Document:

ex10-19.htm

Exhibit 10.19

(English Translation)

	Contract Name: Subcontract of Gezhouba Inner 	Date: October 20, 2010
	Mongolia Wind Tower Tube Manufacturing Project	 

 

Subcontract of Gezhouba Inner Mongolia Wind Tower Tube Manufacturing Project

 

Contract No. XXJFD-10-020

Party A: Gezhouba Inner Mongolia Wind Power Equipment Co., Ltd.

Party B: Liaoning Creative Wind Power Equipment Co., Ltd.

This Contract is made between Party A and Party B in Kailu Town, Tongliao, Inner Mongolia on October 20, 2010.

    Whereas Party A is desirous that Party B should take the subcontracted project, that is, the Manufacturing Contract of Wind Tower Tube of Inner Mongolia Huade Cheliwusu Wind Power Plant. The contract machine models comprise 33 sets of 1.5MW Gold Wind Power Machines, 33 sets of 1.5MW Sinovel Wind Power Machines. The total amount of Wind Power Machines is 66.

Party A has accepted the fixed and tax-included material unit price of 898,400 YUAN (EIGHT HUNDRED NINETY-EIGHT THOUSAND FOUR HUNDRED YUAN) per set for Gold Wind Machine (7020 YUAN per ton) and the fixed and tax-included manufacturing unit price of 395,000 YUAN (THREE HUNDRED AND NINETY-FIVE THOUSAND) per set; fixed and tax-included material unit price of 930,600 YUAN (NINE HUNDRED AND THIRTY-THOUSAND SIX HUNDRED YUAN) per set for Sinovel Machine (7020 YUAN per ton) and fixed and tax-included manufacturing unit price of 395,000 YUAN (THREE HUNDRED AND NINETY-FIVE THOUSAND YUAN) per set as the project quoted price for manufacturing, completion and defect treatment of the subcontracted project. The total contract price is estimated to be 86,427,000.00 YUAN (EIGHTY-SIX MILLION FOUR HUNDRED TWENTY-SEVEN THOUSAND YUAN). The completed quantities of the subject are subject to Party A’s approval.

    Regarding the Contract, Party A and Party B hereby agree as follows:

	
1.  

	
Technical Terms shall be strictly observed (Design Specification and Technical Agreement);

	
2.  

	
Commercial Terms shall be carried out to the letter;

	
3.  

	
The above mentioned documents are considered to complement and explain each other. If ambiguity or contradiction arises, one should follow the first-mentioned terms; if the two are in the same order, one shall observe the after-mentioned terms.

	
4.  

	
After both parties have signed the contract, Party A is expected to pay 20% of material purchase expense to Party B. Party A pays 10% of manufacturing expenses when materials are on site, and pays the remaining 60% expenses after delivery. The residual 10% is retained as quality deposit.

	
5.  

	
If no dispute is raised, the quality deposit, which takes up 10% of the total contract price, will be refunded to Party B.

	
6.  

	
The contract shall come into effect as soon as it is duly signed by both parties.

	
7.  

	
Party A and Party B both agree that the hereby subcontract (including all contract documents) has encompassed all of their agreement, understanding, commitment and covenant, and that the hereby subcontract has collected, combined and substitute all previous negotiations, understanding and agreement. Both Parties assent that, other than the persons who perform the same procedure of the subcontract beyond any written form, anyone that make any revision or change to the hereby subcontract (except for the special provisions in the contract) shall not be effective or binding.

 

  

  

  

	Contract Name: Subcontract of Gezhouba Inner 	Date: October 20, 2010
	Mongolia Wind Tower Tube Manufacturing Project	 

 

Commercial Terms

Article 1

1.1 Party B shall submit documents of manufacturing schedule and process.

Party B is expected to submit a detailed aggregate manufacturing schedule to Party A for record and investigation within five days after the contract is signed. Meanwhile, after the manufacture goes into operation, Party B should submit a scheduled plan every seven days.

1.2 Material Documents that shall be submitted by Party B

In conformity with the Contract, Party B shall provide effective test documents in order to act in concert with the equipment acceptance inspection of Party A and shall supply onsite technical services of equipment installation.

1.3 Transfer: the hereby project must not be transferred or subcontracted (except for anticorrosion and transportation procedures).

 

Article 2

2.1 Responsibilities of Party B on the subcontracted project

2.1.1 General Responsibilities of Party B

(1) To perform strictly to contract requirements.

Following the contract requirements, Party B should organize the manufacture carefully to meet the schedule, and supply Party A with relevant service and quality assurance.

Party A is entitled to suspend or terminate the contract according to the satisfactory degree of manufacturing schedule, quality and delivery on the basis of contract requirements. The resulting responsibilities and economic loss should be taken by Party B.

(2) To assure the quality of products

All aspects of Party B’s manufacture should be in strict accordance with contract, manufacturing drawings and technology documents to meet the requirements on project quality and schedule.

Supervision engineers and Party A are in charge of overall manufacturing process management of the subcontracted project, including time schedule, material, manufacturing techniques, manufacturing schedule, quality accidents management and the approval of quality inspection. However, none of Party B’s liabilities and responsibilities towards the hereby subcontract project is exempted or reduced.

After each batch of project equipments is inspected to be satisfied by Party B, Party B has to apply for the inspection from Party A’s Technology and Quality Administration Department. It is Party A’s Technology and Quality Administration Department who is in charge of acceptance inspection and staff arrangement for patrol and random inspections during the manufacturing process.

(3) Safe and Civil Manufacture

Party B shall implement the national regulations about safe and civil manufacture, and organize the manufacture according to civil manufacturing measures.

2.1.2 Usage of Main Materials

The materials of tower tube mentioned in this contract are purchased by Party B. Party A provides no materials.

 

 

 

 

 

	Contract Name: Subcontract of Gezhouba Inner 	Date: October 20, 2010
	Mongolia Wind Tower Tube Manufacturing Project	 

  

If damage or deficiency of material or components occurred due to the improper use of Party B, Party B has to purchase the licensed materials required by the contract to make up the deficiency. Equipped with ex-factory certification and quality certificates, the makeup materials cannot be used until the approval of Party A is gained. Welding tests of welding test piece are carried out by Party B while the third party performance tests are launched by Party A. Other materials (such as anticorrosive material, transport Mi-brace materials, wrap materials, etc.) shall be purchased by Party B, when painting materials should bear ex-factory certification and quality certificates.

2.1.3 Party B shall offer and present relevant acceptance investigation forms to Party A for approval, and to provide self-inspection record as required. Acceptance investigation on completion investigation materials should also be submitted.

2.1.4 Technical Service

Upon receipt of Party A’s notice, Party B shall send qualified personnel to conduct on-site technical service.

2.2 Possible consequence if Party B breaches the Subcontract Responsibility Letter

        If acceptance investigation or usage cannot be achieved due to the deferred manufacturing schedule or failure in project quality, Party B must bear the corresponding responsibility and economic loss as prescribed in Article 4.2.

 

Article 3

3.1 Commencement of the Subcontracted Project; Time of Completion of Party B

3.1.1 Once the subcontract is mutually signed, manufacture should be prepared. According to the time schedule prescribed by Party A, delivery should be gained by October 31, 2011.

3.1.2 Party B should organize the manufacture in accordance with the controlled manufacturing schedule or the manufacturing scheme revised by Party A, for which Party B shall not claim for indemnity.

3.2 Breach Penalty

(1) Failure by one Party to perform the obligation under this contract constitutes breach. The defaulting Party is liable to sustain the losses of the other party.

(2) If Party B fails to deliver the contract equipments on the specified date or before the deferred deadline approved by both parties through negotiation, Party B shall pay 5% of the total contract price per day, which will be deducted from the project settlement accounts of Party B. If the delivery of contract equipments is deferred for more than one month, Party A has the right to revoke part or the whole contract. In addition, Party B will suffer the breach penalty and compensate Party A’s loss.

(3) Penalty of Quality Breach 

If the manufacturing quality fails to meet the requirements of the contract because of Party B, Party B should take immediate actions and pay 5% of the project price as penalty according to the degree of loss. 

(4) The total amount of the breach penalty shall not be more than 10% of the project price.

(5) Party A can deduct the aforementioned breach penalty from other payments at maturity of Party B. None of Party B’s liabilities and other responsibilities required in the subcontracted project shall be terminated due to the payment or deduction of this breach penalty.

(6) If Party B achieves completion on schedule, Party A should contact the Wind-Power Plant to deliver the products within the prescribed time. If delivery is deferred, Party B will receive a certain amount of indemnities. (The total amount of indemnities shall not excess 10% of the project price.)

Article 4 Change Directive

Party B should obtain all the change directives of subcontracted project only from Party A. Party B shall not lodge an indemnity claim due to Party A’s change directives.

 

  

  

  

 

	Contract Name: Subcontract of Gezhouba Inner 	Date: October 20, 2010
	Mongolia Wind Tower Tube Manufacturing Project	 

 

Article 5 Obligation

5.1 Obligations of Party B before Transfer

Before transfer, Party B is responsible for necessary preservation, storage and defect treatment, to make sure that the subcontracted project remains in a satisfactory state as required in the project by Party A

5.2 Obligations of Party B after Transfer

5.2.1 Party B shall ensure the project manufacturing quality. Party B is supposed to take immediate actions towards unsuitable fittings or measurements upon Party A’s installation of tower tubes. Party B should manufacture the products according to the usage standard of the equipment with fine quality. Besides, Party B shall guarantee that there is no default in his work according to the contract due to any activities conducted by Party B.

5.2.2 Party B shall ensure the project manufacturing quality and meet the requirements of the project demanded by Party A.

5.2.3 Party B shall provide with the relevant technical services during the period of warranty.

5.2.4 If any quality defects arise during the period of warranty, Party B shall launch an on-site treatment within 24 hours after the receipt of Party A’s notice. If the defects or damages are produced by Party B, the quality warranty period of the project under treatment will be prolonged to 18 months after investigation acceptance.

5.2.5 Party A has the right to claim for indemnities if there is damages lead by any project quality defects and/or damages caused by Party B, and/or works that is not in compliance with the manufacturing drawings and technical requirements of Party A, and/or misdirection of Party B’s technical personnel or Party B’s technical documents during the process of manufacture, usage and acceptance investigation and within the period of quality warranty.

This Subcontract is in quadruplicate, two for each party.

This Subcontract shall come into effect after it is duly signed by the legal representatives or the entrusted agents of both parties and is stamped by contract seals.

Note: Party A claims that the Appendix of the Contract constitutes an integral part of the hereby Contract, which is legally of equal effect.

 

	Party A: Gezhouba Inner Mongolia Wind Power Equipment Co., Ltd. (Seal) 

Address: Recycling Economy Industrial Park, Kailu Town, Tongliao, Inner Mongolia

Legal Representative:

Contact Person: Shaopei Zhu

Tel: 0475-2332995    15004989678

Fax: 0475-2332998

Opening Bank: Kailu Branch of ICBC

Account No.:

Tax ID:

	
Party B: Liaoning Creative Wind Power Equipment Co., Ltd (Seal)

Address: Maoshan Industrial Park, Yinzhou District, Tieling, Liaoning

Legal Representative:

Contact Person: Zhang Chi

Tel: 13841007798

Fax: 0410-6129933

Opening Bank: Tieling Southern-City Branch of Construction Bank

Account No.:

Tax ID:ex10-20.htm

Exhibit 10.20

(English Translation)

Huaneng Tongyu Xinhua 1A Wind Farm Project (49.5MW)

Wind Turbine Tower Cylinder Purchase Contract

Contract Index: HN-C-JL/TYXH1A_WZ/WT-002

Buyer: Huaneng Tongyu Xinhua 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 Tongyu Xinhua Wind Power Generation Co. Ltd. (the Buyer), through the public bidding process, confirms to purchase Wind Turbine Tower Cylinder for Huaneng Tongyu Xinhua 1A Wind Farm 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.

1.3           The Wind Turbine Tower Cylinder should comply with the technical specification and technical and economic standard set forth in the Technology Agreement.

1.4           The Seller must not subcontract.

1.5           The price of climbing aid device is determined by the Buyer’s bid soliciting price. If the Seller’s original bid price is lower than the bid soliciting price, the difference would be subtracted from this Contract.

2              Contract Price and Documentation

2.1           This contract price is the contract price in total: Renminbi 36,366,000.00 Yuan even (In Capital: Thirty-Six Million Three Hundred Sixty-Six Thousand Even), and shall cover all the cost, expense and tax including but 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 an 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;

 

(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 the contract;

(7)     Standards and drawings provided by the Buyer to paint Company Logo on the tower cylinders.

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 payments under this contract shall be made in 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: 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 Tower 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.

 

3.3.6        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 damages, 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 Huaneng Tongyu Xinhua 1A Wind Farm Project site.

4.3           Designated Recipient: Huaneng Tongyu Xinhua 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 10 ring foundations starting to be delivered at the designated site

	 	
April 10, 2011

	  
	
3

	
Second set of 10 ring foundations starting to be delivered at the designated site

	 	
April 20, 2011

	  
	
4

	
Third set of 13 ring foundations starting to be delivered at the designated site

	 	
April 30, 2011

	  
	
5

	
First set of 10 Wind Turbine Tower Cylinder units delivered at (each) designated site

	 	
August 30, 2011

	  
	
6

	
Second set of 10 Wind Turbine Tower Cylinder units delivered at (each) designated site

	 	
September 15, 2011

	  
	
7

	
Third set of 13 Wind Turbine Tower Cylinder units delivered at (each) designated site

	 	
September 25, 2011

	  

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.

4.5           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.

4.14         All flanges must have “米” shape support to prevent distortion. The technology should meet requirements of Sanyi Electric Technology Co., Ltd. If the Seller recycles the supportive device, the Seller should be responsible for retrieve.

 

  

  

  

 

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.

 

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.

 

  

  

  

 

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 there from.

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 Laoren Paint. 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 produce 33 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 its 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 liquidated damages 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 damages.

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

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

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

7.10         The liquidated damages 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 borne 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.

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.

 

  

  

  

 

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Buyer:

	
Huaneng Tongyu Xinhua Wind Power

Generation Co. Ltd

	  	
Seller:

	
Liaoning Creative Wind Power

Equipment Co., Ltd.

	
Address:

	
Tongyu, Jilin Province

	  	
Address:

	
Maoshan Industry Park,

Tieling Economic Development Zone

	
Facsimile:

	
0436-4220386

	  	
Facsimile:

	
0410-6129900

	
Telephone:

	
0436-4220386

	  	
Telephone:

	
0410-6129900

	
Zip code:

	
137200

	  	
Zip code:

	
112000

	
Account Opening Bank:

	  	
Account Opening Bank:

	
Industry and Commerce Bank of China, Baicheng Tongyu Branch

	  	
Bank of China, Tieling Branch

	
Account No.:

	  	
Account No.:

	
Buyer:

	  	  	
Seller:

	  
	
(Stamp in red)

	  	
(Stamp in red)

	  	  	  	  	  
	
Huaneng Tongyu Xinhua 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/ Zhou, Libo 2011.01.14

	  	
Signature: /s/ Ma, Huimin 2011.01.14

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