普华永道Chryanthemm EL2802.docx

普华永道Chryanthemm EL2802.docx

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普华永道ChryanthemmEL2802

PRIVATE&CONFIDENTIAL

SingaporeTechnologiesKineticsLtd（“STK”）

249JalanBoonLay

Singapore619523

Attn:

MrLaurenceOng

28November2002

DearSirs,

ProposedjointventurewithBeijingHeavyDutyTruckPlant（“BHDTP”）

ThankyouforappointingPricewaterhouseCooperstoassistyouwithyourmarketresearchandfinancialprojectionreviewinconnectionwithyourproposedjointventurewithBeijingHeavyDutyTruckPlant（“theTarget”）（the“Transaction”）.ThisEngagementLettersetsouttheServicesthatwehaveagreedtoprovideandthetermsofourengagement.

1.TheServicestobeprovided

1.1Marketresearch

1.1.1Wewillprepareamarketresearchreport（the“Report”）onthemarketconditionsoftheproductstobemanufacturedandsoldbytheTarget.TheareasourworkwillcoverandthemainprocedureswewillcarryoutaresetoutinAttachmentAtothisletter.

1.1.2WewillnotprovideacopyofourreporttothemanagementoftheTargetoraskthemtocommentonadraftofourreport.

1.2Financialprojectionreview

1.2.1Withthebenefitoftheknowledgederivedfromthemarketresearch,wewillperformareviewofthefinancialprojectionpreparedbySTK.TheareasourworkwillcoveraresetoutinAttachmentAtothisletter.

2.Timetable

2.1Wewillbeabletocommenceourworkon30November2002andweexpectourreporttobecompletedbywithin20to30workingdays.

3.Theteam

3.1WecurrentlyenvisagethatourteamwillbeledbyXieTao,whowillbetheEngagementPartnerresponsiblefortheServiceswearetoprovidetoyou.

4.Fees

4.1Ourfeesarebaseduponthedegreeofresponsibilityandskillinvolvedandthetimenecessarilyoccupiedontheassignment.WeestimatethatourfeesforthisengagementwillbeUSD45,000,orequivalentRmbtranslatedatpaymentdate.Out-of-pocketexpenseswillincludemainlytransportation,accommodation,telecommunications,postage,copyingandprintingexpenseswhichwillbechargedonanactualbasis.Ourfeesdonotincludebusinesstaxwhichwillalsobechargedtoyouontotalbillings（includingbusinesstax）atarateof5.263%,togetherwiththeexpensesreferredtoabove.

4.2Feeandexpenseswillbeinvoicedasfollows,andwillbepayableonreceiptofinvoice.

Estimatedfees

US$’000

OnacceptanceoftheseTOE

4.5

Onissueofthedraftreport

27

Onissueoffinalreport

13.5

5.

TermsofBusiness

5.1ThislettershouldbereadinconjunctionwiththeenclosedTermsofBusiness.Theenclosedtermsofbusinesshavebeensupersededbythefollowing:

Clause2.2-Shallbedeletedandreplacedasfollows:

-

"Youagreetotreat,forthedurationofthisContractandforafurtherperiodof3yearsthereafter,allwritteninformationwhichisclearlymarked"Confidential"providedtoyouinconnectionwiththeServices（"Reports"）asconfidentialandexcepttotheextentpermittedbyclause2.3,youwillnotmakethebenefitoftheServicesavailabletoanythirdparty."

Clause2.3.–Shallbeamendedasfollows:

-

"CopiesofourReportsmaybemadeavailabletodirectorsandinvestmentcommitteeofSingaporeTechnologiesEngineeringLtd（theparentcompanyofSingaporeTechnologiesKineticsLtd）,yourdirectorsandofficers,legaladvisorsandthoseemployeesinvolvedinthemanagementoftheTransaction,providedthatineachcaseyoutakereasonablestepstoensurethattheyunderstand:

-

（i）ourreportsareconfidential;

（ii）theymayuseourreportsonlyforthepurposesoftheTransaction;

（iii）weacceptnodutyofcaretotheminrespectofanyusetheymaymakeofourReports."

WeshallbeallowedtoincludeanappropriatelegendinourReportstoinformallthirdpartiesoftheaboveunderstandingassetoutin2.3（iii）.

Clause3.1.1–Shallbedeletedandreplacedasfollows:

-

"WeshallbegovernedbytheConfidentialAgreementexecutedonthe11thOctober2002."

Clause3.1.2–Shallbedeletedandreplacedasfollows:

-

"WemaydiscloseConfidentialInformationtoourinsurers,legaladvisersandifrequiredsobylaworprofessionalregulation."

Clause3.1.3–Shallbedeletedandreplacedasfollows:

-

"Subjectto3.1.1above,andoncetheTransactionisnolongerconfidential,wemaycitetheperformanceoftheServicestoourclientsandprospectiveclientsasanindicationofourexperiencesubjecttousobtainingyourpriorwrittenconsent."

Clause3.2.1Shallbeamendedasfollows:

-

"（i）Wemaybeinapositionwhereweareprovidingservicestootherclientswhomaybeincompetitionwithyouorwhoseinterestmayconflictwithyourown.WewillnotbepreventedorrestrictedbyvirtueofourrelationshipwithyouunderthisContract,fromprovidingservicestootherclients,but

（a）wewillnotuseConfidentialInformationfortheadvantageofsuchclientsandwewillpromptlyinformyouinwritingofthepossibilityofsuchanengagementwhereitistobecarriedoutbyPwC'sBeijingTransactionServicesdepartmentand/orPwC’sShanghaiMarketDueDiligenceteampriortothecompletionoftheServiceshereunder;and

（b）PwC'sBeijingTransactionServicesdepartmentand/orPwC’sShanghaiMarketDueDiligenceteamwillnotrepresenttheTarget,anyshareholderoftheTarget,oranycompanywhichisinterestedintheTargetinanymatterwhatsoeverwhilstweareengagedbyyouunderthisContract.”

Clause7.2shallbedeletedandreplacedasfollows:

-

"Anylegalproceedings（whetherincontract,tortorotherwise）arisingoutoforinconnectionwiththeServicesmustbecommencedwithin6yearsafterthedateonwhichtheduediligencereportwassigned."

Clause8.2.2shallbedeletedandreplacedasfollows:

-

NotwithstandingtheprohibitiononthefurtherdistributionofthereportcoveredbythisengagementlettertothirdpartiesbySingaporeTechnologiesKineticsLtd,SingaporeTechnologiesKineticsLtdagreestoindemnifyus,otherPricewaterhouseCoopersFirmsandourrespectivepersonnelandholdeachofusharmlessagainstanyliabilities,losses,expensesandothercostswemayreasonablyincurinconnectionwithanythirdpartyclaim（whetherincontract,tort（includingnegligence）orotherwise）arisingoutoforinconnectionwiththeServicesthatresultsfromdistributionofourReportstoathirdpartythathasnotexecutedareleaseletterinaformacceptabletous（seeAttachmentB）.Thisindemnitywillnotapplytotheextentthatthethirdpartyclaimisfinallydeterminedtohaveresultedfromthefraudordishonestyofthefirmorpersonindemnified.

Clause9.4–Shallbeamendedbyinsertingthefollowingattheendoftheclause:

-

"...savefortheConfidentialityAgreemententeredbetweenthepartieson11thOctober2002."

Clause11.5–Shallbedeletedandreplacedasfollows:

-

""ConfidentialInformation":

hasthesamemeaningasdefinedintheConfidentialAgreementdated11thOctober2002."

6.Acknowledgementandacceptance

6.1ThisEngagementLetter（includingitsattachment）,theenclosedTermsofBusinessandtheamendedclausesinSection5.1togetherformtheContractbetweenus.

6.2PleaserecordyouragreementtothetermsofthisContractbysigningtheenclosedcopyofthisletterinthespaceprovidedandreturningittous.

Yoursfaithfully

PricewaterhouseCoopers

ConfirmationoftheContract

IhavereadtheContracttermssetoutintheEngagementLetterdated28November2002（includingitsattachments）andtheTermsofBusinessprovidedwiththatletter.IacceptthoseContracttermsonbehalfofSingaporeTechnologiesKineticsLtdandrepresentthatIamauthorisedbySingaporeTechnologiesKineticsLtdtodoso.

Signed:

……………………………………………

Nameandposition:

……………………………….

OnbehalfofSingaporeTechnologiesKineticsLtd

Date:

………………………..

ATTACHMENTA

Part1–Matterstobecovered

Ourworkwillcoverthematterssetoutbelow,butourreportwillnotnecessarilyincludecommentsonallofthosemattersbecause,intheinterestsofclearerreporting,wewillnotreportonmattersthatwedonotbelievetobesignificant.

IMARKETRESEARCH

I.1Objectives

ToassistSTKinassessingmoreclearlytheChinesemarketconditionsfortheTarget’s（JVwithBHTDP）productsbyprovidinganupdateanalysis;andtoprovidesupportingmarketdatatoassistinthereviewofthefinancialforecast.

I.2Keyproducts

▪Bulkcementtanker

▪Concretemixer

▪Articulatedtruck

▪Dumptruck

I.3Keyissues

▪MarketpotentialsfortheTarget

-Salesvolume&pricesforecastbykeyproduct

-Specificfocusmarketsizebyregion（BeijingandShanghai）bykeyproduct

-Totalfocusmarketsizebykeyproduct

-Keymarketdriversandtrendsbykeyproduct

▪Regulatoryenvironments

-Theactualimpactsoftheforthcominglaws（especiallythelawsbanningon-siteconcretemixingandpackingofcementinconventionalpaperbag）

-Theimpactoflocalprotectionism（eglocalunwrittenrules,taxsystem,etc）onthesalesofkeyproduct

▪

Productsevaluation

-Productplansofkeycompetitorsbykeyproduct

-Pricingstrategiesofkeycompetitorsbykeyproduct

-Productsfromnewcomersbykeyproduct

▪Customerassessment

-Productpreference（imported/JV’s/local,quality/costs,etc.）

-Technologypreference

-Servicesevaluation

-Brandsassessment

-Satisfaction&dissatisfaction

-Trendsofdemandstructureinthenearfuture

▪Others

-Coststrendsoftop5rawmaterials

-Costsstructureofkeyproductsona“besteffort”basis

-Assessmentontheimpactsofdistributionnetworks

-Competitionarenainthetargetedcities

-Macroenvironmentsfactorsandtrends

I.4Studyapproach

Theresearchmethodologiestobeappliedbyuswillinvolvedesktopandprimaryresearchintheselectivetargetregions（mainlyinBeijingandShanghai）.Therelateddatawillbecr