Document:

Exhibit
4.2

     

    RF
INDUSTRIES, LTD.

    INCENTIVE
STOCK OPTION AGREEMENT

     

    THIS
INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”), is made as of the __ day of
-___________, 200_ by and between RF Industries, Ltd., a Nevada corporation (the
“Company”), and ________ _________ (“Optionee”).

     

    RECITAL

     

    The
action of the Board of Directors of the Company (the “Board”) has authorized the
granting to Optionee as an employee of the Company of an incentive stock option,
pursuant to the Company’s 2010 Stock Incentive Plan (the “Plan”), to purchase
the number of shares of common stock of the Company specified in Section 1
hereof, at the price specified therein, such option to be for the term and
upon  the terms and conditions hereinafter stated.

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the premises and of the undertakings of the
parties hereto contained herein, it is hereby agreed:

     

    1.           Number of Shares; Option
Price.  Pursuant to said action of the Board, the Company
hereby grants to Optionee the option (“Option”) to purchase, upon and subject to
the terms and conditions of the Plan, __________ shares of common stock of the
Company (“Shares”) at the price of $______ per Share (which price shall be no
less than the fair market value of a Share on the date of grant of this
Option).

     

    2.           Term.  This
Option shall expire on the day before the ______ anniversary of the date of
grant of the Option (the “Expiration Date”), unless such Option shall have been
terminated prior to that date in accordance with the provisions of this
Agreement.

     

    3.           Shares Subject to
Exercise.  This Option shall be exercisable in installments as
to ___________ of the number of Shares on the first ______ anniversaries of the
date hereof, as to ___________ of the number of Shares on the second ______
anniversaries of the date hereof, and as to ___________ of the number of Shares
on the third ______ anniversaries of the date hereof provided, however, that an
installment shall not become exercisable if the Optionee is not employed as an
employee of the Company, or any of its subsidiaries, as of such anniversary
date.  Once exercisable, the Option shall thereafter remain
exercisable as to such Shares for the term specified in Section 2 hereof, unless
Optionee’s employment is terminated pursuant to Section 6 hereof or the Option
is terminated pursuant to a Corporate Transaction (as defined in Section 15
hereof).

     

    4.           Method and Time of
Exercise.  The Option may be exercised by written notice
delivered to the Company at its principal executive office stating (i) that
Optionee has no plan to violate Section 16 in the future, (ii) that Optionee
agrees to notify the Company within ten (10) days of a violation of Section 16
hereof, and (iii) the number of shares with respect to which the Option is being
exercised, together with:

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (A)          a
check or money order made payable to the Company in the amount of the exercise
price and any withholding tax, as provided under Section 5 hereof;
or

     

    (B)           if
expressly authorized in writing by the Board, in its sole discretion, at the
time of the Option exercise, the tender to the Company of shares of the
Company’s common stock owned by Optionee having a fair market value not less
than the exercise price; or

     

    (C)           if
expressly authorized in writing by the Board, subject to the Sarbanes-Oxley Act
of 2002, in its sole discretion, at the time of the Option exercise, the
Optionee’s full recourse promissory note in a form approved by the Company;
or

     

    (D)          if
any other method such as cashless exercise is expressly authorized in writing by
the Board, in its sole discretion, at the time of the Option exercise, the
tender of such consideration having a fair market value not less than the
exercise price.

     

    Only
whole shares may be purchased.

     

    5.           Tax
Withholding.  In general, no tax withholding is required with
respect to this Option or its exercise.  If, however, for any reason
all or part of this Option is considered to be a non-qualified stock option,
rather than an incentive stock option, then, as a condition to exercise of such
portion of this Option, the Company may require Optionee to pay over to the
Company all applicable federal, state and local taxes which the Company is
required to withhold with respect to the exercise of this Option in that
connection.  At the discretion of the Board and upon the request of
Optionee, the minimum statutory withholding tax requirements may be satisfied by
the withholding of Shares otherwise issuable to Optionee upon the exercise of
this Option.

     

    6.           Exercise on Termination of
Employment.  If for any reason Optionee ceases to be employed
by the Company or any of its subsidiaries (such event being called a
“Termination”), this Option (to the extent then exercisable) may be exercised in
whole or in part at any time, except with respect to a Termination For Cause,
only within 90 days of the date of such Termination, but in no event after the
earlier of the Expiration Date or a Corporate Transaction which terminates the
Option pursuant to Section 15 hereof.  For purposes of this Agreement,
“employment” means service as an employee.  For purposes of this
Agreement, Optionee’s employment shall not be deemed to terminate by reason of a
transfer to or from the Company or its subsidiary or among such entities, or
sick leave, military leave or other leave of absence approved by the Board, if
the period of any such leave does not exceed ninety (90) days or, if longer, if
Optionee’s right to reemployment by the Company or any Affiliate is guaranteed
either contractually or by statute.  For purposes of this Agreement,
“Termination For Cause” shall mean Optionee’s loss of employment by the Company
or any of its subsidiaries due to Optionee’s (a) willful breach or habitual
neglect or continued incapacity to perform Optionee’s required duties, (b)
commission of acts of dishonesty, fraud, misrepresentation or other acts of
moral turpitude as would prevent the effective performance of Optionee’s duties
or (c) termination for cause under any employment agreement between the Company
and Optionee (as defined therein).  In the event Optionee’s employment
by the Company or any of its subsidiaries is Terminated For Cause, then the
Option shall cease to be exercisable as of the date of such
Termination.

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    7.           Non-Transferability.  This
Option may not be assigned or transferred except by will or by the laws of
descent and distribution, and may be exercised only by Optionee during the
Optionee’s lifetime and after the Optionee’s death, by the Optionee’s personal
representative or by the person entitled thereto under the Optionee’s will or
the laws of intestate succession.

     

    8.           Optionee Not a
Stockholder.  Optionee shall have no rights as a stockholder
with respect to the Shares covered by this Option until the date of issuance of
a stock certificate or stock certificates to the Optionee upon exercise of this
Option.  No adjustment will be made for dividends or other rights for
which the record date is prior to the date such stock certificate or
certificates are issued.

     

    9.           No Right to
Employment.  Nothing in the Option granted hereby shall
interfere with or limit in any way the right of the Company or of any of its
subsidiaries to terminate Optionee’s employment, consulting or advising at any
time, nor confer upon Optionee any right to continue in the employ of, consult
with, or advise the Company or any of its Subsidiaries.

     

    10.         Modification and
Waiver.  This Option may not be modified except by a writing
signed by both parties, except that either party may waive any right hereunder
by an instrument unilaterally signed.

     

    11.         Restrictions on Sale of
Shares.  Optionee represents and agrees that upon the
Optionee’s exercise of this Option, in whole or in part, unless there is in
effect at that time under the Securities Act of 1933 a registration statement
relating to the Shares issued to the Optionee, the Optionee will acquire the
Shares issuable upon exercise of this Option for the purpose of investment and
not with a view to their resale or further distribution, and that upon such
exercise thereof the Optionee will furnish to the Company a written statement to
such effect, satisfactory to the Company in form and
substance.  Optionee agrees that any certificates issued upon exercise
of this Option may bear a legend indicating that their transferability is
restricted in accordance with applicable state and federal securities
law.  Any person or persons entitled to exercise this Option under the
provisions of Sections 6 and 7 hereof shall, upon each exercise of this Option
under circumstances in which Optionee would be required to furnish such a
written statement, also furnish to the Company a written statement to the same
effect, satisfactory to the Company in form and substance.

     

    12.         Nevada Law
Governs.  This Agreement shall be interpreted under the
internal laws of the State of Nevada and any action hereunder shall be brought
in the state or federal courts of Nevada.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    13.         Notices.  All
notices to the Company shall be addressed to the Corporate Secretary at the
principal executive office of the Company at  7610 Miramar Road,
Building 6000, San Diego, California 92126, and all notices to Optionee shall be
addressed to Optionee at the address of Optionee on file with the Company, or to
such other address as either may designate to the other in writing.  A
notice shall be deemed to be duly given if and when enclosed in a properly
addressed sealed envelope deposited, postage prepaid, with the United States
Postal Service.  In lieu of giving notice by mail as aforesaid,
written notices under this Agreement may be given by personal delivery to
Optionee or to the Corporate Secretary (as the case may be).

     

    14.         Sale or Other
Disposition.  If Optionee at any time contemplates the
disposition (whether by sale, gift, exchange, or other form of transfer) of any
Shares acquired by exercise of this Option, the Optionee shall first notify the
Company in writing of such proposed disposition and cooperate with the Company
in complying with all applicable requirements of law, which, in the judgment of
the Company, must be satisfied prior to such disposition.

     

    15.         Corporate
Transactions.  In the event of a Corporate
Transaction  (as such term is defined in the Plan), the Board shall
notify Optionee at least thirty (30) days prior thereto or as soon as may be
practicable.  To the extent not previously exercised, this Option
shall terminate immediately prior to the consummation of such Corporate
Transaction unless the Board determines otherwise in its sole discretion; provided, however, that the
Board, in its sole discretion, may (i) permit exercise of this Option prior to
its termination, even if this Option would not otherwise have been exercisable,
and (ii) provide that this Option shall be assumed or an equivalent option
substituted by an applicable successor corporation or any subsidiary of the
successor corporation.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.

     

    
      
        
          
            
              
                	
                        RF
      INDUSTRIES, LTD.

                      
	 
      	 
      
	
                        By:

                      	
                            

                      
	 
      	
                        Name:

                      
	 
      	
                        Title:

                      
	 
      	 
      
	
                        OPTIONEE:

                      
	 
      	 
      
	 
      	
                            

                      
	 
      	 
      
	
                        Address:

                      
	 
      
	
                         
        

                      
	
                         
        

                      
	
                         
        

                      
	 
      
	
                         
        

                      
	
                        Social
      Security
Number

                      

              

            

          

        

      

    

     

    
      
        
           

        

        
          5Exhibit
10.3

    (English
Translation)

    

    China
Huaneng

     

    

    Huaneng Panjin
Binhai Wind Power Generation Project

    

    

    Wind
Turbine Tower Cylinder Purchase Contract

    

    

    Contract
Index: HN-C-LN/PJIII-WZ/TT-002

    

    

    

    Buyer:
Huaneng Panjin Wind Power Generation Co. Ltd.

    

    Seller:
Liaoning Creative Wind Power Equipment Co., Ltd.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Part
I           General Terms
and Conditions

    

    In accordance with the Contract Law of
the People’s Republic of China, Huaneng Panjin Wind
Power Generation Co. Ltd (the Buyer), through the public bidding process,
confirms to purchase Wind Turbine Tower Cylinder for Huaneng Panjin
Binhai project from Liaoning Creative Wind Power
Equipment Co., Ltd. (the Seller). In order to define the rights and
obligations, assist the mutual cooperation and assure the completion of this
project, both parties, having negotiated, enter this contract.

    

    1           Subject
of Contract

    

    1.1           The
scope of supply in this contract should include but is not limited to the Wind
Turbine Tower Cylinder, internal decoration, spare parts, boosting device,
anti-falling system, specialized tool, technical information, loading, unloading
and transit. Any item omitted from the supply list, which should have been
included in the scope of the supply and is necessary to satisfy the requirement
of the Technology Agreement warranting the performance of the contracted
equipment, should be supplied by the Seller without giving rise to any cost and
expense.

    

    1.2           The
usable life of Wind Turbine Tower Cylinder should exceed 20 years

    

    2           Contract
Price and Documentation

    

    2.1           This
contract price is the contract price in total: Renminbi 29,535,000 Yuan even (In
Capital: Twenty Nine Million Five Hundred Thirty-Five Thousand Even),
and shall cover all the cost, expense and tax including but is not limited to
equipment and parts, insurance, tax payable by the Seller, packing, transit
(including the towing and shipping), technical support, specification (including
the transmittal of any information by mail pertaining to the wind turbine tower
cylinder testing, inspecting, manufacturing and as-built drawing), design
contact and the superintendent.

    

    2.2           This
Price is covering the cost and expense incurred through transit to the
installation project site designated by the Buyer.

    

    2.3           This
contract price in total is the unit price nonnegotiable within the contract
term.  The actual contract price in total will be determined by the
actual quantity of Wind Turbine Tower Cylinder purchased.

    

    2.4           The
following documents constitute the agreements made by and between the Buyer and
the Seller, with each read and understood as integrated part of this contract.
Where any ambiguity or conflict between the documents arises, the clarifying
explanation priority should follow the consecutive sequence of the documents as
below.

    

    
      	
               
      

            	
              (1)

            	
              Supplemental
      agreement or memorandum signed by both parties subsequent to this
      Contract;

            

    

    

    (2)           This
contract and its appendixes;

    

    (3)           Bid
winning notice;

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (4)           Bidding
invitation and the clarifications by the Buyer;

    

    (5)           Bidding
offer and the clarification by the Seller;

    

    (6)           Drawings
and technical information provided by the Seller during thecontract

    

    2.5           Technology
Agreement will be entered and signed as the appendix to this contract by the
project companies.

    

    3           Payment

    

    3.1           All
the payment under this contract shall be made in the Chinese
Renminbi.

    

    3.2           Method
of payment: bank wire transfer or draft.

    

    3.3           Partial
payment shall be paid in the following ratio 1:2:1:3:2:1.

    

    3.3.1           Advanced
Payment: In three months prior to the first delivery, the Buyer shall pay 10% of
the contract price, as the Advanced Payment, to the Seller within 30 business
day after the Buyer is in receipt and review of an unconditional and irrevocable
Performance Bond, issued by a domestic bank to guarantee the Seller’s
performance under this Wind Turbine Tower Cylinder manufacture project, and a
payment receipt by the Seller indicating 10% of the total contract
price.

    

    3.3.2           Payment
for Prepared Materials: as soon as an inspection is conducted by the Buyer or
the third party (the wind turbine manufacturer), in accordance with a technical
agreement entered by three parties, after the flange and steel ordered by the
Seller are delivered, the Buyer shall pay 20% of the contract price, as the
payment for prepared materials, to the Seller within 30 business days after the
Buyer is in receipt and review of the Seller’s flange and steel order contract,
duplicate proof of payment and a payment receipt by the Seller indicating 20% of
the contract price.

    

    3.3.3           Payment
for Ring Foundation Progress: as soon as an inspection is jointly conducted by
the Buyer, the Superintendent, the Seller, the wind turbine manufacturer, the
designer representative and the installation contractor after all the ring
foundations are delivered to the project site,  the Buyer shall pay
10% of the contract price, as the payment for progress, to the Seller within 30
business days after the Buyer is in receipt and review of the bill of landing,
supply list, insurance policy, inspection certificate and a payment receipt by
the Seller indicating 10% of the contract price.

    

    3.3.4           Payment
for Wind Turbine Tower Cylinder Progress:  as soon as each set of the
Wind Turbine Tower Cylinders are produced and delivered to the designated site,
with inspection conducted at wind turbine plant before an inspection certificate
jointly signed and issued by the Buyer, the superintendent, the Seller, the main
equipment manufacturer, the designer representative and the installation
contractor, the Buyer shall pay 30% of the contract price of the set, as the
payment for progress, to the Seller within 30 business days after the Buyer is
in receipt and review of bill of lading, supply list, insurance policy , the VAT
Invoice equivalent to 100% of contract price for this Wind Turbine Towner
Cylinder set and a payment receipt indicating 30% of the contract
price.

    

    3.3.5           As
soon as all Wind Turbine Tower Cylinders are fully and completely installed
pursuant to the contract schedule, the Buyer shall pay 20% of the contract
price, as the inspection payment, to the Seller within 30 business days after
the Buyer is in receipt and review of the inspection certificate and a payment
receipt indicating 20% of the contract price.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.3.6           The
remaining 10% of the contract price is reserved as the Retainage. As soon as the
quality warranty term expires, at the time when the Buyer confirms nonexistence
of defect and issues a certificate, the Buyer shall pay 10% of the contract
price, as the Retainage payment, to the Seller within 30 business days after the
Buyer is in receipt and review of a payment receipt by the Seller indicating 10%
of the contract price.  (If any defect is found, the Retainage should
be deducted proportionately; if any replacing or repairing of the equipment is
needed, the quality warranty term shall be computed from the day of the
satisfied replacing or repairing.)

    

    3.4           The
payment date is determined by the day when the Buyer’s bank submits the
payment.

    

    3.5           In
the event of the Seller’s non-performance or non-conforming performance, with
the fault on the part of the Seller, the Seller shall be liable for the
liquidated damage, penalty and/or the damage for breach of contract, and the
Buyer is entitled to a deduction from any aforesaid payments.

    

    4           Delivery
and Shipment

    

    4.1           Shipping
Method: ground shipping.

    

    4.2           Shipping
Destination: FOB project site.

    

    4.3           Designated
Recipient: Huaneng Panjin Wind Power Generator Co. Ltd.

    

    4.4           Delivery
Timing:

    

    Equipment
Delivery Schedule

    

    
      	
              Seq.
      No.

            	
              Milestone

            	
              Time
      Frame

            	
              Remarks

            
	
              1

            	
              Installation
      process activated

            	
              Date
      of the contract signed

            	 
      
	
              2

            	
              First
      set of 15 ring foundations starting to be delivered at the designated
      site

            	
              30

            	 
      
	
              3

            	
              Second
      set of 15 ring foundations starting to be delivered at the designated
      site

            	
              50

            	 
      
	
              4

            	
               

            	
               

            	 
      
	
              5

            	
              First
      set of 15 Wind Turbine Tower Cylinder units delivered at (each) designated
      site

            	
              60

            	 
      
	
              6

            	
              Second
      set  of 15 Wind Turbine Tower Cylinder units delivered at (each)
      designated site

            	
              80

            	 
      
	
              7

            	
               

            	
               

            	 
      

    

    

    All the equipments shall be delivered
in full compliance with the delivery schedule set forth in this contract. In
order to coordinate with the field contractors, the specific delivery date will
be provided by the Buyer’s advanced notice with which the Seller shall comply;
otherwise, a written approval by the Buyer shall be obtained prior to delivery
in advance of this schedule.

    

    The Buyer shall not bear any cost and
expense incurred from the suspended supply of Wind Turbine Tower Cylinder
accumulated in the manufacture’s possession.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.5           A
written notice shall be given to the Buyer at the end of the equipment
production.  The arrival date of the equipment at the delivery
destination is the actual delivery date. On the day that the delivery is
completed and the inspection certificate is issued, the title and the risk of
loss on the Seller shall be transferred to the Buyer.

    

    4.6           The
Seller shall arrange the equipment shipping, at the expense of the Seller,
including the cost of freight (including miscellaneous shipping expense) and
insurance.

    

    4.7           In
order to notify the Buyer to get ready for equipment pick-up and storage, the
Seller is hereby required to furnish the bill of lading by facsimile to the
Buyer within one business day of loading.

    

    4.8           The
Seller shall take any necessary measure to wrap and tie the equipment to prevent
damage during transit. If any loss or damage occurs, the Seller shall file a
claim while immediately re-arranging the supply to keep the project on
schedule.

    

    4.9           The
roads around the delivery site: the Seller shall investigate and be familiar
with the condition of the roads around the delivery site, taking any necessary
measure to secure the transit and project progress. The Seller shall submit a
Wind Turbine Tower Cylinder shipping plan to the Buyer no later than 15 days
after the contract is signed.

    

    4.10           If
any shipment fails to reach the designated site due to the fault of the Seller’s
carrier, the extra cost and expense incurred from the re-arranging shipment
shall be bore on the Seller.

    

    4.11           If
the Seller fails to unload the cargo due to an act of god, such as hurricane or
heavy rain, the Buyer may provide assistance, with no assumption of any duty or
expense on the part of the Buyer.

    

    4.12           The
specification shall be attached to the equipment.

    

    4.13           The
Buyer will conduct monthly check-up on the Seller’s supply progress, the result
of which shall be taken into account to reset the Seller’s supply quantity.
Unless the delay to the supply is caused under the Clause 9 of this contract,
the Buyer is entitled to deduct an amount from the payment to the Seller as set
forth by this contract. In addition, a notice of warning will be given,
indicating that no action will be taken if the Seller could make up the delay in
the subsequent monthly supply; otherwise, the Buyer shall be able to modify the
supply quantity under this contract with a proportionate modification to the
contract price in total.

    

    5           Packing
and Labeling

    

    5.1           In
order to safely deliver the supply to the project site in an un-damaged and
non-corrosion condition, the packing shall be durable for long distance shipping
and multiple loading and unloading, equipped with excellent anti-moisture,
anti-corrosion, anti-shock and anti-dirt functions.  The Seller will
be held liable for any loss or damage caused by defect packing.

    

    5.2           If
any corrosion, damage or loss to the equipment is caused by the Seller’s defect
or improper packing or insufficient protective measure, the Seller is liable for
any immediate repairing, replacing or damage.

    

    5.3           Seller
will be responsible for any on-site cleaning to the dirt on the interior or
surface of the equipment caused by the Seller’s defect or improper packing or
insufficient protective measure during the transit.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    6           Quality
Inspection

    

    6.1           The
Seller shall completely and meticulously inspect the quality, quantity and
specification of the equipment in accordance with the technical agreements under
the contract prior to any shipping out of the factory, at the expense of the
Seller. At the same time, an inspection certificate containing specification
bearing the signature of the wind turbine supplier, the Buyer or the
Superintendent authorized by the Buyer, shall be issued.

    

    6.2           As
soon as the goods arrive at the delivery site, the Buyer will inspect the
packing, surface and the quantity of the equipment in accordance with the
technical agreements under the contract. If any non-conformance is found, the
Seller should resolve it immediately. As soon as the equipment arrives at the
installation site, the Buyer will invite the Superintendent, designer
representative, main equipment manufacturer, as well as the Seller to conduct a
joint inspection on the quality, specification and quantity. At the time of
inspection, if the Seller is not timely present, the Buyer shall be able to
proceed with the other relevant parties, the result and the record of which
shall be valid to the contracting parties and serve as admissible evidence when
the Buyer is filing a claim for damage against the Seller.

    

    6.3           At
the time of inspection, if any damage, defect, shortness or non-conformance with
the quality standard and specification as set forth in the Technology Agreement
is found, an inspection report shall record such finding, and is signed by both
parties, with each holding a copy, which shall serve as admissible evidence when
the Buyer is filing a claim for damage against the Seller.

    

    6.4           If
disagreed with the Buyer’s request for repairing, replacing and recovery as set
forth in the aforesaid clauses, the Seller shall submit a reconsideration
request to the Buyer within one week of receipt of the Buyer’s written notice;
otherwise, it is deemed that the Buyer’s request is accepted.

    

    6.5           If
disagreement to the joint inspection report has occurred between the contacting
parties, the inspection shall be assigned to a recognized inspection authority.
The wind turbine supplier shall participate to this inspection, the result of
which has the same legal effect and is binding to both parties, at the cost and
expense of the liable party.

    

    6.6           Upon
receiving the Buyer’s request for repairing, replacing and recovery in
accordance with the aforesaid clauses, the Seller should immediately repair,
replace or supply the missing part, at the cost and expense of the Seller. Any
resulting damage will be deducted by the Buyer from the Retainage or the next
payment.

    

    6.7           Any
delay caused by repairing or replacing the equipment or parts, with the fault on
the part of the Seller, shall not affect the production progress in general;
otherwise, such delay will be treated in accordance with the Clause
7.0.

    

    6.8           Any
aforesaid inspection is only referring to the inspection upon delivery and shall
not constitute an exemption to the Seller’s liability under the Clause 7
regarding the Seller’s product warranty.

    

    6.9           The
Seller should incorporate with the in-house Superintendent sent by the wind
turbine main equipment manufacturer.

    

    6.10           The
Seller’s inspection shall be conducted by experienced technical personnel who
have ever participated in any contract manufacturing Wind Turbine Tower Cylinder
with more than megawatt.

    

    7           Warranty
and Claim

    

    7.1           The
Buyer provides the Seller with integrated manufacture drawing and specification
of the Wind Turbine Tower Cylinder made by the wind turbine manufacturer, and
the Seller shall confirm the applicability of the drawing to the manufacturing
of the projected Wind Turbine Tower Cylinder. The Seller shall strictly comply
with such drawing and standard or specification set forth in the technical
document when manufacturing the Wind Turbine Tower Cylinder. The Seller should
provide any document regarding the material purchase, manufacturing technology
and anti-corrosion coating technology to the wind turbine manufacturer for
review, and should proceed to production only if the quality measure and
technology are approved by the wind turbine manufacturer.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    7.2           Within
10 days subsequent to the contract signed, the Seller should provide detailed
material preparation schedule and material source.  Each manufacturing
stage including the material purchase, cutting, tower welding (welding
technology, welding gap inspection, welding rework), tower pre-installation,
anti-corrosion coating, shipping, loading and unloading and storage, should be
in full compliance with the Wind Turbine Tower Cylinder manufacturing standard
and specification set by the wind turbine manufacturer. If any product is
disregarded or product rework is required due to the non-conformance with the
standard or rule set by the wind turbine manufacturer, the Seller will be held
liable for any damage resulting therefrom.

    

    7.3           The
height of the ring foundation supporting “W” Shape steel shall be determined by
the actual height of the wind turbine.

    

    7.4           The
brand name for the paint to the Wind Turbine Tower Cylinder is Haihong. To the
paint on the surface, the Seller provides the color card and the Buyer will
decide the color. The Buyer’s Logo shall be printed to the Wind Turbine Tower
Cylinder, with the font and printing provided by the Seller. The fee and expense
are included in the contract price.  The place, height and color of
the print will be determined by the Buyer.

    

    7.5           The
Seller shall produced 30 identical sets of locks for the Wind Turbine Tower
Cylinder.

    

    7.6           The
quality warranty term under this contract is 18 months starting from the day
when the installation is completed and inspected. After the quality warranty
expires, the Buyer shall issue a final inspection certificate to the Seller
within 15 days, conditioned on the full payment to the Buyer’s claim of damage
submitted within the quality warranty.

    

    7.7           During
the quality warranty term, if any defect or non-conformance to this contract
occurs, the Seller shall repair or replace within 48 hours, at it own expense.
If the Seller failed to timely repair or replace, the Buyer shall be able to
repair or replace on his own or by hiring outside contractor, at the Seller’s
expense. The Seller shall be liable for the Buyer’s damage caused by the
repairing and replacing.

    

    7.8           If
any repairing or replacing the defect equipment results in the suspended
delivery or delayed installation, with the fault on the part of the Seller, the
warranty shall be extended accordingly.

    

    7.9           If
any delay is caused by a failure to comply with the delivery schedule set forth
by this contract, with the fault on the part of the Seller (except force
majeure) , the Seller will be held liable for any damage incurred to the
construction and installation contractors. In addition, the Buyer is entitled to
a liquidated damage from the Seller pursuant to the following scale (unless the
buyer agrees to an extension to the delivery or a waiver of damage), less than
one week counts one week:

    

    7.9.1           If
1 to 2 weeks delay, 2% of delayed supplies’ value will be imposed as weekly
liquidated damage.

    

    7.9.2           If
3 to 4 weeks delay, 4% of delayed supplies’ value will be imposed as weekly
liquidated damage.

    

    7.9.3           If
5 or more weeks delay, 6% of delayed supplies’ value will be imposed as weekly
liquidated damage.

    

    7.9.4           If
6 or more weeks delay, the Buyer is then entitled to terminate partial or whole
contract and claim for liquidated damage for any delayed deliveries and
damage.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    7.10           The
liquidated damage paid by the Seller does not release the Seller’s duty to
continue supply under the contract.

    

    7.11           If
any defect of quality occurs or supply schedule fails to meet the Buyer’s
requirement, the Buyer is entitled to assign the other Wind Turbine Tower
Cylinder manufacturer to manufacture.

    

    7.12           Any
expense induced by the increased work and the compensation to the contraction
and installation contractors that result from the defect of quality shall be
bore by the Seller.

    

    7.13           All
Wind Turbine Tower Cylinder internal decoration pieces shall be brand new
products, interchangeable with the corresponding installed pieces, made in
accordance with the same specification, material, and manufacturing process,
also interchangeable with the same part between the Wind Turbine Tower
Cylinders.

    

    7.14           During
the hoisting and rigging, the Seller shall send a field engineer to participate
in the installation process. The field engineer must have the experience to
provide the field service to the same model Wind Turbine Tower Cylinder as this
contract, and shall provide the corresponding training to the Buyer’s
personnel.

    

    7.15           The
Performance Bond shall cover the entire quality warranty term and shall be valid
till the end that any claim of damage is resolved (if any).

    

    8           Tax

    

    8.1           According
to the nation’s laws, rules and regulations, the Seller shall assume the
responsibility and pay the corresponding tax of this contract.

    

    

    8.2           The
contract price includes tax.

    

    9           Force
Majeure

    

    9.1           If
either party of the contract is affected to perform by an event of Force
Majeure, any delay therefore shall not exceed a period equivalent to the period
so affected, with no effect on the contract price.

    

    9.2           Either
party affected by the Force Majeure shall notify the other party immediately
after the incident, and shall send by regular mail to the Buyer, within 7 days
thereafter, the proof of incident issued by a qualified government agency of the
place where the incident occurs.  The affected party shall make best
effort to mitigate the damage and delay so affected by the event. The affected
party, as soon as the affect by the event of Force Majeure is removed, shall
resume performing immediately.

    

    9.3           In
the event that any delay caused by the Force Majeure exceeds 30 days, the Buyer,
upon the belief that the necessity to perform the contract no longer exists, may
terminate the contact, unless any necessity still remains, by which both parties
shall proceed to a friendly negotiation on the continuing
performance.

    

    10           Applicable
Law and Dispute Resolution

    

    10.1           The
law governing this contract is the law of the People’s Republic of
China.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    10.2           Any
dispute arising out of this contract shall be settled initially through the
friendly negotiation between the parties, if failed, then submitted to the
immediate supervising authority of each party for further settlement
negotiation. Unless the aforesaid efforts fail, either party may at its option
submit the dispute for arbitration to the Beijing Arbitration Commission, or
bring an action to a People’s Court at the place where the contract is
signed.

    

    10.3           The
arbitration decision is binding to both contracting parties.

    

    10.4           Any
cost and expense incurred in the course of aforesaid proceedings, unless the
arbitration decision rules otherwise, shall be borne at the losing
party.

    

    10.5           During
the arbitration, any performance apart from the arbitrated dispute shall be
continued.

    

    11           Contract
Effectiveness, Termination and Miscellaneous

    

    11.1           This
contract shall take effect on the day of signature and stamp by both parties,
and be terminated upon the completion of performance and payment.

    

    11.2           This
contract is made in two original copies, one held by each contracting party, and
twelve counterparts, eight held by the Buyer and four held by the
Seller.

    

    11.3           The
appendixes are inseparable part of this contract, with the same legal effect as
the contract.

    

    11.4           Once
the contract takes effect, neither party could unilaterally modify the content
of this contract (including the appendixes) at its solo discretion. Any change,
modification or supplement shall be made in writing, signed by the corporate
representative (or authorized representative) of both parties upon negotiation,
once signed, shall become integrated part of the contract with the same legal
effect.

    

    11.5           Party
B is prohibited from assigning partial or whole of its right or obligation under
this contract to any third party.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    This page is set for signature
page.

     

    
      	Buyer:	
              Huaneng Panjin
      Wind Power

              Generation  Co.
      Ltd

            	Seller:	
              Liaoning
      Creative Wind Power

              Equipment
      Co., Ltd.

            
	Address:	
              Changxin
      Building, F, 24 Floor

              322
      Qingnian Street, Heping District, Shenyang City

            	Address:	
              Maoshan
      Industry Yuanqu C Qu,

              Tieling
      City, Liaoning Province

            
	Facsimile:	
              024-31883811

            	Facsimile:	
              0410-6129933

            
	Telephone:	
              024-31883814

            	Telephone:	
              0410-6129900

            
	Zip
      code:	
               

            	Zip
      code:	
              112000

            
	 	 	 	 
	
              Buyer:

            	
               

            	
              Seller:

            	
               

            
	(Stamp
      in red)	(Stamp
      in red)
	 	 	 	 
	Huaneng Panjin
      Wind Power Generation Co. Ltd	Liaoning
      Creative Wind Power Equipment Co., Ltd.
	Stamp
      Exclusive for Contract  	Stamp
      Exclusive for Contract
	 	 	 	 
	
              Corporate
      Representative or Authorized 

              Representative

            	
              Corporate
      Representative or Authorized 

              Representative

            
	Signature:
      /s/ Hai Ao	Signature:
      /s/ Zhao, Min 2010.01.05

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