Equity Joint Venture Contract CNGC - Impco Technologies, LLC

Exhibit 10.64


EQUITY JOINT VENTURE CONTRACT

CNGC- IMPCO TECHNOLOGIES, LLC


This Equity Joint Venture Contract (the " Contract" ) is made and executed as of the 16 day of December, 2002, by and between IMPCO Technologies, Inc., a company incorporated under the laws of the State of Delaware U.S.A., and having its principal office of business located at 16804 Gridley Place, Cerritos, California 90703, U.S.A. (hereinafter referred to as " IMPCO" ), and China Natural Gas Co. Ltd., a company organized under the laws of the People' s Republic of China, and having its principal office of business located at No. 143 Huayou Road, Chengdu, Sichuan, People' s Republic of China (hereinafter referred to as " CNGC" ).


WHEREAS, IMPCO is engaged in the manufacturing of alternate fuel management systems and components; and

WHEREAS , IMPCO manufactures world class components, which it wishes to make available to the JVC; and

WHEREAS, CNGC is engaged inter alia in the development and sale of alternate fuel systems (hereinafter referred to as " CNG and LPG" ) in the People' s Republic of China; and

WHEREAS, the Parties (as defined below) have agreed to enter into this Contract, subject to obtaining all necessary approvals, permissions, consents, validations, confirmations, licenses and any other authorizations required to organize an equity joint venture in the People' s Republic of China with the main object of R & D, manufacturing (including assembling) and selling alternate fuel management systems, including but not limited to, CNG Kits, LPG Kits and components for automobiles and other associated and incidental services to customers; and


WHEREAS, IMPCO will contribute the use of the Intellectual Property/Technology Assets (as defined below) and cash to the JVC for general working capital purposes; and


WHEREAS , CNGC will contribute cash to the JVC for general working capital purposes; and


WHEREAS, the Parties are ready, willing and able to assist each other and cooperate in the manner set out hereinafter, to ensure the establishment and success of the JVC. The Parties shall cooperate with each other in the performance of their respective duties and obligations under this Contract to achieve the terms, purposes and intent of this Contract and the Parties shall exercise their respective voting and other rights through their respective members on the Board of Directors so as to give effect to the rights conferred upon the respective Parties by the terms of this Contract.

NOW THEREFORE, in consideration of the mutual promises and covenants hereby contained, this Contract witnesses and the Parties hereto have agreed as follows:


ARTICLE I

DEFINITIONS AND INTERPRETATION

1.1 In this Contract, unless the context otherwise requires, the following terms shall be defined as provided below:

" Accountants" shall mean Ernst & Young LLP or such other accounting firm registered in the People' s Republic of China as may be selected by the Board of Directors from time to time.

" Affiliate(s)" shall mean with respect to any Party to this Contract any entity which controls, is controlled by, or is under common control with such Party. An entity controls another entity when it owns or controls, directly or indirectly, fifty-one percent (51%) or more of the equity share capital issued and outstanding of the other entity or when it controls, on its own or jointly, the majority of the composition of the board of directors of such other entity.

" Approval(s)" shall mean all government, statutory and/or regulatory permissions, consents, validations, confirmations, licenses and any other authorizations required to be obtained in order to give effect to or implement the provisions of this Contract including, but not limited to, all necessary approvals of the relevant Departments in Charge (as defined below).


" Articles of Association" shall mean the Articles of Association of CNGC- IMPCO TECHNOLOGIES, LLC in the form and substance attached hereto as Exhibit A .

" Board" or " Board of Directors" shall mean the Board of Directors of CNGC- IMPCO TECHNOLOGIES, LLC.


" Book Value of the JVC" shall mean an amount equal to the difference between the JVC' s assets and its liabilities as determined by the Accountants in accordance with the People' s Republic of China generally accepted accounting principles, consistently applied.


" Capital Contribution" shall mean, with respect to each Party, all cash and other property contributed by such Party to the capital of the Company pursuant to this Contract.

" Contract" shall mean this Equity Joint Venture Contract, along with all attachments annexed hereto, and shall include any subsequent amendments or modifications hereto made in writing after the date of execution of this Contract.

" Departments in Charge" shall mean the government ministries and/or state holding companies involved with the approval, enterprise registration and administration of sino-foreign equity joint venture companies in the People' s Republic of China, including, without limitation, the Ministry of Foreign Trade and Economic Cooperation and the State Administration of Industry and Commerce.


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" Effective Date" shall mean the date on which the relevant Departments in Charge grant the necessary Approvals for the purpose of giving effect to this Contract and the establishment of the JVC.

" Intellectual Property/Technology Assets" shall mean IMPCO' s brand names and trademarks which are provided, in IMPCO' s sole discretion, to the JVC pursuant to the terms of this Contract (including, without limitation, any of IMPCO' s trademarks that are registered in the Territory (as defined below) or any other place pursuant to the terms of this Contract) and IMPCO' s technical know-how and certain technology related to the R & D and, assembling (manufacturing) process, including, without limitation, available secret, specialized and proprietary know-how, technical information, drawings, data, charts, graphs, procedure books, operation manuals and data, technical processes and other technical literature, tangible or intangible, necessary for the R & D and, assembling (manufacturing) or testing of the systems or otherwise related to the Products (as defined below) which is possessed and controlled by IMPCO at the date of the execution of this Contract by the Parties and not otherwise known by CNGC and which is provided, in IMPCO' s sole discretion, to the JVC pursuant to the terms of this Contract.

" JVC" shall mean the limited liability company to be established and organized under the Sino-Foreign Equity Joint Venture Law and the other relevant laws of the People' s Republic of China pursuant to the terms of this Contract and, subject to the approval of the relevant Departments in Charge, with the name " CNGC- IMPCO TECHNOLOGIES, LLC" or such other name as may be agreed by the Parties, with the main object of R & D and, assembling (manufacturing) and selling alternate fuel management systems, including but not limited to, CNG Kits, LPG Kits and components for automobiles and other associated and incidental services to customers.


" Membership Interest" shall mean IMPCO' s and CNGC' s respective ownership interest in the JVC, including any and all benefits to which either Party is entitled pursuant to this Contract and applicable laws, together with all obligations of such Party to comply with the terms of this Contract.


" Parties" shall mean IMPCO and CNGC, and the term " Party" shall individually refer to IMPCO or CNGC, as the case may be.

" Percentage Interest" shall mean, as to each Party, the ratio of such Party' s Capital Contributions to all Capital Contributions of the Parties, and each Member' s Percentage Interest as set forth in Section 2.3 hereof, as such Section 2.3 may be modified or supplemented from time to time pursuant to this Contract.


" Products" shall mean alternate fuel management systems, including but not limited to, CNG Kits, LPG Kits and components for automobiles to be developed or assembled (manufactured) by the JVC, and any other products as may be mutually agreed from time to time by the Parties to this Contract.


" Territory" shall mean the province of Sichuan Chongqing Municipality in the People' s Republic of China.


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1.2 In this Contract, unless the contrary intention appears, a reference to:

(i) an " amendment" includes a supplement, novation, replacement or re-enactment and " amended" is to be construed accordingly;

(ii) " assets" includes properties (both present and future and whether tangible or intangible and including intellectual property and intellectual property rights), revenues, investments, cash flows, rights, benefits, interests and titles of every description;

(iii) an " authorization" includes an authorization, consent, clearance, approval, resolution, license, permit, exemption, filing or registration;

(iv) " control" means:

a) the ability to appoint more than one half of the members of the board of directors or board of management (howsoever described) of an entity or to control more than 50% of the voting rights of the members of such board; or

b) the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting capital, by contract, laws and regulations or otherwise;

(v) a " law" includes any constitution, statute, law, rule, ordinance, judgment, order, decree, authorization, or any published directive, guideline, requirement or governmental restriction having the force of law, or any determination by, or interpretation of any of the foregoing by any judicial authority, whether in effect as of the date of this Contract or thereafter and each as amended or re-enacted from time to time;

(vi) a " month" is a reference to a period starting on one day in a calendar month and ending on the date immediately before the numerically corresponding day in the next calendar month, except that if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last day in that calendar month; (vii) a " person" includes:

a) any individual, corporation, partnership, joint venture, association of persons, trust, unincorporated organization, government (central or local), sovereign state (or any agency, department, authority or political subdivision thereof), international organization, agency, authority or other entity (in each case whether or not having separate legal personality) and includes any of its successors, transferees and assignees and, in particular:

i) in the case of an individual, any legal representative, administrator, executor and heir of that individual; and ii) in the case of a trust, any trustee of that trust;


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(viii) a " regulation" includes any applicable regulation, rule, official directive, order, decree, request, guideline, requirement or restriction (whether or not having the force of law but if not, being of a kind with which it is customary for companies within the relevant industry to comply) of any governmental, inter-governmental agency, department or regulatory, self-regulatory or other authority or organization, each as amended from time to time;

(ix) a clause, a schedule or an annex is a reference to a clause of or a schedule or annex to this Contract; (x) a schedule, an appendix or an annex to or of a document forms an integral part of that document; (xi) the singular includes a reference to the plural (and vice versa);

(xii) the masculine includes a reference to the feminine and neuter;

(xiii) a time of day is a reference to Beijing Standard Time.

(xiv) the term " including" , " include" or " includes" shall be deemed to be followed by the phrase " but not limited to" ; and

(xv) the index to and the headings in this Contract are for convenience only and are not to be relied upon in construing this Contract.

ARTICLE II ORGANIZATION AND CAPITALIZATION OF CNGC- IMPCO TECHNOLOGIES, LLC

2.1 The Parties hereby agree to organize the JVC as a sino-foreign limited liability company in accordance with the Sino-Foreign Equity Joint Venture Law and the other relevant laws of the People' s Republic of China. The liability of each Party shall be limited to its invested capital. Subject to the necessary Approvals of the relevant Departments in Charge, the name of the company shall be CNGC- IMPCO TECHNOLOGIES, LLC or such other name as may be agreed by the Parties. The Parties shall take all reasonably necessary steps for the organization of CNGC- IMPCO TECHNOLOGIES, LLC. 2.2 All reasonable costs, fees and other expenses necessary for the establishment of the JVC (excluding any legal fees), including, but not limited to, registration fees, shall be paid by the JVC or paid by the Parties and reimbursed by the JVC upon ratification by a resolution of the Board of Directors of the JVC.

2.3 The total amount of investment in the JVC shall be US$ 1,000,000 (one million US dollars). The registered capital of the JVC shall be US$ 1,000,000 (one million US dollars). Each Party' s Percentage Interest and initial Capital Contribution is as follows:

(i) IMPCO' s initial Capital Contribution shall be US$ 510,000 (five hundred and ten thousand US dollars), which shall constitute 51% of the registered capital of the JVC. For all purposes, IMPCO shall be deemed to have a 51% Percentage Interest in the JVC. IMPCO' s initial Capital Contribution shall consist of the following:


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a) Cash in the amount of US$310,000 (three hundred and ten thousand US dollars) (which amount shall include, at the option of IMPCO, the fair market value of any products, components or related materials provided to the JVC by IMPCO for integration into the Products and any completed Products provided to the JVC by IMPCO for sale); and b) Subject to the terms of this Contract, the use of the Intellectual Property/Technology Assets (the items or types of which shall be determined by IMPCO in its sole discretion), which use shall be valued at US$ 200,000 (two hundred thousand US dollars) .

(ii) CNGC' s initial Capital Contribution shall be US$ 490,000 (four-hundred and ninety thousand US dollars), which shall constitute 49% of the registered capital of the JVC. For all purposes, CNGC shall be deemed to have a 49% Percentage Interest in the JVC. CNGC' s initial Capital Contribution shall consist of cash in the amount of US$ 490,000 (four hundred and ninety- thousand US dollars).

2.4 The Parties shall share the profits, losses and risks of the JVC in proportion to their respective Percentage Interest. The JVC and CNGC have the responsibilities to assist IMPCO to remit the dividends out of PRC according to relevant laws and regulations of PRC. The dividends shall be distributed as the follows:

(i) Dividends shall be at the disposal of the Parties. The Parties agree that the payment thereof shall be subject to the approval of the Board of Directors, which approval will not be unreasonably withheld.

(ii) The Parties acknowledge and agree that the goal will be to distribute in good faith, while taking the interests of the JVC into account, between fifty and seventy-five percent of the after tax profits (and less than the Legal Reserve of 10 % thereof and Employment Welfare Fund of 5% thereof) of the JVC to the Parties.

(iii) Any extraordinary distribution of profits of the JVC shall require the unanimous approval by the Parties. (iv) The Parties agree that for so long as there are working capital loans outstanding to any Party or third party, dividend distributions will not exceed twenty-five percent of the after tax profits (and less than the Legal Reserve of 10 % thereof and Employment Welfare Fund of 5% thereof) of the JVC. The Parties agree not to unreasonably withhold consent to declaring dividends of twenty-five percent of the after tax profits of the JVC.

(v) The Parties agree that if the Parties agree to take advantage of an investment opportunity, profits will be applied towards that investment opportunity prior to the payment of the dividends.

2.5

The Parties shall pay or provide, as the case may be, such portion of their respective initial Capital Contribution to the JVC within one (1) months upon the issuance of the business license of the JVC, but in no event less than 15% of their respective initial Capital Contribution. The Parties shall pay or provide, as the case may be, the remaining portion of their respective initial Capital Contribution in such amounts and at such intervals as may be determined by the Board of Directors,


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provided that the remaining portion of their respective initial Capital Contribution shall be paid or provided, as the case may be, no later than six (6) months upon the issuance of the business license of the JVC.

2.6 After each Party has fully paid its respective initial Capital Contribution, the capitalization of the JVC shall be verified by the Accountants and the Accountants shall issue a certificate of verification to the Parties and the JVC with respect to the registered capital of the JVC. Upon full payment by a Party of its initial Capital Contribution, the JVC shall issue a membership interest certificate to such Party signed by the Chairman (as defined below) and the Vice-Chairman (as defined below) of the Board of Directors which shall contain the following particulars: name of the JVC; date, month and year of the establishment of the JVC; names of the Parties and their respective Capital Contribution; date, month and year of the Capital Contribution; and the date, month and year of the issue of the investment certificate. The total amount of registered capital as verified by the Accountants shall not be reduced during the term of this Contract unless such reduction is related to a change with respect to the total investment or the operations of the JVC; provided, however, the registered capital of the JVC shall not be reduced without the unanimous consent of the Board of Directors and the necessary Approvals of the relevant Departments in Charge.

2.7 Additional Capital Contributions shall be made by the Parties from time to time if the Board of Directors determines that such additional Capital Contributions are necessary to accomplish the purposes and objectives of the JVC (" Additional Capital Contributions" ). Subject to the Approval of the relevant Departments in Charge, Additional Capital Contributions shall be payable by each of the Parties on a pro-rata basis in accordance with their respective Percentage Interest within fifteen (15) days after notice is given by the Board of Directors; provided, however, during the term of this Contract, the Additional Capital Contributions required to be made by a Party shall not exceed 50% of such Party' s initial Capital Contribution as set forth in Section 2.3 hereof. If any Party fails to make an Additional Capital Contribution when required to do so, such contribution may be provided, in whole or in part, by the other Party, as an Additional Capital Contribution. The Parties' Percentage Interests shall be adjusted after the payment of any Additional Capital Contributions so that each Party' s Percentage Interest is equal to the ratio of such Party' s Capital Contributions to the aggregate Capital Contributions of the Parties. In the event that any Additional Capital Contribution is paid in a form other than cash, such non-cash Additional Capital Contribution shall be valued at its fair market value as agreed upon by the contributing Party and the Board of Directors.

ARTICLE III

GOVERNANCE OF CNGC- IMPCO TECHNOLOGIES, LLC

3.1 The Articles of Association shall be in accordance with the relevant laws of the People' s Republic of China. The Parties agree that in the event of an ambiguity or inconsistency between this Contract and the Articles of Association, the terms of this Contract shall prevail in each instance.

3.2 The business of the JVC shall be managed by or under the direction of its Board of Directors. Except as otherwise provided in this Contract, the Board of Directors shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the JVC, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the JVC' s business.

3.3

The Board of Directors of the JVC shall consist of five (5) Directors. IMPCO shall have the right to nominate and appoint three (3) members of the Board of Directors (the " IMPCO Directors" ) and


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CNGC shall have the right to nominate and appoint two (2) members of the Board of Directors (the " CNGC Directors" ). IMPCO shall be entitled to appoint the Chairman of the Board of Directors (the " Chairman" ) from the IMPCO Directors and CNGC shall be entitled to appoint the Vice-Chairman of the Board of Directors (the " Vice-Chairman" ) from the CNGC Directors. The representation of IMPCO and CNGC on the Board of the JVC shall be maintained in the above-mentioned ratio; provided, however, if the Percentage Interest of each Party is adjusted pursuant to Section 2.7 hereof, the above-mentioned ratio may also be adjusted by agreement of the Parties if the Party not previously holding the majority Percentage Interest becomes the holder of the majority Percentage Interest. Each Director shall hold office for a term of four (4) years. The term of office of a director may be renewed by the party that had nominated and appointed the director to the Board of Directors. A director may be removed at any time, with or without cause, by the Party that had nominated and appointed such Director. Any vacancy occurring for any reason on the Board of Directors shall be filled by the Party that nominated and appointed the Director causing the vacancy.

3.4 Neither the Chairman, the Vice-Chairman nor any other member of the Board of Directors shall receive or be entitled to receive any compensation for the services provided by them in such capacity to or on behalf of the JVC, provided that the foregoing shall not prevent the JVC from reimbursing members of the Board of Directors for expenses reasonably incurred by them in connection with the services provided by them in such capacity to or on behalf of the JVC or from compensating any member of the Board of Directors who is also an employee or agent of the JVC.

3.5 The President of the JVC shall be appointed by IMPCO and at least one (1) Vice-President of the JVC shall be appointed by CNGC. Subject to the supervision and control of the Board of Directors, the President with the assistance of the Vice-President (or more than one (1) Vice-President as provided in the Articles of Association) shall be in-charge of all day to day management of the JVC, including, but not limited to, all aspects of operations, implementation, personnel, employment or termination as well as remuneration of key executives, personnel, information services, customer services, marketing and sales, accounting, finance and credit collections. The respective powers and obligations of the President and the Vice-President or Vice-Presidents, as the case may be, of the JVC shall be set forth in Articles of Association. 3.6 It is the intent of the parties to enter into a Lease Agreement for the facilities located in Longquanyi District built y CNGC of the JVC. It is agreed that the Lease Agreement shall be in a form acceptable to the JVC and shall be in a separate writing.


ARTICLE IV

TRANSFER OF SHARES

4.1 Except as otherwise permitted by this Contract, during the term of this Contract, no Party shall, directly or indirectly, voluntarily or involuntarily, transfer, sell, assign, pledge, hypothecate, give, encumber or otherwise dispose of (" Transfer" ) its Membership Interest in the JVC without (i) the express prior written consent of the other Party, which consent, unless otherwise provided hereunder, may be denied or otherwise delayed or conditioned in each Party' s sole and absolute discretion, (ii) the unanimous consent of the Board of Directors, and (iii) the necessary Approvals of the relevant Departments in Charge. Each Party hereby ackno ...