Document:

Exhibit 10.02

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER.

 

TONIX PHARMACEUTICALS HOLDING CORP.

8% CONVERTIBLE DEBENTURE

 

Original Issue Date: _________, 2012

 

	A-__	$__________

 

In consideration of
the receipt of $_________, the undersigned, Tonix Pharmaceuticals Holding Corp., a Nevada corporation (“Issuer”),
hereby promises to pay, in accordance with the Subscription Agreement (the “Subscription Agreement”), dated as of ______,
2012, by and between Issuer and ____________ (“Holder”), on the Maturity Date (as hereinafter defined), the principal
amount of __________ ($_______) Dollars (the “Principal Amount”), unless this debenture (“Debenture”) is
earlier converted in accordance with Section 1.2 or Section 3, and interest shall accrue hereon from the date hereof and be payable
as provided herein, unless earlier converted in accordance with Section 1.2 or Section 3 hereof or earlier repaid in accordance
with Section 1.4 hereof.

 

This Debenture is the
convertible debenture referred to in the Subscription Agreement and is entitled to the benefits thereof, and is subject to conversion
as set forth in Sections 1.2 and Section 3 hereof. This Debenture, and all representations, warranties, covenants and agreements
contained in the Subscription Agreement, shall be binding upon Issuer and its successors and assigns.

 

This Debenture is one
of a series of secured convertible debentures of like tenor and ranking (collectively, the “Debentures”) made by the
Issuer in favor of certain investors dated of even date herewith, and issued, from time to time, on and after the date hereof,
all upon terms set forth in Subscription Agreement.

 

    	 

    	 

    

 

1.          Terms
of the Debenture.

 

1.1          Interest;
Interest Rate; Repayment.

 

(a) This Debenture
shall bear interest at the rate of eight (8%) percent (the “Interest Rate”) per annum based on a 360-day year. Interest
shall be payable on the Maturity Date.

 

(b) The principal outstanding,
plus all accrued but unpaid interest hereunder, shall be payable in cash on the earlier of (i) 12 months from the date of the Debenture,
or (ii) the date of closing of a PIPE Financing (as hereinafter defined) (such earlier date being the “Maturity Date”).
“PIPE Financing” shall mean the private placement of equity, equity equivalent, convertible debt or debt financing
in which Issuer receives gross proceeds, in one or more transactions, of at least One Hundred Thousand Dollars ($100,000).

 

(c) The principal amount
and interest thereon shall not be prepaid in whole or in part by the Issuer.

 

(d) All monetary payments
to be made by Issuer hereunder shall be made in lawful money of the United States by check or wire transfer of immediately available
funds.

 

(e) If all or a portion
of the principal amount of this Debenture or any interest payable thereon shall not be repaid when due, whether on the Maturity
Date, by acceleration or otherwise, such overdue amounts shall bear interest at a rate per annum that is five percent (5%) above
the Interest Rate (i.e., 13%) from the date of such non-payment until such amount is paid in full (as well after as before
judgment).

 

1.2          Election
to Convert into PIPE Financing. The Holder shall have the right, at his option, at any time on or before the repayment of
the Debenture, to convert, in whole or in part, subject to the terms and provisions hereof, the Principal Amount of the Debenture
and interest accrued through the date of conversion, into securities to be issued by the Company in the PIPE Financing at a 25%
discount to the offering price in the PIPE Financing. For example, if the Company were to sell shares of Common Stock in the PIPE
Financing at $1.00 per share, the Holder shall have the right to convert the Principal Amount of the Debenture and interest accrued
into shares of Common Stock at $0.75 per share.

 

1.3          Conversion
Procedures. Upon conversion of this Debenture as provided in Section 1.2 hereof, Holder shall surrender this Debenture, appropriately
endorsed, to Issuer at Issuer’s principal office, accompanied by written notice to Issuer setting forth the name or names
(with address(es)) in which the PIPE Securities issuable upon such conversion shall be issued and registered on the books of Issuer.
This Debenture shall be marked cancelled on the books of Issuer as of the date of the PIPE Financing, whether or not surrendered.

 

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1.4          Payment
Rights Upon Merger, Consolidation, Etc. If, at any time, prior to the Maturity Date, Issuer proposes to consolidate with, or
merge into, another corporation or entity, or to effect any sale or conveyance to another corporation or other entity of all or
substantially all of the assets of Issuer, or effect any other corporate reorganization, in which the stockholders of Issuer immediately
prior to such consolidation, merger, reorganization or sale would own capital stock of the entity surviving such merger, consolidation,
reorganization or sale representing less than fifty (50%) percent of the combined voting power of the outstanding securities of
such successor or combined entity immediately after such consolidation, merger, reorganization or sale (a “Liquidation Event”),
then Issuer shall provide Holder with at least ten (10) days’ prior written notice of any such proposed action, and Holder
will, at its option, have the right to demand immediate payment of all amounts due and owing under this Debenture. Holder will
give Issuer written notice of such demand within five (5) days after receiving notice of the Liquidation Event. All amounts (including
all accrued and unpaid interest) due and owing under this Debenture shall be paid by Issuer to Holder within five (5) days from
the date of such written notice by Holder via wire transfer(s) of immediately available funds, in accordance with written instructions
provided to Issuer by Holder.

 

1.5          Other
Assurances. Issuer shall not, by amendment of its Articles of Incorporation or By-laws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issuance or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed hereunder by Issuer, but shall at all times in good
faith assist in the carrying out of all the provisions of this Debenture and in taking of all such actions as may be necessary
or appropriate in order to protect the rights of Holder herein against impairment.

 

2.          Events
of Default. If any of the following events (each, an “Event of Default”) shall occur and be continuing:

 

(i)         
Issuer shall fail to pay any amount payable under this Debenture, including but limited to installments of interest
and/or principal, within three (3) business days after such payment becomes due (at the Maturity Date, an Interest Payment
Date or other date) in accordance with the terms hereof;

 

(ii)         Except for accounts payable
outstanding as of the date of this Debenture, Issuer shall fail to pay when due (following the expiration of applicable notice
and cure periods), whether upon acceleration, prepayment obligation or otherwise, any indebtedness for money due, individually
or in the aggregate, involving an amount in excess of $50,000;

 

(iii)        Any
representation, warranty, covenant or agreement made by Issuer in the Subscription Agreement, the Security Agreement, or this Debenture
was incorrect in any material respect on or as of the date made;

 

(iv)        Issuer
shall default, in any material respect, in the observance or performance of any other agreement contained in this Debenture or
any other agreement or instrument contemplated by this Debenture or the Subscription Agreement, and such default shall continue
unremedied for a period of fifteen (15) days after written notice to Issuer of such default;

 

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(v)          (a)
Issuer shall commence any case, proceeding or other action (x) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (y) seeking appointment
or a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets,
or Issuer shall make a general assignment for the benefit of its creditors; or (b) there shall be commenced against Issuer any
case, proceeding or other action of a nature referred to in clause (a) above that (A) results in the entry of an order for relief
of any such adjudication of appointment or (B) remains undismissed, undischarged or unbonded for a period of ninety (90) days;
or (c) there shall be commenced against Issuer any case, proceeding other action seeking issuance of a warrant of attachment, execution,
distrait or similar process against all or any substantial part of its assets that results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry
thereof; or (d) Issuer shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in any
of the acts set forth in clauses (a), (b) or (c) above; or (e) Issuer shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due, then, and in any such event, (x) if such event is an Event of Default
specified in subsection (v) above of this Section 2, automatically this Debenture (with all accrued and unpaid interest thereon)
and all other amounts owing under this Debenture shall immediately become due and payable, and (y) if such event is any other Event
of Default, Holder may, by written notice to Issuer, declare this Debenture (with all accrued and unpaid interest thereon) and
all other amounts owing under this Debenture to be due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 2, presentation, demand, protest and all other notices of any kind
are hereby expressly waived by Issuer.

 

3.  
Conversion.

 

3.1           Optional
Conversion. Subject to the terms of this Section 3, the Holder shall
have the right, but not the obligation, at any time until the Maturity Date, or thereafter during an Event of Default, to convert
all or any portion of the outstanding Principal Amount and/or accrued interest and fees due and payable into fully paid and nonassessable
shares of the Common Stock at the Conversion Price. The shares of Common Stock to be issued upon such conversion are herein referred
to as the “Conversion Shares.” The “Conversion Price” shall mean $1.00 per share. The Conversion Price
may be adjusted pursuant to the other terms of this Debenture.

 

3.2           Conversion
Limitation. Notwithstanding anything contained herein to the contrary, the Holder shall not be entitled to convert pursuant
to the terms of this Debenture an amount that would be convertible into that number of Conversion Shares which would exceed the
difference between the number of shares of Common Stock beneficially owned by such Holder and 4.99% of the outstanding shares of
Common Stock of Issuer. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder.

 

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3.3          Mechanics
of Holder’s Conversion. Subject to Section 3.2, this Debenture will be converted by the Holder in part from time to time
after the Issue Date, by submitting to the Issuer a Notice of Conversion (by facsimile or other reasonable means of communication
dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time). On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records and shall provide written notice thereof to the Issuer on the Conversion Date. Each
date on which a Notice of Conversion is delivered or telecopied to Issuer in accordance with the provisions hereof shall be deemed
a Conversion Date (the “Conversion Date”). A form of Notice of Conversion to be employed by the Holder is annexed hereto
as Exhibit A. Pursuant to the terms of the Notice of Conversion, Issuer will issue instructions to the transfer agent accompanied
by an opinion of counsel to Issuer of the Notice of Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by physical delivery or crediting the account of the Holder’s designated
broker with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”)
system within five (5) business days after receipt by Issuer of the Notice of Conversion (the “Delivery Date”). In
the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised
and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by Issuer
of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such Common Stock, unless the
Holder provides Issuer written instructions to the contrary.

 

3.4          Late
Payments. The Issuer understands that a delay in the delivery of the shares of Common Stock in the form required pursuant to
this Section beyond the Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss,
the Issuer agrees to pay late payments to the Holder for late issuance of such shares in the form required pursuant to this Section
3 upon conversion of the Debenture, in the amount equal to $500 per business day after the Delivery Date. The Issuer shall pay
any payments incurred under this Section in immediately available funds upon demand.

 

3.5          Conversion
Mechanics.

 

(a)          The
number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion
of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price.

 

(b)          The
Conversion Price and number and kind of shares or other securities to be issued upon conversion shall be subject to adjustment
from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:

 

(i)          Reclassification,
etc. If Issuer at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number
of securities of any class or classes, this Debenture, as to the unpaid Principal Amount and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable
as the result of such change with respect to the Common Stock (i) immediately prior to or (ii) immediately after such reclassification
or other change at the sole election of the Holder.

 

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3.6          Authorized
Shares. The Issuer covenants that during the period the conversion right exists, the Issuer will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Debenture. The Issuer is required at all times to have authorized and reserved such number of
shares that is actually issuable upon full conversion of the Debenture (based on the Conversion Price in effect from time to time)
(the “Reserved Amount”). The Issuer represents that upon issuance, such shares will be duly and validly issued, fully
paid and non-assessable. In addition, if the Issuer shall issue any securities or make any change to its capital structure which
would change the number of shares of Common Stock into which the Debenture shall be convertible at the then current Conversion
Price, the Issuer shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Debenture. The Issuer agrees
that its issuance of this Debenture shall constitute full authority to its officers and agents who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the
terms and conditions of this Debenture.

 

3.7          Issuance
of New Debenture. Upon any partial conversion of this Debenture, a new Debenture containing the same date and provisions of
this Debenture shall, at the request of the Holder, be issued by the Issuer to the Holder for the principal balance of this Debenture
and interest which shall not have been converted or paid. Subject to the provisions of Section 3, the Issuer will pay no costs,
fees or any other consideration to the Holder for the production and issuance of a new Debenture.

 

3.8          Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Debenture may not be sold or transferred unless (i)
such shares are sold pursuant to an effective registration statement under the Act or (ii) the Issuer’s transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule)
(“Rule 144”). Except as otherwise provided in the Subscription Agreement (and subject to the removal provisions set
forth below), until such time as the shares of Common Stock issuable upon conversion of this Debenture have been registered under
the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular
date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Debenture
that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

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“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The
legend set forth above shall be removed and the Issuer shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Issuer’s transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Debenture, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. The Issuer shall cause its counsel
to issue any legal opinion to the Issuer’s transfer agent promptly if required by the transfer agent to effect the removal
of the legend hereunder, and the Issuer shall be liable for such costs of such legal opinion.

 

4.  Miscellaneous.

 

4.1          Interest
Rate. Any interest payable hereunder that is in excess of the maximum interest rate permitted under applicable law shall
be reduced to the maximum interest rate permitted under such applicable law.

 

4.2
        Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when delivered by hand or by facsimile transmission, when telexed, or upon receipt
when mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

 

If to Issuer:

 

Tonix Pharmaceuticals Holding Corp.

509 Madison Avenue, Suite 306

New York, New York 10022

Attn: Seth Lederman

Facsimile: (212) 923-5700

 

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With a copy (which copy shall not constitute notice)
to:

 

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attn: Marc J. Ross, Esq.

Facsimile: (212) 930-9725

 

If to Holder at its address as furnished in the
Subscription Agreement.

 

4.3         Entire
Agreement; Exercise of Rights. (a) This Debenture embodies the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof. No amendment of any provision of this Debenture shall be effective unless it is in writing
and signed by each of the parties; and no waiver of any provision of this Debenture, nor consent to any departure by either party
from it, shall be effective unless it is in writing and signed by the affected party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

 

(b) No failure on the
part of a party to exercise, and no delay in exercising, any right under this Debenture, or any agreement contemplated hereby,
shall operate as a waiver hereof by such party, nor shall any single or partial exercise of any right under this Debenture, or
any agreement contemplated hereby, preclude any other or further exercise thereof or the exercise of any other right.

 

4.4        Governing Law. This Debenture shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely within such state.

 

4.5        Transferability.
This Debenture shall not be transferable in any manner without the express written consent of Issuer, which consent may not be
unreasonably withheld.

 

*********************

 

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IN WITNESS WHEREOF,
the parties hereto have executed this Debenture on the date first above written.

 

	 	TONIX PHARMACEUTICALS HOLDING CORP.
	 	 
	 	By:	 
	 	 	Name: Seth Lederman
	 	 	Title: Chief Executive Officer

  

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EXHIBIT “A”

 

NOTICE OF CONVERSION

 

(To be executed by the Holder in order
to convert all or part of the Debenture)

 

The undersigned hereby converts $_________
of the principal due on _______ , 2013 under the Convertible Debenture issued by Tonix Pharmaceuticals Holding Corp. (“Issuer”)
dated as of ___________, 2012 by delivery of shares of Common Stock of Issuer on and subject to the conditions set forth in Section
3 of such Debenture.

  

	Date of Conversion:	 

 

	Conversion Price:	 

 

	Number of Shares To Be Delivered:	 

 

	Signature:	 

 

	Print Name:	 

 

	Address:Equipment procurement contract

 

Buyer: China Great Wall Industry Co.
Ltd.

 

(中国长城工业集团有限公司)

 

Seller: CER Energy Recovery (Yangzhou)
Co. Ltd.

 

(中江能源回收(扬州)有限公司)

 

Contract Number: 12GWITC-CG001

 

Signed Date: 2012-8-9

 

Signed place: Beijing

 

    	 

    	 

    

 

This contract is entered into by the below
parties on August 09, 2012.

Seller: CER Energy Recovery (Yangzhou) Co.
Ltd.

Address: No.100
Zhongjiang Road Automobile Industrial Park, Yizheng City, Jiangsu Province, China.

 

Buyer: China Great Wall Industry Co. Ltd.

Address: No. 88 Nancaiyuan Street Xicheng
district, Beijing

 

Pursuant to “Contract Law of The People’s
Republic of China” and related regulations, upon fully and friendly negotiated based on equality and free will between the
two parties, both parties hereto agree as follows:

 

		1.	Definition :

“Contract” means
this HRS Equipment Purchase Contract signed between the Buyer and the Seller, including all appendices.

 

“Total
Price” means the sum price payable from the Buyer to the Seller under the Contract for the performance of its contractual
obligations as given in Article 4.

 

“Product” and “Products”
mean Seller’s proprietary HRS equipment, machinery, instruments, spare parts, tools, and other materials as described in
contract which Buyer shall purchase from Seller under the terms and conditions of this Contract.

 

“Technical Documents”
means all the technical drawings and documents issued by Seller in accordance.

 

“Effective
Date of Contract” means the signature date of the Contract as set forth hereunder.

 

		2.	Product name, quantity and specification

 

	Item	 	Product Name	 	Quantity	 	 	Unit Price	 	 	Price(RMB)	 
	1	 	HRS boiler with steam drum	 	 	2	 	 	 	3,266,567.79	 	 	 	6,533,135.58	 
	2	 	HRS boiler auxiliaries	 	 	2	 	 	 	858,599.29	 	 	 	1,717,198.58	 
	3	 	HRS mist eliminators	 	 	2	 	 	 	2,489,762.04	 	 	 	4,979,524.08	 
	4	 	HRS 1-stage distributor	 	 	2	 	 	 	2,776,461.91	 	 	 	5,552,923.82	 
	5	 	HRS heater	 	 	2	 	 	 	1,963,355.21	 	 	 	3,926,710.42	 
	6	 	HRS dilutor	 	 	2	 	 	 	2,771,758.70	 	 	 	5,543,517.40	 
	7	 	HRS process analyzers	 	 	2	 	 	 	517,353.15	 	 	 	1,034,706.30	 
	8	 	Lubrite Slide Plates	 	 	2	 	 	 	47,639.60	 	 	 	95,279.20	 
	9	 	Steam Injection Chamber	 	 	2	 	 	 	344,902.10	 	 	 	689,804.20	 
	10	 	Steam Injection Chamber	 	 	2	 	 	 	1,190,990.07	 	 	 	2,381,980.14	 

 

    	 

    	 

    
 

		3.	Contract Price

The Total
Price of the Contract shall be RMB 32,454,779.72 (SAY RMB thirty two million four hundred fifty four thousand seven hundred and
seventy nine point seven two).

The itemized
unit price of this contract shall specify in this contract.

 

		4.	Payment Terms and Payment Schedule

 

		4.1	Prepayment

The Buyer shall
issue the irrevocable Letter of Credit in favor of the Seller within 15 calendar days from signature date of this contract, and
the amount of L/C is RMB 10 million.

The Seller
shall issue the corresponding amount of invoice of value added tax to the Buyer.

 

		4.2	Progress payment

The Buyer
shall issue the irrevocable Letter of Credit in favor of the Seller within 45 calendar days from signature date of this contract,
and the amount of L/C is RMB 20 million.

The Seller shall issue the corresponding
amount of invoice of value added tax to the Buyer and simultaneously provide the delivery order issued by carrier.

 

		4.3	Delivery payment

The Buyer or
designated party shall make the inspection and acceptance during delivery. When the Seller completes the installation and test
as well as signed confirmation by two parties, within 30 calendar days from progress payment date, the Buyer shall make the delivery
payment to the Seller via T/T, in the amount of RMB 2,454,779.72.

 

Seller’s bank
details are as follows:

Company name: CER
energy recovery (Yangzhou) Co. Ltd.

Account Bank: Bank
of China, Yizheng branch

Account Number: 511858204774

 

		5.	Shipment and Delivery

 

		5.1	Deliver the equipments via land carriage under this contract.

		5.2	The Seller shall deliver the equipments to designated place within 60 calendar days from the signature
date of this contract.

		5.3	The Seller shall be responsible for the installation and test. The security management and responsibilities
of security incidents shall be assumed by the Seller during test.

 

    	 

    	 

    
 

		6.	Quality Warranty

Subject to the Limitations
of Article 9 and except as otherwise provided herein, Seller warrants title to the Products sold hereunder:

 

		(1)	In respect to the products, the Seller warrants, which are not subject to any encumbrance, and
that they shall conform to Seller's specifications there for, and do not infringe upon the third party's intellectual property.

		(2)	Seller further warrants that the Products will be free from defects due to materials or workmanship
until the expiration of the earlier of twelve (12) months from the date that acid is first introduced into the HRS Plant. If, within
thirty (30) days after Buyer's discovery of any such defects, and, in any event, prior to the expiration of the Warranty Period,
Buyer shall notify Seller thereof in writing, Seller shall, at its option promptly repair or replace, that portion of the Products
found by Seller to be defective.

		(3)	During the Warranty Period, the equipment and/or materials to be supplied under Seller's warranty
obligations, which is for repairing and/or replacing any defective items of the Products attributable to Seller’s faults,
the Seller shall assume the expense of providing the equipment and/or materials during the range of warranty.

 

		7.	Settlement Ways of Quality Assurance

If Buyer finds
defective items as specified in article 6, the Seller shall assume the corresponding responsibility.

The Seller
has rights to address the quality assurance compensation event by the ways of following:

 

		(1)	Devalue the Products according to the degree of inferiority, extent of damage and amount of losses
suffered by the Buyer.

		(2)	Repair or replace if needed, the defective Products partly or wholly with new parts, components
or equipment which conforms to the specifications and quality as stipulated in this Contract. Buyer shall be responsible for the
removal / installation costs.

 

		8.	Inspection

 

8.1 Before
delivery, the Seller shall inspect the goods, issuing the inspection report and signing on it.

8.2 When delivery,
the Buyer or Principal shall inspect the goods according to delivery list provided by the Seller.

8.3 When open-package
inspecting, both parties shall confirm by signatures in respect to products’ quantity, model and external packing, if any
dissent, both parties shall sign to confirm on the spot.

8.4 After the Seller
completing the installation and test in accordance with the Buyer and this contract, both parties shall sign to confirm for the
result of installation and test, if any dissent, both parties shall sign to confirm on the spot.

 

    	 

    	 

    
 

		9.	Default Responsibilities

 

		9.1	If fails to make the payment before the maturity date as stipulated in this contract, the Buyer
will assume the default responsibilities. In addition, the Seller still can charge an interest fee to Buyer, carrying a daily interest
rate of 0.01% from the due date to actual payment date upon unpaid amount, but shall in no event exceed 5% of unpaid amount.

		9.2	If fails to deliver the goods before the maturity date as stipulated in this contract, the Seller
shall assume the corresponding default responsibilities. In addition, the Buyer still can charge an interest fee to Seller, carrying
a daily interest rate of 0.01% from the stipulated delivery date to actual delivery date, but shall in no event exceed 5% of the
amount of undelivered equipment.

 

		10.	Limitation of Liabilities

Seller’s
aggregate total liability for any and all losses and damages arising out of any cause whatsoever shall in no event exceed the total
contract price as listed in article 3.

 

		11.	Force Majeure

Where circumstances,
which are beyond either Party’s reasonable control, cause delay in or failure of a Party’s performance of its obligations
pursuant to this Contract, such Party shall not be considered in breach of this Contract or be liable to the other Party, and the
term of implementation of such Party’s respective obligation may be extended accordingly. The aforementioned circumstances
include, but shall not be limited to such cases which will affect the contract execution as natural disaster, war, unrest, fire,
explosion, flood, strikes, port congestion, epidemic, enactment of new laws and acts of the government. When one party fails to
perform or incompletely perform the obligations under this contract due to force majeure, shall inform the counter party of this
contract within 15 calendar days from the date of force majeure occurred, and provided the corresponding evidence within 60 days.
If one party fails to perform the obligations arising from force majeure, the involved party will be partly or fully exempted from
liabilities, except as otherwise provided by law.

 

		12.	Disputes resolution

All disputes
arising from the execution, performance or termination of or in connection with this Contract shall be settled amicably through
friendly negotiation. In case no settlement can be reached through negotiation, the case shall then be finally resolved by submitting
to China International Trading Arbitration Commission. The arbitration shall take place in Beijing and be conducted in Chinese
language according to its procedures and rules of China International Trading Arbitration Commission and the law of the arbitration
shall be the laws of China.

 

		13.	Others

The Contract
is executed with four originals, two of which is held by Buyer and Seller, respectively. This Contract is effective from the date
on which the sign and stamp.

 

    	 

    	 

    
 

( Signature page, no text )

 

Seller:

 

CER Energy Recovery (Yangzhou) Co., Ltd
 ( Stamp )

 

The legal representative (authorized representative)

 

Buyer: China Great Wall Industry Co. Ltd. ( Stamp ) 

 

The legal representative (authorized representative)

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