SALES CONTRACT
 
Prefabricated Plate Heat Exchanger Unites
And Components of Separate Sub stations
 
 
 
 
 
 
 
The Buyer: Dalkia (Jiamusi) Urban Heating Company Ltd
 
The Seller: Shenyang Taiyu Machinery & Electronic Equipment Co. Ltd.
 
Contract No.: CS0101/063-0607
 
Sign date: June 18 2007

 
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The Contract is made and entered into through friendly negotiation by and
between Dalkia (Jiamusi) Urban Heating Company Ltd, a corporation organized and
existing under the laws of China (hereinafter referred to as the Buyer) and
Shenyang TAIYU Machinery & Electronic Equipment Co., Ltd. a corporation
organized and existing under the laws of China (hereinafter referred to as the
Seller or Taiyu) under [Contract Law of the People's Republic of China]
 
Taiyu promise design and function for its product and service to meet the end
user’s requirements in the Appendix 2 technical specification. And bear legal
duty.
 
1.           Taiyu Scope of Supply and Price
 
See Appendix 1 for details.
 
2.           The technology standard for the Contract Equipment
 
Technical Requirements from the Buyer: see Appendix 2 for details.
 
Standards for manufacturing goods: CJ/T 191-2004.
 
3.           Guarantee and Warranty
 
The Supplier warrants that it will repair and correct any Defects in the Supply,
that occur during the Warranty Period (including any required re-design or
re-engineering) at no cost to the Buyer. The Buyer’s warranty rights shall not
be reduced by the presence of spare parts at the Plant or the lack thereof.
 
The Supplier shall not be responsible of defects which are the consequences of
mishandlings, faulty operation or insufficient maintenance.
 
The Supplier’s internal costs for removal, replacement, and reinstallation of
materials and equipments necessary to all others internal costs incurred by the
Supplier as a result thereof, including transportation and taxes of whatever
nature, shall be borne by the Supplier, exclusive of any costs incurred by
Buyer, the user and any third parties, in particular site personnel costs, cost
for stopping/shut-downs /re-starting, and any other consequential costs.
 
The Supplier shall perform such remedial actions and make any tests in such a
manner and at such time so as to minimize revenue loss to the Buyer and
disruption of normal operations at the Plant. However, in case those shut-downs
of the plant are required to allow the Supplier to fulfill its obligation of
warranty, Buyer shall obtain corresponding shut-downs.
 
 
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3.1
The Seller guarantees that the Contract Equipment shall be completely new,
advanced in technology and superior in quality, free from any defect in design,
material and workmanship, suitable for the use and purpose specified in the
Contract and in conformity with the stipulation of the Appendix 1.

 
 
3.2
The Warranty Period of the Contract Equipment shall be two (2) heating seasons
from the date of delivery from the seller or latest August 2009, all the
warranty of this contract expire at August 2009

 
 
3.3
During the Warranty Period, the buyer should give written information in 7
working days if the buyer found the quality problems which are not caused by the
buyer. The seller has the responsibility to take necessary measures to avoid
damage coming and extending. Otherwise, the buyer has no right to demand
penalties of damage.

 
 
3.4
After receiving the notifying message from the buyer, the seller should repair
or replace the poor quality components in 7 working days, while the buyer should
provide necessary help.

 
 
3.5
The seller has no responsibility for below items

 
 
3.5.1
Damage cause by the buyer or the third party modifying without the agreement of
the seller.

 
 
3.5.2
Damage caused by the buyer or the third party deviating notice, instruction,
requirement, operating book or manual provide by the seller.

 
 
3.5.3
Damage caused by the buyer or the third party’s duty, including accident or
scrimshanks.

 
 
3.5.4
Other damage caused by the buyer or force majeure.

 
 
3.6
The seller will provide the guarantee and warranties 3.1 to 3.4 free of charge
if the buyer doesn’t break any items in this contract. If the buyer wants to
repair or change components under items 3.5.1 to 3.5.4, the seller will charge
the buyer for service, repairing, material and all other charges.

 
The Buyer shall promptly notify the Supplier in writing of the discovery of any
Defects in the equipment.
 
In the event of any Defects, the Supplier shall, at the Supplier’s own cost and
expense and in the shortest reasonably possible time, but in any event within
two (2) days for Defects that jeopardize the performance of the Plant or any
Section thereof, or twenty (20) days for other Defects following the Supplier’s
receipt of written notice of any Defect or the Supplier’s otherwise obtaining
knowledge of any Defect:
 
 
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(i)
Initiate the performance of, and thereafter diligently pursue the completion of,
any necessary Services to correct any Defects;

 
 
(ii)
Initiate and thereafter diligently pursue the completion of re-design,
re-engineering, organization of repair, reworking, and re-testing (as
appropriate) of defective materials and equipment or systems (and Materials and
Equipment or systems supplied by the Suppliers damaged as a result of such
defective materials and equipment or systems) and construction workmanship,
and/or construct at the Supplier’s expense any changes, modifications, or
additions to the Equipment supplied by the Supplier that are necessary and
furnish the Materials and Equipment in accordance with the standards set forth
in 16.1.? Any similar Materials and Equipment which suffer from a like Defect
shall also be corrected ; and

 
 
(iii)
Provide to the Buyer the relevant data and records regarding the Defect.

 
If the Supplier fails to initiate as above mentioned within the above time
periods or to diligently pursue such repair work, Buyer may undertake such
repairs at the Supplier’s expense, and such work Buyer, or others on behalf of
Buyer, shall not void the Supplier’s warranty hereunder.
 
4           Delivery and Acceptance
 
 
4.1
Delivery schedule:

 
Delivery Schedule of Jiamusi East Central Heating Project
 
 
4.1.1
One week after DALKIA settle the down payment, Taiyu deliver the PHEs for all
the separate stations.(Within 21 days after signed the contract)

 
 
4.1.2
Taiyu promises to deliver the pumps of separate stations from the 4th week after
signing the contract, and finish this delivery at 5-6th week（42 days）.

 
 
4.1.3
Start from 6th week, Finish the delivery of Automation components of separate
station before 9th week after signed the contract.

 
 
4.1.4
From 6th week after signing the contract, Taiyu promise to delivery the heating
units, and finish the delivery at 9th week.

 
 
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Remark: If we can sign contract at June 18th, Taiyu promise to finish the
delivery before Aug 25th 2007.
 
 
4.2
The seller could arrange delivery authored by the buyer; transit the goods to
the destination by truck or by railway. The installation company should unload
the goods in the appointed place. The delivery way in this contract is: by
truck.

 
 
4.3
The buyer should check the contract equipment within 15 days after receive the
goods and note the seller in writing in 20 days if there is any problem,
otherwise it will be deemed as acceptance.

 
5.           Payment
 
Term N°1: Thirty percent (30%) of the total Contract Price viz. CNY 3,645,665.00
(Say: three million six hundred and forty-five thousands six hundred and
sixty-five Chinese Yuan only) shall be paid by the buyer to the seller （before
June 30th 2007）as the down payment not later than 15 days after the contract
signed by both sides, Taiyu will give the general arrangement drawings within 5
working days after sign the contract.
 
Term N°2 : 30 % of the total Contract Price viz. CNY 3,645,665.00 (Say: three
million six hundred and forty-five thousands six hundred and sixty-five Chinese
Yuan only) at the signature of the Factory Acceptance Test. This payment should
be not later than 15 days after the FAT（before July 20th 2007）.
 
Term N°3 : Taiyu will issue 10% performance bond of the total Contract Price
viz. CNY 1,215,222.00 (Say: one million two hundred fifteen thousands two
hundred and twenty-two Chinese Yuan only) to DALKIA after DALKIA settle the
payment in Term N°2 (before August 15th 2007).
 
Term N°4 : 10 % of the total Contract Price viz. CNY 1,215,222.00  (Say: one
million two hundred fifteen thousands two hundred and twenty-two  Chinese Yuan
only) at the delivery in Jiamusi, this payment should be not later than 30 days
after the SAT (before October 2007).
 
TermN° 5 : 20 % of the total Contract Price viz. CNY 2,430,444.00 (Say: two
million forty hundred and thirty thousands four hundred forty-four Chinese Yuan
only) at the end of blank tests, this payment should be not later than 30 days
,after the blank tests and before September 15th,2007.
 
Term N°6 : 10 % of the total Contract Price viz. CNY1,215,222.00  (Say: one
million two hundred fifteen thousands two hundred and twenty-two  Chinese Yuan
only) at the signature of the Provisional Acceptance Certificate, Taiyu will
issue 5% warranty Bond first. And at the same time the 10% performance bond in
Term N°3 will be ended. This payment should be not later than 30 days (before
January 1 2008)
 
 
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A letter of guarantee issued by the seller’s bank covering five percent (5%) of
the total Contract Price viz. CNY 607,611.00(Say: six hundred and seven
thousands six hundred and eleven Chinese Yuan only) should be effected to the
Seller as quality warranty before the last payment from the buyer to the seller.
 
The Buyer will provide payments after receipt of supplier’s invoices
 
6.           Discrepancy
 
 
6.1
All disputes arising in connection with this Sales Contract or the Appendix
thereof shall be settled by way of amicable negotiation. Once one party requests
negotiation in writing, the other party should response immediately. In case of
no settlement can be reached in 20 days, the case at issue shall then be
submitted to China International Commerce Arbitration Institute. The arbitration
award shall be final and binding on both parties.

 
 
6.2
Notwithstanding any reference to arbitration, the two Parties shall continue to
perform their respective obligations under the Contract unless the two Parties
otherwise agree.

 
7.           Penalties
 
 
7.1
Late delivery: In case the Seller fails to meet the delivery schedules as
contract, the Seller shall pay late delivery penalties of two percent (2%) per
month of the delayed goods’ value; the upper limit is five percent (5 %) of the
delayed goods’ value. Once the seller accepts the penalties, the buyer has no
right to reject the goods. Late delivery caused by force majeure is excluding in
the penalties items.

 
 
7.2
The buyer collect good late or settle payment late: In case of the buyer collect
goods late except force majeure, the buyer should settle additional stock
charges, the stock charges is 2% per month of the contract value. In case of the
buyer settle payment late, the buyer should charge 0.6‰ of the contract value
one day, the seller can stop delivery and services temporarily, and the seller
has right to terminate the contract after the 60th days.

 
 
7.3
Taiyu will accept penalty, in case Taiyu’s equipments can not reach the designed
parameters specified in this contract.

 
 
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7.4
Returning

 
 
7.4.1
The scope of returning: Returning because of market price greatly dropping, and
there is no quality problems, no operating and unpacking goods in general
standard is excluded in this items. The validity date of returning: 60 days
after collecting goods.

 
 
7.4.2
In case of the returning goods is OK after the seller inspects, the seller will
deduct 80% of returning goods charges in the total contract value. All freight
charges will be paid by the buyer.

 
 
7.4.3
The buyer claims returning without collecting goods, the buyer will deduct 80%
of returning goods value in the total contract value.

 
8.           Indirectly losing
 
The indirectly losing caused by the buyer signing, executing, applying the
contract under any case, the seller doesn’t have responsibility.
 
9.           Responsibility limit
 
The upper limit of penalty to the seller is 5% of the contract value at any
case.
 
10.           Contract validity
 
The contract validates after signed by the two parties.
 
The period of validity of this contract is from validating till reaching the
quality guarantee date and the buyer settle all the payment.
 
11.           Intellectual Property and confidential Technology
 
The intellectual Property and Technological confidence relate with this
contract, including but not limit to product design, technology documents,
drawings and so on are belong to the seller. The buyer has responsibility to
keep confidential. The buyer shouldn’t copy the any above documents, and
shouldn’t leak to the third party.
 
12.           Others
 
 
12.1
This contract is made in eight (6) copies, four (4) for the Buyer and four (2)
for the Seller and execute in fax.

 
 
12.2
All amendments, supplements and alterations to the terms and conditions of the
Contract shall be made in written form and signed by the authorized
representatives of the two Parties through consultation.

 
 
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12.3
Any notice, request and communication relate with this contract between the two
parties should be made in written form.

 
12.4           Appendices to the Contract are integral parts of the Contract and
shall have the same legal force as the Contract itself.
 
The buyer (seal):
The seller (seal):
Representative:                                Wu Shao Bin,
Representative: Wu Jun
   
                  Thierry Stievenard
     
Address: Jiamusi Heilongjiang
Address: 10A-1, No.7 Str.,
 
Shenyang Econonomic &
 
Technological Development Zone
   
Telephone: 0086 13359552816
Telephone: +86 24 25363366
   
Fax:
Fax: +86 24 25365355
   
Tax Registration No.:
     
Post Code: 154002
Post Code: 110027
   
Bank Name: Jiamusi ICBC,
Bank Name:                                Agricultural Bank
of
            China Shenyang
 
            Development
 
            Zone Branch
   
Central branch
     
Account: 0904021109223051063
Account: 06-182001040008276