-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A/wsf3Vf4dr4XulwSLvLyxuEoHjDgauv5USuiFwbSS25kTLDgvBHZDe3kWJzBM/i swpP7hdgXDqLDS2c5DnDKQ== 0001010549-07-000294.txt : 20070409 0001010549-07-000294.hdr.sgml : 20070409 20070409143150 ACCESSION NUMBER: 0001010549-07-000294 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070408 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070409 DATE AS OF CHANGE: 20070409 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA RECYCLING ENERGY CORP CENTRAL INDEX KEY: 0000721693 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 900093373 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12536 FILM NUMBER: 07755965 BUSINESS ADDRESS: STREET 1: 429 GUANGDONG ROAD CITY: SHANGHAI STATE: F4 ZIP: 200001 BUSINESS PHONE: 86-21 6336-8686 MAIL ADDRESS: STREET 1: 429 GUANGDONG ROAD CITY: SHANGHAI STATE: F4 ZIP: 200001 FORMER COMPANY: FORMER CONFORMED NAME: CHINA DIGITAL WIRELESS INC DATE OF NAME CHANGE: 20040810 FORMER COMPANY: FORMER CONFORMED NAME: BOULDER ACQUISITIONS INC DATE OF NAME CHANGE: 20020430 FORMER COMPANY: FORMER CONFORMED NAME: BOULDER BREWING CO DATE OF NAME CHANGE: 19920703 8-K 1 crec8k040807.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 08, 2007 CHINA RECYCLING ENERGY CORPORATION (Exact name of registrant as specified in its charter) Nevada 000-12536 90-0093373 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) Services-Business Services, NEC 0000721693 [7389] 06628887 (Central Index Key) (Standard Industrial (Film Number.) Classification) 429 Guangdong Road Shanghai 200001 People's Republic of China (Address of principal executive offices, including zip code) (86-21) 6336-8686 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On April 08, 2007, the Board of Directors of China Recycling Energy Corporation ("Registrant") approves and makes effective a TRT Project Joint-Operation Agreement ("Joint-Operation Agreement", please see Exhibit 10.1) which is conditionally entered on February 01, 2007 between Shanghai TCH Data Technology Co., Ltd. ("TCH") and Xi'an Yingfeng Science and Technology Co., Ltd.("Yingfeng"). TCH is a wholly owned sub-subsidiary of Registrant. Yingfeng is a Chinese company that is located in Xi'an, Shaanxi Province, China, and is engaging in the business of designing, selling, installing, and operating top gas recovery turbine system ("TRT") and other renewable energy products. Its primary customers are steel mills and companies. TRT is an electricity generating system that utilizes the exhaust pressure and heat produced in the blast furnace of steel mill to generate electricity. Under the Joint-Operation Agreement, TCH and Yingfeng will jointly pursue a top gas recovery turbine project ("Project") which is to design, construct, install and operate a TRT system in Xingtai Iron and Steel Company, Ltd. ("Xingtai"). This project was originally initiated by a Contract to Design and Construct TRT System ("Project Contract" Please see Exhibit 10.2) entered by Yingfeng and Xingtai on September 26, 2006. Due to Yingfeng's lack of capital in pursuing this Project alone, Yingfeng sought TCH's cooperation. After intensive and substantial inquiry and assessment, TCH agreed to pursue this project with Yingfeng in the joint-operation mode. Under the terms of the Joint-Operation Agreement, TCH provides various forms of investments and properties into the Project including cash, hardware, software, equipments, major components and devices. In return, TCH becomes entitled to all the rights, titles, benefits and interests that Yingfeng originally had under the Project Contract, including but not limited to the cash payment made by Xingtai on regular basis and other property rights and interests. Yingfeng remains liable for providing all the manpower, expertise and skills to design, construct, install, maintain and operate the TRT system under the terms of the Project Contract and also takes responsibility to manage the properties that TCH possesses in this Project. As for consideration, TCH will make monthly payment of 30,000 RMB Yuan (approximately US $ 3,900) to Yingfeng as compensation for their effort in managing TCH's properties. Prior to the approval by the Board of Registrant, TCH and Yingfeng have taken several preliminary actions in preparation for the full pursuit of the Project, including selecting and purchasing necessary components and software for TRT system, organizing and training the technician team for the Project and developing the construction and installation plan for the TRT system. Item 9.01 Financial Statements and Exhibits (d) Exhibits Exhibit No. Description - -------------------------------------------------------------------------------- 10.1 TRT Project Joint-Operation Agreement between TCH and Yingfeng. 10.2 Contract to Design and Construct TRT System between Yingfeng and Xingtai SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. China Recycling Energy Corporation Date: April 08, 2007 /s/Guohua Ku ------------ Guohua Ku President and Chairman EXHIBIT INDEX Exhibit No. Description - -------------------------------------------------------------------------------- 10.1 TRT Project Joint-Operation Agreement between TCH and Yingfeng. 10.2 Contract to Design and Construct TRT System between Yingfeng and Xingtai EX-10.1 2 crec8kex101040807.txt FORM 8-K Exhibit 10.1 - -------------------------------------------------------------------------------- TRT PROJECT JOINT-OPERATION AGREEMENT THIS JOINT-OPERATION AGREEMENT (hereinafter "Agreement"), is made and entered into as of this First day of February, 2007, subject to the approval by Board of Directors of both Parties and their mother companies if applicable, by and between: Shanghai TCH Data Technology Co. Ltd. ("TCH"), a company duly organized and existing under the laws of the People's Republic of China and having its principal executive office at Suite 301, No.689, East Laoshan Road, Pudong New District, Shanghai, People's Republic of China; And Xi'an Yingfeng Science and Technology Co., Ltd. ( "Yingfeng"), a company duly organized and existing under the laws of the People's Republic of China and having its principal executive office at Chang'an International Square, Suite B, Room 909, No. 88, Nan-Guan-Zheng Street, Xi'an City, Shaanxi Province, People's Republic of China, Postal Code: 710068; (TCH and Yingfeng shall individually be referred to as a "Party", and collectively as the "Parties".) WITNESSETH: WHEREAS, Both Parties are duly organized under the applicable laws and regulations and have full authority and power to negotiate, enter and execute business contracts and agreements; and WHEREAS, Both Parities have experiences and expertise in designing, constructing and operating top gas recovery turbine systems ("TRT"); and WHEREAS, On September 26, 2006, Yingfeng entered the "Contract To Design and Construct TRT Project" ("Project Contract") with Xingtai Iron and Steel Company.,Ltd. ("Xingtai") to design and construct a TRT system for Xingtai (Please see Exhibit A to this Agreement or Exhibit 10.2 to this Form 8-K for the full text of the Project Contract between Yingfeng and Xingtai); and WHEREAS, Yingfeng and TCH would jointly pursue the TRT Project specified in the aforementioned Project Contract. TCH would provide the necessary investment and properties including cash, hardware, software, major components, and equipments; Yingfeng would provide the expertise, skills and manpower in designing, installation, maintenance and operation of the TRT system; and NOW, THEREFORE, intending to be bound, the Parties hereto agree as follows: ARTICLE 1. RIGHTS AND OBLIGATIONS SECTION 1.01. TCH and Yingfeng agree to jointly pursue the project of designing, constructing, installing, maintaining and operating TRT system for Xingtai ("Joint Project"). SECTION 1.02 The Rights and Obligations of TCH. TCH provide the investment and properties in the TRT Project, including cash, hardware, software, equipments, components, and devices that are set forth in the Project Contract as necessary and needed in constructing and operating the TRT system. The detailed list of the hardware, software, equipments, components, and devices to be invested by TCH will be presented in the "Property Item List" recognized and confirmed by both Parties. The Property Item List will be prepared by TCH and submitted for approval by both Parties prior to the actual construction and installation of the TRT system. The items listed in the Property Item List will include, but no limited to, tangible and intangible properties. TCH shall also: (1) Remain in possession of the titles to the investment and properties such as hardware, software, equipments, components, and devices invested by TCH in the Joint Project, which are listed in the "Property Item List". TCH also has the right to transfer and divide the aforementioned properties. (2) Have all the rights, titles, benefits and interests that Yingfeng originally had under the Project Contract including the payment made by Xingtai for the TRT system and other property rights and interests specified in the Project Contract, except for those rights, titles, benefits and interests set forth in Section 1.03 of this Agreement. (3) Have the right to monitor and oversee Yingfeng's conducts in designing, constructing, installing, maintaining and operating the TRT system. (4) Have the ownership of all the patents and intellectual property rights that developed by Yingfeng in its course of pursuing the Joint Project. (5) May terminate this Agreement if TCH obtains all the necessary Chinese governmental approval and certifications required for pursuing TRT projects independently. (6) Bear the risk of loss or damage to the properties and capital invested by TCH in the Joint Project. (7) Make monthly payment of Thirty Thousand RMB Yuan (RMB (Y) 30,000.00) to Yingfeng as the compensation for Yingfeng's efforts in managing TCH's properties in the Joint Project. (8) Reimburse Yingfeng for the costs and expenses incurred in the regular maintenance and operation of the Joint Project within one week after receiving the expense invoice from Yingfeng. TCH shall not be required or obligated in any manner to observe, perform or fulfill any of the conditions or obligations in the Project Contract that are not specifically imposed on TCH by this Section. SECTION 1.03. The Rights and Obligations of Yingfeng. Yingfeng provides the technical and engineer team, expertise, skills, and all the manpower to design, construct, install, maintain and operate the TRT system specified in the Project Contract. Yingfeng shall: (1) Undertake necessary steps and measures in maintaining and upgrading the TRT system upon the written consent of TCH. (2) Enter and execute supplemental agreements and contracts with Xingtai for purpose of carrying out the Joint Project. (3) Exercise the right and power to designate or remove the personnel on the work positions in the Joint Project, choose the component suppliers and vendors and take other actions necessary to carry out the Joint Project. (4) Maintain the intactness and safety of the properties that TCH invests and owns in the Joint Project and make reasonable efforts to maintain and manage the properties invested and owned by TCH in the Joint Project. (5) Have the entitlement to the monthly payment of Thirty Thousand RMB Yuan (RMB (Y) 30,000.00) made by TCH, as compensation for Yingfeng's efforts in managing TCH's properties in the Joint Project. (6) Have the rights to be reimbursed by TCH for the cost and expenses incurred in the regular maintenance and operation of the Joint Project within one week after TCH received the expense invoice from Yingfeng. (7) Refrain from assigning, delegating, or transfering any of the obligations or rights set forth in this Agreement without TCH's express consent. (8) Transmit to TCH all the payments made by Xingtai for the TRT system pursuant to the Project Contract within Two (2) days after receiving them from Xingtai if Xingtai directly wires the payments to Yingfeng's account. (9) Provide to TCH a detailed status report of the Joint Project without concealing or misrepresent any material fact or incident. (10) Coordinate and address all the issues involving Xingtai in the pursuit of the Joint Project, such as issues regarding suppliers and vendors, etc. (11) Pay the tax associated with the Joint Project. Yingfeng also remains fully liable under the Project Contract to observe, perform and fulfill all other conditions and obligations in the Project Contract that are not listed above and are not imposed on TCH by Section 1.02 of this Agreement. ARTICLE 2. REPRESENTATIONS AND WARRANTIES SECTION 2.01. TCH hereby represents, warrants, and agrees that: (1) It is duly organized under the applicable laws and regulation; (2) It is in good standing; (3) It has all the necessary power, right and authorization to enter and execute this Agreement. SECTION 2.02. Yingfeng hereby also represents, warrants and agrees that the Project Contract are in full force and effect. Yingfeng further represents, warrants, and agrees that: (1) It is duly organized under the applicable laws and regulation; (2) It is in good standing; (3) It has all the necessary power, right and authorization to enter and execute this Agreement. ARTICLE 3. TERM AND TERMINATION SECTION 3.01.Term. This Agreement and the Joint Project will become fully effective upon the final approval by the Board of Directors of both Parties and will continue in effect thereafter until February 01, 2012, unless otherwise terminated pursuant to Section 3.02 of this Agreement. Both Parties may take certain preliminary actions to make preparation for the Joint Project prior to the final approval by the Board, including selecting and purchasing necessary components and software for TRT system, organizing and training the technician team for the Joint Project and developing the construction and installation plan for the TRT system. SECTION 3.02. Termination. This Agreement may be terminated as follows: (1) In the event that Yingfeng fails to perform its obligation to transmit the payments to TCH as required in Section 1.03(8) of this Agreement, causing TCH material loss, and fails to make any remedy within two months after receipt of written notice from TCH specifying such failure, Yingfeng is deemed in material breach of this Agreement and TCH may choose to terminate this Agreement by notifying Yingfeng in writing and Yingfeng shall be liable for all the damages caused by its breach. (2) In the event that TCH fails to perform its obligation to make the payment to Yingfeng as required in Section 1.02(7) of this Agreement, causing Yingfeng material loss, and fails to make any remedy within two months after receipt of written notice from Yingfeng specifying such failure, TCH is deemed in material breach of this Agreement and Yingfeng may choose to terminate this Agreement by notifying TCH in writing and TCH shall be liable for all the damages caused by its breach. (3) In the event that either Party fails in any material respect to observe or perform its obligations under this Agreement, which failure is not remedied in a reasonable time, after receipt of written notice from the other Party specifying such failure, this Agreement shall automatically terminate. (4) Either Party may, at its option, terminate this Agreement without cause, effective at any time after the date first written above, upon giving at least Thirty (30) days prior written notice of such termination to the other Party. (5) Upon the completion of the Term set forth in Section 3.01 of this Agreement. SECTION 3.03. Force Majeure. Notwithstanding any other provision of this Agreement, if either TCH or Yingfeng is delayed in or prevented from fulfilling any of its obligations hereunder by reason of any cause beyond its reasonable control (including, but not limited to acts of God, fire, third party strike, flood, delay of transportation or inability to obtain necessary raw materials through normal commercial channels), then that party will not be liable under this Agreement for damages resulting from such delay or failure. Each Party will promptly notify the other upon becoming aware of the occurrence of any such cause and will use its reasonable best efforts to minimize any resulting delay in or interference with the performance of its obligations hereunder. ARTCLE 4. MISCLEANOUS MATTERS SECTION 4.01. Confidential Information and Publicity. - ----------------------------------------------------- From time to time during the term of this Agreement either Party may disclose or make available to the other Confidential Information in connection with activities contemplated hereunder. Except as may be required by law or as may be reasonably necessary to enforce rights hereunder, each Party agrees that during the term of this Agreement and thereafter (a) it will use Confidential Information belonging to the other solely for the purpose(s) of this Agreement and (b) it will not disclose Confidential Information belonging to the other to any third party without the express prior written consent of the disclosing party. Each party further agrees that except as reasonably necessary for performance hereunder or otherwise expressly required by law, it will not publicly announce or otherwise disclose any of the terms and conditions of this Agreement without the express prior written consent of the other. SECTION 4.02. Governing Law; Successors and Assigns. - --------------------------------------------------- This Agreement shall be governed and construed in accordance with the laws of the People's Republic of China and shall be binding upon the heirs, personal representatives, executors, administrators, successors and assigns of the Parties SECTION 4.03. Entire Agreement. - ------------------------------- This Agreement constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes and replaces any prior agreement or understanding between the Parties with respect to the Assignment. No changes, alterations or modifications hereto shall be effective unless made in writing and signed by all the Parties. SECTION 4.04. Headings and Counterparts. - ---------------------------------------- The headings of the Sections of this Agreement are for convenience and shall not by themselves determine the interpretation of this Agreement. This Agreement may be executed in any number of counterpart copies, all of which copies shall constitute one and the same instrument. SECTION 4.05. Independent Counsel. - ---------------------------------- The Parties each acknowledges that this Agreement has been prepared on behalf of TCH by Bernard & Yam, LLP, counsel to TCH, and that Bernard & Yam, LLP is not representing, and is not acting on behalf of, Yingfeng in connection with this Agreement. Yingfeng has been provided with an opportunity to consult with its own counsel and its own business, securities and tax advisors with respect to this Agreement. IN WITNESS WHEREOF, the Parties hereto have signed this Agreement as of the date first above written. SIGNATURE By: - ---------------------------------------------------------------- /s/Hanqiao Zheng Hanqiao Zheng Shanghai TCH Data Technology Co., Ltd. By: - ---------------------------------------------------------------- /s/Geyun Wang Geyun Wang Xi'an Yingfeng Science and Technology Co., Ltd. EX-10.2 3 crec8kex102040807.txt FORM 8-K Exhibit 10.2 - -------------------------------------------------------------------------------- CONTRACT TO DESIGN AND CONSTRUCT TRT SYTEM This Contract to Design and Construct TRT System (`Contract") is entered on this 26th Day of September, 2006 by and between Xingtai Iron and Steel Co., Ltd ("Xingtai"), locate at No.262 Steel South Road, Xingtai City, Hebei Province, People's Republic of China, Postal Code: 054027 and Xi'an Yingfeng Science&Technology Co.,Ltd ("Yingfeng"), located at Chang'an International Square, Suite B, Room 909, No. 88, Nan-Guan-Zheng Street, Xi'an City, Shaanxi Province, People's Republic of China, Postal Code: 710068 (Xingtai and Yingfeng shall individually be referred to as a "Party", and collectively as the "Parties".) In accordance with the Contract Law of the People's Republic of China and other pertinent laws and regulations of China, both Parties enter into the following sections and terms on the principles of equality and mutual benefit and through friendly negotiations: Section 1. TRT Project - ---------------------- This is a Blast Furnace Top Gas Recovery Turbine Unit Project (hereinafter referred to as "TRT Project") and will be constructed based on No.4 and No.5 blast furnace owned by Xingtai. Section 2. Cooperation Method - ----------------------------- (1) The fund for designing and constructing the TRT Project will be raised by Yingfeng. A third party, China Foreign Economy and Trade Trust & Investment Co.,Ltd ("FOTIC"), which shall be capable of fulfilling the qualifications for capital lease, will be invited by Yingfeng. FOTIC will provide the capital leasing service for TRT Project. Xingtai and FOTIC will enter a Contract of Capital Lease. (2) Yingfeng agrees to make payments of deposit, commission charges and other fees associated with the financial affairs of TRT Project. Xingtai agrees to pay the monthly rental to Yingfeng and FOTIC after the TRT Project is completely constructed and relegated by Yingfeng. Section 3. Technology Requirements - ---------------------------------- Yingfeng designs the project according to the technology documents and plans ("Plan") attached to this Contract signed by Xingtai and Yingfeng and such design should be accepted by Xingtai. Yingfeng constructs the project according to the above-mentioned Plan. The completed project should comply with such plan and other industrial standards and fulfill the requirement of connecting to public electrical wire in XingTai. The appendices to this Contract, such as construction technology agreement entered in accordance with the Plan, are integral parts of this Contract and equally effective. Section 4. Necessary Condition - ------------------------------ Xingtai shall: (1) Apply for and acquire all the necessary license, approval and certificates for land use and construction of the TRT project. (2) Ensure that the pipeline of Blast Furnace Gasi(cent)wateri(cent)nitrogen and eletricity will be linked to construction site of the TRT Project. Section 5. Fund and Payment - --------------------------- (1) The total amount of fund for the TRT Project is Thirty Million RMB Yuan ((pound)*30,000,000), which include the cost of design, constructioni(cent)equipments and financial affairs. (2) Project rental: Base on the investment forecast, Xingtai will make monthly rental payment of Nine Hundred Thousand RMB Yuan ((pound)*900,000) to Yingfeng and FOTIC for total 60 months. As the actual investment is confirmed by both Parties, monthly rental payment will be adjusted accordingly. The formula of adjustment is: Monthly Rental Payment(RMB Yuan in 10 Thousands)=(pound)*900,000 x Actual Investment (RMB Yuan in 10 Thousands)/(pound)*30,000,000. (3) Project fund payment: Yingfeng will relegate the TRT project to Xingtai when it is completed and under working order. Xingtai shall make the monthly rental payment set forth in Section 5 (2) of this Contract to Yingfeng and FOTIC, starting from either the first day or the 16th day of the month following the relegation. Xingtai shall make the monthly rental payment to Yingfeng and FOTIC within three business days following the end of the prior month. (4) Within the term of this Contract, Xingtai may redeem all the remanent payment of principal under the Contract. If the Xingtai terminates the Contract for cause of redemption, at any time, Xingtai may purchase all the assets of TRT Project. The amount of payment should be discussed between both Parties. Section 6. Constructing Period - ------------------------------ Based on the plan confirmed by Xingtai in writing, Yingfeng should construct the project within Six (6) months following the effective date of this Contract. The period of construction may be extended in the event of any delay caused by Xingtai. In the event of delay caused by Yingfeng, Yingfeng will pay the damages to Xingtai in the amount equal to 5% of Yingfeng's total revenue earned from this TRT Project. Section 7. Warranty Period - -------------------------- (1) The warranty period of TRT Project is 18 months, starting from the first payment due date of monthly rental payment. Within the warranty period, Yingfeng has the responsibility to maintain the working conditions of all TRT equipments free of charge to Xingtai, and promise to prescribe the servicing solution within 48 hours after receiving the repair notice. Yingfeng will compensate Xingtai for the loss caused by the technical problems of the equipments if the technical problems are not fixed up within 20 days. (2) Yingfeng should also maintain the operation within a reasonable period for a reasonable service fee charged to Xingtai after the warranty period expires. Section 8. Transfer of Possession of the TRT System - --------------------------------------------------- After TRT Project is completed and has passed through 72-hours full-loaded output trial, Yingfeng will transfer the possession of the TRT system to Xingtai for use. The entire procedure of possession transfer shall be completed in 2 days. Section 9. Advanced Rental Payment - ---------------------------------- After this Contract takes effect, Xingtai supplies to Yingfeng the steel valued at Three Million RMB Yuan ((pound)*3,0000,000) as advanced rental payment (the actual delivery date of the aforementioned steel is to be determined by Yingfeng). The aforementioned steel (advanced payment) is counted into the total rental payment payable to Yingfeng and Xingtai is not obligated to make cash payment until the aforementioned steel (advanced payment) is used up as monthly rental payment. Section 10.Right and Obligation of Xingtai - ------------------------------------------ (1) Xingtai has the right to (a) supervise the designing and construction process of TRT system; (b) participate in equipment stock bidding, construction bidding and selection of the designing institutions. Xingtai's reasonable suggestion will be adopted. (2) Xingtai has the obligations to (a) assist Yingfeng to inspect and test the equipments; (b) timely make rental payment to Yingfeng and FOTIC under Section 5.(2); (c) furnish facility to Yingfeng for TRT system. Section 11. Right and Obligation of Yingfeng - -------------------------------------------- (1) Yingfeng has the right to (a) request Xingtai's payment; (b) take charge of the project designing, plant side construction, equipment stocking, installation, debugging and tech support; (2) Yingfeng has the obligation to (a) hold the public bidding and confirmation for suppliers and construction teams for TRT and plant side construction. These actions will be supervised by Xingtai. Yingfeng promises to recommend more than 2 of the best suppliers and constructers; (b) take charge of TRT equipment installation and debugging and connect supporting facilities in one meter beyond TRT Project plant side. (c) offer training for staff and workers within warranty period. Section 12. Transfer of Project Ownership - ----------------------------------------- After Xingtai pays off all the obligated payment set forth in this Contract, the ownership of TRT project will be transfer to Xingtai automatically. Yingfeng and FOTIC will cooperate in this matter unconditionally. Section 13. Change to Contract - ------------------------------ Once this Contract takes effect, either Party may not unilaterally change or rescind this Contract. Both Parties may enter supplemental contract upon mutual assents and negotiation. Section 14. Breach of Contract and Liability - -------------------------------------------- (1) In the event that Xingtai fails to make the payment within 10 days grace period after the due date of any payment Xingtai obligated to make, Xingtai shall pay daily liquidated damage to Yingfeng and FOTIC in the amount equal to 0.03 percent of the delayed payment. (2) In the event that Yingfeng fails to complete the TRT system by the due date prescribed in Section 6 of this Contract, Yingfeng shall pay daily liquidated damage to Xingtai in the amount equal to 0.03 percent of total cost of the TRT project. (3) Notwithstanding any other provision of this Contract, if either Xingtai or Yingfeng is delayed in or prevented from fulfilling any of its obligations hereunder by reason of any cause beyond its reasonable control (including, but not limited to acts of God, fire, third party strike, flood, delay of transportation or inability to obtain necessary raw materials through normal commercial channels), then that party will not be liable under this Contract for damages resulting from such delay or failure. (4) Other breach of contract will be settled pursuant to contract law. Section 15. Dispute Resolution - ------------------------------ In the event that any dispute regarding the performance and execution of this Contract arises, both Parties shall try to negotiate on good faith the settlement for the dispute. If both Parties fail to reach settlement, either Party may bring legal action in the courts governing the place where this Contract is performed. Section 16. Execution of Contract - --------------------------------- This Contract has been signed and executed on September 26, 2006 at Xingtai's executive office in Xingtai City, Hebei Province, the People's Republic of China. Section 17. Appendix - -------------------- The appendix to this Contract include: engineering design plan, cost calculate sheet, shop drawing and technology appendices of TRT Project. All appendix to the Contract have equal effects. Section 18. Unspecified Matters and S7upplemental Contract - ---------------------------------------------------------- In the course of performing the contract, if any matter that has not been specified or needs more definitude terms of right and obligation, both Parties will enter and sign supplemental contracts to cover those matters. The supplemental contract has equal force and effect as appendix to this Contract. IN WITNESS WHEREOF, the Parties hereto have signed this Contract as of the date first above written. SIGNATURE By - ---------------------------------------------------------------- /s/Geyun Wang Geyun Wang Xi'an Yingfeng Science and Technology Co., Ltd. By - ---------------------------------------------------------------- /s/Shiqiang Yuan Shiqiang Yuan Xingtai Iron and Steel Co., Ltd. -----END PRIVACY-ENHANCED MESSAGE-----