Document:

EPC Contract
for Boxing CDQ Waste Heat Power
Generation Project

 

Employer (Party A): Xi’an
Zhonghong New Energy Technology Co., Ltd

Contractor (Party B): Xi’an
Huaxin New Energy Co., Ltd

 

Date signed: July 22, 2013

Signed at: Xi’an

 

    	 

    	 

    

 

 

 

Section One, Agreement

 

Employer: Xi’an Zhonghong New Energy
Technology Co., Ltd (Party A)

Contractor: Xi’an Huaxin New Energy
Co., Ltd (Party B)

 

1. Party A, as the owner of the Boxing
CDQ (coke dry quenching) power generation project, has agreed Party B to be the EPC general contractor of the project.

 

2. Party B agrees to undertake this project.
Pursuant to provisions contained herein, Party B will commit to the civil works, equipment procurement, transportation, installation
and commissioning, and test run etc. The project is one turn-key project, and Party B is responsible for the quality, safety, duration
and cost of the project.

 

3. Pursuant to “PRC Contract Law”
and “PRC Construction Law” and applicable laws, regulations, and principles, on the basis of equality, fairness and
in good faith, Party A and Party B agreed the following agreement:

 

I. Project Overview

Project name: Boxing CDQ and waste heat
power generation project

 

Project location: Chunhua Town, Boxing
County, Shandong Province

 

Project content: Party B is contracted
with construction of 1 x 150T/H CDQ and 1 x 25MW waste heat power plant. Party B is responsible for civil works, equipment procurement,
transportation, installation and commissioning, and test run etc. required for the operation of the CDQ and waste heat power plants.

 

II. Scope and Pattern of Project

1. Scope of work by Party B (contracting
scope)

Party B undertakes the project as an EPC
contractor and shall be responsible for civil works, equipment supply, equipment installation and commissioning, and final acceptance
pursuant to national standards and project design approved by Party A. The scope of work by Party B is as follows:

 

		(1)	All civil works included in the CDQ and waste heat power generation project;

 

		(2)	Equipment (including imported equipment), installation material procurement, manufacture supervision,
unloading, and storage, ensuring all equipment and products are up to standard;

 

		(3)	Project construction and management;

 

		(4)	Equipment installation;

 

    	 

    	 

    

 

 

 

		(5)	Hot test run;

 

		(6)	Commissioning;

 

		(7)	Delivering the final acceptance report and documents to Party A.

 

2. The specific work scope is as follows:

		(1)	Party B is responsible for the design and related costs;

 

		(2)	Party B is responsible for civil works;

 

		(3)	Party B is responsible for equipment procurement, installation and commissioning, tests, flaw detection
for special facilities, pressure containers and pipes, and bearing the costs;

 

		(4)	Party B is responsible for the commissioning, and bearing the costs;

 

		(5)	Party B is responsible for application of others other than application of power grid connection
(special construction permits, such as pressure containers and pipes);

 

		(6)	Specific construction quantities are shown on the civil work and installation drawings (Party B
is responsible for the drawing design). Party B is responsible for civil works, installation, and procurement of equipment for
power plants, main and auxiliary materials;

 

		(7)	Party A is responsible for the government approval of the project, application of access systems,
remote control and communication systems, and bearing the costs;

 

		(8)	Party B is responsible for the fuel costs during commissioning and test runs.

 

3. Contracting pattern: civil works, equipment
procurement, installation, project duration, costs, quality, safety, services, and turn-key project.

 

4. Contract duration

(1) The commencement date of the project
is the tenth calendar day after the contract is signed.

 

(2) Project termination date: the day after
72+24 hours of test run of the power plant.

 

(3) Total construction period: 12 months.

 

    	 

    	 

    

 

 

 

(4) Project delivery day: final acceptance
shall be conducted within 30 days after the 72+24 hour test run. The delivery day is the day all parties complete the acceptance
and sign on the acceptance report.

 

5. Quality standard

Project quality standard: the project will
be accepted in accordance with the “national quality standard”. Party B shall provide qualification certificates as
per relevant department’s requests and cooperate with Party A to provide completion and acceptance documents.

 

6. Contract price

(1) Total contract price: RMB 200,000,000
(RMB 0.2 billion);

 

(2) The total contract price is the lump
sum price including civil works, equipment supply, procurement of main and auxiliary materials, transportation, unloading of equipment
and materials, second-time transportation, storage, labor, management, installation and commissioning, safety, water and electricity
fees during installation, fees for maintenance, insurance, profit, taxes, provisions, risks, and fees for transportation, installation
and disassembling of large machineries.

 

(3) Total contract price also includes
extra costs for remote construction, temporary facility fees, antifreeze costs, safety fees (safety, environment protection and
special needs), construction costs, night-time construction costs, high-rise construction costs, scaffold assembling and demolition
costs, boiler pressure and pipeline checking costs, single test run, hot-test runs and maintenance costs. It also includes second-time
transportation costs of equipment and material, increase in engineering costs caused by material price difference, changes and
other costs.

 

(4) Increase and reduction of engineering
costs due to change of detail design and markets shall be considered.

 

7. Payment

7.1 Party A shall pay 15% of the contract
price as the advance payment, which is RMB 30,000,000 (RMB 30 million), to Party B within 15 days after the contract is signed;

 

7.2 Party A shall pay 15% of the contract
price as the progress payment, which is RMB 30,000,000 (RMB 30 million), to Party B after the primary design is approved;

 

7.3 Party A shall pay 20% of the contract
price, which is RMB 40,000,000 (RMB 40 million), to Party B 7 days after the main equipment is ordered.

 

7.4 Party A shall pay 20% of the contract
price, which is RMB 40,000,000 (RMB 40 million), to Party B within 2 months after the civil works started and equipment contract
is signed.

 

    	 

    	 

    

 

 

 

7.5 Party A shall pay 15% of the contract
price, which is RMB 30,000,000 (RMB 30 million), to Party B after the installation started and before main equipment is supplied.

 

7.6 Party A shall pay 15% of the contract
price, which is RMB 30,000,000 (RMB 30 million), to Party B within 7 days after the installation is completed and ready for test
runs.

 

7.7 Quality guarantee: 10% of the contract
price, RMB 20,000,000 (RMB 20 million) of bank guarantee.

 

8. Documents that constitute the contract
include:

(1) The contract

 

(2) Terms of the agreement

 

(3) Appendixes of the contract

 

(4) Applicable standards, regulations and
technical documents

 

Written documents of negotiation and modification
by both parties are part of this contract.

 

9. In accordance with the contract, Party
B shall perform the contracting service till delivery of the project and be responsible for quality warranty within the warranty
period. The warranty period is 12 months after the power plants are accepted or 18 months after the power plant construction is
completed.

 

10. Party B promises to monitor and manage
the project during its performance period, Party B shall:

(1) Submit project progress report;

 

(2) Accept the inspection to all parts
of the project. For any unqualified parts, Party B shall redo it.

 

(3) Accept the supervision during the construction
period and rectify the issues raised.

 

11. Party A commits to Party B to make
payment pursuant to the schedule and method stated herein. Representative of Party A will discuss the issues raised about the construction.
Party A is responsible for the project management fee.

 

12. The contract is executed effective
as of the date representatives or agencies of both parties signed and sealed.

 

    	 

    	 

    

 

 

 

Section Two, Terms of the contract

 

I. Documents
of the contract

 

1. Documents of the contract and sequence
interpretation

 

1.1 Documents of the contract shall be
interrelated and mutually explanatory of one another. Documents comprising the contract and the priority are as follows:

 

(1) The contract

 

(2) Terms of the contract

 

(3) Appendix of the contract

 

(4) Applicable standard, specifications
and related technical documents

 

For implementation of the contract, written
agreements or documents related to both Party A and Party B’s engineering negotiation, supplement and modification are deemed
as part of the contract.

 

2. Language and applicable laws, standards
and rules

 

2.1 Besides Chinese, the contract also uses
the language of    /   .

 

2.2 Applicable laws and rules

 

Laws and administrative regulations required
to be expressed clearly are: “Construction Law”, “Contract Law”, “Quality Regulations of Construction”
and other current applicable national laws and local regulations.

 

2.3 Applicable standards and specifications

 

Applicable standards and specifications:
“Power Construction and Technical Specification Acceptance”, “Quality Inspection and Assessment Standards of
Thermal Power Construction”, “Safety Construction Regulations of Power Construction”, “Installation Construction
and Technique Acceptance Regulation of Power Equipment” and related standards and rules etc..

 

Date
of Party A to provide the standards and regulations:    /   

 

Evens have no related standards and regulations
in China: negotiation by both parties

 

II. General rights and obligations of
both parties

 

1. Party A will accredit engineers.

 

2. Party A’s work

 

2.1 Party A shall complete the following
works in accordance with the stipulated time and requirements:

 

    	 

    	 

    

 

 

 

(1) Required conditions of the construction
site and time of satisfying the conditions: within 10 days prior to the commencement of construction.

 

(2) Arrange the water and electricity line,
Party B shall connect the line to the required place for construction requirements.

 

(3) Roads connection time and requirements
between the construction site and public ways: within 10 days prior to the commencement of construction.

 

(4) Provide information of engineering
geology and underground pipeline: within 10 days prior to the commencement of construction.

 

(5) Approval for required certificate and
documents construction handle by Party A and completion time: within 10 days prior to the commencement of construction

 

(6) Examination requirements of standard
point and coordinate control point: within 10 days prior to the commencement of construction.

 

(7) Design drawing review and design completion
time: within 5 days prior to the commencement of construction. (Presided over by Party A)

 

(8) Take coordination works of protecting
underground pipelines, adjacent buildings, structures (including listed buildings) as well as old and famous trees surrounding
the construction site.

 

(9) Based on current conditions of the
Plant, provide accommodation and office for the construction works, the deficiency part shall be resolved by Party B.

 

(10) Responsible for the on-site and entrance
security work.

 

(11) Works stipulated by both parties:
negotiated by two parties

 

(12) All off-site construction works.

 

(13) Party A is responsible for coordination
works between the owner and Party B.

 

2.2 Works entrusted to Party B by Party
A: negotiated by both parties

 

3. Party B’s work

 

3.1 Party B shall complete the following
works in accordance with stipulated time and Party A’s requirements

 

(1) Provide the name and completion date
of the plan and statement:

 

(2) Undertake the safety work of construction
and non-night construction lighting: Party A shall be responsible for the coordination. Party B provides and maintains the construction
night lighting and the rail facilities. Party B is also responsible for the security in construction site.

 

    	 

    	 

    

 

 

 

(3) Related traffic in construction site,
sanitation and noise management procedures handle by Party B: comply with the government and related departments’ regulations
for the traffic, noise and environmental protection in the construction site, transact related procedures. Party A shall actively
assist Party B, and Party B shall bare all costs arising from it.

 

(4) Special requirements and fees of completed
product: refer to general item.

 

(5) Protection of underground pipelines,
adjacent buildings, structures (including listed buildings) as well as old and famous trees surrounding the construction site.

 

(6) Sanitation and hygiene requirements
of the construction site: refer to the general item

 

(7) Other works through negotiation.

 

III. Construction design and time limit

 

1. Schedule

 

1.1 Party B provides construction design
(construction plan) and schedule

 

1.2
Schedule requirement related to group engineering:        /        

 

2. Time limit exceed

 

2.1 The construction period shall be extended
if time limit exceed by the following reasons:

 

(1) Construction
cannot operate normally by virtue of delay of engineering fees paid by Party A;

 

(2) Major design changes caused by Party
A

 

(3) Cut-off of water, electricity and gas
supply for more than 24 hours in one week which is not Party B’s causes;

 

(4) Force majeure

 

2.2 Party B shall make a written notice
for the construction delay within 7 days since the date the situations of above 2.1 occur. Party A may issue a confirmation after
receiving the report within 7 days, no confirmed or amendments shall be deemed an agreement to the delay.

 

    	 

    	 

    

 

 

 

IV. Quality and acceptance

 

1 Party B shall notify to do concealment
engineering checks and center acceptance 48 hours in advance, the construction shall be continued after confirmation.

 

V.
Safety construction: refer to general item

 

VI. Contract price and adjustment

 

1. Contract price

 

1.1 Fixed total price shall be adopted
in a stipulated scope for the contract price, taking lump sum fee containing tax, profit and management fees, which include:

 

(1) Engineering design cost;

 

(2) Equipment and materials fees used for
the power plant; materials including main materials and auxiliary materials;

 

(3) Party B’s management fees in
construction site; technical fees for construction, security costs, temporary facility fees; equipment and tool fees for construction;

 

(4) Material consumption fees, water and
electricity fees for construction, construction fees in rainy season and scaffolding fees;

 

(5) Unloading fees, inspection and management
for all equipment and material arriving to the construction site;(including warehouse or stack place of materials, or board on
the shipping vehicle are shipped to the installation place);

 

(6) The quantity and price difference of
the substitution material if material substitution is needed;

 

(7) Difficulties for specialty-intersecting
construction;

 

(8) Direct and indirect costs
on repairing, distribution, change and addition paint for equipment deformation and damage (caused by installation unit);

 

(9) A variety of construction allowances,
such as night duty allowance and health subsidies;

 

(10) Entrance and exit fees of heavy machinery;
addition fees for remote construction;

 

(11) Policy adjustment made by state; temporary
costs for temporary shortage;

 

(12) Reasonable construction speed-up costs
required by Party A, idleness costs caused by equipment delivery delay;

 

(13) Clean-up fees of the civil work and
installation site; scrap removal within 20 km; pollution discharge fees of engineering;

 

    	 

    	 

    

 

 

 

(14) Fees of special tool for installation,
production fees of tire tool; flat roof building and teardown fee;

 

(15) Fees for Sub-system’s non-load
joint test, entire start (load linkage test) and debugging test;

 

(16) Addition
labor cost and machinery cost for installation and production caused by low efficiency by virtue of
hostile environment;

 

(17) Cost for road maintenance, road transportation
management, insurance, and vehicle usage happen in machine-team of construction;

 

(18) Costs caused by water and electricity
cut-off; addition fees for exceeding rated water;

 

1.2 Contract price and other adjustment
factors stipulated by both parties;

 

Either party
shall not change the contract price except for the following situations and adjustable items pursuant to provisions contained
herein.

 

(1) Increase or decrease of engineering
costs exceeds 1% of the engineering’s total price and confirmed by Party A (including change of the basic design);

 

(2) Increase or decrease in number of equipments
with the approved design which is proposed by Party A and confirmed by parties, corresponding increase or decrease could be made;

 

(3) For any increase or decrease of engineering
work on the design change caused by government reason, corresponding adjustment can be made after negotiation through both parties.

 

VII.
Supply of equipment and materials

 

1. Party A will not provide any materials
and equipment for this project.

 

2. Party B shall purchase materials and
equipment.

 

2.1 Party B agreed: Party B shall provide
all equipment relevant to field construction, CDQ system and power plant, cable, cable tray, insulation materials for insulation
works, all valves and accessories, all auxiliary equipment as sheets, tubes, profiles, main materials, secondary steel and so on.

 

2.2 Party B shall provide materials warranty
and product certificate for purchased equipment and materials.

 

    	 

    	 

    

 

 

 

2.3 Major auxiliary equipment purchased
by Party B shall be provided by quality, reputable manufactures and design institute. Otherwise, Party B shall make free replacement
for products and equipment approved by Party A without preconditions.

 

VIII.
Final acceptance and settlement

 

1. Final acceptance

 

1.1 Party B agrees to provide built drawings:
Party B shall submit one copy of build drawings, full completion data in quadruplicate and all electronic copy (provide by institute)
to Party A; Submission time: within 30 days since date of completion and commissioning.

 

1.2 Completion
conditions for the project: pursuant to relevant regulations of completion and acceptance conditions
of the nation, Party B shall provide Party A one copy of full build drawings, completion data in quadruplicate and application
report of completion and acceptance. Party A will identify and assess with quality supervision departments.

 

1.3 Project has single-unit operation and
no-load test conditions, and Party A shall be informed 24 hours early. The notice includes: test content, time, location, engineering
test record by Party B and so on. When the test passed, Party A or its representative shall sign on the test record.

 

At the backfill of hidden civil engineering,
Party B must inform Party A and supervisor 48 hours before the acceptance (include the name, time and location of the hidden project),
the bidden project shall be deemed qualified if Party A does not appear on the scene. Installation works with subsystem test conditions:
Party B arranges the test and informs Party A with a 48 hours notice which includes: test content, time, location and preparatory
work by outsourcer. Three parties sign the test record when the test passed and final acceptance may be started.

 

1.4 The field construction shall have a
pass rate of 100%, other non-main production shall have a pass rate of 95%. The installation works by Party B shall have a pass
rate of 95%, the main production system should have a good rate of acceptance with no less than 90%. If 90% cannot be met, a penalty
of 5% of the total cost will be charged.

 

    	 

    	 

    

 

 

 

1.5 After completion and acceptance of
the project, Party B shall prepare the completion of the project accounts and submit to Party A for approval.

 

1.6 Organization, coordination and technical
guidance when the full system was tested (load linkage test): Party A shall provide operating personnel and Party B shall be responsible
for commissioning and specific implementation.

 

IX.
Breach of contract, claim, indemnity
and reward

 

1. Breach of contract:

 

1.1 Party B
shall pay an indemnity of 5,000 Yuan for each day of construction delay.

 

1.2 Party B ensures to complete the construction
within the contract settled date and strives to complete in advance, expect for force majeure.

 

1.3 Party B will obtain a reward of 5,000
Yuan for each day in advance.

 

1.4 Any quality issue of the project caused
by Party B, or there are quality problems of the equipment chosen by Party B, any loss shall be undertaken by Party B.

 

2. Disputes

 

2.1 Both parties agree when there is a
dispute happens during the performance of the contract:

 

(1) Be conciliate by relevant authorities

 

(2) If
any dispute is not resolved by friendly consultations within [sixty (60)] days after the date such consultations were first requested
by a Party, then any Party may submit a lawsuit in the people’s court where Party A locates.

 

X.
Miscellaneous

 

1. Subcontract

 

1.1 Party A has the right to adjust the
contracting content if the construction period, quality and condition of the work finished or unfinished do not reach Party A’s
requirements. The price difference for the adjusted part is borne by Party B.

 

2. Force majeure

 

2.1 Both parties agreed on force majeure:
objective situation that cannot be foreseen, avoided or overcome.

 

    	 

    	 

    

 

 

 

3. Insurance

 

3.1 Two parties agreed to insure the content
of this project as follows:

 

(1)
Party A’s insurance content:            /            

 

Insurance
matters Party A entrusted to Party B:            /            

 

(2)
Party B’s insurance content:            /            

 

4. Guarantees

 

Each party represents and warrants to the
other Party:

 

(1)
Party B provide performance guarantees to Party A in the form of:            /            ,
guaranty contract is the annex to this contract;

 

(2) Other matters agreed by both parties:
           /           .

 

5. Others

 

(1) In
the event of any breach of contract, both Parties shall attempt in the first instance to resolve such breach through friendly consultations.

 

(2) This contract
is in duplicate, each party holds one. All of the following are enforceable by law: terms of
contract, agreement, plan drawings, construction drawings, tender documents, tender, tender meetings, bid notices and so on. This
main contract has the highest effect.

 

(3) This contract
has been executed effective as of the date signed and sealed by both parties; This Contract shall
terminate upon the project completion and acceptance and the maintenance period expires.

 

(4) If there are changes and additions
after the contract signed, a supplementary contract or agreement shall be made in a written form which with is enforceable by law
and equally binding with the contract.

 

The remainder of this page is intentionally
left blank.

 

    	 

    	 

    

 

 

 

(Signature page)

 

	Outsourcer:	Contractor:
	 	 
	Xi’an Zhonghong New Energy Technology Co.,Ltd.	Xi’an Huaxin energy engineering Co.,Ltd.
	 	 
	Commission representative:	Commission representative:
	 	 
	Date: 7/22/2013	Date:7/22/2013EPC Contract
for CDQ Power Generation
Project of

Xuzhou
Tianyu Group

 

Employer (Party A): Xi’an
Zhonghong New Energy Technology Co., Ltd

Contractor (Party B): Xi’an
Huaxin New Energy Co., Ltd

 

Date signed: July 22, 2013

Signed at: Xi’an

 

    	 

    	 

    

 

Section One Agreement

 

Employer: Xi’an Zhonghong New Energy
Technology Co., Ltd (Party A)

Contractor: Xi’an Huaxin New Energy
Co., Ltd (Party B)

 

1. Party A, as the owner of the CDQ (coke
dry quenching) power generation project at Jiangsu Tianyu Energy and Chemical Group Co., Ltd, has agreed Party B to be the EPC
general contractor of the project.

 

2. Party B agrees to undertake this project.
Pursuant to provisions contained herein, Party B will commit to the civil works, equipment procurement, transportation, installation
and commissioning, and test run etc. The project is one turn-key project, and Party B is responsible for the quality, safety, duration
and cost of the project.

 

3. Pursuant to “PRC Contract Law”
and “PRC Construction Law” and applicable laws, regulations, and principles, on the basis of equality, fairness and
in good faith, Party A and Party B agreed the following agreement:

 

I. Project Overview

Project name: CDQ and waste heat power
generation project at Xuzhou Tianyu Group

 

Project location: Tian’an Chemical
Co., Ltd. and Huayu Gas Co., Ltd. of Jiangsu Tianyu Energy and Chemical Group Co., Ltd.

 

Project content: Party B is contracted
with construction of two CDQ and waste heat power generation projects at Jiangsu Tianyu Energy and Chemical Group Co., Ltd, including
1 x 170T/H CDQ and 1 x 25MW waste heat power plant at Tian’an Chemical Co., Ltd., and 1 x 170T/H CDQ and 1 x 25MW waste heat
power plant at Huayu Gas Co., Ltd., two subsidiaries of Jiangsu Tianyu. Party B is responsible for civil works, equipment procurement,
transportation, installation and commissioning, and test run etc. required for the operation of the CDQ and waste heat power plants.

 

II. Scope and Pattern of Project

1. Scope of work by Party B (contracting
scope)

Party B undertakes the project as an EPC
contractor and shall be responsible for civil works, equipment supply, equipment installation and commissioning, and final acceptance
pursuant to national standards and project design approved by Party A. The scope of work by Party B is as follows:

 

		(1)	All civil works included in the CDQ and waste heat power generation project;

 

		(2)	Equipment (including imported equipment), installation material procurement, manufacture supervision,
unloading, and storage, ensuring all equipment and products are up to standard;

 

    	 

    	 

    

 

		(3)	Project construction and management;

 

		(4)	Equipment installation;

 

		(5)	Hot test run;

 

		(6)	Commissioning;

 

		(7)	Delivering the final acceptance report and documents to Party A.

 

2. The specific work scope is as follows:

		(1)	Party B is responsible for the design and related costs;

 

		(2)	Party B is responsible for civil works;

 

		(3)	Party B is responsible for equipment procurement, installation and commissioning, tests, flaw detection
for special facilities, pressure containers and pipes, and bearing the costs;

 

		(4)	Party B is responsible for the commissioning, and bearing the costs;

 

		(5)	Party B is responsible for application of others other than application of power grid connection
(special construction permits, such as pressure containers and pipes);

 

		(6)	Specific construction quantities are shown on the civil work and installation drawings (Party B
is responsible for the drawing design). Party B is responsible for civil works, installation, and procurement of equipment for
power plants, main and auxiliary materials;

 

		(7)	Party A is responsible for the government approval of the project, application of access systems,
remote control and communication systems, and bearing the costs;

 

		(8)	Party B is responsible for the fuel costs during commissioning and test runs.

 

3. Contracting pattern: civil works, equipment
procurement, installation, project duration, costs, quality, safety, services, and turn-key project.

 

4. Contract duration

(1) The commencement date of the project
is the tenth calendar day after the contract is signed.

 

    	 

    	 

    

 

(2) Project termination date: the day after
72+24 hours of test run of the power plants.

 

(3) Total construction period: 12 months
for single system.

 

(4) Project delivery day: final acceptance
shall be conducted within 30 days after the 72+24 hour test run. The delivery day is the day all parties complete the acceptance
and sign on the acceptance report.

 

5. Quality standard

Project quality standard: the project will
be accepted in accordance with the “national quality standard”. Party B shall provide qualification certificates as
per relevant department’s requests and cooperate with Party A to provide completion and acceptance documents.

 

6. Contract price

(1) Total contract price: RMB 400,000,000
(RMB 0.4 billion), RMB 200,000,000 (RMB 0.2 billion) for Tian’an, and RMB 200,000,000 (RMB 0.2 billion) for Huayu;

 

(2) The total contract price is the lump
sum price including civil works, equipment supply, procurement of main and auxiliary materials, transportation, unloading of equipment
and materials, second-time transportation, storage, labor, management, installation and commissioning, safety, water and electricity
fees during installation, fees for maintenance, insurance, profit, taxes, provisions, risks, and fees for transportation, installation
and disassembling of large machineries.

 

(3) Total contract price also includes
extra costs for remote construction, temporary facility fees, antifreeze costs, safety fees (safety, environment protection and
special needs), construction costs, night-time construction costs, high-rise construction costs, scaffold assembling and demolition
costs, boiler pressure and pipeline checking costs, single test run, hot-test runs and maintenance costs. It also includes second-time
transportation costs of equipment and material, increase in engineering costs caused by material price difference, changes and
other costs.

 

(4) Increase and reduction of engineering
costs due to change of detail design and markets shall be considered.

 

7. Payment

The payment shall be made in tranches for
two systems at Tian’an and Huayu. The payment shall be made as follows:

 

7.1 Party A shall pay 15% of the price
for a single system as the advance payment, which is RMB 30,000,000 (RMB 30 million), to Party B within 15 days after the contract
is signed;

 

    	 

    	 

    

 

7.2 Party A shall pay 15% of the price
for a single system as the progress payment, which is RMB 30,000,000 (RMB 30 million), to Party B after the primary design is approved;

 

7.3 Party A shall pay 20% of the price
for a single system, which is RMB 40,000,000 (RMB 40 million), to Party B 7 days after the main equipment is ordered.

 

7.4 Party A shall pay 20% of the price
for a single system, which is RMB 40,000,000 (RMB 40 million), to Party B within 2 months after the civil works started and equipment
contract is signed.

 

7.5 Party A shall pay 15% of the price
for a single system, which is RMB 30,000,000 (RMB 30 million), to Party B after the installation started and before main equipment
is supplied.

 

7.6 Party A shall pay 15% of the price
for a single system, which is RMB 30,000,000 (RMB 30 million), to Party B within 7 days after the installation is completed and
ready for test runs.

 

7.7 Quality guarantee: 10% of the price
for a single system, RMB 20,000,000 (RMB 20 million) of bank guarantee.

 

8. Documents that constitute the contract
include:

(1) The contract

 

(2) Terms of the agreement

 

(3) Appendixes of the contract

 

(4) Applicable standards, regulations and
technical documents

 

Written documents of negotiation and modification
by both parties are part of this contract.

 

9. In accordance with the contract, Party
B shall perform the contracting service till delivery of the project and be responsible for quality warranty within the warranty
period. The warranty period is 12 months after the power plants are accepted or 18 months after the power plant construction is
completed.

 

10. Party B promises to monitor and manage
the project during its performance period, Party B shall:

(1) Submit project progress report;

 

(2) Accept the inspection to all parts
of the project. For any unqualified parts, Party B shall redo it.

 

    	 

    	 

    

 

(3) Accept the supervision during the construction
period and rectify the issues raised.

 

11. Party A commits to Party B to make
payment pursuant to the schedule and method stated herein. Representative of Party A will discuss the issues raised about the construction.
Party A is responsible for the project management fee.

 

12. The contract is executed effective
as of the date representatives or agencies of both parties signed and sealed.

 

Section Two, Terms of the contract

 

I. Documents
of the contract

 

1. Documents of the contract and sequence
interpretation

 

1.1 Documents of the contract shall be
interrelated and mutually explanatory of one another. Documents comprising the contract and the priority are as follows:

 

(1) The contract

 

(2) Terms of the contract

 

(3) Appendix of the contract

 

(4) Applicable standard, specifications
and related technical documents

 

For implementation of the contract, written
agreements or documents related to both Party A and Party B’s engineering negotiation, supplement and modification are deemed
as part of the contract.

 

2. Language and applicable laws, standards
and rules

 

2.1 Besides Chinese, the contract also uses
the language of      /     .

 

2.2 Applicable laws and rules

 

Laws and administrative regulations required
to be expressed clearly are: “Construction Law”, “Contract Law”, “Quality Regulations of Construction”
and other current applicable national laws and local regulations.

 

2.3 Applicable standards and specifications

 

Applicable standards and specifications:
“Power Construction and Technical Specification Acceptance”, “Quality Inspection and Assessment Standards of
Thermal Power Construction”, “Safety Construction Regulations of Power Construction”, “Installation Construction
and Technique Acceptance Regulation of Power Equipment” and related standards and rules etc..

 

    	 

    	 

    

 

Date of Party A to provide the standards
and regulations:      /     

 

Evens have no related standards and regulations
in China: negotiation by both parties

 

II. General rights and obligations of
both parties

 

1. Party A will accredit engineers.

 

2. Party A’s work

 

2.1 Party A shall complete the following
works in accordance with the stipulated time and requirements:

 

(1) Required conditions of the construction
site and time of satisfying the conditions: within 10 days prior to the commencement of construction.

 

(2) Arrange the water and electricity line,
Party B shall connect the line to the required place for construction requirements.

 

(3) Roads connection time and requirements
between the construction site and public ways: within 10 days prior to the commencement of construction.

 

(4) Provide information of engineering
geology and underground pipeline: within 10 days prior to the commencement of construction.

 

(5) Approval for required certificate and
documents construction handle by Party A and completion time: within 10 days prior to the commencement of construction

 

(6) Examination requirements of standard
point and coordinate control point: within 10 days prior to the commencement of construction.

 

(7) Design drawing review and design completion
time: within 5 days prior to the commencement of construction. (Presided over by Party A)

 

(8) Take coordination works of protecting
underground pipelines, adjacent buildings, structures (including listed buildings) as well as old and famous trees surrounding
the construction site.

 

(9) Based on current conditions of the
Plant, provide accommodation and office for the construction works, the deficiency part shall be resolved by Party B.

 

(10) Responsible for the on-site and entrance
security work.

 

(11) Works stipulated by both parties:
negotiated by two parties

 

(12) All off-site construction works.

 

    	 

    	 

    

 

(13) Party A is responsible for coordination
works between the owner and Party B.

 

2.2 Works entrusted to Party B by Party
A: negotiated by both parties

 

3. Party B’s work

 

3.1 Party B shall complete the following
works in accordance with stipulated time and Party A’s requirements

 

(1) Provide the name and completion date
of the plan and statement:

 

(2) Undertake the safety work of construction
and non-night construction lighting: Party A shall be responsible for the coordination. Party B provides and maintains the construction
night lighting and the rail facilities. Party B is also responsible for the security in construction site.

 

(3) Related traffic in construction site,
sanitation and noise management procedures handle by Party B: comply with the government and related departments’ regulations
for the traffic, noise and environmental protection in the construction site, transact related procedures. Party A shall actively
assist Party B, and Party B shall bare all costs arising from it.

 

(4) Special requirements and fees of completed
product: refer to general item.

 

(5) Protection of underground pipelines,
adjacent buildings, structures (including listed buildings) as well as old and famous trees surrounding the construction site.

 

(6) Sanitation and hygiene requirements
of the construction site: refer to the general item

 

(7) Other works through negotiation.

 

III. Construction design and time limit

 

1. Schedule

 

1.1 Party B provides construction design
(construction plan) and schedule

 

1.2 Schedule requirement related to group
engineering:      /     

 

2. Time limit exceed

 

2.1 The construction period shall be extended
if time limit exceed by the following reasons:

 

(1) Construction
cannot operate normally by virtue of delay of engineering fees paid by Party A;

 

    	 

    	 

    

 

(2) Major design changes caused by Party
A

 

(3) Cut-off of water, electricity and gas
supply for more than 24 hours in one week which is not Party B’s causes;

 

(4) Force majeure

 

2.2 Party B shall make a written notice
for the construction delay within 7 days since the date the situations of above 2.1 occur. Party A may issue a confirmation after
receiving the report within 7 days, no confirmed or amendments shall be deemed an agreement to the delay.

 

IV. Quality and acceptance

 

1 Party B shall notify to do concealment
engineering checks and center acceptance 48 hours in advance, the construction shall be continued after confirmation.

 

V. Safety construction: refer to general
item

 

VI. Contract price and adjustment

 

1. Contract price

 

1.1 Fixed total price shall be adopted
in a stipulated scope for the contract price, taking lump sum fee containing tax, profit and management fees, which include:

 

(1) Engineering design cost;

 

(2) Equipment and materials fees used for
the power plant; materials including main materials and auxiliary materials;

 

(3) Party B’s management fees in
construction site; technical fees for construction, security costs, temporary facility fees; equipment and tool fees for construction;

 

(4) Material consumption fees, water and
electricity fees for construction, construction fees in rainy season and scaffolding fees;

 

(5) Unloading fees, inspection and management
for all equipment and material arriving to the construction site;(including warehouse or stack place of materials, or board on
the shipping vehicle are shipped to the installation place);

 

(6) The quantity and price difference of
the substitution material if material substitution is needed;

 

(7) Difficulties for specialty-intersecting
construction;

 

(8) Direct and indirect costs
on repairing, distribution, change and addition paint for equipment deformation and damage (caused by installation unit);

 

    	 

    	 

    

 

(9) A variety of construction allowances,
such as night duty allowance and health subsidies;

 

(10) Entrance and exit fees of heavy machinery;
addition fees for remote construction;

 

(11) Policy adjustment made by state; temporary
costs for temporary shortage;

 

(12) Reasonable construction speed-up costs
required by Party A, idleness costs caused by equipment delivery delay;

 

(13) Clean-up fees of the installation
site; scrap removal within 20 km; pollution discharge fees of engineering;

 

(14) Fees of special tool for installation,
production fees of tire tool; flat roof building and teardown fee;

 

(15) Fees for Sub-system’s non-load
joint test, entire start (load linkage test) and debugging test;

 

(16) Addition
labor cost and machinery cost for installation and production caused by low efficiency by virtue of
hostile environment;

 

(17) Cost for road maintenance, road transportation
management, insurance, and vehicle usage happen in machine-team of construction;

 

(18) Costs caused by water and electricity
cut-off; addition fees for exceeding rated water;

 

1.2 Contract price and other adjustment
factors stipulated by both parties;

 

Either party
shall not change the contract price except for the following situations and adjustable items pursuant to provisions contained
herein.

 

(1) Increase or decrease of engineering
costs exceeds 1% of the engineering’s total price and confirmed by Party A (including change of the filed construction and
illustration);

 

(2) Increase or decrease in number of equipments
with the approved design which is proposed by Party A and confirmed by parties, corresponding increase or decrease could be made;

 

(3) For any increase or decrease of engineering
work on the design change caused by government reason, corresponding adjustment can be made after negotiation through both parties.

 

    	 

    	 

    

 

VII.
Supply of equipment and materials

 

1. Party A will not provide any materials
and equipment for this project.

 

2. Party B shall purchase materials and
equipment.

 

2.1 Party B agreed: Party B shall provide
all equipment relevant to field construction, CDQ system and power plant, cable, cable tray, insulation materials for insulation
works, all valves and accessories, all auxiliary equipment as sheets, tubes, profiles, main materials, secondary steel and so on.

 

2.2 Party B shall provide materials warranty
and product certificate for purchased equipment and materials.

 

2.3 Major auxiliary equipment purchased
by Party B shall be provided by quality, reputable manufactures and design institute. Otherwise, Party B shall make free replacement
for products and equipment approved by Party A without preconditions.

 

VIII.
Final acceptance and settlement

 

1. Final acceptance

 

1.1 Party B agrees to provide built drawings:
Party B shall submit one copy of build drawings, full completion data in quadruplicate and all electronic copy (provide by institute)
to Party A; Submission time: within 30 days since date of completion and commissioning.

 

1.2 Completion
conditions for the project: pursuant to relevant regulations of completion and acceptance conditions
of the nation, Party B shall provide Party A one copy of full build drawings, completion data in quadruplicate and application
report of completion and acceptance. Party A will identify and assess with quality supervision departments.

 

1.3 Project has single-unit operation and
no-load test conditions, and Party A shall be informed 24 hours early. The notice includes: test content, time, location, engineering
test record by Party B and so on. When the test passed, Party A or its representative shall sign on the test record.

 

    	 

    	 

    

 

At the backfill of hidden civil engineering,
Party B must inform Party A and supervisor 48 hours before the acceptance (include the name, time and location of the hidden project),
the bidden project shall be deemed qualified if Party A does not appear on the scene. Installation works with subsystem test conditions:
Party B arranges the test and informs Party A with a 48 hours notice which includes: test content, time, location and preparatory
work by outsourcer. Three parties sign the test record when the test passed and final acceptance may be started.

 

1.4 The field construction shall have a
pass rate of 100%, other non-main production shall have a pass rate of 95%. The installation works by Party B shall have a pass
rate of 95%, the main production system should have a good rate of acceptance with no less than 90%. If 90% cannot be met, a penalty
of 5% of the total cost will be charged.

 

1.5 After completion and acceptance of
the project, Party B shall prepare the completion of the project accounts and submit to Party A for approval.

 

1.6 Organization, coordination and technical
guidance when the full system was tested (load linkage test): Party A shall provide operating personnel and Party B shall be responsible
for commissioning and specific implementation.

 

IX.   Breach
of contract, claim, indemnity
and reward

 

1. Breach of contract:

 

1.1 Party B
shall pay an indemnity of 5,000 Yuan for each day of construction delay.

 

1.2 Party B ensures to complete the construction
within the contract settled date and strives to complete in advance, expect for force majeure.

 

1.3 Party B will obtain a reward of 5,000
Yuan for each day in advance.

 

1.4 Any quality issue of the project caused
by Party B, or there are quality problems of the equipment chosen by Party B, any loss shall be undertaken by Party B.

 

2. Disputes

 

2.1 Both parties agree when there is a
dispute happens during the performance of the contract:

 

(1) Be conciliate by relevant authorities

 

(2) If
any dispute is not resolved by friendly consultations within [sixty (60)] days after the date such consultations were first requested
by a Party, then any Party may submit a lawsuit in the people’s court where Party A locates.

 

    	 

    	 

    

 

X.
Miscellaneous

 

1. Subcontract

 

1.1 Party A has the right to adjust the
contracting content if the construction period, quality and condition of the work finished or unfinished do not reach Party A’s
requirements. The price difference for the adjusted part is borne by Party B.

 

2. Force majeure

 

2.1 Both parties agreed on force majeure:
objective situation that cannot be foreseen, avoided or overcome.

 

3. Insurance

 

3.1 Two parties agreed to insure the content
of this project as follows:

 

(1) Party A’s insurance content:      /     

 

 Insurance matters Party A entrusted to
Party B:      /     

 

(2) Party B’s insurance content:      /     

 

4. Guarantees

 

Each party represents and warrants to the
other Party:

 

(1)
Party B provide performance guarantees to Party A in the form of:
     /     , guaranty contract is the annex to this
contract;

 

(2) Other matters agreed by both parties:
     /     .

 

5. Others

 

(1) In
the event of any breach of contract, both Parties shall attempt in the first instance to resolve such breach through friendly consultations.

 

(2) This contract
is in duplicate, each party holds one. All of the following are enforceable by law: terms of
contract, agreement, plan drawings, construction drawings, tender documents, tender, tender meetings, bid notices and so on. This
main contract has the highest effect.

 

(3) This contract
has been executed effective as of the date signed and sealed by both parties; This Contract shall
terminate upon the project completion and acceptance and the maintenance period expires.

 

    	 

    	 

    

 

(4) If there are changes and additions
after the contract signed, a supplementary contract or agreement shall be made in a written form which with is enforceable by law
and equally binding with the contract.

 

The remainder of this page is intentionally
left blank.

 

(Signature page)

 

	Outsourcer:	Contractor:
	 	 
	Xi’an Zhonghong New Energy Technology Co.,Ltd.	Xi’an Huaxin energy engineering Co.,Ltd.
	 	 
	Commission representative:	Commission representative:
	 	 
	Date: 7/22/2013	Date:7/22/2013

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