MONOCRYSTALLINE SILICON MODULAR
LONG TERM SUPPLY CONTRACT

(English Translation)

Entered by

Tianjin Huan-ou Semiconductor Technology Inc. Ltd.

And

Perfectenergy (Shanghai), Co. Ltd.

Date: July 2008

 
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Index

1.
The Parties
3
2.
Background
3
3. 
Obligations of the Seller
3
4. 
Obligations of the Buyer
5
5. 
Overdue Supply- Overdue Payment
7
6. 
Quality Warrant
7
7. 
Intellectual Property Rights
8
8. 
Special Rules
8
9. 
Miscellaneous
9

Appendix

Appendix 1
Annual Supply Volume
13
Appendix 2
Purchase Order Requirements
13
Appendix 3
Technical Specifications
13
Appendix 4
Price List
13
Appendix 5
Refund of Advance Payment
14
Appendix 6
Supplement Agreement
14

 
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I.              
The Parties

Seller: Tianjin Huan-ou Semiconductor Technology Inc, Ltd. (hereinafter, known
as “Seller”)

Address: No. 12 E Haitai Rd., Huayuan Chanyeyuan District (Huanwai)
Tianjin, China
Business License Number: 120193000006017
Legal Representative: Donghu Jin

Buyer: Perfectenergy (Shanghai), Ltd. (hereinafter, known as “Buyer”)

Address: No. 479 East Xinzhuang Rd.,
Shanghai, China
Business License Number: 310000400431094
Legal Representative: Wennan Li
 

II.            
Background

2.1  
The Seller is a manufacturer of semiconducting silicon and solar monocrystalline
silicon.

2.2  
The Buyer is a manufacturer of solar cell module.

2.3  
This agreement is entered into by and between the Seller and the Buyer so as to
ensure the rights and obligations of the parties.

2.4  
The purpose of entering this agreement is to ensure and consolidate the
coordination and cooperation between the parties during the agreed term of 5
years from the signing date to December 31, 2013, to avoid or reduce the
unexpected damages caused by the market change, and to assure the fulfillment of
the obligations of the parties.

2.5  
Because of the large total price of the deals involved, this Agreement serves as
the basis and interim of the prospective contract.

III.           
Obligations of the Seller

3.1  
       The Supply Volume

3.1.1       
The Supply Volume Based on Agreement

Based on agreement, the Seller and the Buyer entered into a five-year
monocrystalline silicon modular supply contract. See Appendix 1 Annual Supply
Volume. If the actual annual supply volume differs from the number under
Appendix 1(except situations under 3.1.2), the parties shall reach an agreement
in writing regarding the supply volume to be realized in the coming year and
other changes incurred accordingly at least 90 days before the start of the
coming year. The parties have 30 days to negotiate and change the supply volume
for the next year. If the parties fail to do so, the number under Appendix 1 for
the next year applies.
 
 
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3.1.2      
Adjustment of Supply Volume

3.1.2.1   
Adjustment of Annual Supply Volume

Any party can increase or decrease the supply volume by less than 5% of the
Annual Supply Volume under Appendix 1. However, the adjustment is subject to
consent of the other party, who shall be informed of such change in writing at
least 45 days before the supply of the coming year.

3.1.2.2   
Monthly Supply

The monthly supply volume can be regarded as 1/12 of the annual supply volume of
the same year, except the parties agree on a change of supply volume in writing
at least 15 days before the supply of the next month starts.
The parties can make a change up to 10% of the product (including product
category and product specification) every month if such change will not affect
the Seller’s performance of contract to other buyers. An agreement of such
change must be made at least 45 days before the date of delivery of products. If
the Buyer requires an increase or a decrease of the supply volume at a rate
higher than the one under Article 3.1.2.1, the Buyer shall compensate the Seller
for the production adjustment, storage, and any influence on the supply volume
of other buyers (while the Seller shall make all efforts to reduce such
expense). If the Seller requires an increase or a decrease of the supply volume
at a rate higher than the one under Article 3.1.2.1, the Seller shall compensate
the Buyer for production adjustment, storage and any breach of contract (while
the Buyer shall make all efforts to reduce such expense).

3.1.2.3   
Extra Orders

The Seller only warrants the supply volume for the five years under this
Agreement. However, the Seller shall make all efforts to accept the Buyer’s
extra orders (as long as such orders do not affect the Seller’s performance of
other contracts).

3.1.2.4   
Actual Supply

The actual supply means the adjusted supply volume under Article 3.1.2
Adjustments of Supply Volume in a contract year.
The actual supply shall be regarded as the basis of the Buyer’s obligation, no
matter whether the actual supply is more (due to the extra supply in Article
3.1.2.3) or less (due to insufficient supply) than the adjusted annual supply
volume.

3.1.2.5  
The Confirmation of Order

The Seller shall confirm the order within 7 working days after receiving it.
(See Article 4.1 Purchase Order).
The Seller shall not reject any purchase order, except under the following
situations: (a) the order discords with Appendix 2 Purchase Order Requirements;
(b) the number of product in the order exceeds the supply volume under Article
3.1.2, unless the Seller agrees otherwise; (c) other discordance with this
Agreement.
The Sellers shall make no changes to the order after confirmation.

 
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3.2  
Product Specification - Quality

The product shall match the specification requirement under Appendix 3.

3.3  
Transportation - Shipment - Packaging

See the information of the frequency of transporting, destination of shipment,
delivery and packaging requirement under Appendix 3. The Seller shall, in
accordance with this Agreement and the confirmed order, package the product,
arrange and pay for the transportation, and make the delivery at the agreed time
and place.
After the shipping starts, the Seller shall give notice to the Buyer timely by
fax or express mail of: (a) the order number; (b) a brief description of the
product; (c) an estimated time of arrival; (d) tracking number and the method of
shipping.

3.4  
Invoice

Unless negotiated and agreed in writing otherwise, the Seller shall issue a
value-added-tax invoice for the Buyer in accordance with the relevant tax laws
and regulations.
 

IV.           
Obligations of the Buyer

4.1  
Purchase and the Purchase Order

The Buyer shall pay for the actual supply under Article 3.1.2.4.
The parties shall agree on the annual supply volume for the coming year 30
working days before the start of the coming year. After that, the Buyer shall
provide the purchase order for the coming year within 15 working days.
The purchase order shall match the requirements under Appendix 2 and include at
least the following information: (a) indicating the purchase order is based on
this Agreement; (b) product name, price and number; (c) delivery requirement and
the place for taking the delivery; (d) required delivery date; (e) issue date of
purchase order.
The purchase order is valid only under the terms of this Agreement (including
the Appendix).
As under Article 3.1.2.5, the Buyer is bond by the purchase order while the
Seller is bond by the confirmation of order.
When any item or condition under an order disagrees with this Agreement, the
order prevails if the Seller confirms the order in writing. Otherwise, this
Agreement prevails.

4.2  
The Price and the Price Adjustment

The Buyer shall pay the agreed price for the purchased product. See the product
price under Appendix 4.
The Buyer shall compensate the Seller for the value-added-tax based on the
value-added-tax invoice issued by the Seller.

4.3  
Advance Payment, Deposit and Compensation

Method of Payment: the parties shall use wire transfer to send the payment to
the other party’s bank account in its registered place in China.
 
 
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4.3.1      
Advance Payment

The term of this Agreement is five years. The parties agree on the signing date
that the total sale volume from 2008 to 2013 is 81,710,000 units with a total
value of 2,449,060,000.00 RMB.
To ensure the cooperation between the parties, the Buyer shall make the advance
payment to the Seller in the year of signing this Agreement (2008). The total
advance payment is 100,000,000.00 RMB. This payment will be made by three
installments.
Time of payment: the Buyer shall pay 30,000,000.00 RMB by September 20, 2008;
the Buyer shall pay 30,000,000.00 RMB by November 20, 2008; the Buyer shall pay
40,000,000.00 RMB by December 20, 2008.

4.3.2      
Refund of Advance Payment

The Seller shall refund the advance payment during the five years period from
2009 to 2013, i.e. 20% of the total advance payment each year (20,000,000.00 RMB
per year). The total refund of the five years shall be 100,000,000.00 RMB. The
Seller shall pay the refund no later than October 31 of each year.

4.3.3      
The Fund Cost’s Influence on Price

According to Article 4.3.1, the advance payment will be a long-term saving in
the Seller’s account, which will affect 10% of the Buyer’s fund cost per year
and become a same amount of profit to the Seller. Through negotiations between
the parties, the Seller promised to compensate the fund cost to the Buyer every
year. The method of compensation is stated in the price of product.

4.3.4      
Invoice and Payment

The Seller shall issue the product delivery instruction and the value-added-tax
invoice to the Buyer at the time of the delivery.
The Buyer shall pay the product and the value-added tax and provide proof of
such payment to the Seller within 3 working days after receiving the notice of
delivery or the bill of loading.

4.3.5      
Method of Payment

The parties shall use wire transfer to send the payment to the other party’s
bank account in its registered place in China or shall use other method agreed
by both parties.

4.4  
Advance Notice of Purchase

Although the number and type of product are based on the confirmation of order,
the Buyer shall give periodical advance notice to the Seller of the product to
be purchased. In accordance with the Agreement, the times to give such notice
are: (a) the annual rolling advance notice each year shall be made in 90 days
before the next year; (b) the advance notice within a year shall be made
quarterly, in 15 days before the next quarter.
 
 
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4.5  
Product Inspection

4.5.1       
Packaging, Exterior of Product and Quantity Inspection

Within 3 working days of receiving a shipment, the Buyer shall inspect the
packaging, exterior quality and quantity of the product and respond to the
Seller in writing. Confirmed by both parties, if the packaging, exterior quality
or quantity does not comply with this Agreement or the confirmed purchase order,
the Seller shall change or supplement the product within 20 working days after
receiving the Buyer’s notice.

4.5.2       
Quality Inspection

The Buyer shall inspect the quality of the product timely after receiving a
shipment. If the product does not match the required quality specification or
has any other defect, the Buyer shall provide a written inspection result to the
Seller within 20 working days after receiving the shipment. If the Buyer fails
to provide such result, the product is regarded as qualified and the Seller is
not liable for any quality defect caused by the Buyer.

V.           
Overdue Payment and Overdue Delivery

If any overdue payment and overdue delivery is resulted from a force majeure
event, the breaching party shall be liable under this Article.
The Seller shall pay the damage of 0.3% of the delivered product value every
week (less than one week is also regarded as one week) if the delivery is
overdue because of a reason other than a force majeure event or reasons
acknowledged by the Buyer.
The Buyer shall pay the damage of 0.3% of the payment every week (less than one
week is also regarded as one week) if payment is overdue because of a reason
other than a force majeure event or reasons acknowledged by the Seller. If the
payment is due over three weeks, the Seller has the right to terminate the
Agreement and inform the Buyer in writing. The Buyer shall pay the damage and
all the payables within 5 working days after receiving the notice of termination
from the Seller.

VI.          
Quality Warrant

6.1  
Quality Warrant of Product

Under Article 3.2 and 3.3, the Seller shall assure that the quality of product
matches the requirements under Appendix 3.
Due to the physical and chemical stability of monocrystalline silicon modular,
the solar industry has longer production and sale cycles and longer quality
inspection cycles compared with other industries. The parties agree that the
term of quality warranty is 8 weeks after the delivery of product.

6.2  
Quality Evaluation and Remedy

If any defect of product occurs during the warranty period, the Buyer shall
inform the Seller of the defect and the number of the defected product in
writing or other means (including fax, email). After both parties confirm the
above information, the Seller shall change the defected product timely and
ensure that the changed product matches the specification requirements.

 
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VII.         
Intellectual Property

The Seller shall warrant that the sale and use of its product will not infringe
the intellectual property right of a third party.
Once the Buyer is aware of the fact that the Seller’s product may infringe the
intellectual property right of a third party, the Buyer shall inform the Seller
and provide relevant evidence of such infringement. However, the Seller is not
liable for the damages caused by the following infringement:

(1)  
The infringement is caused by a composite of the Seller’s product and the
product of other party or the product required by the Seller. The infringement
warning, charge or litigation aims at the composite, not at the Seller’s product
in the composite not modified by the Seller.

(2)  
The infringement is caused by the modification of the Buyer after the product
reaches the Buyer.

 

VIII.        
Special Rules

8.1  
The Use of Product

The Buyer agrees that the products under the terms of sale, delivery and payment
of this Agreement are only used to produce solar cell and module and are not to
be sold or used for other purposes. The Seller has the right to require remedy
if the Seller uses the products for other purposes.

8.2  
Liability Scope

The monetary liability of any party shall not exceed 10% of the total value of
the transaction under this Agreement.
The above liability scope does not have effect on the liability of the breaching
party under Article 4, 6 and 7.

8.3  
Force Majeure

Any party shall not be liable for breach of contract due to a force majeure
event, which includes war, terrorist attack, government suppression and
blockade, domestic transportation failure, change of laws and regulations,
government act, natural disaster such as storm and fire, explosion and any other
unforeseeable, unavoidable and irresistible reasons. When a force majeure event
happens, the breaching party shall inform the non-breaching party of the reason
of non-performance or the late performance within 30 days after the force
majeure event happens. If the force majeure event remains more than 30 days, the
parties shall meet and negotiate how the Agreement will be carried out. If the
force majeure event remains more than two months, any party has the right to
terminate the Agreement after informing the other party in writing. The
Agreement will be terminated when the written notice reaches the other party.

 
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IX.           
Miscellaneous

9.1  
The Effectiveness and Validation Period of the Agreement

Once the parties agree that this Agreement is effective, this Agreement becomes
binding and enforceable.
The conditions of effectiveness: A. the Buyer makes the advance payment to the
Seller according to Article 4.3; B. when condition A satisfied, the parties
agree that the Agreement becomes effective on December 20, 2008; C. as public
companies, both parties shall have their shareholder meetings approve the
Agreement.
Validation period: this Agreement is effective for five years since the
effective date, until December 31, 2013.

9.2  
The Termination of the Agreement

During the validation period of this Agreement, if any party does not comply
with the specification of business and technology agreed by both parties
(including this Agreement and its Appendix), the breaching party shall make
remedy to the non-breaching party in accordance with this Agreement.
If the breaching party fails to make remedy or gives any writing notice in 60
days, the non-breaching party has the right to terminate the Agreement
unilaterally and inform the breaching party in writing.
The termination of this Agreement by any reason shall not affect the obligations
generated before the termination and other obligations that are not affected by
the termination (see Article 7). The termination by one party shall not make the
purchase order confirmed before the termination invalid. The Seller shall supply
the product based on the purchase order and the Buyer shall pay all fees
generated before the termination.
If any dispute occurs, no damage shall be paid before the parties settle the
dispute.

9.3  
Calculating - Packaging

All products shall be calculated by calculation tools in accordance with the
state standard. The calculated number is the actual supply volume.
The Seller shall package the products properly so as to ensure a safe
transportation.

9.4  
Confidentiality

The parties shall keep the relevant information confidential during and after
the validation period of this Agreement. No party shall disclose the identities
of relevant personnel, or any articles of this Agreement. No party shall
disclose the information of the products, transactions, business relationships,
organizations, production methods, financial status, trade secret or any other
relevant information that deemed confidential. However, such information can be
disclosed to the confidential agreement signers and relevant employees, experts,
financial advisers, relevant governmental agencies and judicial institutions.
Confidential information does not include the information that needs to be
disclosed to the public according to laws and regulations, court orders or the
company management decisions. Confidential information does not include the
information that must be disclosed according to security exchange regulations,
such as information of company management and number of shares. However, before
disclosure, the disclosing party shall provide the information to the other
party and get recognition from the other party.
 
 
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9.5  
Modification and Supplement of the Agreement

See extra agreement under Appendix 6. When the extra agreement disaccords with
the Agreement, the Appendix 6 applies.
This Agreement (including its Appendix) is the only final and complete contract
made by the Seller and the Seller. No concession, announcement, promise,
persuasion, dictation, interpretation or supplement shall be made, except the
parties negotiate and agree otherwise and resort it in writing. This Article
applies to all the unilateral purchase order under this Agreement.
Any modification of this Agreement shall not be effective unless signed by both
parties. Any modified article does not affect the validity of other articles.
Any other agreement made by the parties that is supplemental to this Agreement
shall be referred as Supplement Agreement in Appendix 6.
If agreed by both parties, this Agreement can be performed in part. The
performance of every part of the Agreement shall accord with the original
Agreement. The combination of partial performances shall have the same effect to
the performance of the whole Agreement. The copies of signed partial agreement
have the same effect as the original partial agreement.

9.6  
Notice

All the notice, requirements and information shall be communicated by email and
domestic express delivery. Fax and email shall be kept for later reference.
Contact information:
Buyer: Perfectenergy (Shanghai), Ltd.
Address: No. 479 E Xinzhuang Rd., Shanghai, China 201108
Tel: 021-54880958
Fax: 021-54888243
Contact Person: Wennan Li, Diping Zhou
Email: jack.li@perfectenergy.com.cn

Seller: Tianjin Huan-ou Semiconductor Technology Inc, Ltd.
Address: No. 12 E Haitai Rd., Huayuan Chanyeyuan District (Huanwai), Tianjin,
China 300384
Tel: 022-23786028
Fax: 022-24382296
Contact Person: Haoping Shen, Xiaohua Liao
Email: shhp@eyou.com, piro3118@163.com

Any party shall inform the other party if any of the above information is
changed. Such change shall be effective 5 days after the other party receiving
the notice.

9.7  
The Change of Controlling Person

A change of the controlling person of any party shall not affect the validity
and enforceability of this Agreement. Before such change, the controlling person
shall inform the succeeding controlling person of the validity and
enforceability of this Agreement so as to protect the rights and interests of
the other party.
The rights and obligations under this Agreement shall not be assigned to a third
party without the permission of the other party in writing. Any violation of
this Article shall be deemed as a breach of contract.
 
 
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9.8  
Applicable Laws and Dispute Settlement

9.8.1       
Applicable Laws

The laws of People’s Republic of China are applicable to this Agreement.

9.8.2       
Dispute Settlement

Both parties shall settle their disputes through negotiations. If a dispute
remains unresolved through negotiation after 60 days, any party can submit the
dispute to the Beijing Office of China Economic and Trade Commission.

9.8.3       
Waiver of Immunity

Any party shall waive its immunity of person and assets so as to ensure the
performance of this Agreement, no matter such immunity is granted by any
arbitration commission, any court or litigation (such as the collateral of court
decision and supplement of other legal procedures).

9.8.4       
Waiver of Judicial Decision

With the judicial settlement agreed, the parties still have right to waive
judicial settlement, litigation and counterclaim regarding this Agreement and
any infringement.

9.9  
Copies of Agreement

Four copies of this Agreement shall be made. Each party owns 2 copies.
 

 
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Signature Page

Seller: Tianjin Huan-ou Semiconductor Technology Inc, Ltd.
Address: No. 12 E Haitai Rd., Huayuan Chanyeyuan District (Huanwai), Tianjin,
China

Signature:

Stamp:

Title:

Date: July 17, 2008

Buyer: Perfectenergy (Shanghai), Ltd.
Address: No. 479 E Xinzhuang Rd., Shanghai, China 201108

Signature:

Stamp:

Title:

Date: July 20, 2008

 
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Appendix 1: Annual Supply Volume

(Unit: 10,000 pieces)
Time of Supply
2009
2010
2011
2012
2013
Total
             
Number of Supply
1275
1715
1720
1726
1735
8171

Appendix 2: Purchase Order Requirements

1.    
The purchase order shall accord with all articles of this Agreement.

2.    
The purchase order shall state the product name, price and number.

3.    
The purchase order shall state the delivery articles and delivery place.

4.    
The purchase order shall state the time of delivery.

5.    
The purchase order shall state the time of issuance.

6.    
The purchase order shall state all the other agreement of the parties.

Appendix 3: Technological Specifications

1.    
Product Description: Monocrystalline silicon (SOLAR-WAFER)

2.    
Product Specificaton:

Conductor type: Type P
Crystallographic directions: <100>+3
Size: 125mm x 125mm+0.5mm
Diagonal diameter:  ≥ Φ 150 mm ± 0.5mm
Electrical resistance:  0.5-3 Ω C.T , 3-6 Ω, cm
TTV:  < 50 µm
Minority carrier life:  > 10 µs
Thickness Stall:  180 + 20 µm
No fracture, no hole, no stria

Appendix 4: Supply Cycle, Quantity and Price (2008-2013)

(Unit: 10,000 pieces/ 10,000 RMB)
Time of Supply
2009
2010
2011
2012
2013
Total
             
Number of Supply (10,000 pieces)
1275
1715
1720
1726
1735
8171
             
Price (RMB/Piece)
47.5
35
26
23.5
22.5
               
Annual Purchase (10,000 RMB)
60562.5
60025
44720
40561
39037.5
244906

 
 
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Price Floatation: to remain the competitiveness, the parties agree that they can
adjust the price based on the market price since 2011. The agreed price can have
a +5% floatation after negotiation.

Appendix 5: Refund of Advance Payment

(Unit: RMB)
Year
2009
2010
2011
2012
2013
           
Refund Per Year
20,000,000
20,000,000
20,000,000,
20,000,000
20,000,000
           
Advance Payment Balance (at the end of year)
80,000,000
60,000,000
40,000,000
20,000,000
0

Appendix 6: Supplement Agreement and Modification
 
 
 
 
 
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