CONSULTING SERVICES AGREEMENT (English Translation)
Exhibit
10.1
(English
Translation)
This
Consulting Services Agreement (this “Agreement”)
is
dated August 17, 1007 and effective as of March 8, 2006, and is entered into
in
Xian, China between Shaanxi
Xilan Natural Gas Equipment Co.,Ltd.,
a
company incorporated under the laws of the PRC (“Party A”), located at 3 floor,
No.6 Xianmen Road, Xi'an Lantian County, Xi’an Shaanxi Province, China, and
Xi'an
Xilan Natural Gas Co.,Ltd.,
a
company with joint stock limited liability organized under the laws of the
PRC
(“Party B”), with a registered address at Suite
418, Tangxing Shuma Building, Xi'an High-Tech Zone, Xi’an, Shanxi Province,
China. Party A and Party B are referred to collectively in this Agreement as
the
“Parties.”
RECITALS
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(1)
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Party
A is a company incorporated in PRC under the laws of the PRC, which
has
the technological expertise in natural gas industrial transportation
and
machinery ;
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(2)
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Party
B is a natural gas company with limited liability duly incorporated
in
Xi’an, China;
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(3)
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The
Parties desire that Party A provide technology consulting services
and
relevant services to Party B, for compensation.
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(4)
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The
Parties are entering into this Agreement to set forth the terms and
conditions under which Party A shall provide consulting services
to Party
B.
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NOW
THEREFORE,
the
Parties agree as follows:
1.
DEFINITIONS
1.1
In
this Agreement the following terms shall have the following
meanings:
“Affiliate,”
with
respect to any Person, shall mean any other Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person.
As
used in this definition, “control” shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether ownership of securities or partnership or other ownership interests,
by
contract or otherwise).
“Consulting
Services Fee”
shall
be as defined in Clause 3.1.
“Indebtedness”
shall
mean, as to any Person, without duplication, (i) all indebtedness (including
principal, interest, fees and charges) of such Person for borrowed money for
the
deferred purchase price of property or services, (ii) the face amount of all
letters of credit issued for the amount of such Person and all drafts drawn
thereunder, (iii) all liabilities secured by any Lien on any property owned
by
such person, whether or not such liabilities have been assumed by such Person,
(iv) the aggregate amount required to be capitalized under leases under which
such Person is the lessee and (v) all contingent obligations (including, without
limitation, all guarantees to third parties) of such Person.
“Lien”
shall
mean any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority or other security
agreement of any kind or nature whatsoever (including. without limitation,
any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under recording or notice statute, and any lease
having substantially the same effect as any of the foregoing).
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“Person”
shall
mean any individual, corporation, company, voluntary association, partnership,
joint venture, trust, unincorporated organization, entity or other organization
or any government body.
“PRC”
means
the People’s Republic of China.
“Services”
means
the services to be provided under the Agreement by Party A to Party B, as more
specifically described in Clause 2; in this Agreement a reference to a Clause,
unless the context otherwise requires, is a reference to a clause of this
Agreement.
1.2
The
headings in this Agreement shall not affect the interpretation of this
Agreement.
2.
RETENTION AND SCOPE OF SERVICES
2.1
Party
B hereby agrees to retain the services of Party A, and Party A accepts such
appointment, to provide to Party B services in relation to the current and
proposed operations of Party B’s business in the PRC upon the terms and
conditions of this Agreement. The services subject to this Agreement shall
include, without limitation:
(a)
General
Business Operation.
Advice
and assistance relating to development of technology and provision of
consultancy services, particularly as related to travel services.
(b)
Human
Resources.
(i)
Advice and assistance in relation to the staffing of Party B, including
assistance in the recruitment, employment and secondment of management
personnel, administrative personnel and staff of Party B;
(ii)
Training of management, staff and administrative personnel;
(iii)
Assistance in the development of sound payroll administrative controls in Party
B;
(iv)
Advice and assistance in the relocation of management and staff of Party
B;
(c)
Research
and Development
(i)
Advice and assistance in relation to research and development of Party
B;
(ii)
Advice and assistance in strategic planning; and
(d)
Other. Such other advice and assistance as may be agreed upon by the
Parties.
2.2 Exclusive
Services Provider.
During
the term of this Agreement, Party A shall be the exclusive provider of the
Services. Party B shall not seek or accept similar services from other providers
unless the prior written approval is obtained from Party A.
2.3 Intellectual
Properties Related to the Services.
Party A
shall own all intellectual property rights developed or discovered through
research and development, in the course of providing Services, or derived from
the provision of the Services. Such intellectual property rights shall include
patents, trademarks, trade names, copyrights, patent application rights,
copyright and trademark application rights, research and technical documents
and
materials, and other related intellectual property rights including the right
to
license or transfer such intellectual properties. If Party B must utilize any
intellectual property, Party A agrees to grant an appropriate license to Party
B
on terms and conditions to be set forth in a separate agreement.
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2.4 Pledge.
Party B
shall permit and cause Party B’s shareholders to pledge the equity interests of
Party B to Party A for securing the Fee that should be paid by Party B pursuant
to this Agreement.
3. PAYMENT
3.1
General.
(a)
In
consideration of the Services provided by Party A hereunder, Party B shall
pay
to Party A during the term of this Agreement a consulting services fee (the
“Consulting
Services Fee”),
payable in RMB each quarter, equal to all of its revenue for such quarter based
on the quarterly financial statements provided under Clause 5.1 below. Such
quarterly payment shall be made within 15 days after receipt by Party A of
the
financial statements referenced above.
(b)
Party
B will permit, from time to time during regular business hours as reasonably
requested by Party A, or its agents or representatives (including independent
public accountants, which may be Party B’s independent public accountants), (i)
to conduct periodic audits of books and records of Party B, (ii) to examine
and
make copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of Party B (iii) to visit the offices and properties of Party B for
the
purpose of examining such materials described in clause (ii) above, and (iv)
to
discuss matters relating to the performance by Party B hereunder with any of
the
officers or employees of Party B having knowledge of such matters. Party A
may
exercise the audit rights provided in the preceding sentence
at any time, provided that Party A provides ten days written notice to Party
B
specifying the scope, purpose and duration of such audit. All such audits shall
be conducted in such a manner as not to interfere with Party B’s normal
operations.
3.2 Party
B
shall not be entitled to set off any amount it may claim is owed to it by Party
A against any Consulting Services Fee payable by Party B to Party A unless
Party
B first obtains Party A’s written consent.
3.3 The
Consulting Services Fee shall be paid in RMB by wire transfer to a bank account
or accounts specified by Party A, as may be specified in writing from time
to
time.
3.4 Should
Party B fail to pay all or any part of the Consulting Service’s
Fee
due
to Party A in RMB under this Clause 3 within the time limits stipulated, Party
B
shall pay to Party A interest in RMB on the amount overdue based on the three
(3) month lending rate for RMB announced by the Bank of China on the relevant
due date.
3.5 All
payments to be made by Party B hereunder shall be made free and clear of and
without deduction for or on account of tax, unless Party B is required to make
such payment subject to the deduction or withholding of tax.
4. FURTHER
TERMS OF COOPERATION
4.1 All
business revenue of Party B shall be directed in full by Party B into a bank
account(s) nominated by Party A.
5. UNDERTAKINGS
OF PARTY A
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Party
B
hereby agrees that, during the term of the Agreement:
5.1 Information
Covenants.
Party B
will furnish to Party A:
5.1.1
Preliminary
Monthly Reports.
Within
five (5) days of the end of each calendar month the preliminary income
statements and balance sheets of Party B made up to and as at the end of such
calendar month, in each case prepared in accordance with the PRC generally
accepted accounting principles, consistently applied.
5.1.2
Final
Monthly Reports.
Within
ten (10) days after the end of each calendar month, a final report from Party
B
on the financial position and results of operations and affairs of Party B
made
up to and as at the end of such calendar month and for the elapsed portion
of
the relevant financial year, setting forth in each case in comparative form
figures for the corresponding period in the preceding financial year, in each
case prepared in accordance with the PRC generally accepted accounting
principles, consistently applied.
5.1.3
Quarterly
Reports.
As soon
as available and in any event within forty-five (45) days after each Quarterly
Date (as defined below), unaudited consolidated and consolidating statements
of
income, retained earnings and changes in financial position of the Party B
and
its subsidiaries, if any, for such quarterly period and for the period from
the
beginning of the relevant fiscal year to such Quarterly Date and the related
consolidated and consolidating balance sheets as at the end of such quarterly
period, setting forth in each case actual versus budgeted comparisons and in
comparative form the corresponding consolidated and consolidating figures for
the corresponding period in the preceding fiscal year, accompanied by a
certificate of the chief financial officer of the Party B, which certificate
shall state that said financial statements fairly present the consolidated
and
consolidating financial condition and results of operations, as the case may
be,
of the Party B and its subsidiaries, if any, in accordance with PRC general
accepted accounting principles applied on a consistent basis as at the end
of,
and for, such period (subject to normal year-end audit adjustments and the
preparation of notes for the audited financial statements).
5.1.4
Annual
Audited Accounts.
Within
six (6) months of the end of the financial year, the annual audited accounts
of
Party B to which they relate (setting forth in each case in comparative form
the
corresponding figures for the preceding financial year), in each case prepared
in accordance with, among others, the PRC generally accepted accounting
principles, consistently applied.
5.1.5
Budgets.
At
least 90 days before the first day of each financial year of Party B, a budget
in form satisfactory to Party A (including budgeted statements of income and
sources and uses of cash and balance sheets) prepared by Party B for each of
the
four financial quarters of such financial year accompanied by the statement
of
the chief financial officer of Party B to the effect that, to the best of his
knowledge, the budget is a reasonable estimate for the period covered
thereby.
5.1.6
Notice
of Litigation.
Promptly, and in any event within one (1) business day after an officer of
Party
B obtains knowledge thereof, notice of (i) any litigation or governmental
proceeding pending against Party B which could materially adversely affect
the
business, operations, property, assets, condition (financial or otherwise)
or
prospects of Party B and (ii) any other event which is likely to materially
adversely affect the business, operations, property, assets, condition
(financial or otherwise) or prospects of Party B.
5.1.7
Other
Information.
From
time to time, such other information or documents (financial or otherwise)
as
Party A may reasonably request. For purposes of this Agreement, a “Quarterly
Date”
shall
mean the last day of March, June, November and December in each year, the first
of which shall be the first such day following the date of this Agreement;
provided that if any such day is not a business day in the PRC, then such
Quarterly Date shall be the next succeeding business day in the
PRC.
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5.2 Books,
Records and Inspections.
Party B
will keep proper books of record and account in which full, true and correct
entries in conformity with generally accepted accounting principles in the
PRC
and all requirements of law shall be made of all dealings and transactions
in
relation to its business and activities. Party B will permit officers and
designated representatives of Party A to visit and inspect, under guidance
of
officers of Party B, any of the properties of Party B, and to examine the books
of record and account of Party B and discuss the affairs, finances and accounts
of Party B with, and be advised as to the same by, its and their officers,
all
at such reasonable times and intervals and to such reasonable extent as Party
A
may request.
5.3 Corporate
Franchises.
Party B
will do or cause to be done, all things necessary to preserve and keep in full
force and effect its existence and its material rights, franchises and
licenses.
5.4 Compliance
with Statutes, etc.
Party B
will comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, in respect of
the
conduct of its business arid the ownership of its property, including without
limitation maintenance of valid and proper government approvals and licenses
necessary to provide the services, except that such noncompliances could not,
in
the aggregate, have a material adverse effect on the business, operations,
property, assets, condition (financial or otherwise) or prospects of Party
B.
6. NEGATIVE
COVENANTS
Party
B
covenants and agrees that, during the term of this Agreement, without the prior
written consent of Party A.
6.1
Equity.
Party B
will not issue, purchase or redeem any equity or debt securities of Party
B.
6.2
Liens.
Party B
will not create, incur, assume or suffer to exist any Lien upon or with respect
to any property or assets (real or personal, tangible or intangible) of Party
B
whether now owned or hereafter acquired, provided that the provisions of this
Clause 6.1 shall not prevent the creation, incurrence, assumption or existence
of:
6.2.1
Liens for taxes not yet due, or Liens for taxes being contested in good faith
and by appropriate proceedings for which adequate reserves have been
established; and
6.2.2
Liens in respect of property or assets of Party B imposed by law, which were
incurred in the ordinary course of business, and (x) which do not in the
aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of Party
B or
(y) which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
of assets subject to any such Lien.
6.3
Consolidation,
Merger, Sale of Assets, etc.
Party B
will not wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
any
part of its property or assets, or purchase or otherwise acquire (in one or
a
series of related transactions) any part of the property or assets (other than
purchases or other acquisitions of inventory, materials and equipment in the
ordinary course of business) of any Person, except that (i) Party B may make
sales of inventory in the ordinary course of business and (ii) Party B may,
in
the ordinary course of business, sell equipment which is uneconomic or
obsolete.
6.4
Dividends.
Party B
will not declare or pay any dividends, or return any capital, to its
shareholders or authorize or make any other distribution, payment or delivery
of
property or cash to its shareholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares
of
any class of its capital stock now or hereafter outstanding (or any options
or
warrants issued by Party B with respect to its capital stock), or set aside
any
funds for any of the foregoing purposes.
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6.5
Leases.
Party B
will not permit the aggregate payments (including, without limitation, any
property taxes paid as additional rent or lease payments) by Party B under
agreements to rent or lease any real or personal property to exceed US$100,000
in any fiscal year of Party B.
6.6
Indebtedness.
Party B
will not Contract, create, incur, assume or suffer to exist any indebtedness,
except accrued expenses and current trade accounts payable incurred in the
ordinary course of business, and obligations under trade letters of credit
incurred by Party B in the ordinary course of business, which are to be repaid
in full not more than one (1) year after the date on which such indebtedness
is
originally incurred to finance the purchase of goods by Party B.
6.7
Advances,
Investment and Loans.
Party B
will not lend money or credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any other interest in,
or
make any capital contribution to, any other Person, except that Parry A may
acquire and hold receivables owing to it, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with Customary
trade terms.
6.8
Transactions
with Affiliates.
Party B
will not enter into any transaction or series of related transactions, whether
or not in the ordinary course of business, with any Affiliate of Party B, other
than on terns and conditions substantially as favorable to Party B as would
be
obtainable by Party B at the time in a comparable arm’s-length transaction with
a Person other than an Affiliate and with the prior written consent of Party
A.
6.9
Capital
Expenditures.
Party B
will not make any expenditure for fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be
“capitalized in accordance with generally accepted accounting principles in
the
PRC and including capitalized lease obligations) during any period set forth
below (taken as one accounting period) which exceeds in the aggregate for Party
B the amount of commencing in the fiscal year.
6.10
Modifications
to Debt Arrangements, Agreements or Articles of Association.
Party B
will not (i) make any voluntary or optional payment or prepayment on or
redemption or acquisition for value of (including, without limitation, by way
of
depositing with the trustee with respect thereto money or securities before
due
for the purpose of paying when due) any Existing Indebtedness or (ii) amend
or
modify, or permit the amendment or modification of, any provision of any
Existing Indebtedness or of any agreement (including, without limitation, any
purchase agreement, indenture, loan agreement or security agreement) relating
to
any of the foregoing or (iii) amend, modify or change its Articles of
Association or Business License, or any agreement entered into by it, with
respect to its capital stock, or enter into any new agreement with respect
to
its capital stock.
6.11
Line
of Business.
Party B
will not engage (directly or indirectly) in any business other than those types
of business prescribed within the business scope of Party B’s business license
except with the prior written consent of Party A.
7.
TERM
AND TERMINATION
7.1 This
Agreement shall take effect on the date of execution of this Agreement and
shall
remain in full force and effect unless terminated pursuant to Clause
7.2.
7.2 This
Agreement may be terminated by Party A with or without reason.
7.3
If
Party
A electing properly to terminate this Agreement pursuant to Clause 7.2 shall
have no liability to Party B for indemnity, compensation or damages arising
solely from the exercise of such right. The termination of this Agreement shall
not affect the continuing liability of Party B to pay any Consulting Services
Fees already accrued or due and payable to Party A. Upon termination of this
Agreement, all amounts then due and unpaid to Party A by Party B hereunder,
as
well as all other amounts accrued but not yet payable to Party A by Party B,
shall forthwith become due and payable by Party B to Party A.
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8. PARTY
B’S
REMEDY UPON PARTY A’S BREACH
In
addition to the remedies provided elsewhere under this Agreement, Party A shall
be entitled to remedies permitted under PRC laws, including without limitation
compensation for any direct and indirect losses arising from the breach and
legal fees incurred to recover losses from such breach.
9. AGENCY
The
Parties are independent contractors, and nothing in this Agreement shall be
construed to constitute either Party to be the agent, Partner, legal
representative, attorney or employee of the other for any purpose whatsoever.
Neither Party shall have the power or authority to bind the other except as
specifically set out in this Agreement.
10. GOVERNING
LAW AND JURISDICTION
10.1 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the PRC.
10.2 Arbitration.
Any
dispute arising from, out of or in connection with this Agreement shall be
settled through friendly consultations between the Parties. Such consultations
shall begin immediately after one Party has delivered to the other Party a
written request for such consultation. If within ninety (90) days following
the
date on which such notice is given, the dispute cannot be settled through
consultations, the dispute shall, upon the request of any Shareholder with
notice to the other Party, be submitted to arbitration in China under the
auspices of China International Economic and Trade Arbitration Commission (the
“CIETAC”).
The
Parties shall jointly appoint a qualified interpreter for the arbitration
proceedings and shall be responsible for sharing in equal portions the expenses
incurred by such appointment.
10.3
Number
and Selection of Arbitrators.
There
shall be three (3) arbitrators. Party B shall select one (1) arbitrator and
Party A shall select one (1) arbitrator, and both arbitrator shall be selected
within thirty (30) days after giving or receiving the demand for arbitration.
Such arbitrators shall be freely selected, and the Parties shall not be limited
in their selection to any prescribed list. The chairman of the CIETAC shall
select the third arbitrator. If a Party does not appoint an arbitrator who
has
consented to participate within thirty (30) days after the selection of the
first arbitrator, the relevant appointment shall be made by the chairman of
the
CIETAC.
10.4 Language.
Unless
otherwise provided by the arbitration rules of CIETAC, the arbitration
proceeding shall be conducted in English. The arbitration tribunal shall apply
the arbitration rules of the CIETAC in effect on the date of the signing of
this
Agreement. However, if such rules are in conflict with the provisions of this
Clause, including the provisions concerning the appointment of arbitrators,
the
provisions of this Clause shall prevail.
10.5 Cooperation;
Disclosure.
Each
Party shall cooperate with the other Party in making full disclosure of and
providing complete access to all information and documents requested by the
other Party in connection with such proceedings, subject only to any
confidentiality obligations binding on such Parties.
10.6 Jurisdiction.
Judgment upon the award rendered by the arbitration may be entered into by
any
court having jurisdiction, or application may be made to such court for a
judicial recognition of the award or any order of enforcement
thereof.
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10.7 Continuing
Obligations.
During
the period when a dispute is being resolved, the Parties shall in all other
respects continue their implementation of this Agreement.
11.
ASSIGNMENT
No
part
of this Agreement shall be assigned or transferred by either Party without
the
prior written consent of the other Party. Any such assignment or transfer shall
be void. Party A, however, may assign its rights and obligations hereunder
to an
Affiliate.
12.
NOTICES
Notices
or other communications required to be given by any party pursuant to this
Agreement shall be written in English and Chinese and delivered personally
or
sent by registered mail or postage prepaid mail or by a recognized courier
service or by facsimile transmission to the address of relevant each party
or
both parties set forth below or other address of the party or of the other
addressees specified by such party from time to time. The date when the notice
is deemed to be duly served shall be determined as the follows: (a) a notice
delivered personally is deemed duly served upon the delivery; (b) a notice
sent
by mail is deemed duly served the tenth (10th)
day
after the date when the air registered mail with postage prepaid has been sent
out (as is shown on the postmark), or the fourth (4th)
day
after the delivery date to the internationally recognized courier service
agency; and (c) a notice sent by facsimile transmission is deemed duly served
upon the receipt time as is shown on the transmission confirmation of relevant
documents.
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Party
A:
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Shaanxi
Xilan Natural Gas Equipment Co.,Ltd.
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Address:
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3th
Floor, Xx.0 Xxxxxxx Xxxx
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Xx'xx
Xxxxxxx Xxxxxx,
Xx’xx
Xxxxxxx Xxxxxxxx, Xxxxx (710065)
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Fax:
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(000)
00000000
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Phone:
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(000)
00000000
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Party
B:
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Xi'an
Xilan Natural Gas Co, Ltd.
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Address:
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00xx
Xxxxx,
Xxx Xxxxxxxxxx X,
Xxxxxxx
XX,Xx-xxxxXxxx,
Xi’an,
Shanxi Province, China (710065)
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Fax:
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(000)
00000000
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Phone:
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(000)
00000000
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13. GENERAL
13.1 The
failure to exercise or de]ay in exercising a right or remedy under this
Agreement shall not constitute a waiver of the right or remedy or waiver of
any
other rights or remedies and no single or partial exercise of any right or
remedy under this Agreement shall prevent any further exercise of the right
or
remedy or the exercise of any other right or remedy.
13.2 Should
any Clause or any part of any Clause contained in this Agreement be declared
invalid or unenforceable for any reason whatsoever, all other Clauses or parts
of Clauses contained in this Agreement shall remain in full force and
effect.
13.3 This
Agreement constitutes the entire agreement between the Parties relating to
the
subject matter of this Agreement and supersedes all previous
agreements.
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13.4 No
amendment or variation of this Agreement shall be valid unless it is in writing
and signed by or on behalf of each of the Parties.
13.5 This
Agreement in written in both Chinese and English language and shall be executed
in two originals in English. In the event there is any conflict between the
Chinese version and the English version, the English version shall
prevail.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF
both
parties hereto have caused this Agreement to be duly executed by their legal
representatives and duly authorized representatives on their behalf as of the
date first set forth above.
PARTY
A:
| Shaanxi Xilan Natural Gas Equipment Co.,Ltd. | |||
| By: /s/ Qinan Ji | |||
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| Name: Qinan Ji | |||
| Title: Chairman |
| PARTY B: | |||
| Xi'an Xilan Natural Gas Co, Ltd. | |||
| By: /s/ Qinan Ji. | |||
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| Name: Qinan Ji | |||
| Title: Chairman |
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