8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): October 17, 2008

CHINA WIND SYSTEMS, INC.

(Exact name of registrant as specified in Charter)

Delaware	33-16335	74-2235008
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employee Identification No.)

No. 9 Yanyu Middle Road

Qianzhou Village, Huishan District, Wuxi City

Jiangsu Province, People’s Republic of China

(Address of Principal Executive Offices)

(86) 510-8338-6339

(Registrant’s Telephone number)

Copies to:

Asher S. Levitsky PC

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32^nd Floor

New York, New York 10006

Phone: (212) 981-6767

Fax: (212) 930 – 9725

E-mail: alevitsky@srff.com

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(b) under the Exchange Act (17 CFR 240.14a-12(b))

¨ 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.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On October 17, 2008, China Wind Systems, Inc., a Delaware corporation (the “Company”), entered into a purchase agreement with Eos Holdings LLC for the sale of a 17.4% subordinated note, due six months from the date of issuance (the “Note”) in the principal amount of $575,000, for a purchase price of $575,000. Under the terms of the Purchase Agreement and the Note, the Company may prepay the Note, in whole or in part, at any time prior to the maturity date of the Note upon five (5) days’ oral or written notice to Eos Holdings LLC.

As a condition to the sale of the Note, the purchase agreement requires that Eos Holdings exercise certain common stock purchase warrants having a total exercise price of not less than $175,000, at a per share exercise price of $.58. On October 17, 2008, Eos Holdings purchased the Note and exercised the warrants. Such warrants were exercised notwithstanding the Company’s right to redeem the warrants for $.01 per share if (i) the trading price of the common stock was at least $1.16 or 200% of the exercise price for the last 20 consecutive trading days and (ii) that the trading volume on each day in the computation period was at least 1,000 shares.

Payment of the Company’s obligations of the Note are secured by a pledge of and conversion right with respect to 959,000 shares (the “Pledged Shares”) of the Company’s common stock owned by Jianhua Wu, the Company’s chief executive officer and principal stockholder. The pledge and conversion right enables Eos Holdings LLC to convert any or all of the principal amount of the Note into Pledged Shares at any time or from time to time until the Note shall be paid in full or until Eos shall have exercised the conversion right in full, at a conversion price of $.60 per share (the “Conversion Price”). The number of Pledged Shares to be delivered shall be determined by dividing the principal amount of the Note being converted by the Conversion Price, with any fractional shares to be rounded to the nearest whole share. The Pledged Shares shall be held in escrow.

In connection with the issuance of the Note, on October 17, 2008, the Company entered into a consulting agreement with Eos Asia Investments Ltd., an affiliate of Eos Holdings, for the provision of consulting services. Pursuant to the consulting agreement, the Company shall pay consulting fees at a rate of $31,662.50 per month until the Company repays the Note in full or until Eos Holdings LLC exercises its right to receive the Pledged Shares.

Assuming the Note is paid on the maturity date of April 17, 2009, the total payments made by the Company as interest on the Note and as consulting fees under the consulting agreement would total $240,000.

Item 3.02. Unregistered Sales of Equity Securities.

On October 14, 2008, the Company entered into subscription agreements with certain investors for the private placement of an aggregate of 225,000 shares of the Company’s common stock, at a purchase price of $0.60 per share, for an aggregate purchase price of $135,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act. Each of the investors is either (a) an “accredited investors” as defined in Rule 501 of Securities and Exchange Commission under the Securities Act, or (b) not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S under the Act, and that such investor was acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that each Investor understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits.

4.1	17.4% Subordinated Note, dated October 17, 2008.
99.1	Purchase Agreement, dated October 17, 2008, by and between China Wind Systems, Inc. and Eos Holdings LLC.
99.2	Consulting Agreement, dated October 17, 2008, by and between China Wind Systems, Inc. and Eos Asia Investments Ltd.
99.3	Pledge and Conversion Right Agreement, dated October 17, 2008, by and between Jianhua Wu and Eos Holdings LLC.
99.4	Form of Subscription Agreement, dated October 14, 2008 for the sale of shares of common stock.

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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.

Date: October 21, 2008		China Wind Systems, Inc.
	By:	/s/ Adam Wasserman
		Adam Wasserman
		Chief Financial Officer

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EX-4.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACTS AND AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

$575,000 New York, New York October 17, 2008

CHINA WIND SYSTEMS, INC.

17.4% SUBORDINATED NOTE DUE APRIL 17, 2009

FOR VALUE RECEIVED, China Wind Systems, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of Eos Holdings LLC, the principal amount of Five Hundred Seventy Five Thousand Dollars ($575,000) on or before April 17, 2009 (“Maturity Date”). Interest on the outstanding principal balance shall be paid at the rate of seventeen and four-tenths percent (17.4%) per annum, payable monthly in arrears, with the first interest payment being payable on November 17, 2008, being one month after the date of issuance of this Note, and on the same day of each month thereafter until the Note shall be paid in full or the Note shall have been converted in accordance with Article 2 of this Note. Each such date is referred to as an Interest Payment Date. Interest shall be paid to the record holder of this Note on the second business day before the Interest Payment Date. Accrued interest shall also be payable at such time as any payment of principal of this Note is made. Interest shall be computed on the basis of a 365-day year and the number of days actually elapsed.

ARTICLE 1.

Events of Default and Acceleration

(a)Events of Default Defined. The entire unpaid principal amount of this Note, together with interest thereon shall, on written notice to the Company given by the holder of this Note, forthwith become and be due and payable if any one or more the following events (“Events of Default”) shall have occurred (for any reason whatsoever and whether such happening shall be voluntary or involuntary or be affected or come about by operation of law pursuant to or in compliance with any judgment, decree, or order of any court or any order, rule or regulation of any administrative or governmental body) and be continuing. An Event of Default shall occur:

(i)if failure shall be made in the payment of the principal of the Note when and as the same shall become due and such failure shall continue for a period of five (5) business days after such payment is due; or

(ii)if failure shall be made in the payment of any installment of interest of the Note when and as the same shall become due and payable whether at maturity or otherwise and such failure shall continue for ten (10) days after the date such payment is due; or

(iii)if the Company shall violate or breach any of the representations, warranties and covenants contained in the Note and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the holder of Note, such notice to specify in reasonable detail the nature of the breach; or

(iv)if the Company or any Material Subsidiary (which term shall mean any subsidiary of the Company which would be considered a significant subsidiary, as defined in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”)) shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or shall admit in writing its inability to pay its debts generally as they become due, or shall make a general assignment for the benefit of creditors, or shall file a voluntary petition in bankruptcy, or an answer seeking reorganization in a proceeding under any bankruptcy law (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company or any Material Subsidiary, in any such proceeding, or shall by voluntary petition, answer or consent, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, or shall, in a petition in bankruptcy filed against it or them be adjudicated a bankrupt, or the Company or any Material Subsidiary or their directors or a majority of its stockholders shall vote to dissolve or liquidate the Company or any Material Subsidiary other than a liquidation involving a transfer of assets from a Subsidiary to the Company or another Subsidiary; or

(v)if an involuntary petition shall be filed against the Company or any Material Subsidiary seeking relief against the Company or any Material Subsidiary under any now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, and such petition shall not be vacated or set aside within ninety (90) days from the filing thereof; or

(vi)if a court of competent jurisdiction shall enter an order, judgment or decree appointing, without consent of the Company or any Material Subsidiary, a receiver, trustee or liquidator of the Company or any Material Subsidiary, or of all or any substantial part of the property of the Company or any Material Subsidiary, or approving a petition filed against the Company or any Material Subsidiary seeking a reorganization or arrangement of the Company or any Material Subsidiary under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or any substantial part of the property of the Company or any Material Subsidiary shall be sequestered; and such order, judgment or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or

(vii)if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or any Material Subsidiary or of all or any substantial part of the property of the Company or any Material Subsidiary and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control.

(b)Rights of Note Holder. Nothing in this Note shall be construed to modify, amend or limit in any way the right of the holder of this Note to bring an action against the Company.

ARTICLE 2.

The Pledge and Conversion Right Agreement

(a)Rights under Pledge and Conversion Right Agreement. The holder of this Note shall be entitled to the benefits of the holder pursuant to a pledge and conversion right agreement (the “Pledge and Conversion Right Agreement”) dated the date of this Note by and between Jianhua Wu and the initial holder of this Note.

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(b)Effect of Exercise of Rights under Pledge and Conversion Right Agreement. In the event that the holder of this Note shall exercise rights to convert any or all of the principal amount of this Note into shares of the Company’s common stock owned by Jianhua Wu and held in escrow pursuant to the Pledge and Conversion Right Agreement, to the extent that any principal amount of the Note shall be converted, (i) the principal amount of this Note shall be reduced by the principal amount so converted, (ii) no interest shall be paid with respect to any Interest Payment Date which occurs subsequent to the date that notice of conversion is given pursuant to the Pledge and Conversion Right Agreement, and (iii) the Company shall have no further obligation with respect to the principal amount so converted.

ARTICLE 3.

Subordination

(a)Agreement of Subordination. The Company, for itself, its successors and assigns, covenants and agrees, and the Holder of this Note by his or her acceptance of this Note likewise covenants and agrees, that the payment of the principal of and interest on this Note is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, to the prior payment in full of all Senior Indebtedness, as hereinafter defined. The provisions of this Article 3 shall constitute a continuing offer to all persons who, in reliance upon such provision, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are hereby made obligees hereunder the same as if their names were written herein as such, and they and/or each of them may proceed to enforce such provisions.

(b)Company Not to Make Payments with Respect to Note in Certain Circumstances.

(i)Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, all principal thereof and premium, if any, and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holder or holders of such Senior Indebtedness, before any payment is made by the Company (A) on account of the principal of or interest on this Note or (B) to acquire this Note.

(ii)Upon the happening of an event of default with respect to any Senior Indebtedness, as such event of default is defined therein or in the instrument under which it is outstanding, permitting the holders to accelerate the maturity thereof, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, no payment shall be made by the Company (A) on account of the principal of or interest on this Note or (B) to acquire this Note.

(iii)Subject to Paragraphs 3(b)(i) and (ii), as long as any Senior Indebtedness shall be outstanding, (A) the Company shall not make any payment of principal on this Note except upon the Maturity Date, and (B) the Company may pay interest on this Note as long as the payment of such principal or interest will not result in an event of default under the terms of the instruments pursuant to which the Senior Indebtedness is issued.

(iv) In the event that, notwithstanding the provision of this Paragraph 3(b), the Company shall make any payment to the Holder of this Note on account of the principal of or interest on this Note after the happening of a default in payment of the principal of or premium, if any, or interest on Senior Indebtedness or after receipt by the Company of written notice of an event of default with respect to any Senior Indebtedness, then unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, such payment shall be held by the holder of this Note in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.

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(c)Notes Subordinated to Prior Payment of all Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise):

(i)The holders of all Senior Indebtedness shall first be entitled to receive payment in full of the principal thereof, premium, if any, and interest due thereon before the holder of this Note are entitled to receive any payment on account of the principal of or interest on this Note (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof which may at the time be outstanding); and

(ii)Any payment or distribution of assets of the Company of any kind or character whether in cash, property or securities (other than securities that are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof which may at the time be outstanding), to which the holder of this Note would be entitled except for the provisions of this Article 3, shall be paid by the liquidating trustee or agent or other person making such payment of distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness.

(iii)In the event that, notwithstanding the foregoing provision of this Paragraph 3(c), any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than shares representing equity of the Company as reorganized or readjusted, or securities of the Company or any other entity provided for by a plan of reorganization or readjustment which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof which may at the time be outstanding), shall be received by the holder of this Note on account of principal of or interest on this Note before all Senior Indebtedness is paid in full, or effective provision made for its payment or distribution, such payment or distribution shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness.

(d)Noteholder to be Subrogated to Right of Holders of Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the holders of the Notes shall be subrogated, pro rata, to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Notes shall be paid in full, and, for the purpose of such subrogation, no payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Company or by or on behalf of the holder of this Notes by virtue of this Article 3 which otherwise would have been made to the holder of this Notes shall, as between the Company and the holder of this Note, be deemed to be payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article 3 are, and are intended solely, for the purpose of defining the relative rights of the holders of the Notes, on the one hand, and the holders of the Senior Indebtedness, on the other hand.

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(e)Obligation of the Company Unconditional. Nothing contained in this Article 3 or elsewhere in this Note is intended to or shall impair as between the Company and the holder of this Note, the obligation of the Company, which is absolute and unconditional, to pay to the holder of this Note the principal of and interest on this Note as and when the same shall become due and payable in accordance with its terms, or is intended to or shall affect the relative rights of the holder of this Note and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the holder of this Note from exercising all remedies otherwise permitted by applicable law upon default under this Note, subject to the rights, if any, under this Article 3 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy; provided, however, that the holder of this Note shall not exercise any remedies if the exercise of such remedies would result in an event of default under the terms of the Senior Indebtedness. Upon any distribution of assets of the Company referred to in this Article 3, the holders of this Note shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the holder of this Note for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 3. In no event shall any provision of this Article 3 be interpreted as limiting or abrogating the right of the holder of this Note to convert principal and interest thereon pursuant to Article 3 of this Note.

(f)Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness. No right of any present or future holders of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Note, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.

(g)Definition of Senior Indebtedness. The term “Senior Indebtedness” is defined to mean the principal of and premium, if any, and interest on and any obligations of the Company with respect to the Company’s indebtedness to the any bank, insurance company or other institutional lender.

(h)Additional Agreement. The holder of this Note, by its acceptance of this Note, agrees to execute any formal instruments of subordination which may be reasonably requested by any holder of Senior Indebtedness.

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ARTICLE 4.

Miscellaneous

(a)Transferability. This Note shall not be transferred except in a transaction exempt from registration pursuant to the Securities Act and applicable state securities law. The Company shall treat as the owner of this Note the person shown as the owner on its books and records.

(b)Right of Prepayment. The Company may at any time prior to the Maturity Date prepay this Note, in whole or in part, upon five (5) days’ notice to the holder of this Note without payment of any penalty or premium. Any prepayment shall be accompanied by interest on this Note to the date of prepayment, subject to the provisions of Article 2 of this Note. Notice may be given by telecopier or e-mail, as well as by overnight courier service.

(c)Usury Saving Provision. All payment obligations arising under this Note are subject to the express condition that at no time shall the Company be obligated or required to pay interest at a rate which could subject the holder of this Note to either civil or criminal liability as a result of being in excess of the maximum rate which the Company is permitted by law to contract or agree to pay. If by the terms of this Note, the Company is at any time required or obligated to pay interest at a rate in excess of such maximum rate, the applicable rate of interest shall be deemed to be immediately reduced to such maximum rate, and interest thus payable shall be computed at such maximum rate, and the portion of all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of principal.

(d)Notice to Company. Notice to the Company shall be given to the Company at its principal executive offices, presently located No. 9 Yanyu Middle Road, Qianzhou Village, Huishan District, Wuxi City, Jiangsu Province, People’s Republic of China, attention of Mr. Jianhua Wu, Chief Executive Officer, or to such other address or person as the Company may, from time to time, advise the holder of this Note, or to the holder of this Note at the address set forth on the Company’s records, with a copy to Asher Levitsky, P.C., Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, NY 10006. Notice shall be given by hand delivery, certified or registered mail, return receipt requested, overnight courier service which provides evidence of delivery, or by telecopier if confirmation of receipt is given or of confirmation of transmission is sent as herein provided.

(e)Governing Law. This Note shall be governed by the laws of the State of New York applicable to agreements executed and to be performed wholly within such State. The Company hereby (i) consents to the exclusive jurisdiction of the United States District Court for the Southern or Eastern District of New York and Supreme Court of the State of New York in the County of New York, Nassau or Suffolk in any action relating to or arising out of this Note, (ii) agrees that any process in any such action may be served upon it, in addition to any other method of service permitted by law, by certified or registered mail, return receipt requested, or by an overnight courier service which obtains evidence of delivery, with the same full force and effect as if personally served upon him in New York City, and (iii) waives any claim that the jurisdiction of any such tribunal is not a convenient forum for any such action and any defense of lack of in personam jurisdiction with respect thereto.

(f)Expenses. In the event that the Holder commences a legal proceeding in order to enforce its rights under this Note, the Company shall pay all reasonable legal fees and expenses incurred by the holder with respect thereto.

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IN WITNESS WHEREOF, the Company has executed this Note as of the date and year first aforesaid.

CHINA WIND SYSTEMS, INC.
By:	/s/ Jianhua Wu
	Jianhua Wu, Chief Executive Officer

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EX-99.1

Date: October 17, 2008

China Wind Systems, Inc.

No. 9 Yanyu Middle Road

Qianzhou Village, Huishan District, Wuxi City

Jiangsu Province, People’s Republic of China

Re: Purchase Agreement

Ladies and Gentlemen:

The undersigned (the “Purchaser”) hereby agrees to purchase from China Wind Systems, Inc. (the “Company”), and the Company agrees to sell to Purchaser the Company’s 17.4% promissory note (the “Note”) in the principal amount of $575,000 for a purchase price (the “Purchase Price”) of $575,000.

1.The payment of the Purchase Price for the Note shall be made by wire transfer to the Company in accordance with the wire transfer instructions (the “Wire Transfer Instructions” set forth in Exhibit A-1 to this Agreement, and the Company will deliver the Note to Purchaser on the date that such wire transfer is made (“Closing Date”). The Note shall be in substantially the form of Exhibit B to this Agreement.

2.It shall be a condition to the sale by the Company of the Note that Purchaser shall cause to be exercised certain common stock purchase warrants held by Eos Holdings having a total exercise price of not less than $175,000. Payment of the exercise price shall be made by wire transfer of the exercise price of the warrants in accordance with the Wire Transfer Instructions set forth in Exhibit A-2 to this Agreement.

3.Payment of the Company’s obligations under the Note shall be secured by a pledge of and conversion right with respect to 959,000 shares (the “Pledged Shares”) of the Company’s common stock, par value $.001 per share (“Common Stock”) owned by Jianhua Wu, the Company’s chief executive officer and principal stockholder. As set forth in greater detail in the Pledge and Conversion Right Agreement, in the form of Exhibit C to this Agreement, in the event that the Company fails to pay principal and interest on the Note by the maturity date set forth in the Note, the Purchaser shall have the right to convert the principal amount of the Note and any accrued and unpaid interest into Pledged Shares. Upon such conversion, the Note, to the extent converted, shall be cancelled and the Company shall have no further obligations with respect to such principal amount.

4.The Company represents and warrants to the Purchaser that:

(a)The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue and sell the Note pursuant to this Agreement. The execution, delivery and performance of this Agreement and the issuance of the Note have been duly authorized by the Company’s board of directors. This Agreement has been duly executed and delivered by the Company and constitutes, the valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, liquidation, reorganization, moratorium, usury or other laws of general application affecting the rights of creditors generally and subject to the exercise of judicial discretion as to the application of principles of equity, regardless of whether such principles are applied by a court of law or equity.

(b)The Pledged Shares have been duly authorized, validly issued, fully paid an non-assessable.

5.The Purchaser hereby represents, warrants, covenants and agrees as follows:

(a)The Purchaser understands that the offer and sale of the Note is being made only by means of this Agreement. The Purchaser understands that the Company has not authorized the use of, and the Purchaser confirms that he is not relying upon, any other information, written or oral, other than material contained in this Agreement and in material that has been publicly filed with the Securities and Exchange Commission (the “Commission”). The Purchaser is aware that the purchase of the Note involves a high degree of risk and that the Purchaser may sustain, and has the financial ability to sustain, the loss of her entire investment, understands that no assurance can be given that the Company will be profitable in the future, that the Company may need additional financing and that the failure of the Company to raise additional funds when required may have a material adverse effect upon its business. Furthermore, in subscribing for the Note, the Purchaser acknowledges that it is not relying upon any projections or any statements of any kind relating to future revenue, earnings, operations or cash flow in purchasing the Note.

(b)The Purchaser represents to the Company that the Purchaser is an accredited investor within the meaning of Rule 501 of the Commission under the Securities Act and she understands the meaning of the term “accredited investor.” The Purchaser further represents that the Purchaser has such knowledge and experience in financial and business matters as to enable the Purchaser to understand the nature and extent of the risks involved in purchasing the Note. The Purchaser is fully aware that such investments can and sometimes do result in the loss of the entire investment. The Purchaser has engaged her own counsel and accountants to the extent that she deems it necessary.

(c)All of the information provided by the Purchaser in its Confidential Investor Questionnaire is true and correct in all material respects.

(d)The Purchaser is acquiring the Note pursuant to this Agreement for investment and not with a view to the sale or distribution thereof, for the Purchaser’s own account and not on behalf of others; has not granted any other person any interest or participation in or right or option to purchase all or any portion of the Note; is aware that the Note is a restricted security within the meaning of Rule 144 of the Commission under the Securities Act, and may not be sold or otherwise transferred other than pursuant to an effective registration statement or an exemption from registration; and understands and agrees that the Note and the certificates for the Pledged Shares shall bear the Company’s standard investment legend. The Purchaser understands the meaning of these restrictions.

(e)The Purchaser will not transfer the Note or any Pledged Shares except in compliance with all applicable federal and state securities laws and regulations, and, in such connection, the Company may request an opinion of counsel reasonably acceptable to the Company as to the availability of any exemption.

(f)The Purchaser understands that the Company may prepay, in whole or in part, the Note at any time prior to the Maturity Date, as defined in the Note, upon five (5) days’ oral or written notice to the Purchaser.

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(g)The Purchaser represents and warrants that no broker or finder was involved directly or indirectly in connection with the Purchaser’s purchase of the Note pursuant to this Agreement. The Purchaser shall indemnify the Company and hold it harmless from and against any manner of loss, liability, damage or expense, including fees and expenses of counsel, resulting from a breach of the Purchaser’s warranty contained in this Section 6(g).

(h)The Purchaser understands that it has no registration rights with respect to the Note or the Pledged Shares.

(i)The Purchaser represents and warrants that the address set forth on the signature page is its true and correct address, and understands that the Company will rely on this representation in making filings under state securities or blue sky laws.

6.(a) This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, superseding any and all prior or contemporaneous oral and prior written agreements, understandings and letters of intent. This Agreement may not be modified or amended nor may any right be waived except by a writing which expressly refers to this Agreement, states that it is a modification, amendment or waiver and is signed by all parties with respect to a modification or amendment or the party granting the waiver with respect to a waiver. No course of conduct or dealing and no trade custom or usage shall modify any provisions of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

(b)All notices provided for in this Agreement shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of communication if receipt is confirmed. Notices shall be deemed to have been received on the date of delivery or attempted personal delivery if sent by registered or certified mail, by messenger or by an overnight courier services which provides evidence of delivery or attempted delivery, of if sent by telecopier, upon the date of receipt provided that receipt is acknowledge by the recipient. Notices shall be sent to the parties at their respective addresses set forth on the signature page of this Agreement. A copy of any notice to the Company shall be sent to Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32^nd floor, New York, New York 10006, Attention Asher S. Levitsky P.C., telecopier: (212) 930-9725, e-mail: alevitsky@srff.com. Any party may, by like notice, change the address, person or telecopier number to which notice shall be sent.

(c)This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Section 6(b) of this Agreement (other than by telecopier or e-mail), or (y) by any other method of service permitted by law.

(d)This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

- 3-

(e)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 document.

(f)The representations, warranties and covenants set forth in this Agreement or in any other writing delivered in connection therewith shall survive the issuance of the Note.

Please confirm your agreement with the foregoing by signing this Agreement where indicated.                

Very truly yours,
EOS HOLDINGS LLC
By:	/s/ Jon Carnes
Name: Jon Carnes
Title: Managing Member

The undersigned is an accredited investor pursuant to Item (i) of Exhibit D.

Address: 2560 Highvale Drive, Las Vegas, NV 89134

Telecopier Number: (917) 591-7787

e-mail:jcarnes@eosfunds.com

Social Security or Taxpayer ID No.:_______________________________

Accepted this      day of October, 2008

CHINA WIND SYSTEMS, INC.

By:	/s/ Jianhua Wu
	Jianhua Wu
	Chief Executive Officer

The undersigned agrees to execute the Pledge and Conversion Right Agreement and to pledge the Pledged Shares pursuant thereto.

/s/ Jianhua Wu

Jianhua Wu

- 4-

Exhibit A-1

Wire Transfer Instructions

For $500,000 of the Purchase Price of the Note

BANK NAME	Transportation Bank, Qianzhou Branch
NAME OF ACCOUNT:	WUXI FULAODE WIND EQUIPMENT CO., LTD.
BRANCH #	3220-0065-6018-0100-11019
ACCOUNT #	3202-0067-7980-2260

Exhibit A-2

Wire Transfer Instructions

For Warrant Exercise and $75,000 of the Purchase Price of the Note

WACHOVIA BANK, N.A.
BANK CUSTOMER SERVICE PHONE	(800) 669-4458 (Domestic)
	(866) 815-5747 (International)
NAME OF ACCOUNT:	CHINA WIND SYSTEMS, INC.
ABA #	063 000 021
ACCOUNT #	2000035488527

FOR INTERNATIONAL WIRES ONLY

SWIFT CODE: PNBPUS33

A-1

Exhibit E

A Purchaser who meets any one of the following tests is an accredited investor:

(a)The Purchaser is an individual who has a net worth, or joint net worth with the Purchaser’s spouse, of at least $1,000,000.

(b)The Purchaser is an individual who had individual income of more than $200,000 (or $300,000 jointly with the Purchaser’s spouse) for the past two years, and the Purchaser has a reasonable expectation of having income of at least $200,000 (or $300,000 jointly with the Purchaser’s spouse) for the current year.

(c)The Purchaser is an officer or director of the Company.

(d)The Purchaser is a bank as defined in section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity.

(e)The Purchaser is a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934.

(f)The Purchaser is an insurance company as defined in section 2(13) of the Securities Act.                   

(g)The Purchaser is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act.

(h)The Purchaser is a small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958.

(i)The Purchaser is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

(j)The Purchaser is a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.

(k)The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

(l)The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Commission under the Securities Act.

E-1

(m)The Purchaser is an entity in which all of the equity owners are accredited investors (i.e., all of the equity owners meet one of the tests for an accredited investor).

If an individual investor qualifies as an accredited investor, such individual may purchase the Shares in the name of his or her individual retirement account (“IRA”).

E-2

EX-99.2

]

EX-99.3

EX-99.4

Date: October 14, 2008

China Wind Systems, Inc.

No. 9 Yanyu Middle Road

Qianzhou Village, Huishan District, Wuxi City

Jiangsu Province, People’s Republic of China

Re: Subscription Agreement

Ladies and Gentlemen:

The undersigned (the “Subscriber”) hereby subscribes for the number of Shares (the “Shares”) of common stock, par value $.001 per share (“Common Stock”), of China Wind Systems, Inc., a Delaware corporation (the “Company”), as are set forth on the signature page of this Agreement, at a purchase price of $0.60 per share. The total purchase price for the Shares is set forth on the signature page of this Agreement.

1.The Company represents and warrants to the Subscriber that the issuance of the Shares has been duly authorized and reserved for issuance and when issued pursuant to this Agreement upon payment of the purchase price of the Shares, will be validly issued, fully paid and non-assessable.

2.The Company is offering 3,500,000 shares of Common Stock at a purchase price of $0.60 per share on a best efforts basis, with no minimum number of Shares being sold. As a result, the Subscriber understands that it is possible that the Company will not receive any proceeds from the sale of Shares other than the purchase price of the Shares previously sold by the Company and the purchase price of the Shares being purchased by the Subscriber. The payment of the purchase price shall be made by wire transfer to the Company in accordance with the wire transfer instructions set forth in Exhibit A to this Agreement, and the Company will have the Shares issued as soon as practical thereafter.

3.The Subscriber hereby represents, warrants, covenants and agrees as follows:

(a)The Subscriber understands that the offer and sale of the Shares is being made only by means of this Agreement. The Subscriber understands that the Company has not authorized the use of, and the Subscriber confirms that he is not relying upon, any other information, written or oral, other than material contained in this Agreement and in material that has been publicly filed with the Securities and Exchange Commission (the “Commission”). The Subscriber is aware that the purchase of the Shares involves a high degree of risk and that the Subscriber may sustain, and has the financial ability to sustain, the loss of her entire investment, understands that no assurance can be given that the Company will be profitable in the future, that the Company may need additional financing and that the failure of the Company to raise additional funds when required may have a material adverse effect upon its business. Furthermore, in subscribing for the Shares, the Subscriber acknowledges that he or she is not relying upon any projections or any statements of any kind relating to future revenue, earnings, operations or cash flow in purchasing the Shares.

(b)The Subscriber represents to the Company that the Subscriber is an accredited investor within the meaning of Rule 501 of the Commission under the Securities Act and she understands the meaning of the term “accredited investor.” The Subscriber further represents that the Subscriber has such knowledge and experience in financial and business matters as to enable the Subscriber to understand the nature and extent of the risks involved in purchasing the Shares. The Subscriber is fully aware that such investments can and sometimes do result in the loss of the entire investment. The Subscriber has engaged her own counsel and accountants to the extent that she deems it necessary.

1

(c)All of the information provided by the Subscriber in his or her Confidential Investor Questionnaire is true and correct in all material respects.

(d)The Subscriber is acquiring the Shares pursuant to this Agreement for investment and not with a view to the sale or distribution thereof, for the Subscriber’s own account and not on behalf of others; has not granted any other person any interest or participation in or right or option to purchase all or any portion of the Shares; is aware that the Securities are restricted securities within the meaning of Rule 144 of the Commission under the Securities Act, and may not be sold or otherwise transferred other than pursuant to an effective registration statement or an exemption from registration; and understands and agrees that the certificates for the Shares shall bear the Company’s standard investment legend. The Subscriber understands the meaning of these restrictions.

(e)The Subscriber will not transfer any Shares except in compliance with all applicable federal and state securities laws and regulations, and, in such connection, the Company may request an opinion of counsel reasonably acceptable to the Company as to the availability of any exemption.

(f)The Subscriber represents and warrants that no broker or finder was involved directly or indirectly in connection with the Subscriber’s purchase of the Shares pursuant to this Agreement. The Subscriber shall indemnify the Company and hold it harmless from and against any manner of loss, liability, damage or expense, including fees and expenses of counsel, resulting from a breach of the Subscriber’s warranty contained in this Section 3(f).

(g)The Subscriber understands that she has no registration rights with respect to the Shares.

(h)The Subscriber represents and warrants that the address set forth on the signature page is his or her true and correct address, and understands that the Company will rely on this representation in making filings under state securities or blue sky laws.

(i)The Subscriber understands that the Company may reject the Subscriber’s subscription if the Subscriber is not an accredited investor.

4.The proceeds from the sale of the Shares shall be used for the completion of Phase I, with the assets being acquired by the WFOE that is engaged the forged products business.

5.             (a) This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, superseding any and all prior or contemporaneous oral and prior written agreements, understandings and letters of intent. This Agreement may not be modified or amended nor may any right be waived except by a writing which expressly refers to this Agreement, states that it is a modification, amendment or waiver and is signed by all parties with respect to a modification or amendment or the party granting the waiver with respect to a waiver. No course of conduct or dealing and no trade custom or usage shall modify any provisions of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

(b)All notices provided for in this Agreement shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of communication if receipt is confirmed. Notices shall be deemed to have been received on the date of delivery or attempted personal delivery if sent by registered or certified mail, by messenger or by an overnight courier services which provides evidence of delivery or attempted delivery, of if sent by telecopier, upon the date of receipt provided that receipt is acknowledge by the recipient. Notices shall be sent to the parties at their respective addresses set forth on the signature page of this Agreement. A copy of any notice to the Company shall be sent to Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32^nd floor, New York, New York 10006, Attention Asher S. Levitsky P.C., telecopier: (212) 930-9725, e-mail: alevitsky@srff.com. Any party may, by like notice, change the address, person or telecopier number to which notice shall be sent.

- 2 -

(c)This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Section 6(b) of this Agreement (other than by telecopier or e-mail), or (y) by any other method of service permitted by law.

(d)This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

(e)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 document.

(f)The representations, warranties and covenants set forth in this Agreement or in any other writing delivered in connection therewith shall survive the issuance of the Shares.

- 3 -

Please confirm your agreement with the foregoing by signing this Agreement where indicated.                

	Very truly yours,
Number of Shares Subscribed for: _______________
Total Purchase Price: $_______________	[Name of Subscriber]
	By:
	Name: Title:

The undersigned is an accredited investor pursuant to Item _____ of Exhibit B.

Address:

Telecopier Number:

e-mail:

Social Security or Taxpayer ID No.:

Accepted this      day of            , 2008

CHINA WIND SYSTEMS, INC.

By:
	Adam Wasserman
	Chief financial officer

- 4 -

Exhibit A

Wire Transfer Instructions

WACHOVIA BANK, N.A.
BANK CUSTOMER SERVICE PHONE	(800) 669-4458 (Domestic)
	(866) 815-5747 (International)
NAME OF ACCOUNT:	CHINA WIND SYSTEMS, INC.
ABA #	063 000 021
ACCOUNT #	2000035488527

FOR INTERNATIONAL WIRES ONLY

SWIFT CODE: PNBPUS33

A-1

Exhibit B

A Subscriber who meets any one of the following tests is an accredited investor:

(a)The Subscriber is an individual who has a net worth, or joint net worth with the Subscriber’s spouse, of at least $1,000,000.

(b)The Subscriber is an individual who had individual income of more than $200,000 (or $300,000 jointly with the Subscriber’s spouse) for the past two years, and the Subscriber has a reasonable expectation of having income of at least $200,000 (or $300,000 jointly with the Subscriber’s spouse) for the current year.

(c)The Subscriber is an officer or director of the Company.

(d)The Subscriber is a bank as defined in section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity.

(e)The Subscriber is a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934.

(f)The Subscriber is an insurance company as defined in section 2(13) of the Securities Act.                   

(g)The Subscriber is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act.

(h)The Subscriber is a small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958.

(i)The Subscriber is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

(j)The Subscriber is a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.

(k)The Subscriber is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

(l)The Subscriber is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Commission under the Securities Act.

B-1

(m)The Subscriber is an entity in which all of the equity owners are accredited investors (i.e., all of the equity owners meet one of the tests for an accredited investor).

If an individual investor qualifies as an accredited investor, such individual may purchase the

Shares in the name of his or her individual retirement account (“IRA”).

B-2