FORM 8-K Exhibit 10.2
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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 Xx.000 Xxxxx Xxxxx
Xxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxxxx, People's Republic of China, Postal Code:
054027 and
Xi'an Yingfeng Science&Technology Co.,Ltd ("Yingfeng"), located at Xxxxx'an
Xxxxxxxxxxxxx Xxxxxx, Xxxxx X, Xxxx 000, Xx. 00, Xxx-Xxxx-Xxxxx Xxxxxx, Xx'xx
Xxxx, Xxxxxxx Xxxxxxxx, 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
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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
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(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
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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
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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
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(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
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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
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(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
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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
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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
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(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
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(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
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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
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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
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(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
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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
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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
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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
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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
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/s/Geyun Wang
Geyun Xxxx
Xx'an Yingfeng Science and Technology Co., Ltd.
By
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/s/Xxxxxxxx Xxxx
Xxxxxxxx Xxxx
Xingtai Iron and Steel Co., Ltd.
