OPERATING AGREEMENT (English Translation)
Exhibit
10.2
(English
Translation)
This
Operating Agreement (this “Agreement”) is dated August 17, 2007 and effective as
of March 8, 2006, and is entered into between and among 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 19th
floor, Van Metropolis B, Tangyan RD,Hi-techZone, Xi’an, Shanxi Province,
China, and each of the shareholders of Party B listed on Appendix 1
(“Shareholders”).
Party
A, Party B, Chairman and Shareholders are collectively referred to in this
Agreement as the “Parties.”
RECITALS
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1.
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Party
A has technological expertise in natural gas transportation and
machinery.
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2.
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Party
B is a natural gas company with joint stock limited liability duly
incorporated in Xi’an, Shanxi Province under PRC
law.
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3.
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The
Chairman is the chairman and a shareholder of Party B; the Shareholders
are shareholders of Party B. Chairman and Shareholders collectively
own
over 50% of the equity interests of Party B;
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4.
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Party
A has established a business relationship with Party B by entering
into
the “Consulting Services Agreement” (hereinafter referred to as the
“Services
Agreement”);
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5.
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Pursuant
to the above-mentioned agreement between Party A and Party B, Party
B
shall pay certain consulting fees to Party A.
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6.
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The
Parties are entering into this Agreement define and clarify the
relationship between Party A and Party B, relating to Party B’s
operations.
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NOW
THEREFORE,
all
parties of this Agreement hereby mutually agree as follows:
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1.
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Party
A agrees, subject to the satisfaction of the relevant provisions
by Party
B herein, as the guarantor for Party B in the contracts, agreements
or
transactions in connection with Party B’s operation between Party B and
any other third party, to provide full guarantee for the performance
of
such contracts, agreements or transactions by Party B. Party B agrees,
as
a counter-guarantee, to pledge all of its assets, including accounts
receivable, to Party A. According to the aforesaid guarantee, Party
A
wishes to enter into written guarantee agreements with Party B’s
counter-parties thereof to assume liability as the guarantor when
and if
needed; therefore, Party B, the Chairman and Shareholders shall take
all
necessary actions (including but not limited to executing and delivering
relevant documents and filing of relevant registrations) to carry
out the
arrangement of counter-guarantee to Party
A.
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2.
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In
consideration of the requirement of Article 1 herein and assuring
the
performance of the various operation agreements between Party A and
Party
B and the payment of the payables accounts by Party B to Party A,
Party B
together with the Chairman and the Shareholders hereby jointly agree
that
Party B shall not conduct any transaction which may materially affects
its
assets, obligations, rights or the operations of Party B (excluding
the
business contracts, agreements, sell or purchase assets during Party
B’s
regular operation and the lien obtained by relevant counter parties
due to
such agreements) prior written consent of Party A, including but
not
limited to the following:
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2.1
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To
borrow money from any third party or assume any debt;
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2.2
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To
sell, license, transfer, or acquire from or to any third party any
asset
or right, including but not limited to any intellectual property
right;
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2.3
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To
provide any guarantees to any third parties using its assets or
intellectual property rights;
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2.4
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To
assign to any third party and of its business agreements.
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3.
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In
order to ensure the performance of the various operational agreements
between Party A and Party B and the payment of the various payables
by
Party B to Party A, Party B together with the Chairman and the
Shareholders hereby jointly agree to accept, from time to time, advice
regarding corporate policy advise provided by Party A in connection
with
company’s daily operations, financial management and the employment and
dismissal of the company’s employees.
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4.
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Party
B together with the Chairman and the Shareholders hereby jointly
agree
that the Chairman and the Shareholders shall appoint the person
recommended by Party A as the directors of Party B, and Party B shall
appoint Party A’s senior managers as Party B’s General Manager, Chief
Financial Officer, and other senior officers. If any of the above
senior
officers leaves or is dismissed by Party A, he or she will lose the
qualification to take any position in Party B and Party B shall appoint
other senior officers of Party A recommended by Party A to take such
position. The person recommended by Party A in accordance with this
Article herein should comply with the stipulation on the qualifications
of
directors, General Manager, Chief Financial Officer, and other senior
officers pursuant to applicable law.
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5.
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Party
B together with the Chairman and the Shareholders hereby jointly
agree and
confirm that Party B shall seek the guarantee from Party A first
if it
needs any guarantee for its performance of any contract or loan of
flow
capital in the course of operation. In such case, Party A shall have
the
right but not the obligation to provide the appropriate guarantee
to Party
B on its own discretion. If Party A decides not to provide such guarantee,
Party A shall issue a written notice to Party B immediately and Party
B
shall seek a guarantee from other third party.
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6.
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In
the event that any of the agreements between Party A and Party B
terminates or expires, Party A shall have the right but not the obligation
to terminate all agreements between Party A and Party B including
but not
limited to the Services Agreement.
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7.
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Any
amendment and supplement of this Agreement shall be made in writing.
The
amendment and supplement duly executed by all parties shall be deemed
as a
part of this Agreement and shall have the same legal effect as this
Agreement.
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8.
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If
any clause hereof is judged as invalid or non-enforceable according
to
applicable laws, such clause shall be deemed invalid only with respect
to
the affected clauses, and without affecting other clauses hereof
in any
way.
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9.
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Party
B shall not assign its rights and obligations under this Agreement
to any
third party without the prior written consent of Party A. Party B
hereby
agrees that Party A may assign its rights and obligations under this
Agreement at its discretion and such transfer shall only be subject
to a
written notice sent to Party B by Party A, and no any further consent
from
Party B will be required.
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10.
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All
parties acknowledge and confirm that any oral or written materials
communicated pursuant to this Agreement are confidential documents.
All
parties shall keep secret of all such documents and not disclose
any such
documents to any third party without prior written consent (except
the
written consent of the Shareholders shall not be required) from other
parties except under the following conditions: (a) such documents
are
known or shall be known by the public (excluding the receiving party
discloses such documents to the public without authorization); (b)
any
documents disclosed in accordance with applicable laws or rules or
regulations of stock exchange; (c) any documents required to be disclosed
by any party to its legal counsel or financial consultant for the
purpose
of the transaction of this Agreement by any party, and such legal
counsel
or financial consultant shall also comply with the confidentiality
as
stated hereof. Any disclosure by employees or agencies employed by
any
party shall be deemed the disclosure of such party and such party
shall
assume the liabilities for its breach of contract pursuant to this
Agreement. This Article shall survive termination of this Agreement.
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11.
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This
Agreement shall be governed by and construed in accordance with the
laws
of the PRC.
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12.
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The
parties shall strive to settle any dispute arising from the interpretation
or performance of this Agreement through friendly consultation. In
case no
settlement can be reached through consultation, each party can submit
such
matter to China International Economic and Trade Arbitration Commission
(“CIETAC”)
for arbitration in accordance with its rules of CIETAC. The arbitration
proceedings shall take place in Beijing and shall be conducted in
Chinese.
Any resulting arbitration award shall be final and conclusive and
binding
upon all the parties.
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13.
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This
Agreement shall be executed by a duly authorized representative of
each
party as of the date first written above and become effective
simultaneously.
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14.
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Notwithstanding
Article 13 hereof, the parties confirm that this Agreement shall
constitute the entire agreement of the Parties with respect to the
subject
matters therein and supersedes and replaces all prior or contemporaneous
verbal and written agreements and
understandings.
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15.
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Party
A shall have the right to terminate this Agreement at any time by
issuing
a thirty (30) days prior written notice to Party B.
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16.
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This
Agreement is written in both Chinese and English language and in
the event
there is any conflict between the Chinese version and the English
version,
the English version shall prevail.
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17.
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This
Agreement has been executed in duplicate originals, each Party has
received one (1) duplicate original, and all originals shall be equally
valid.
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[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF
each
party hereto has caused this Agreement duly executed by itself or a duly
authorized representative on its behalf as of the date first written above.
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PARTY
A:
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Shaanxi
Xilan Natural Gas Equipment Co.,Ltd.
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By:
/s/
Qinan Ji
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Name:
Qinan
Ji
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Title:
Chairman
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PARTY
B:
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Xi'an
Xilan Natural Gas Co, Ltd.
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By:
/s/
Qinan Ji
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Name:
Qinan
Ji
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Title:
Chairman
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SHAREHOLDERS:
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By:
/s/ Qinan Ji
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Name:
QINAN JI
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By:
/s/ Xxxxxxxx Xxx
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Name:
XXXXXXXX XXX
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By:
/s/ Shaohu Jia
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Name:
SHAOHU JIA
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By:
/s/ Xxxxxx Xxx
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Name:
XXXXXX XXX
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By:
/s/ Liyin Shi
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Name:
LIYIN SHI
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By:
/s/ Yuai She
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Name:
YUAI SHE
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By:
/s/ Xxxxxx Xxx
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Name:
XXXXXX XXX
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By:
/s/ Shengming Li
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Name:
SHENGMING LI
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By:
/s/ Xiang Ji
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Name:
XIANG JI
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By:
/s/ Jiaoyin Shi
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Name:
JIAOYIN SHI
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By:
/s/ Xingiao Han
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Name:
XINGIAO HAN
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