit CEM Special’s financial statements including, without limitation, its balance sheet statement, its cash flow statement and its income statement, as of or ended at the Closing Date, as the case may be, by CEM Special’s auditor that is an independent certified public accountants registered in China in accordance with the GAAP of the PRC, and that it shall, and it shall cause CEM Special to, deliver such audited financial statements to the Buyer within 25 days after the Closing Date. The Seller covenants that it shall, and it shall cause CEM Special to, settle accounts between the Company and CEM Special at the Closing in accordance with the provisions as set forth in Appendices X and XI. As part of the settlement of accounts between the Company and CEM Special, the Seller covenants that it shall cause CEM Special to transfer CEM Special’s current assets, current liabilities and its current customers’ accounts to the Company.

5. EFFECTIVENESS

5.1.	Effective Date . This Contract shall become effective on the date (the “ Effective Date ”) upon which all of the following conditions have been fulfilled unless any such condition is waived by the Seller or the Buyer, as the case may be:

(a)

this Contract shall have been executed by the authorized representatives of the Parties;

(b)

the approvals contemplated in Sections 4.1, 4.2, 4.3 and 4.4 above have been obtained, and the amended business license of the Company has been issued as contemplated by Section 4.5 above, in such form and substance acceptable to the Buyer;

(c)

the new approval certificate with respect to the transfer of the Seller’s Entire Interest from the Seller to the Buyer has been issued by the Examination and Approval Authority;

(d)

certificates in form and substance satisfactory to the Buyer shall have been issued to the Company by each of the SAIC and any and all other relevant and necessary governmental authorities evidencing that the Company has complied with all regulations regarding annual inspection or audits or tax filing, or that any necessary fines that may have been imposed on the Company have been paid in full by the Company;

(e)

the Seller’s representations and warranties made in this Contract are true in all material respects;

(f)

the Seller shall have performed and complied in all material respects with all of its obligations under this Contract that are to be performed or complied with by it prior to the Effective Date, and the Seller is not otherwise in default in any material respect under any of the provisions of this Contract;

(g)

no litigation, proceeding, investigation, or inquiry is pending or threatened which, if sustained, would hinder or prevent the consummation of the transactions contemplated by this Contract or would materially and adversely affect the Buyer’s right to carry on the business of the Company as presently conducted;

(h)

the Seller shall have delivered to the Buyer copies of resolutions adopted by the Board of Directors and sole shareholder of the Company, certified as of the Effective Date by an authorized signatory of the Seller, approving the execution and delivery of this Contract and the performance by the Seller of its obligations under this Contract;

(i)

subject to Section 4.6(b), the Buyer shall be entitled to determine certain Affiliate Agreements to be terminated. If the Buyer so determines, each of such certain Affiliate Agreements shall have been terminated. Such termination shall include waivers and releases by the parties thereto of all claims against the Company for moneys, services or other obligations due or arising under the terms of such agreements, and shall be in form and substance satisfactory to the Buyer;

(j)

the Seller shall, and the Seller shall have caused the Company to, have settled in full any and all accounts between the Company and the Seller, or between the Company and the Seller’s Affiliate in accordance with Section 4.8, have fully paid off or fully transferred any outstanding debts, as the case may be, owed by the Company to the banks, or any third parties in accordance with any loan contracts, loan facility letters or agreements as set forth in Section 4.8; and have lifted the security interest over the land use rights and buildings as set forth in Section 4.9;

(k)

the Seller shall, and the Seller shall have caused the Company to, have registered the ownership of or any other rights, titles and interests in the Technologies and Drawings under the name of the Company with the relevant governmental authorities and any other agencies in order to warrant the full and complete ownership of or any other rights, titles and interests in the Technologies and Drawings under the name of the Company without any Encumbrances, as the result that the Company is the sole registered owner of all the Technologies and Drawings; and

(l)

effective as of the Effective Date, the Original Articles of Association shall be amended and restated in its entirety in accordance with the form and substance satisfactory to the Buyer and in conjunction with the Closing of the transaction contemplated hereunder between the Parties. The Seller is not a signatory or party to the Amended and Restated Articles of Association.

6. CLOSING DATE

6.1.	Conditions in Connection with the Seller . On or before the dates specified in this Section 6.1, the Seller shall have fulfilled all of the following conditions unless any such condition set forth in this Section 6.1 is waived by the Buyer, against delivery to it of the Purchase Price by the Buyer:

(a)

Resignations . On or before the Closing Date, the Seller shall have executed and delivered to the Buyer written resignations in form and substance satisfactory to the Buyer of all directors and other appointed positions held by appointees or nominees of the Seller with the Company.

(b)

Officer’s Certificate . On the Closing Date, the Seller shall have executed and delivered to the Buyer a certificate of an authorized signatory of the Seller to the effect that:

(i)

the Seller’s representations and warranties made in this Contract are true in all material respects as of the Closing Date;

(ii)

the Seller shall have performed and complied in all material respects with all of its obligations under this Contract that are to be performed or complied with by it prior to the Closing Date, and the Seller is not otherwise in default in any material respect under any of the provisions of this Contract, as of the Closing Date; and

(iii)

(c)

Delivery of Documents . On or before the Closing Date, the Seller shall, and the Seller shall cause the Company to, have executed and delivered to the Buyer:

(i)

any consents, waivers or documents necessary to evidence to the Buyer’s satisfaction that each of the conditions has been and remains fulfilled or waived under Sections 4, 5 and 6;

(ii)

the constitution, certificate of incorporation or registration (including any certificate of incorporation or registration on change of name), common seal (if any), all statutory registers, minute books and other Records of directors’ and shareholders’ meetings of the Company in proper order and condition, fully entered up to the Closing Date and otherwise complying with all requirements under any law;

(iii)

all cheque books, financial and accounting books and Records, copies of any tax returns lodged and assessments issued under any tax laws or regulations, fringe benefits tax returns, business activity statements, land use rights fee Records, mortgages, leases, agreements, insurance policies, title documents, licenses, certificates and all other Records of the Company;

(iv)

a duly completed authority for the alteration of the signatories of every bank account of the Company in the manner required by the Buyer; and

(v)

all current permits, licenses and other documents issued to the Company under any law relating to its business activities;

(d)

Execution of Certain Contracts .

(i)

On the Closing Date, the Seller shall have caused CEM Special to have executed with the Company and delivered to the Company the Lease Agreement attached hereto as Appendix VI;

(ii)

On the Closing Date, the Distributor Agreement attached hereto as Appendix IV shall have been executed and delivered between the parties thereof ;

(iii)

On the Closing Date, the Seller shall have caused CEM Special to have executed with the Company and delivered to the Company the Asset Sale Contract attached hereto as Appendix II;

(iv)

On the Closing Date, the Seller shall have caused CEM Special to have executed with the Company and delivered to the Company the Consultancy Services Contract attached hereto as Appendix III; and

(v)

On the Closing Date, the Seller shall have caused CEM Special to have executed with the Company and delivered to the Company the Asset Purchase Contract attached hereto as Appendix I; .

(e)

Other Conditions . On or before the Closing Date,

(i)

the Seller shall have introduced the Buyer to the Company’s three customers, Praxair, Linde and Air Liquide, the Seller shall have arranged for meetings between the Buyer and each of Praxair, Linde and Air Liquide, and the Buyer will have actually met each of Praxair, Linde and Air Liquide;

(ii)

the Seller shall have introduced the Buyer to the management of ZhongQi Business, and arranged for meetings between the Buyer and the management of ZhongQi Business, and the Buyer will have actually met the management of ZhongQi Business;.

(iii)

the Seller shall, and it shall have caused the Company to, before the Closing Date, have gone with the authorized representative(s) of the Buyer in writing to all the banks that the Company maintains bank accounts, have duly amended any and all signature registers of any management personnel of the Company appointed by the Seller with such banks in order to invalidate such signature registers, have replaced them with the signature registers of the management personnel appointed by the Buyer, and have turned to the Buyer any and all chops of the Company, whether with the corporate name of the Company or with the name of any individuals, which have the power of authorization of the business operations of the Company or access to the above bank accounts, including, without limitation, the Company chop, the chop for the chief executive officer and the chop for the chief financial officer;

(iv)

the Seller shall have delivered to the Buyer a letter executed under seal by each resigning director or officer of the Company acknowledging that he or she has no claim of any kind or nature against the Company or the Buyer for breach of contract, loss of office, redundancy, unfair dismissal, compensation, payment or repayment of loans; and

(v)

the Seller shall, and it shall have caused the Company to, have done all other acts and executed all other documents that this Contract requires the Seller to do, or execute and deliver.

6.2.	Payment of the Purchase Price by the Buyer . Upon the fulfillment of the conditions set forth in Section 6.1, on the Closing Date, the Buyer shall do the following:

(a)

pay to the Seller the remaining fifty percent (50%) of the Purchase Price, or that part of the Purchase Price as is required to be paid on the Closing Date in accordance with Section 3;

(b)

execute and deliver the Distributor Agreement; and

(c)

do all other acts and execute all other documents that this Contract requires the Buyer to do, or execute and deliver on the Closing Date.

6.3.

Duties in relation to Conditions or Actions in Sections 4, 5, and 6 . Each Party shall use its best efforts to ensure that the conditions, actions, approvals, documents, contracts, or agreements referred to in Sections 4, 5, and 6 are fulfilled or waived, taken, obtained, and executed and delivered, as the case may be, on or before the date specified in those Sections. Each party shall supply the other Party with copies of all applications made and documents supplied for the purpose of fulfilling any conditions, taking any actions, obtaining any approvals, and executing and delivering any documents, contracts or agreements as set forth in Sections 4, 5, and 6. Each Party shall not take any actions that would, or would be likely to, prevent or hinder the fulfillment of any conditions, taking of any actions, obtaining of any approvals, and execution and delivery of any documents, contracts or agreements as contemplated under Sections 4, 5, and 6. Each Party shall, within two (2) Business Days of such a Party becoming aware that a condition set forth in Sections 4 and 5, has been fulfilled, notify the other Party in writing of that fact.

6.4.	Fulfillment by a Waiver . A Party may waive a condition set forth in Sections 4 and 5, but only to the extent set out in the waiver:

(a)

where the condition is for the benefit of such Party, if such Party gives a written notice of waiver of the condition to the other Party; or

(b)

otherwise, if the Seller and the Buyer agree in writing to waive the condition.

6.5.

Failure of Sections 6.1 and 6.2 . The Closing is conditional on, and will not be taken to have occurred until both the Buyer and the Seller have complied with all of their respective obligations under Sections 6.1 and 6.2. If either the Seller or the Buyer fails to fully comply with its respective obligations under Sections 6.1 and 6.2, without prejudice to any other rights either Party may have in respect of that failure, then each Party shall:

(a)

return to the other Party all documents delivered to it under this Section 6; and

(b)

repay to the other Party all payments received by it under this Section 6.

7. REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1.	Representations and Warranties of the Parties . Each Party represents and warrants, severally and not jointly, to the other Party, as of the date hereof, the Effective Date and the Closing Date, that:

(a)

such Party has the full power and authority to enter into, execute and deliver this Contract and to perform the transactions contemplated hereby and such Party is duly incorporated or organized and existing under the laws of the jurisdiction of its incorporation or organization;

(b)

the execution and delivery by such Party of this Contract and the performance by such Party of the transactions contemplated hereby have been duly authorized by all necessary corporate or other action of such Party;

(c)

assuming the due authorization, execution and delivery hereof by the other Party and the satisfaction of the conditions set forth in Section 5.1(b), this Contract constitutes the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights in general; and

(d)

the execution, delivery and performance of this Contract by such Party and the consummation of the transactions contemplated hereby will not (i) violate any provision of the organizational or governance documents of such Party; (ii) require such Party to obtain any consent, approval or action of, or make any filing with or give any notice to, any governmental authority in such Party’s jurisdiction of organization or any other person pursuant to any instrument, contract or other agreement to which such Party is a party or by which such Party is bound, other than any such consent, approval, action or filing that has already been duly obtained or made; (iii) conflict with or result in any material breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both constitute) a default under, any instrument, contract or other agreement to which such Party is a party or by which such Party is bound; (iv) violate any order, judgment or decree against, or binding upon, such Party or upon its respective securities, properties or businesses; or (v) violate any law or regulation of such Party’s jurisdiction of organization or any other jurisdiction in which it maintains its principal office.

7.2.

Representations and Warranties of the Seller . The Seller hereby represents and warrants to the Buyer, as of the date hereof, the Effective Date and the Closing Date, and the Seller covenants that it shall cause the Company to represent and warrant to the Buyer, as of the date hereof, the Effective Date and the Closing Date, as the case may be, that:

(a)

the Seller’s Entire Interest to be transferred by the Seller to the Buyer under this Contract is and will after transfer to the Buyer be free from any charges,

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