Document:

ex10-21.htm

Exhibit 10.21

(English Translation)

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

Wind Turbine Tower Cylinder Purchase Contract

Contract Index: HN-C-JL/TYXH1B_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 1B 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 1B 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

	 	
September 30, 2011

	  
	
6

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

	 	
October 15, 2011

	  
	
7

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

	 	
October 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.

 

  

  

  

 

This page is set for signature page.

 

	
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 2011.01.14ex10-22.htm

Exhibit 10.22

 

 

CLEANTECH INNOVATIONS, INC.

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”), dated ________, ____, is between CleanTech Innovations, Inc., a Nevada corporation (the “Company”), with its principal office at C District, Maoshan Industry Park, Tieling Economic Development Zone, Tieling, Liaoning Province, China 112616, and __________, an individual residing at __________ (“Optionee”).

	
1.  

	
Grant of Option. The Company hereby grants to Optionee, effective as of ________, ____ (the “Grant Date”), the right and option (the “Option”) to purchase from the Company, for a price equal to the closing price per share of the Company’s common stock, par value $.00001 (the “Common Stock”), on ________, ____, as reported on the __________ of $____ per share (the “Exercise Price”), up to __________ (______) shares (the “Shares”) of Common Stock as a nonqualified stock option, which Option shall be subject to the applicable terms and conditions set forth below.

	
2.  

	
Terms and Conditions of Option. The Option evidenced by this Agreement is subject to the following terms and conditions, as well as the terms and conditions of Section 3 hereof.

	
a.  

	
Exercise Price. The Exercise Price is $____ per Share.

	
b.  

	
Vesting of Option. The Option shall vest and become exercisable over a two-year period if the Optionee shall have remained in the continuous employ of the Company or subsidiaries of the Company (the “Subsidiaries”) or a member of the Board of Directors of the Company (the “Board of Directors”) through the vesting dates set forth below with respect to the portion of the Shares set forth next to such date.

	
Vesting Date

	  	
Portion of Shares Vested

and Exercisable

	  	  	  
	  	  	  
	  	  	  

	
c.  

	
Term of Option. The term over which the Option may be exercised shall commence on the Grant Date and, subject to the provisions of Section 3(b) below, shall terminate three (3) years after the vesting date.

	
d.  

	
Exercisability of Option. Notwithstanding the provisions of Section 2(b), the Option will become immediately exercisable in full if, prior to the date the Option becomes fully vested and exercisable pursuant to Section 2(b), and while the Optionee is in the employ of the Company or its Subsidiaries or a member of the Board of Directors, the Optionee dies or becomes permanently disabled as reasonably determined by the Board of Directors (“Permanent Disability”). 

 

  

1

  

 

	
3.  

	
Additional Terms and Conditions.

	
a.  

	
Exercise of Option; Payments for Shares. To the extent the Option has become vested and exercisable in accordance with this Agreement, the Option may be exercised from time to time with respect to all or any portion of the number of Shares with respect to which the Option has become exercisable, in whole or in part, by written notice to the Company at the Company’s then principal office, substantially in the form of Exhibit A attached hereto. Any notice of exercise of the Option shall be accompanied by payment of the full Exercise Price for the Shares being purchased by certified or bank check, or other form of immediately available funds, payable to the order of CleanTech Innovations, Inc. The Option shall not be exercised for any fractional Shares and no fractional Shares shall be issued or delivered. The date of actual receipt by the Company of the notice of exercise shall be treated as the date of exercise of the Option for the Shares being purchased.

	
b.  

	
Forfeiture of Option. To the extent that the Option has not yet vested pursuant to Section 2 above, it shall be forfeited automatically without further action or notice if Optionee ceases to be employed by the Company or its Subsidiaries or be a member of the Board of Directors prior to the Vesting Date other than as provided in Section 2(b).

	
c.  

	
Termination of Option. If Optionee’s employment with the Company or its Subsidiaries or appointment to the Board of Directors terminates, the Option shall continue to be exercisable to the extent it is vested and exercisable on the date such employment or directorship terminated for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates pursuant to Section 2 above. However, if Optionee’s employment or directorship (i) terminates because of Optionee’s death or Permanent Disability or (ii) is terminated by the Company without cause or for good reason, to the extent the Option is vested and exercisable on the date such employment or directorship terminated, the Option shall continue to be exercisable for twelve (12) months after such termination, but in no event after the date the Option otherwise terminates pursuant to Section 2 above.

	
d.  

	
Continued Employment. The Option granted hereunder shall confer no right on Optionee to continue in the employ of the Company or its Subsidiaries or appointment to the Board of Directors, nor limit in any respect the right of the Company (in the absence of a specific agreement to the contrary) to terminate the employment, remove from the Board of Directors or adjust the compensation of the Optionee at any time.

 

	
e.  

	
Issuance of Shares; Registration; Withholding Taxes. As soon as practicable after the exercise date of the Option, the Company shall cause to be issued and delivered to Optionee, or for Optionee’s account, a certificate or certificates for the Shares purchased. The Company may postpone the issuance or delivery of the Shares until (i) the receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules and regulations, including applicable federal and state securities laws and listing requirements, if any; and (ii) the payment to the Company, upon its demand, of any amount requested by the Company to satisfy any federal, state or other governmental withholding tax requirements related to the exercise of the Option. Optionee shall comply with any and all legal requirements relating to Optionee’s resale or other disposition of any Shares acquired under this Agreement.

 

  

2

  

 

	
f.  

	
Nontransferability of Options. The Option and this Agreement shall not be assignable or transferable by Optionee other than by will or by the laws of descent and distribution. During Optionee’s lifetime, the Option and all rights of Optionee under this Agreement may be exercised only by Optionee (or by his guardian or legal representative). If the Option is exercised after Optionee’s death, the Company may require evidence reasonably satisfactory to it of the appointment and qualification of Optionee’s personal representatives and their authority and of the right of any heir or distributee to exercise the Option.

	
g.  

	
Option is Nonqualified Stock Option. The Option granted hereunder is intended to constitute a nonqualified stock option which is not an “incentive stock option”, as that term is defined in Section 422 of the Internal Revenue Code of 1986, as amended.

	
4.  

	
Changes in Capitalization; Reorganization.

	
a.  

	
Adjustments. The number of Shares subject to the Option and the Exercise Price shall be adjusted proportionately for any increase or decrease in the number of issued shares of Common Stock by reason of stock dividends, split-ups, recapitalizations or other capital adjustments. Notwithstanding the foregoing, (i) no adjustment shall be made, unless the Company determines otherwise, if the aggregate effect of all such increases and decreases occurring in any fiscal year is to increase or decrease the number of issued shares by less than five percent (5%); (ii) any right to purchase fractional shares resulting from any such adjustment shall be eliminated; and (iii) the terms of this Section 4(a) are subject to the terms of Section 4(b) below.

	
b.  

	
Corporate Transactions. In the event of (i) a dissolution or liquidation of the Company, (ii) merger, consolidation or reorganization of the Company in which the Company is not the surviving corporation, (iii) merger, consolidation or reorganization in which the Company is the surviving corporation but after which the shareholders cease to own their shares in the Company, (iv) the sale of substantially all of the assets of the Company, or (v) the acquisition, sale, or transfer of more than fifty percent (50%) of the outstanding shares of the Company (herein referring to (i) through (v) as “Corporate Transaction”), or (vi) the Board of Directors proposes that the Company enter into a Corporate Transaction, then the Company may in its discretion take any or all of the following actions: (i) by written notice to Optionee, provide that the Option shall be terminated unless exercised within thirty (30) days (or such longer period as the Company shall determine its discretion) after the date of such notice; and (ii) accelerate the dates upon which any or all outstanding Options granted to Optionee shall be exercisable.

Whenever deemed appropriate by the Company, any action referred to in this Section 4(b) may be made conditional upon the consummation of the applicable Corporate Transaction.

 

  

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c.  

	
Company Determination. Any adjustments or other action pursuant to this Section 4 shall be made by the Company, and the Company’s determination as to what adjustments shall be made or actions taken, and the extent thereof, shall be final and binding.

	
5.  

	
No Rights as Shareholder. Optionee shall acquire none of the rights of a shareholder of the Company with respect to the Shares until a certificate for the Shares is issued to Optionee upon the exercise of the Option. Except as otherwise provided in Section 4 above, no adjustments shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such certificate is issued.

	
6.  

	
Legends. All certificates representing the Shares acquired pursuant to the Option may be issued with or without a restrictive legend as counsel to the Company deems appropriate to ensure compliance with applicable law. All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear a restrictive legend substantially in the following form (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

 

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares purchased under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

	
7.  

	
Notices. Any notice or other communication made in connection with this Agreement shall be deemed duly given when delivered in person or mailed by certified or registered mail to Optionee at Optionee’s address listed above or such other address of which Optionee shall have advised the Company by similar notice, or to the Company at its then principal office, to the attention of the Company.

 

  

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8.  

	
Miscellaneous. This Agreement sets forth the parties’ final and entire agreement with respect to the subject matter hereof, may not be changed or terminated orally and shall be governed by and shall be construed in accordance with the laws of the State of New York, without giving effect to the principles of conflict of laws thereof, applicable to contracts made and to be performed in New York. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable. This Agreement shall bind and benefit Optionee, the heirs, distributees and personal representative of Optionee, and the Company and its successors and assigns. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Stock Option Agreement on the date first above written.

	
CLEANTECH INNOVATIONS, INC.

	  	
OPTIONEE

	
By:

	  	  	
By:

	  
	
Name:

	  	  	  	  
	
Title:

	  	  	  	  

  

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EXHIBIT A

[Date]

CleanTech Innovations, Inc.

C District, Maoshan Industry Park,

Tieling Economic Development Zone,

Tieling, Liaoning Province, China 112616

Dear Sir/Madam:

Pursuant to the provisions of the CleanTech Innovations, Inc. Stock Option Agreement, dated __________, ____ (the “Option Agreement”), whereby you have granted me the Option to purchase up to ________ shares of the common stock of CleanTech Innovations, Inc. (the “Company”), I hereby notify you that I elect to exercise my option to purchase ________ of the shares covered by the Option at a price of $______ per share in accordance with the Option Agreement. I am delivering to you payment in the amount of $__________, in the form of a certified or bank check, or other form of immediately available funds, payable to the order of CleanTech Innovations, Inc., in full payment of the purchase price for the shares being purchased hereby.

The undersigned hereby agrees to provide the Company, prior to the receipt of the shares being purchased hereby, with such representations or certifications or payments that the Company may require pursuant to the terms of the Option Agreement.

Sincerely,

Address:

(For notices, reports, dividend checks and communications to shareholders.)

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