Home > Uncategorized > A Case of Corporate and National Defamation: AMSC v. Sinovel, hot air in legal and media exercises.

A Case of Corporate and National Defamation: AMSC v. Sinovel, hot air in legal and media exercises.

In 2011, a little known Massachusetts-based technology company, American Superconductor (AMSC) sued a startup company, Sinovel, in several provincial courts in China.  Most people paid little heed to the development of the case, until several US politicians cited the case as a most egregious example of Chinese Corporate Espionage.  As usual, the politicians’ citations of examples are rarely backed up with any factual analysis, especially for a case that’s yet unresolved in China.  US politicians’ rather empty fanciful descriptions of the case have been amplified by repetitions of the accusations across Western media, with equally poor amount of factual analysis.  Thus, we here provide our most detailed analysis from available facts.

 

http://www.greentechmedia.com/articles/read/Can-AMSC-Recover-From-Alleged-IP-Theft-by-Chinas-Biggest-Wind-Company

Case History:

 

AMSC was a struggling US tech company that promised a lot of superconductor related technologies, but couldn’t get much farther beyond US government sponsored research projects.  Some time around 2009, Dan McGahn took over as AMSC’s President/CEO, and began to redirect the company to produce more basic components suitable for the existing market.  Instead of dreaming of making viable superconductor power lines, the company sought to produce simpler technological advances that might be profitable.

 

Dan McGahn some how managed to strike up a deal with a Chinese startup wind farm company, Sinovel.  Sinovel didn’t have much, but it had the financial backing of the Chinese government, who was eager to invest huge amounts of Chinese taxpayers’ money in massive number of windfarms.  The deal was in essence, that AMSC would sell specialized controllers /converters for Sinovel’s wind turbines.  AMSC would make the controllers in AMSC’s Chinese subsidiary factory, and then install the controllers into Sinovel’s wind turbines in the wind farms of remote Northwestern China.

In 2010, Sinovel suddenly stopped accepting AMSC’s controllers, citing low quality and bad performance of the controllers.  AMSC through its investigations, believes that Sinovel had bribed an employee/manager of Windtec, an AMSC subsidiary in Austria.  The bribe reportedly totaled around $20,000, plus an apartment and prostitute.  The bribed employee allegedly resigned from Windtec, but his supervisor asked him to keep the company email access to help the company until a replacement was found.  Sinovel allegedly hired the employee, who emailed stolen source codes to Sinovel employees, and then went to China and helped Sinovel modify AMSC’s code in the controllers.  Sinovel then established its own subsidiary in China to make the controller hardware, and installed its own controller with the modified AMSC code.

AMSC’s bribed employee upon interrogation in Austria, promptly confessed to the entire plot, conveniently.  An Austrian court sentenced the corporate spy, a Serbian National, to several years in prison.

AMSC then brought lawsuits in 4 separate jurisdictions in China, among them, 1 for breach of contract, 2 for copyright infringement, with damage totaling about $1.2 billion. Sinovel countersued for breach of contract with damages of $58 million.

Most pertinent to the US Politicians’ accuastions relates to the 2 lawsuits for copyright infringement, 1 in Hainan and 1 in Beijing.  Sinovel moved to dismiss both cases on the ground that both cases of copyright infringement should be covered by the Contract arbitration clause, and thus should be consolidated with the Breach of Contract lawsuit pending in an Arbitration Commission.

A Hainan Higher Court dismissed AMSC’s copyright infringement case in Hainan, but a Beijing Intermediate Court ruled against Sinovel.  AMSC appealed the Hainan ruling in the Chinese Supreme Court, and the ruling is pending.  Western media hyped the pending Chinese Supreme Court ruling as monumental for IP rights in China.  As we will see, it’s any thing but, and AMSC’s entire case may actually fall apart in the substance as well.

FACTUAL ANALYSIS:

(1) The pending issue before the Chinese Supreme Court is not on the merit of the cases.  The Issue is one of jurisdiction:  Whether the civil courts are the proper jurisdiction for determining the copyright infringement claims, or the Arbitration Commission should hear the copyright infringement claims.

Regardless of how the Chinese Supreme Court rules on the pending issue, the outcome of the copyright infringement claims would not be determined until much later.

(2) On the merits of AMSC’s claims and allegations, there are many unclear factual aspects.  Here are some most glaring ones, along with my analysis:

I. Copyright infringement NOT covered by Contract??

Sinovel was AMSC’s customer, and accounted for about 80% of AMSC’s revenue (according to AMSC).  Sinovel bought and paid for at least some of AMSC’s shipment of controllers, which AMSC had programmed the control codes into the “firmware,” which is like the resident ROM type memory of the controller system, without the need for loading the code from any disk.

AMSC’s own public statements also indicated that AMSC loaded the controller firmware in Windtec with a 14 day expiration date or “trial period,” after which the controllers in Sinovel’s wind turbines would automatically shut down.  14 days?  How can that work?  And why?  AMSC would have to reset the trial period for every wind turbine after every 14 days.

According to AMSC’s signed Quarterly 10Q statement filed with US Security Exchange Commission:  http://quote.morningstar.com/stock-filing/Quarterly-Report/2011/9/30/t.aspx?t=XNAS:AMSC&ft=10-Q&d=f34e3a03802c28239a30ee0552f302be

….

The evidence presented during the court hearing showed that this former employee was contracted by Sinovel through an intermediary while employed by us and improperly obtained and transferred to Sinovel portions of our wind turbine control software source code developed for Sinovel’s 1.5MW wind turbines. Except for portions of this 1.5MW wind turbine software, we do not believe that the source code for any other turbines, such as the 3MW, 5MW and 6MW wind turbines that were designed by and co-developed with us have been transferred to Sinovel. Moreover, we believe the evidence shows this former employee illegally used source code to develop for Sinovel a software modification to circumvent the encryption and remove technical protection measures on the PM3000 power converters in 1.5MW wind turbines in the field. We believe that only the binary code, or upper layer, of the PM3000 software developed to circumvent the encryption and remove technical protection measures was transferred to Sinovel. We do not believe that any PM3000 source code was transferred to Sinovel. These actions potentially enable Sinovel to deploy, independent of us, wind turbine control software, including a low voltage ride through solution, on all of its 1.5MW wind turbines in the field. In addition, by having the wind turbine control source code, Sinovel could potentially modify the source code to allow the use of core electrical components, including power converters, from other manufacturers.

….

The answer is that AMSC planted a “Time Bomb” upper layer in their firmware code, a piece of code that would cause AMSC’s encrypted firmware code to become inoperable after 14 days.  Some similar types of software copyright protection are called “trialware,” most common of which can be seen in the trial versions of Microsoft’s Window Vista Operating System.

However, the difference between a “trialware” and a “Time Bomb” is that a buyer of “trialware” is aware and agreed to the “trialware,” which is usually free, while in contrast, a buyer of a “Time Bomb” planted software is NOT aware and did not agree to the “Time Bomb.”  A “trialware” is usually legal, due to evidence of buyer’s awareness in a software license (a contract).

A “Time bomb” is generally not legal, not enforceable, and potentially considered criminal computer trespass, because the buyer did not agree to it.  (See for example, US, Virginia Criminal Code, § 18.2-152.4. Computer trespass; penalty,  “A. It shall be unlawful for any person, with malicious intent, to: … 2. Cause a computer to malfunction, regardless of how long the malfunction persists”.)

A particularly relevant US case is Clayton X-Ray Co. v. Professional Systems Corp., 812 SW2d 565 (Mo. Ct. App. 1991).  http://www.leagle.com/xmlResult.aspx?xmldoc=19911377812SW2d565_11324.xml&docbase=CSLWAR2-1986-2006.  In Clayton, software vendor PSC planted a time bomb in Clayton X-ray’s computer, which caused the computers to lock up after a period of contract dispute between the parties.  (Also in this case, Clayton X-ray managed to hire a former PSC employee to disable the time bomb to allow Clayton X-ray to resume operations).  The state appeals court in the Clayton case upheld a punitive damage against software vendor PSC.

Here, AMSC’s own assertion may be harming its own case, because AMSC asserted that the copyright of its software was not covered by its contract with Sinovel.  I.e. the contract did not contain any provisions relating to software licensing, and Sinovel was not aware of the Time Bomb at the time of the contract.

Without a software license for AMSC’s code, the code was effectively part of Sinovel’s hardware purchase, especially because the code came along with the controllers, and without the code, the controller could not function properly, or usable by typical commercial contract standards.  Effectively, AMSC’s contract sale of the controllers gave Sinovel unlimited license to use the software as it chooses.

Because AMSC shipped the software with the controller hardware as part of a contract, Sinovel was a legitimate user of the code.  As such, under Chinese copyright law, Sinovel was allowed to modify the code WITHOUT the permission of AMSC:

Article 41: Lawfully authorized users of computer programmes may engage in the following activities:

(1) installing the said computer on computers and other devices having information processing capacity on the basis of requirements for use;

(2) producing back-up reproductions to prevent damage to the computer programme. This sort of back-up reproductions may not be provided to other persons from use in any way, and when that person loses lawful authorization, he is responsible for the destruction of back-up reproductions;

(3) conducting necessary alterations in order to use the said computer programme in a real applied computing environment or improve its functions or functioning; without permission of the copyright holder of the said programme, the revised programme may not be provided to third parties in any way.

Article 42: In order to study and research the design thinking and principles that computer programmes contain, those using computer programmes through installation, display, transmission, storage or other means, may go without the permission of the copyright holder of the computer programme, and do not pay remuneration to them.

Article 43: When lawfully authorized users of computer programmes cannot obtain necessary compatibility information through regular channels, they may reproduce and translate the content of the part related to compatibility information in the said computer programme, without permission of the copyright holder of the said computer programme.

For using the information obtained according to the provisions of the above Paragraph, the use objective of computer programme compatibility may not be exceeded, it may not be used to develop, produce or sell virtually similar computer programmes, and may not be used for any activity infringing copyright.

As long as Sinovel does not transfer its copy of the AMSC’s code, Sinovel can make copies, use, modify the code as it pleases.

Note also, without an express software licensing agreement to limit, Sinovel can have as many copies as it chooses and use the code with whatever hardware it can buy or build.

II.  Why was there no software licensing?

AMSC’s own VP and spokesman confirmed my suspicion regarding the lack of IP coverage on AMSC’s contract:  http://www.greentechmedia.com/articles/read/the-wheels-of-chinese-justice-turning-slowly-toward-u.s.-wind

“These are copyright infringement matters,” (AMSC VP of Communication Jason) Fredette said. “Our contracts don’t contemplate copyright theft. Or IP theft.” These matters, he added “belong in the court system rather than in arbitration. For the time being, Hainan does not agree with us but Beijing does.”

AMSC’s appeal to the Supreme People’s Court will be based on that premise.

“We have trade secret matters and copyright infringement matters that we’re taking to the civil court because we don’t think there’s any recourse we could have in arbitration,” Fredette explained. The Beijing court’s decision, he added, “said this dispute does not arise from or in connection with the execution of our contracts with Sinovel.”

A Chinese source familiar with contractual dealings there, who because he continues to do business in Shanghai with Chinese wind manufacturers did not want to be named, suggested to GTM that ultimately AMSC’s mistake was in not having a contract that protected proprietary information.

Fredette did not find that plausible. “When you draft and sign contracts, you do not contemplate that the party you’re dealing with will eventually steal your intellectual property,” he said. “You can’t really write that into a contract because I think the other party would take umbrage (offense) with it.

Please NOTE the last quote from AMSC’s spokesman.  Apparently, AMSC was so worried about how the other party might be offended, that it didn’t bother to specifically protect its supposedly most valuable IP assets in a legal contract!!

Well, by that logic, AMSC should have torn up the contract completely, because why negotiate or bargain money?  I would think the other side would be more offended by money haggling!!  By the same logic, by doing business, you don’t contemplate that the party you’re dealing with will eventually cheat out of the deal either, but that’s precisely WHY parties have written contracts!!!

(I do not believe that AMSC management would be that bad at negotiating that they would accidentally forget to put in some kind of contract clause limiting software license, which would be a TERRIBLE MONUMENTAL ERROR in ANY country, but I’m being apparently optimistic, because in this case, AMSC’s contract literally gave away the software.  HOWEVER– see next).

It’s odd to say the least, that AMSC would somehow negotiate a contract with Sinovel, its biggest customer, to sell its unique IP, without limiting the software licensing.  So what could be the explanation for this?  I would not speculate to say for certainty, so here are some POSSIBLE explanations based upon available facts and general business practices:

(a) AMSC didn’t want to sell software, because the hardware would have a bigger revenue.

Afterall, even with billions poured by the Chinese government into the Sinovel wind farms, there are ONLY so many turbines.  How many copies of the software can AMSC possibly sell?  Controllers on the other hand, integrated with the software, AMSC could potentially lock in as a parts supplier for decades (considering replacements, etc.)

AMSC also probably knew that the controller was not very special, and Chinese electronics makers could easily build one of their own for much cheaper.  And if AMSC provided a full copy of the software, even with copyright protections, the Chinese could easily and quickly reverse-engineer the software and make their own versions.  So AMSC locked in their unique software encrypted into the firmware of the controllers, along with a “time bomb”.  That way, if Sinovel ever stopped buying AMSC’s hardware, the “time bomb” would just go off, and Sinovel’s wind turbines would shut down.
This type of “bundling software into hardware” is sometimes referred to as “vertical tying”, and may be considered anti-competitive practice under many countries.  That is, AMSC may have attempted to use its unique software to force its customers to buy the hardware, thus cornering the entire controller market in Chinese wind turbines.  (From its own data and assertions, AMSC nearly succeeded).
(b) Software licensing hassle in China.
Chinese laws require that all software licensing agreements with foreign suppliers be registered with the Chinese government and approved.  Registrant must prove that they are legally allowed to export the software into China.  Some foreign companies do not like the bureaucracy of this procedure, and choose not to register the software licensing agreement.  However, even an unregistered software licensing agreement may be enforceable in Chinese courts.  Thus, it still makes little sense for AMSC to not have one at all.
(c) Export Control issue.
Software export from US sometimes require Export control review.  AMSC’s own legal page noted since the company’s founding that, “Software from this Site is subject to United States export controls.”  So did AMSC actually comply with US Export Control rules regarding its software export?  The facts suggest that AMSC might have tried to bypass the US Export Control rules.
AMSC “sequestered” its software to its Austrian subsidiary Windtec, to house the software and to install it in the controller, while its Chinese subsidiary made the hardware.  Why “sequester” the software in Austria, when it would be far safer to sequester the software in AMSC’s own US headquarter in Massachusetts??!
One possible explanation is that Austria was a 3rd-party transfer point for the potentially export controlled Software.  AMSC can send the software by email from US to Windtec in Austria, and vice versa, without export control review.  Then Windtec can install the code into the hardware in Austria, and send it to China.
(d) Transfer pricing.
To maximize profit margin and lower tariffs and taxes, AMSC may have shifted its profit on paper, by attributing the entire value of the controller to the hardware, and by not mentioning the software at all in the contract.
Remember AMSC also makes the hardware in its Chinese subsidiary, no doubt for low costs.  But AMSC could charge Sinovel higher prices, because of its own software.  So AMSC could gain a high profit margin.  But if a software licensing agreement was mentioned in the contract, (or registered with the Chinese government), then AMSC would have to pay an import tariff on EACH copy of the software it licensed to Sinovel.
By not mentioning the software licensing, AMSC effectively would make the controller 100% in China at low cost, and attribute nearly 100% of the profit to the hardware in China, and pay almost ZERO in tariffs on software export to China.
III.  What about the “trade secret theft”??
AMSC also claimed that its “trade secrets” were stolen by its employee in Austria and given to Sinovel.  But what “trade secrets” was AMSC talking about?
Not the code, because even encrypted and time-bombed, the code was supposedly working in the controllers.  (If it was only a partially functional copy, then Sinovel would definitely have a valid claim that the controller from AMSC didn’t work well.)
What did AMSC’s disgruntled and bribed employee take in “trade secrets”?  That which allowed the employee to disable the “time bomb” in the code.
Effectively, AMSC is claiming that its “time bomb” was the “trade secret”!!
Here, I must commend such an imaginative legal theory.  If the code was solely AMSC’s possession, Sinovel may even be liable for hacking the code.  Except, Sinovel bought the code, even if the encrypted version.  As stated earlier, under Chinese copyright laws (similar to US laws), Sinovel was an authorized user, and could modified the code as it pleased.  And since there is no limitations on Sinovel’s software copy, Sinovel could also disable the “time bomb” if it wished.
Also except, under Trade Secret laws, “trade secret” must be ITSELF of economic value.  A “time bomb” is NOT a trade secret, NOT unless AMSC is somehow selling the “time bomb” by itself for economic value.
Under the Chinese Trade Secret laws, the “trade secret” must be immediately useful and applicable for industrial and business applications.  AMSC’s “time bomb” is by itself useless, other than the value of what it may protect, (which in this case was already sold to Sinovel).
Generally also, IP may NOT be claimed or protected, if the IP was designed for immoral or illegal uses.  (A computer malware code cannot be claimed as copyrighted or trade secret or patented).
*What’s ongoing?
AMSC’s shareholders also sued the company for misrepresenting financial statements.
AMSC also attempted to have a Brazilian partner ban Sinovel’s shipment of wind turbines from Brazil.  The Brazilian company dropped the ban against Sinovel recently.
1 Noted EXCEPTION for AMSC’s legal battle with Sinovel, conspicuously absent, is that AMSC did NOT file any lawsuits against Sinovel in US, when Sinovel constructed a wind farm for the State of Massachusetts to completion around end of 2012, also supposedly with Sinovel’s Chinese made wind turbines with the “stolen IP”, right in the backyard of AMSC’s US headquarters.
WHY NOT?!  AMSC would have a home court advantage, but did not take advantage of it?
Is it possible that AMSC has no desire to have a US court digging into its corporate policies regarding export control, etc.?
The Chinese Supreme Court will hold another hearing on the jurisdiction issue of the copyright infringement case from Hainan.
Hope the honored Chinese Justices will consider the cases deeply and recognize the hot air from the West.
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  1. N.M.Cheung
    December 30th, 2012 at 14:12 | #1

    Thanks for making an intriguing technical issue clear for lay persons. Apparently AMSC outsmarted itself and is crying foul with no leg to stand on. I was wondering why it wasn’t filed in U.S. courts and now understand why.

  2. Black Pheonix
    May 24th, 2013 at 08:09 | #2

    http://finance.boston.com/boston/news/read/24270407/china%27s_supreme_people%27s_court_to_hear_amsc%27s_cases_against_sinovel_on_may_29

    AMSC announces that Chinese Supreme Court to hold hearing for jurisdiction question on May 29.

  3. Black Pheonix
    June 30th, 2013 at 19:03 | #3
  4. Black Pheonix
    July 1st, 2013 at 06:49 | #4

    This is a very dangerous trend set by US to use government criminal prosecutorial powers to bring political pressure on foreign nationals.

    If this keeps up, China will have no choice but to respond by charging American businesses in China with various crimes to settle business disputes.

    @Black Pheonix

  5. Zack
    July 1st, 2013 at 07:19 | #5

    @Black Pheonix
    never underestimate what a declining hegemon can and will do to stay on top. Not even murdering innocents and prosecuting journalists who expose them (assange, manning and Abdulelah Haider Shaye<- google the last one and how obama made sure he stayed in prison indefinitely) is too small or too petty.

  6. Black Pheonix
    July 1st, 2013 at 07:28 | #6

    @Zack

    On the other hand, I think it is rather overdue for China to start indicting foreign IT companies for “aiding and abetting” foreign government in espionage, in light of recent disclosures on NSA.

    Cisco, Google, Apple, Facebook, etc., should be brought on charges. (Google has a presence in HK, so they are still reachable under Chinese law).

    There is sufficient evidence to charge them.

    I think China is still playing the nice guy, and letting them have a pass with a warning.

    But I think Chinese government may run out of patience with them soon. The hard liners, rightfully, are pushing to crack down on the foreign companies that abuse Chinese hospitality to aid US in spying on Chinese citizens.

  7. Black Pheonix
    July 9th, 2013 at 16:17 | #7

    @Black Pheonix

    Not that I want to nitpick with DOJ, but why the hell would they indict Sinovel with a grand jury in WISCONSIN (of all the places in US)?!

    I mean, none of those people and company indicted are located in WISCONSIN, none of the alleged actions were done in WISCONSIN. AMSC is based in Mass., where Sinovel supplied several wind turbines to US wind farms.

    DOJ alleges “The software that runs the PM3000, a part of AMSC’s wind turbine electrical control system, was developed in Wisconsin and was stored on a computer in AMSC’s office in Middleton, Wis.”

    Incidentally, the AMSC facility in Middleton, Wis is a small office building with may be 20 parking spaces. “Developed” that multi-million dollar software there?! I don’t think so.

    “A federal grand jury in the Western District of Wisconsin indicted Sinovel Wind Group Co. Ltd., dba Sinovel Wind Group (USA) Co. Ltd.; Su Liying, 36, the deputy director of Sinovel’s research and development department; Zhao Haichun, 33, a technology manager for Sinovel; and Dejan Karabasevic, 40, a former employee of AMSC Windtec GmbH, a wholly-owned subsidiary of AMSC, with one count each of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud.”

    Another thing: AMSC still has not filed any US lawsuits against Sinovel. (if its case is that strong, with the Feds able to dig up evidence of criminal conduct, why not also sue Sinovel in a civil court in US, in say, Mass.?? Odd indeed.)

    Maybe I’m missing something in this mess, but a lot of these actions are just sound very weird.

    Or, maybe, a grand jury indictment from WISCONSIN is nothing but show-boating venue shopping.

    Afterall, what would a grand jury in WISCONSIN know about ‘trade secret’ or copyright laws? Not exactly a hot bed of IP legal disputes. (Yes, American jurors, just nod your heads and sign your names on the indictment sheets).

    I wonder how long did DOJ and AMSC had to go around to shop for that venue to get that indictment? Quite long apparently.

    *1 reason why the Civil suit from AMSC won’t be coming in US: “trade secret” theft (generally under the Computer fraud and abuse Act CFAA ) has a statute of limitation of only 2 years, after discovery of theft.

    And AMSC long past that 2 year mark.

  8. Black Pheonix
    July 9th, 2013 at 17:21 | #8

    BTW, I managed to find some of the original contracts between Sinovel and AMSC’s Austrian subsidiary Windtec, for the hardware and I think the interface software. But the contracts don’t mention any thing about the Firmware code in the hardware (as I suspected in the beginning).

    http://files.shareholder.com/downloads/AMSC/2574261359x0xS1193125-08-124825/880807/filing.pdf

    Exhibit 10.38, starting page 207:

    (for those of you interested in reading through piles of legal mumbo-jumbo, 🙂

    ****************

    Exhibit 10.38

    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. 06.7IC014
    for the Core Components of the Electrical Control System of
    FL 1500 Wind Turbine
    This Purchase Contract is signed between
    Sinovel Wind Co., Ltd (hereinafter referred to as Buyer)
    and
    Windtec Systemtechnik Handels GmbH in Austria (hereinafter referred to as Seller) in a friendly way.
    The contract equipment is used for the purchasing contract of the electrical control system for FL 1500 wind turbine which is signed between Buyer and Seller.
    Buyer and Seller agreed as follows:
    1. Definition
    In construing this contract, the following words and expressions shall have the meanings hereby assigned to them unless otherwise specified in the contract:
    1.1 Contract means this contract, including Article 1 to Article 20.
    1.2 Contract price means the price payable to Seller under the contract for the full and proper performance of its contractual obligations, which is not influenced by the price fluctuations.
    1.3 Contract currency means the currency used in the payment under the contract, which is Euro.
    1.4 Buyer’s Bank means Bank of China designated by Buyer or the other banks designated by Seller.
    1.5 Seller’s bank, means
    1.6 Effective date of the contract means the date when the contract enters into force upon fulfillment of the conditions stated in Article 20.
    1.7 Contract equipment means the core components of electrical control system of FL 1500 wind turbine.
    2. Scope of Supply:
    Each set comprises of:

    Item
    no.

    Description

    Code no.

    Windtec ID-No.

    Quantity

    Remarks
    1 PM1000 Converter 3 Pole +NCC320-V308.2 10100957 1off Including water cooling base-plate, DC bus capacitance, control circuit board
    2 PM1000 Converter 6 Pole +NCC320-V308.4 10100956 1off Including water cooling base-plate, DC bus capacitance, control circuit board
    3 Crowbar control WTCBA200A +NCC320-B312.7 10100787 1off Crowbar short circuit protection control
    4 Controller WT 98
    +NCC310-A240.3,
    +NCC310-A250.3
    10100068 2off
    5 Controller WT97 +TBC100-A120.3 10100002 1off
    6 Analogue input module WTAI91 +NCC310-A280.3 10100006 1off
    7 Digital input module WTDI92 +NCC310-A260.3 10100005 1off
    8 Panel Display WT502
    +NCC310-P241.2,
    +TBC100-P122.2
    10100775 2off One HMI for nacelle control cabinet, another one at tower base as HMI for SCADA system
    9 Servo motor [**]-combivert 90° connector
    +BM400-M23.2,
    +BM410-M33.2,
    +BM420-M43.2
    10101229 3 sets Including safety lock system, motor cable 2 meters
    10 Frequency converter [**] combivert F Multi
    +HC400-U23.4,
    +HC410-U33.4,
    +HC420-U43.4
    10100098 3off [**]
    11 DC-filter [**]-combivert
    +HC400-Z21.7,
    +HC410-Z31.7,
    +HC420-Z41.7
    10100101 3off
    12 Static frequency converter F5-Compact +NCC300-U118.6 10100361 1off [**]
    13 Radio interference filter +NCC300-Z118.3 10100362 1off
    14 CAN-operator 10100099 4off For connecting pitch and yaw converter
    15 Interface cable WT90 10100883 2off
    16 Lithiumbattery 07LE90 Included in item 10100068 10100485 1off
    17 Spring-operated brake [**]-Combivert mounted in item 10101229 10100106 3off
    18 Motor cable [**]-Combivert 10100104 3off
    19 Rectifier [**]-Combivert mounted in item 10101229 10100102 3off
    20 Foamed rubber [**]-combivert 10100100 3off
    21 Resolver cable [**]-combivert 10100103 3off
    Remarks: All the core components shall satisfy with the -40°C low temperature requirements.
    Optionally -45°C will be checked by Supplier until end of January 2007.
    3. Quantities: [**] sets
    4. Price:
    The delivery price for Seller is [**] Euro/set. The total contracting price will be [**] Euro.
    (INCOTERMS 2000, FOB)
    5. Port of shipment:
    PM1000 Converter shall be on shipment from USA (Wisconsin), others from main European seaport or Austria airport.
    6. Delivery-Period:
    The delivery will be made in batches as per preliminary schedule below (FOB):

    FOB date

    Quantity(Sets)

    EoDec,2006 [**]
    5.Jan, 2007 [**]
    10.Jan, 2007 [**]
    15.Jan, 2007 [**]
    01.Feb,2007 [**]
    10.Feb,2007 [**]
    20.Feb,2007 [**]
    5.Mar,2007 [**]
    20.Mar,2007 [**]
    20.Apr,2007 [**]
    20.Mai,2007 [**]
    20.Jun,2007 [**]
    20.Jul,2007 [**]
    20.Aug,2007 [**]
    20.Sep,2007 [**]
    20.Oct,2007 [**]
    19.Nov,2007 [**]
    20.Dez,2007 [**]

    Total

    [**]
    Note: Under the precondition that [**] sets core components of the electrical control system shall be purchased in 2007. BUYER will notify Seller three months in advance in writing to revise the plan, in case of any changes to the delivery plan.
    7. Documentation
    Seller shall provide to the Buyer the certificate and test report of the converter together with the equipment.
    8. Payment Schedule:

    95% by L/C at sight.
    Two weeks before each shipment date, an irrevocable Letter of Credit at an amount of 95% of each shipment value shall be issued by a first-class bank. The L/C shall be according to ICC WCP500. If L/C is delayed, the delivery time will be postponed accordingly.

    5% Retention Bond:
    The Retention Bond shall be paid upon the expiry of warrantee period (12 months after WT has arrived on the wind farm and finished the commissioning, or 18 months after the delivery time of Seller, for whichever is earlier, as the warranty period) within 14 days, under the precondition that the availability of the electrical control system for each WT is at least [**]% during such period. Such percentage will be the average of a respective wind park. The dependency of this 5%- payment from an availability of [**]% will only be on the condition that (i) control cabinets have been manufactured by BUYER under supervision and instruction of Seller, (ii) test and quality of electrical cabinets have been released by Seller, (iii) fault of electrical control system will be diagnosed by Seller, (iv) replacement of components will be executed by BUYER within 24 hours, and (v) Seller will have continuous and full access to the SCADA system of the respective wind turbines.
    BUYER is responsible for item I-V. If any of these items is not fulfilled, the retention bond has to be paid to Seller even in case of an availability of at least [**]% has not been reached.
    Seller must provide the following performance bond to Buyer:
    Within 30 days after effectiveness of the contract, Seller shall through Seller’s bank open an irrevocable performance bond in favor of Buyer, for an amount of 100,000.00 Euro. Validity of the guarantee shall be by the end of June 2008.
    9. The Seller shall supply the following documents as part of L/C paperwork:


    B/L


    Commercial Invoice


    Packing List


    Certificate of Origin


    Certificate of quarantine for Packing Wood


    Shipping Advice


    Quality Certificate

    The details refer to the detailed definition in L/C.
    10. Delivery notice
    Seller shall complete the delivery of Contract Equipment in batches and on time as required in article 6. 2 weeks before shipping, Buyer will be informed about the exact date of delivery.
    11. Packing and Marking
    Unless otherwise specified in the contract, the contract equipment shall be packed by Seller in a properly manner. And necessary measures shall be taken to protect the contract equipment from moisture, rain, rust, corrosion, shock and other damages according to their different characteristics so as to withstand numerous handling, loading and unloading as well as long distance sea and inland transportation.
    The following documents shall be enclosed in each package of the Contract Equipment:
    Two (2) copies of detailed packing list;
    Two (2) of quality certificate;
    One (1) copy of technical documentation for relevant Contract Equipment (including the following documentation but not limited to; e.g. the documentation for IGBT module, PLC, control panel, pitch converter, yaw converter and the operational manual for the CAN interface);
    12. Inspection
    Seller shall inspect the Contract Equipment and issue the quality certificates as well as inspection records, all involved expenses shall be for Seller’s account. The quality certificates and inspection records including detail and result of inspection before delivery shall be submitted by Seller to Buyer.
    13. Warranty
    Seller warrants, that the Contract Equipment shall be completely new, advanced in technology and superior in quality, free from any defect in design, material and workmanship, suitable for the use and purpose and in conformity with the technical specification.
    Seller warrants that the technical documentation shall be complete, clear and correct. Warranty period is 12 months after WT has arrived on the wind farm and finished the commissioning, or 18 months after the delivery time of Seller, for whichever is earlier.
    Warrantee means within warrantee period in case of any damage or problem of any core components, that the components for replacement will be provided by Seller free of charge, and Seller should ensure timely supply of spare parts. Seller shall correct any such failure either at its option, (i) by repairing any defective or damaged part or parts or the supplied products, or (ii) by making available any necessary repaired or replacement parts. Fault of electrical control system will be diagnosed by Seller and replacement of components will be executed by BUYER, each party at his own expense.
    14. Penalty for delayed delivery
    In case of delayed delivery of any shipment, starting from the second week of delay, every week of delay will be charged [**]% of the price of the delayed set as penalty, only a delay for more than 4 days is counted as one complete week Sum of the above mentioned penalty shall not exceed [**]% of the total contract price. Payment of the delayed delivery penalty shall not relieve Seller from the obligation of continuing delivery of relevant contract equipment.
    15. Claims

    15.1 In case the Contract Equipment supplied by Seller does not meet the specified technical performance during the Warranty Period and Seller doesn’t fulfil his responsibility according to item 13, Buyer has the right to lodge claims against Seller, and Seller shall settle the claims upon the agreement of Buyer in the following way:

    1) Repair or remove the defects and discrepancies of the equipment at Seller’s expense. In case Seller cannot send his personnel to the Job Site, Buyer shall have the right to do the repair or removal of the defects and discrepancies and all the expensed incurred should be borne by Seller.

    2) Replace the defective equipment or technical documents with new one at Seller’s expenses and Seller shall guarantee the quality of the replaced equipment for a recalculated warrantee period. The replaced and /or supplemented equipment shall be delivered DDP to the Job Site.
    In case Seller fails to make proposals for settling the claims according to any and/or all the ways mentioned above within 14 days after notification of the claim raised by Buyer, Buyer shall have the right to recover the claimed amount from Retention Bond (maximum up to 5% of the total contract price).

    15.2 The notice of claim for the defective equipment shall be effective if it is issued not later than thirty (30) days after the expiration of the Warranty Period, but the claim must be detected within the warranty period (proved and reported by an independent expert).

    15.3 In case Seller fails to accept the claim within thirty (30) days after receipt of Buyer’s claim, the claim shall be regarded as not acceptable by Seller.
    16. Force Majeure
    Neither party shall be held responsible for failure or delay to perform all or any party of this Contract due to flood, fire, earthquake, snowstorm, drought, hailstorm, hurricane, or any other events that are beyond the control of the affected party and could not reasonably be expected at the time of conclusion of the Contract or have been avoided or overcome by such party. However, the party who’s performance is affected by the event of Force Majeure shall give a notice to the other party of its occurrence as soon as possible and a certificate or a document of the occurrence of the Force Majeure event issued by the relative authority or a neutral independent third party shall be sent to the other party not later than (14) days after its occurrence. If the event of Force Majeure event continues for more than (180) days, both parties shall negotiate the performance or the termination of this Contract. In the case of such a termination either party shall bear its own costs, further claims for compensation in connection with the termination shall be excluded.
    17. Taxes and Duties
    17.1 All taxes in connection with and in the execution of the Contract levied by the Chinese government on Buyer in accordance with the tax laws of P.R. China shall be borne by Buyer.
    17.2 All taxed levied by the Chinese government on Seller, in connection with and in the execution of the Contract, according to Chinese tax laws and the agreement between the government of the People’s Republic of China and the Government of Seller’s country for the reciprocal avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income shall be borne by Seller.
    17.3 All taxes arising outside of China in connection with and in execution of the Contract shall be borne by Seller.
    18. Arbitration
    All disputes arising from, or in connection with the execution of the Contract, shall be settled through friendly discussion between the two Parties. In case no agreement can be reached throughout, the disputes shall be submitted to Chamber of Commerce in Zurich Switzerland, for Arbitration.
    Not withstanding any reference to arbitration, the two Parties shall continue to perform their respective obligations under the Contact unless the two Parties otherwise agree.
    19. Termination
    19.1 Buyer may, without prejudice to any remedy to any remedy by Seller for Seller’s following breach of Contract, by written notice of default sent to Seller, terminate the Contract in whole or in part, if Seller fails to deliver any or all of the Contract Equipment within 120 days after the delivery time specified in Article 6.
    19.2 Buyer may at any time terminate the Contract, by giving written notice to Seller in case Seller becomes bankrupt or otherwise insolvent, and such termination does not prejudice or affect any right of action or remedy available to Buyer. The same applies vice versa to Seller.
    20. Effectiveness of the Contract and Miscellaneous
    20.1 The contract becomes valid on signing by the authorized representatives of the two parties of the Contract.
    20.2 The present Contract shall be valid for 3 years from the effective date of the Contract, however the Contract shall become null and void automatically when each party of the Contract has fulfilled its rights and obligations under the Contract.
    20.3 At the expiration of the Contract, any unsettled credit and debt under the Contract shall not be affected by the expiration of the Contract. The debtor shall still effect his obligation of reimbursement to the creditor.
    20.4 The Contract shall be made in English.
    20.5 All amendments, supplements and alternations to the terms and conditions of the Contract shall be made in written form and signed by the authorized representatives of the two Parties.
    20.6 Unless otherwise stipulated in the Contract, the terms and conditions of the Contract shall be interpreted in accordance with INCOTERMS (2000 Edition).
    20.7 No assignment of any right or obligation under the Contract shall be made by either party to a third party without the previous consent of the other party.
    20.8 The communication between the two parties shall be conducted in written form. The fax concerning the important matter shall be confirmed timely by the registered or express mail.

    Buyer: Sinovel Wind Co., Ltd
    Address: Culture Building, No. 59, Zhongguancun Street, Haidian, Beijing, China
    Post code: 100872
    Fax: (0086) 10-82500072
    Tel: (0086) 10-62515566
    Authorized representative :
    /s/ [Illegible]

    (Signature)
    Signing date: 2006.12.15

    Buyer’s Agent: Dalian Huarui Heavy Industry International Co., Ltd
    Address: 12/F Huarui Building, No. 169, Bayi Road, Xigang Dist., Dalian, China
    Fax: (0086)411-86852398
    Tel: (0086)411-86852376
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2006.12.15

    Seller: Windtec Systemtechnik Handels GmbH
    Address: Schleppeplatz 5,9020 Klagenfurt
    Fax: (0043)463-4446044
    Tel: (0043)463-444604-10
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 11.Dec.2006
    Exhibit 10.39

    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. 06.7IC015
    for the software of FL 1500 Wind Turbine
    This Purchase Contract is signed between
    Sinovel Wind Co., Ltd (hereinafter referred to as Buyer)
    and
    Windtec Systemtechnik Handels GmbH in Austria (hereinafter referred to as Seller) in a friendly way.
    Buyer and Seller agreed as follows:

    1. Scope of Supply:
    [**] sets of software comprising:


    FL1500 software program for pitch converter, yaw converter, IGBT converter and PLCs; according to Technical Specification of FL1500 Wind Turbine.

    2. Prices:
    The delivery price is CIF Dalian [**] EURO per set. The total contract price is CIF Dalian [**] EURO.

    3. Conditions:
    General Terms of Delivery issued by the Austrian Electrical and Electronics Industry Association, Ed. Jan. 2002

    4. Warranty:
    Warranty period is 12 months after wind turbine has arrived on the wind farm and finished the commissioning, or 18 months after the delivery (shippment-date), whichever is earlier.

    5. Delivery:
    The software of PLC and converter will be sent out by 1 off CD and/or email per batch, as a valid licence for the number of sets indicated therein. The delivery will be made in batches as per preliminary schedule below (shippment date):

    Month

    EoDec.2006

    5.Jan.2007

    10.Jan.2007

    15.Jan.2007

    01.Feb.2007

    10.Feb.2007
    Quantity [**] sets [**] sets [**] sets [**] sets [**] sets [**] sets

    Month

    20.Feb.2007

    5.Mar.2007

    20.Mar.2007

    20.Apr.2007

    20.Mai.2007

    20.Jun.2007
    Quantity [**] sets [**] sets [**] sets [**] sets [**] sets [**] sets
    Month

    20.Jul.2007

    20.Aug.2007

    20.Sep.2007

    20.Oct.2007

    19.Nov.2007

    20.Dez.2007
    Quantity [**] sets [**] sets [**] sets [**] sets [**] sets [**] sets

    6. Payments:
    95% of each shipment value will be paid by T/T within 14days after each shipment date against receipt of the invoice;
    5% of each shipment value, as the retention bond, shall be paid by T/T within 14 days after the expiry of the warranty period.

    7. Taxes:
    Note: Any applicable withholding tax according to the Austrian-Chinese-Double-Tax-Treaty will be borne by Windtec in Austria.

    Buyer: Sinovel Wind Co., Ltd
    Address: 19/F, Culture Building, No. 59, Zhongguancun Street, Haidian, Beijing, China
    Post code: 100872
    Fax: (0086) 10-82500072
    Tel: (0086) 10-62515566
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2006.12.15

    Buyer’s agency: Dalian Huarui Heavy Industry International Co., Ltd
    Address: 12/F Huarui Building, No. 169, Bayi Road, Xigang Dist., Dalian, China
    Fax: (0086)411-86852398
    Tel: (0086)411-86852376
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2006.12.15
    Seller: Windtec Systemtechnik Handels GmbH
    Address: Schleppeplatz 5,9020 Klagenfurt
    Fax: (0043)463-44460444
    Tel: (0043)463-444604-11
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 11. Dec. 2006
    Exhibit 10.40
    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    Contract Amendment to the Purchase Contract No.
    06.7IC014
    for the Core Components of the Electrical Control System of
    FL 1500 Wind Turbine
    This contract is made according to the purchase contract for FL1500 WT core components of electrical control system.
    This contract is made and amended according to the delivery quantities for the core components of electrical system signed between Sinovel Wind Co., Ltd and Windtec Windtec Systemtechnik Handels GmbH in 2007.
    Apart from the following amendment, all other terms and conditions remain the same as what are stated in the original contract.
    Quantity: Purchase another [**] sets of core components on the basis of the original purchasing quantity [**] sets, the unit price of each set remains unchanged.
    Delivery: The delivery time of the original [**] sets remains unchanged; the delivery time for additional [**] sets will be made according to the delivery time (FOB) as follows:

    FOB date

    Quantity (Sets)

    Jul 20,2007 [**]
    Aug 20,2007 [**]
    Sep 20,2007 [**]
    Oct 20,2007 [**]
    Nov 20,2007 [**]
    Dez 20,2007 [**]

    Total

    [**]
    Buyer: Sinovel Wind Co., Ltd
    Address: Culture Building No. 59, Zhongguancun Street, Haidian, Beijing, China,
    Postcode: 100872
    Fax: ( 0086 ) 10-82500072 Tel: ( 0086) 10-62515566
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2007.03.06

    Buyer’s Agent: Dalian Huarui Heavy Industry International Co., Ltd
    Address: 12/F Huarui Building, No. 169, Bayi Road, Xigang Dist., Dalian, China
    Fax: (0086)411-86852398 Tel: (0086)411-86852376
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date:

    Seller: Windtec Systemtechnik Handels GmbH
    Address: Schleppeplatz 5, 9020 Klagenfurt, Austria
    Fax: (0043)463-4446044 Tel: (0043) 463-444604-0
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: Feb. 14 th , 2007
    Exhibit 10.41

    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    Contract Amendment to the Purchase Contract No.
    06.7IC015
    for the software of
    FL 1500 Wind Turbine
    This contract is made according to the purchase contract for the software of FL1500 WT.
    This contract is made and amended according to the delivery quantities for the software of electrical system signed between Sinovel Wind Co., Ltd and Windtec Systemtechnik Handels GmbH in 2007.
    Apart from the following amendment, all other terms and conditions remain the same as what are stated in the original contract.
    Quantity: Purchase another [**] sets of software on the basis of the original purchasing quantity [**] sets, the unit price of each set remains unchanged.
    Delivery: The delivery time of the original [**] sets remains unchanged; the delivery time for additional [**] sets will be made according to the delivery time (FOB) as follows:

    FOB date

    Quantity (Sets)

    Jul 20,2007 [**]
    Aug 20,2007 [**]
    Sep 20,2007 [**]
    Oct 20,2007 [**]
    Nov 20,2007 [**]
    Dez 20,2007 [**]

    Total

    [**]
    Buyer: Sinovel Wind Co., Ltd
    Address: Culture Building ,No.59, Zhongguancun Street, Haidian, Beijing, China,
    Postcode: 100872
    Fax: (0086) 10-82500072 Tel: (0086) 10-62515566
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2007.03.06

    Buyer’s Agent: Dalian Huarui Heavy Industry International Co., Ltd
    Address: 12/F Huarui Building, No. 169, Bayi Road, Xigang Dist., Dalian, China
    Fax: (0086)411-86852398 Tel: (0086)411-86852376
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date:

    Seller: Windtec Systemtechnik Handels GmbH
    Address: Schleppeplatz 5, 9020 Klagenfurt, Austria
    Fax: (0043)463-4446044 Tel: (0043)463-444604-0
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: Feb. 14 th , 2007
    Exhibit 10.42
    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. FDCGO7060
    for the Core Components of the Electrical Control
    System of
    SLI500 Wind Turbine
    This Purchase Contract is signed between
    Sinovel Wind Co., Ltd (hereinafter referred to as Buyer)
    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation (hereinafter referred to as Buyer’s agent)
    and
    Windtec™ Systemtechnik Handels GmbH in Austria (hereinafter referred to as Seller) in a friendly way.
    The contract equipment is used for the purchasing contract of the electrical control system for SL 1500 wind turbine which is signed between Buyer and Seller.
    Buyer and Seller agreed as follows:

    1. Definition
    In construing this contract, the following words and expressions shall have the meanings hereby assigned to them unless otherwise specified in the contract:

    1.1 Contract means this contract, including Article 1 to Article 20.

    1.2 Contract price means the price payable to Seller under the contract for the full and proper performance of its contractual obligations, which is not influenced by the price fluctuations.

    1.3 Contract currency means the currency used in the payment under the contract, which is Euro.

    1.4 Buyer’s Bank means Bank of China designated by Buyer or the other banks designated by Seller.

    1.5 Seller’s bank, means

    1.6 Effective date of the contract means the date when the contract enters into force upon fulfillment of the conditions stated in Article 20.

    1.7 Contract equipment means the core components of electrical control system of SL 1500 wind turbine.

    1
    2. Scope of Supply:
    Each set comprises of:

    Item
    no.

    Description
    Code no. Windtec
    ID-No. Quantity
    Remarks
    1 PM1000 Converter 3 Pole +NCC320-V308.2 10100957 1off Including water cooling base-plate, DC bus capacitance, control circuit board

    Alternatively PM3000

    2 PM1000 Converter 6 Pole +NCC320-V308.4 10100956 1off Including water cooling base-plate, DC bus capacitance, control circuit board

    Alternatively PM3000

    3 Crowbar control WTCBA200A +NCC320-B312.7 10100787 1off Crowbar short circuit protection control
    4 Controller WT 98 +NCC310-A240.3,
    +NCC310-A250.3
    10100068 2off
    5 Controller WT97 +TBC100-A120.3 10100002 1off
    6 Analogue input module WTA191 +NCC310-A280.3 10100006 1off
    7 Digital input module WTD192 +NCC310-A260.3 10100005 1off
    8 Panel Display WT502 +NCC310-P241.2,
    +TBC100-P122.2
    10100775 2off One HMI for nacelle control cabinet, another one at tower base as HMI for SCADA system

    2
    9 Servo motor [**]-combivert 90º connector +BM400-M23.2
    +BM410-M33.2,
    +BM420-M43.2
    10101229 3 sets Including safety lock system, motor cable 2 meters
    10 Frequency converter [**] combivert F Multi +HC400-U23.4,
    +HC410-U33.4,
    +HC420-U43.4
    10100098 3off [**]
    11 DC-filter [**]-combivert +HC400-Z21.7,
    +HC410-Z31.7,
    +HC420-Z41.7
    10100101 3off
    12 Static frequency converter F5-Compact +NCC300-U118.6 10100361 1off [**]
    13 Radio interference filter +NCC300-Z118.3 10100362 1off
    14 CAN-operator 10100099 4off For connecting pitch and yaw converter
    15 Interface cable WT90 10100883 2off
    16 Lithiumbattery 07LE90 Included in item 10100068 10100485 1off
    17 Spring-operated brake [**]-Combivert mounted in item 10101229 10100106 3off
    18 Motor cable [**]-Combivert 10100104 3off
    19 Rectifier [**]-Combivert mounted in item 10101229 10100102 3off

    20 Foamed rubber [**]-combivert 10100100 3off
    21 Resolver cable [**]-combivert 10100103 3off

    3
    Remarks : All the core components shall satisfy with the -45°C low temperature requirements.
    Description of PM3000: It is updated on the basis of PM1000; regarding to 1.5MW WT, PM3000 is compatible to PM1000. But the capacity is relatively bigger; The rated current value of LSC is 300A; The rated current value of GSC is 650A; it also has the low voltage ride through function which can be applied to the global grid code (including Europe, North America and Canada etc strictest grid conditions) requirements.

    3. Quantities: Total [**] sets which includes:
    [**] sets with PM1000 and [**] sets with PM3000.
    Windtec will supply [**] sets of PM3000 to Sinovel in March, 2008; at the same time the relevant auxiliary elements for implementing the PM3000 into a PM1000 cabinet shall be supplied to Sinovel free of charge.
    By January, 2008, Windtec shall supply to Sinovel the detailed modification documentation and control cabinet specification for changing the converter cabinet for implementing PM3000 and LVRT.
    In case the test for [**] sets of PM3000 supplied on March, 2008 is failed, Windtec shall supply to Sinovel [**] sets PM1000 and the relevant auxiliary switches to be replaced free of charge; The delivery after July, 2008 for the PM3000 shall be stopped and the later supply for PM3000 shall be replaced by PM1000.

    4. Price:
    The delivery price for Seller is as follows:
    [**] Euro/set regarding the [**] sets of PMI000.
    [**] Euro/set regarding the [**] sets of PM3000 delivered in March, 2008.
    [**] Euro/set regarding the [**] sets of PM3000.
    The total contracting price will be [**] Euros (INCOTERMS 2000, FOB).

    5. Port of shipment:
    PM1000 and PM3000 Converter shall be on shipment from USA (Wisconsin), others from main European seaport or Austria airport.

    4
    6. Delivery-Period:
    The delivery will be made in batches as per preliminary schedule below (FOB):

    Jan
    Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
    PM1000

    [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
    PM3000

    [**] [**] [**] [**] [**] [**] [**]
    Note: Under the precondition that [**] sets core components of the electrical control system shall be purchased in 2008. BUYER will notify Seller three months in advance in writing to revise the plan, in case of any changes to the delivery plan. BUYER shall also notify SELLER six months in advance in writing in case there’s any change for changing the purchased core components from core components with PMI000 to core components with PM3000.

    7. Documentation
    Seller shall provide to the Buyer the certificate and test report of the converter together with the equipment.

    8. Payment Schedule:

    95%
    by L/C at sight.

    Two weeks before each shipment date, an irrevocable Letter of Credit at an amount of 95% of each shipment value shall be issued by a first-class bank. The L/C shall be according to ICP600. If L/C is delayed, the delivery time will be postponed accordingly.
    5%
    Retention Bond:

    The Retention Bond shall be paid upon the expiry of warrantee period [12 months (for the converter, it shall be 18 months) after WT has arrived on the wind farm and finished the commissioning, or 18 months (for the converter it shall be 24 months) after the delivery time of Seller, for whichever is earlier, as the warranty period] within 14 days, under the precondition that the availability of the electrical control system for each WT is at least [**]% during such period. Such percentage will be the average of a respective wind park. The dependency of this 5%- payment from an availability of [**]% will only be on the condition that (i) control cabinets have been manufactured by BUYER under supervision and instruction of Seller, (ii) test and quality of electrical cabinets have been released by Seller, (iii) fault of electrical control system will be diagnosed by Seller, (iv) replacement of components will be executed by BUYER within 24 hours, and (v) Seller will have continuous and full access to the SCADA system of the respective wind turbines.

    BUYER is responsible for item I-V. If any of these items is not fulfilled, the retention bond has to be paid to Seller even in case of an availability of at least [**]% has not been reached.
    Seller must provide the following performance bond to Buyer:
    Within 30 days after effectiveness of the contract, Seller shall through Seller’s bank open an irrevocable performance bond in favor of Buyer, for an amount of 100,000.00 Euro. Validity of the guarantee shall be by the end of June 2009.

    5
    9. The Seller shall supply the following documents as part of L/C paperwork:


    B/L or Air Way Bill


    Commercial Invoice


    Packing List


    Certificate of Origin


    Certificate of quarantine for Packing Wood; Declaration for Packing Wood issued by Seller marking IPPC


    Shipping Advice


    Quality Certificate

    The details refer to the detailed definition in L/C.

    10. Delivery notice
    Seller shall complete the delivery of Contract Equipment in batches and on time as required in article 6. 2 weeks before shipping, Buyer will be informed about the exact date of delivery.

    11. Packing and Marking
    Unless otherwise specified in the contract, the contract equipment shall be packed by Seller in a properly manner. And necessary measures shall be taken to protect the contract equipment from moisture, rain, rust, corrosion, shock and other damages according to their different characteristics so as to withstand numerous handling, loading and unloading as well as long distance sea and inland transportation.
    The following documents shall be enclosed in each package of the Contract Equipment:
    Two (2) copies of detailed packing list;
    Two (2) of quality certificate;
    One (1) copy of technical documentation for relevant Contract Equipment (including the following documentation but not limited to; e.g. the documentation for IGBT module, PLC, control panel, pitch converter, yaw converter and the operational manual for the CAN interface);

    12. Inspection
    Seller shall inspect the Contract Equipment and issue the quality certificates as well as inspection records, all involved expenses shall be for Seller’s account. The quality certificates and inspection records including detail and result of inspection before delivery shall be submitted by Seller to Buyer.

    13. Warranty
    Seller warrants, that the Contract Equipment shall be completely new, advanced in technology and superior in quality, free from any defect in design, material and workmanship, suitable for the use and purpose and in conformity with the technical specification.

    6
    Seller warrants that the technical documentation shall be complete, clear and correct. Warranty period is 12 months (it shall be 18 months for the converter) after WT has arrived on the wind farm and finished the commissioning, or 18 months (it shall be 24 months for the converter) after the delivery time of Seller, for whichever is earlier.
    Warranty means within warranty period in case of any damage or problem of any core components, that the components for replacement will be provided by Seller free of charge, and Seller should ensure timely supply of spare parts. Seller shall correct any such failure either at its option, (i) by repairing any defective or damaged part or parts or the supplied products, or (ii) by making available any necessary repaired or replacement parts. Fault of electrical control system will be diagnosed by Seller and replacement of components will be executed by BUYER, each party at his own expense.

    14. Penalty for delayed delivery
    In case of delayed delivery of any shipment, starting from the second week of delay, every week of delay will be charged [**]% of the price of the delayed set as penalty, only a delay for more than 4 days is counted as one complete week Sum of the above mentioned penalty shall not exceed [**]% of the total contract price. Payment of the delayed delivery penalty shall not relieve Seller from the obligation of continuing delivery of relevant contract equipment.

    15. Claims

    15.1 In case the Contract Equipment supplied by Seller does not meet the specified technical performance during the Warranty Period and Seller doesn’t fulfill his responsibility according to item 13, Buyer has the right to lodge claims against Seller, and Seller shall settle the claims upon the agreement of Buyer in the following way:

    1) Repair or remove the defects and discrepancies of the equipment at Seller’s expense. In case Seller cannot send his personnel to the Job Site, Buyer shall have the right to do the repair or removal of the defects and discrepancies and all the expensed incurred should be borne by Seller.

    2) Replace the defective equipment or technical documents with new one at Seller’s expenses and Seller shall guarantee the quality of the replaced equipment for a recalculated warrantee period. The replaced and /or supplemented equipment shall be delivered DDP to the Job Site.
    In case Seller fails to make proposals for settling the claims according to any and/or all the ways mentioned above within 14 days after notification of the claim raised by Buyer, Buyer shall have the right to recover the claimed amount from Retention Bond (maximum up to 5% of the total contract price).

    15.2 The notice of claim for the defective equipment shall be effective if it is issued not later than thirty (30) days after the expiration of the Warranty Period, but the claim must be detected within the warranty period (proved and reported by an independent expert).

    7
    15.3 In case Seller fails to accept the claim within thirty (30) days after receipt of Buyer’s claim, the claim shall be regarded as not acceptable by Seller.

    16. Force Majeure
    Neither party shall be held responsible for failure or delay to perform all or any party of this Contract due to flood, fire, earthquake, snowstorm, drought, hailstorm, hurricane, or any other events that are beyond the control of the affected party and could not reasonably be expected at the time of conclusion of the Contract or have been avoided or overcome by such party. However, the party who’s performance is affected by the event of Force Majeure shall give a notice to the other party of its occurrence as soon as possible and a certificate or a document of the occurrence of the Force Majeure event issued by the relative authority or a neutral independent third party shall be sent to the other party not later than (14) days after its occurrence. If the event of Force Majeure event continues for more than (180) days, both parties shall negotiate the performance or the termination of this Contract. In the case of such a termination either party shall bear its own costs, further claims for compensation in connection with the termination shall be excluded.

    17. Taxes and Duties

    17.1 All taxes in connection with and in the execution of the Contract levied by the Chinese government on Buyer in accordance with the tax laws of P.R. China shall be borne by Buyer.

    17.2 All taxed levied by the Chinese government on Seller, in connection with and in the execution of the Contract, according to Chinese tax laws and the agreement between the government of the People’s Republic of China and the Government of Seller’s country for the reciprocal avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income shall be borne by Seller.

    17.3 All taxes arising outside of China in connection with and in execution of the Contract shall be borne by Seller.

    18. Arbitration
    All disputes arising from, or in connection with the execution of the Contract, shall be settled through friendly discussion between the two Parties. In case no agreement can be reached throughout, the disputes shall be submitted to Chamber of Commerce in Zurich Switzerland, for Arbitration.
    Not withstanding any reference to arbitration, the two Parties shall continue to perform their respective obligations under the Contact unless the two Parties otherwise agree.

    19. Termination

    19.1 Buyer may, without prejudice to any remedy by Seller for Seller’s following breach of Contract, by written notice of default sent to Seller, terminate the Contract in whole or in part, if Seller fails to deliver any or all of the Contract Equipment within 120 days after the delivery time specified in Article 6.

    19.2 Buyer may at any time terminate the Contract, by giving written notice to Seller in case Seller becomes bankrupt or otherwise insolvent, and such termination does not prejudice or affect any right of action or remedy available to Buyer. The same applies vice versa to Seller.

    8
    20. Effectiveness of the Contract and Miscellaneous

    20.1 The contract becomes valid on signing by the authorized representatives of the two parties of the Contract.

    20.2 The present Contract shall be valid for 3 years from the effective date of the Contract, however the Contract shall become null and void automatically when each party of the Contract has fulfilled its rights and obligations under the Contract.

    20.3 At the expiration of the Contract, any unsettled credit and debt under the Contract shall not be affected by the expiration of the Contract. The debtor shall still effect his obligation of reimbursement to the creditor.

    20.4 The Contract shall be made in English.

    20.5 All amendments, supplements and alternations to the terms and conditions of the Contract shall be made in written form and signed by the authorized representatives of the two Parties.

    20.6 Unless otherwise stipulated in the Contract, the terms and conditions of the Contract shall be interpreted in accordance with INCOTERMS (2000 Edition).

    20.7 No assignment of any right or obligation under the Contract shall be made by either party to a third party without the previous consent of the other party.

    20.8 The communication between the two parties shall be conducted in written form. The fax concerning the important matter shall be confirmed timely by the registered or express mail.
    Buyer: Sinovel Wind Co., Ltd
    Address: Culture Building, No.59, Zhongguancun Street, Haidian, Beijing, China
    Post code: 100872
    Fax: (0086) 10-82500072
    Tel: (0086) 10-62515566
    Authorized representative:
    /s/ [Illegible]
    (Signature)
    Signing date: 2007.12.24
    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation
    Address: 12/F 178,Guangan Men Wai Street, Xuan Wu District, Beijing, China
    Fax: 0086(0)10-63452264
    Tel : 0086(0)10-63452250

    Authorized representative:

    /s/ [Illegible]
    (Signature)
    Signing date: 2007.12.18

    9
    Seller: Windtec™ Systemtechnik Handels GmbH
    Address: Schleppeplatz 5,9020 Klagenfurt
    Fax: (0043)463-4446044
    Tel: (0043)463-444604-10
    Gerald Hehenberger:
    /s/ Gerald Hehenberger
    (Signature)
    Signing date: 2007-11-30

    10
    Exhibit 10.43
    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. FDCG07061
    for the software of SL1500 Wind Turbine
    This Purchase Contract is signed between
    Sinovel Wind Co., Ltd (hereinafter referred to as Buyer)
    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation (hereinafter referred to as Buyer’s agent)
    and
    Windtec Systemtechnik Handels GmbH in Austria (hereinafter referred to as Seller) in a friendly way.
    Buyer and Seller agreed as follows:

    1. Scope of Supply:
    [**] sets of software comprising:


    SL1500 software program for pitch converter, yaw converter, IGBT converter and PLCs; according to Technical Specification of SL1500 Wind Turbine.

    2. Prices:
    The delivery price is CIF Dalian [**] EURO per set. The total contract price is CIF Dalian [**] EURO.

    3. Conditions:
    General Terms of Delivery issued by the Austrian Electrical and Electronics Industry Association, Ed. Jan. 2002

    4. Warranty:
    Warranty period is 12 months after wind turbine has arrived on the wind farm and finished the commissioning, or 18 months after the delivery (shippment-date), whichever is earlier.

    5. Delivery:
    The software of PLC and converter will be sent out by 1 off CD and/or email per batch, as a valid licence for the number of sets indicated therein. The delivery will be made in batches as per preliminary schedule below (shippment date):

    Jan

    Feb

    Mar

    Apr

    May

    Jun

    Jul

    Aug

    Sep

    Oct

    Nov

    Dec
    [**]

    [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
    6. Payments:
    95% of each shipment value will be paid by T/T within 14 days after each shipment date against receipt of the invoice;
    5% of each shipment value, as the retention bond, shall be paid by T/T within 14 days after the expiry of the warranty period.

    7. Taxes:
    Note: Any applicable withholding tax according to the Austrian-Chinese-Double-Tax-Treaty will be borne by Windtec in Austria.

    Buyer: Sinovel Wind Co., Ltd
    Address: 19/F, Culture Building, No. 59, Zhongguancun Street, Haidian, Beijing, China
    Post code: 100872
    Fax: (0086) 10-82500072
    Tel: (0086) 10-62515566
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2007.12.24

    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation
    Address: 12/F 178, Guangan Men Wai Street, Xuan Wu District, Beijing, China
    Fax: 0086(0)10-63452264
    Tel: 0086(0)10-63452250
    Authorized representative:
    /s/ [Illegible]

    (Signature)
    Signing date: 2007.12.19

    Seller: Windtec Systemtechnik Handels GmbH
    Address: Schleppeplatz 5,9020 Klageenfurt
    Fax: (0043)463-44460444
    Tel: (0043)463-444604-11
    Authorized representative:
    /s/ Gerald Heneberger
    / General Manager
    (Signature)
    Signing date: 2007-11-30
    Exhibit 10.44
    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. FDCG08050
    for the Electrical System of SL 3000 Wind Turbine
    This Purchase Contract is signed between:
    Sinovel Wind Co., Ltd (hereinafter referred to as Buyer)
    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation (hereinafter referred to as Buyer’s agent)
    And
    Windtec™ Systemtechnik Handels GmbH in Austria (hereinafter referred to as Seller) in a friendly way.
    The contract equipment is used for the purchasing contract of the electrics for SL 3000 wind turbine which is signed between Buyer and Seller.
    Buyer and Seller agreed as follows:

    1. Definition
    In construing this contract, the following words and expressions shall have the meanings hereby assigned to them unless otherwise specified in the contract.

    1.1 Contact means this contract, including Article 1 to Article 20.

    1.2 Contract price means the price payable to Seller under the contract for the full and proper performance of its contractual obligations, which is not influenced by the price fluctuations.

    1.3 Contract currency means the currency used in the payment under the contract, which is Euro.

    1.4 Buyer’s Bank means Bank of China designated by Buyer for the other banks designated by Seller.

    1.5 Sellers Bank means Bank Austria Creditanstalt AG.

    1.6 Effective date of the contract means the date when the contract enters into force upon fulfillment of the conditions stated in Article 20.

    1.7 Contract equipment means the 50 Hz electrics of SL 3000 wind turbine.

    1
    2. Scope of Supply:
    Each set comprises of:

    Pos.

    Name
    No. Units Total Price
    1 Nacelle Cabinet (incl. Converter) plus Power Supply Cabinet (located in TB) +CC300/+CC310 1 EUR [**]
    +NC300/+NC310 EUR [**]
    +PSC100 EUR [**]
    +CRO300 EUR [**]
    2 IPS (Internal Power Supply) +IPS100 1 EUR [**]
    3 Slip Ring inc,. Overvoltage Protection +SR300/+OVP400 1 EUR [**]
    4 Hub Cabinets inc,. Power Caps Cabinets +HC400/+HC410 3 EUR [**]
    +HC420/+PC400/
    +PC410/+PC420
    5 Servo Pitch Motor +PM400/+PM410/ 3 EUR [**]
    +PM420
    6 Tower Base Cabinet incl. SCADA +TBC100 1 EUR [**]
    7 CMS (Condition Monitoring System) (1) 1 EUR [**]
    – incl. CPU MX213
    – incl. AIC 212 Module
    – incl. Dummy Module LM201
    – incl. Electrical Cabinet MKL4 machined
    TOTAL VALUE EUR [**]

    (1) Sensors are beyond SELLER’s scope of core components supply. The respective specification shall be defined by SELLER but purchased by BUYER separately.

    3. Quantities:
    Total number of goods is 4 sets.

    4. Price
    The total contracting price will be [**] Euros (INCOTERNS 2000, FOB packed).

    5. Port of shipment:
    Goods shall be on shipment from main European seaport or Austria airport.

    6. Delivery Period:
    The delivery will be made in batches as per preliminary schedule below.
    CW 30, 2008 – [**] sets, tested
    CW 35, 2008 – [**] sets, tested

    2
    7. Documentation
    Seller shall provide to the Buyer the certificate and test report of the converter together with the equipment.

    8. Payment Schedule
    95% by L/C at sight.
    Two weeks before each shipment date, an irrevocable Letter of Credit at an amount of 95% of each shipment value shall be issued by a first class bank. The L/C shall be according to ICP600. If L/C is delayed, the delivery time will be postponed accordingly.
    5% Retention Bond:
    The Retention Bond shall be paid upon the expiry of warranty period of 24 months after finished commissioning, or 30 months after the delivery, whichever is earlier – within 14 days, under the precondition that the availability of the electrical control system for each WT is at least [**]% during such period. Such percentage will be the average of a respective wind park. The dependency of this 5%-payment from an availability of [**]% will only be on the condition that (i) control cabinets have been manufactured by BUYER under supervision and instruction of Seller, (ii) test and quality of electrical cabinets have been released by Seller, (iii) fault of electrical control system will be diagnosed by Seller, (iv) replacement of components will be executed by BUYER within 24 hours, and (v) Seller will have continuous and full access to the SCADA system of the respective wind turbines.
    BUYER is responsible for item I-V. If any of these items is not fulfilled, the retention bond has to be paid to Seller even in case of an availability of at least [**]% has not been reached.
    Seller must provide the following performance bond to Buyer:
    Within 30 days after effectiveness of the contract, SELLER shall through SELLER’s bank open an irrevocable performance bond in favour of BUYER, for an amount of EUR 100,000.00. Validity of the guarantee shall be by the end of February 2009.

    9. The Seller shall supply the following documents as part of L/C paperwork:


    B/L or Air Way Bill


    Commercial Invoice


    Packing List


    Certificate of Origin


    Certificate of quarantine for Packing Wood; Declaration for Packing Wood issued by Seller marking IPPC


    Shipping Advice


    Quality Certificate

    The details refer to the detailed definition in L/C.

    3
    10. Delivery notice
    Seller shall complete the delivery of Contract Equipment in batches and on time as required in article 6. Two (2) weeks before shipping, Buyer will be informed about the exact date of delivery.

    11. Packing and Marking
    Unless otherwise specified in the contract, the contract equipment shall be packed by Seller in a properly manner. And necessary measures shall be taken to protect the contract equipment from moisture, rain, rust, corrosion, shock and other damages according to their different characteristics so as to withstand numerous handling, loading and unloading as well as long distance sea and inland transportation.
    The following documents shall be enclosed in each package of the Contract Equipment:


    Two (2) copies of detailed packing list;


    Two (2) of quality certificate;


    One (1) copy of technical documentation for relevant Contract Equipment.

    12. Inspection
    Seller shall inspect the Contract Equipment and issue the quality certificates as well as inspection records. All involved expenses shall be for Seller’s account. The quality certificates and inspection records including detail and result of inspection before delivery shall be submitted by Seller to Buyer.

    13. Warranty
    Seller warrants, that the Contract Equipment shall be completely new, advanced in technology and superior in quality, free from any defect in design, material and workmanship, suitable for the use and purpose and in conformity with the technical specification.
    Seller warrants that the technical documentation shall be complete, clear and correct. Warranty period is 24 months after finished commissioning, or 30 months after the delivery, whichever is earlier.
    Warranty means within warranty period in case of any damage or problem of any core components, that the components for replacement will be provided by Seller free of charge and Seller should ensure timely supply of spare parts. Seller shall correct any such failure either at its option, (i) by repairing any defective or damaged part or parts or the supplied products, or (ii) by making available any necessary repaired or replacement parts. Fault of electrical control system will be diagnosed by Seller and replacement of components will be executed by BUYER, each party at his own expense.

    14. Penalty for delayed delivery
    In case of delayed delivery of any shipment, starting from the second week of delay, every week of delay will be charged [**]% of the price of the delayed set as penalty, only a delay for more than 4 days is counted as one complete week Sum of the above mentioned penalty shall not exceed [**]% of the total contract price. Payment of the delayed delivery penalty shall not relieve Seller from the obligation of continuing delivery of relevant contract equipment.

    4
    15. Claims
    15.1 In case the Contract Equipment supplied by Seller does not meet the specified technical performance during the Warranty Period and Seller doesn’t fulfill his responsibility according to article 13, Buyer has the right to lodge claims against Seller, and Seller shall settle the claims upon the agreement of Buyer in the following way:
    1) Repair or remove the defects and discrepancies of the equipment at Seller’s expense. In case Seller cannot send his personnel to the Job Site, Buyer shall have the right to do the repair or removal of the defects and discrepancies and all the expensed incurred should be borne by Seller.
    2) Replace the defective equipment or technical documents with new one at Seller’s expenses and Seller shall guarantee the quality of the replaced equipment for a recalculated warrantee period. The replaced and/or supplemented equipment shall be delivered DDP to the Job Site.
    In case Seller fails to make proposals for settling the claims according to any and/or all the ways mentioned above within 14 days after notification of the claim raised by Buyer, Buyer shall have the right to recover the claimed amount from Retention Bond (maximum up to 5% of the total contract price).
    15.2 The notice of claim for the defective equipment shall be effective if it is issued not later than thirty (30) days after the expiration of the Warranty Period, but the claim must be detected within the warranty period (proved and reported by an independent expert).
    15.3 In case Seller fails to accept the claim within thirty (30) days after receipt of Buyer’s claim, the claim shall be regarded as not acceptable by Seller.

    16. Force Majeure
    Neither party shall be held responsible for failure or delay to perform all or any party of this contract due to flood, fire, earthquake, snowstorm, drought, hailstorm, hurricane, or any other events that are beyond the control of the affected party and could not reasonably be expected at the time of conclusion of the contract or have been avoided or overcome by such party. However, the party who’s performance is affected by the event of Force Majeure shall give a notice to the other party of its occurrence as soon as possible and a certificate or a document of the occurrence of the Force Majeure event issued by the relative authority or a neutral independent third party shall be sent to the other party not later than (14) days after its occurrence. If the event of Force Majeure event continues for more than (180) days, both parties shall negotiate the performance or the termination of this contract. In the case of such a termination either party shall bear its own costs, further claims for compensation in connection with the termination shall be excluded.

    17. Taxes and Duties
    17.1 All taxes in connection with and in the execution of the contract levied by the Chinese government on Buyer in accordance with the tax laws of P.R. China shall be borne by Buyer.

    5
    17.2 All taxed levied by the Chinese government on Seller, in connection with and in the execution of the contract, according to Chinese tax laws and the agreement between the government of the People’s Republic of China and the Government of Seller’s country for the reciprocal avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income shall be borne by Seller.
    17.3 All taxes arising outside of China in connection with and in execution of the contract shall be borne by Seller.

    18. Arbitration
    All disputes arising from, or in connection with the execution of the contract, shall be settled through friendly discussion between the two parties. In case no agreement can be reached throughout, the disputes shall be submitted to Chamber of Commerce in Zurich Switzerland, for Arbitration.
    Not withstanding any reference to arbitration, the two parties shall continue to perform their respective obligations under the contact unless the two parties otherwise agree.

    19. Termination
    19.1 Buyer may, without prejudice to any remedy by Seller for Seller’s following breach of contract, by written notice of default sent to Seller, terminate the contract in whole or in part, if Seller fails to deliver any or all of the contract Equipment within 120 days after the delivery time specified in Article 6.
    19.2 Buyer may at any time terminate the contract, by giving written notice to Seller in case Seller becomes bankrupt or otherwise insolvent, and such termination does not prejudice or affect any right of action or remedy available to Buyer. The same applies vice versa to Seller.

    20. Effectiveness of the Contract and Miscellaneous

    20.1 The contract becomes valid on signing by the authorized representatives of the two parties of the Contract.

    20.2 The present contract shall be valid for 3 years from the effective date of the contract, however the contract shall become null and void automatically when each party of the contract has fulfilled its rights and obligations under the contract.

    20.3 At the expiration of the Contract, any unsettled credit and debt under the Contract shall not be affected by the expiration of the Contract. The debtor shall still effect his obligation of reimbursement to the creditor.

    20.4 The Contract shall be made in English.

    20.5 All amendments, supplements and alternations to the terms and conditions of the Contract shall be made in written form and signed by the authorized representatives of the two Parties.

    20.6 Unless otherwise stipulated in the Contract, the terms and conditions of the Contract shall be interpreted in accordance with INCOTERMS (2000 Edition).

    20.7 No assignment of any right or obligation under the Contract shall be made by either party to a third party without the previous consent of the other party.

    6
    20.8 The communication between the two parties shall be conducted in written form. The fax concerning the important matter shall be confirmed timely by the registered or express mail.
    Buyer: Sinovel Wind Co., Ltd
    Address: Culture Building, No.59, Zhongguancun Street, Haidian, Beijing, China
    Post code: 100872
    Fx: (0086) 10-82500072
    Ph: (0086) 10-62515566

    Liu Zhengqi:

    /s/ Liu Zhengqi
    (Signature)
    Signing date: March 7 th , 2008
    Buyer’s Agent: China National Machinery & Equipment Import & Export Corporation
    Address: 12/F 178, Guangan Men Wai Street, Xuan Wu District, Beijing, China
    Fx: 0086(0)10-63452264
    Ph: 0086(0)10-63452250

    Authorized representative:

    (Signature)
    Signing date:

    Seller: Windtec™ Systemtechnik Handels GmbH
    Address: Schleppeplatz 5,9020 Klagenfurt, Austria
    Fx: (0043) 463-444604-44
    Ph: (0043) 463-444604-10

    Gerald Hehenberger:
    /s/ Gerald Hehenberger
    (Signature)
    Signing date: March 7 th , 2008

    7
    APPENDIX 1
    Single Line Diagram SL3000

    8
    [Confidential treatment has been requested for the remainder of this exhibit]

    9
    APPENDIX 2
    Main Components in Cabinets for SL3000

    cabinet

    main components

    technical data
    +CC3x0 grid choke [**]
    generator choke [**]
    conntectors circuit breaker more than [**]
    PM3000 converter
    control unit [**] Components for communication
    busbar [**] per phase lenght [**] meters( not included connections)
    high flexible cables for connections
    cabinet see attached dimensions, protected for vibrations
    +PSC100 Stator Circuit Breaker with min Protection [**] circuit breaker [**]
    Rotor Circiut Breaker with min Protection [**] circuit breaker [**]
    NH-fuse for auxiliary power supply disconnector functionality
    busbar [**] per phase lenght [**] meters
    cabinet see attached dimensions, protected for vibrations

    10
    APPENDIX 3
    Dimensions of Cabinets for SL3000
    [Confidential treatment has been requested for this exhibit in its entirety.]

    11
    Exhibit 10.45
    Confidential Materials omitted and filed separately with the
    Securities and Exchange Commission. Asterisks denote omissions.
    The Purchase Contract No. FDCG08051
    for the Core Components of the Electrical Control
    System of SL3000 Wind Turbine
    This Purchase Co

  9. Black Pheonix
    July 9th, 2013 at 17:31 | #9

    Incidentally, the software contract mentioned in the document is not for the firmware codes, I believe. These contracted software sales are sold per license basis to Sinovel.

    Thus, we can see that at the time of the contracting, AMSC was well aware of the need and ways to protect software by licensing in China.

    So why didn’t it also license the firmware code??

    *
    Now compare to the AMSC’s spokesman’s statement: “When you draft and sign contracts, you do not contemplate that the party you’re dealing with will eventually steal your intellectual property,” he said. “You can’t really write that into a contract because I think the other party would take umbrage (offense) with it.”

    Clearly contradicting AMSC’s own conduct, which actually did license at least part of the software for the turbines, but chose NOT to license the firmware code (which implies an unconditional sale of firmware via the hardware installed on).

  10. colin
    July 9th, 2013 at 19:09 | #10

    Who wants to bet this whole affair ends like the BoJiang/Wolfe affair.

    Those clowns in Congress really need to be reigned in. Anytime there is anything related to china, they go in to china bashing mode. Someone needs to call out those a**holes like Schumer and Wolfe.

  11. Black Pheonix
    July 10th, 2013 at 10:33 | #11

    Unfortunately, the Chinese individuals indicted certainly would not voluntarily come to US, just to clear their own names (given the circumstances of a US national lynch mob atmosphere, which would only use that to point to admission of guilt).

    Fortunately, Trial in absentia is not allowed (yet) in US. Hence, this indictment by DOJ is clearly just show-boating, knowing that no rational person would submit themselves to arrest in US under such circumstance, over an indictment that stretches the reaches of US to ridiculous magnitude across the world. (Especially considering that victim in question did not even bother to file a civil lawsuit in US).

    This indictment is also clearly designed to bring political diplomatic pressure on the Chinese Supreme Court.

  12. Black Pheonix
    July 10th, 2013 at 13:04 | #12

    On a related note: I think Sinovel should ask the Chinese police to investigate AMSC’s personnel’s insertion of “time bomb” into the controllers that Sinovel bought and paid for.

    Pretty sure that that constitutes “hacking”.

    Chinese police should charge AMSC’s personnel and seize their assets in China.

  13. Black Pheonix
    July 30th, 2013 at 10:37 | #13

    It’s also interesting to note the stretchy indictment by the US justice department recently, based largely on the Austrian conviction of AMSC’s former employee. That “conviction” came out of an all night interrogation (Austrian style) and a quick 3-hour trial.

    http://www.boston.com/business/articles/2011/09/24/engineer_guilty_in_software_theft/

    Far from the slam-dunk impression US would give in this current indictment, ONE should note that even the Austrian court did not indict Sinovel or its employees. (And Dejan was given only a 1 year sentence with 2 year probation).

    That’s because the evidence is that

    “According to an indictment filed in the public prosecutor’s office in Klagenfurt, Karabasevic had developed “increasingly strong ties’’ with Sinovel as the “result of numerous business trips to China.’’ Karabasevic, the indictment states, was paid at least $20,700 to copy codes downloaded from American Superconductor’s network, and use them to help Sinovel upgrade versions of the US company’s software that he said the Chinese company had already “cracked.’’

    The last part is important, because according to Austrian indictment, (to which Karabasevic only admitted to the extent of the allegations), SINOVEL had already “cracked” AMSC’s software!!! I.E. Sinovel had reverse-engineered the code and modified it. (which Sinovel already had unlimited license to the software as part of the hardware purchase).

    According to the Austrian indictment, Karabasevic only “USED” the code he got from AMSC to help Sinovel “upgrade”/install.

    In other words, Karabasevic never technically “transferred” the code to Sinovel.

    Under Austrian law, it was merely “unauthorized access” that Karabasevic committed, since he used AMSC’s code for unauthorized purposes.

    Karabasevic’s mistake was that he kept his access to AMSC’s network, (as his AMSC supervisor asked him to help).

    If he did not access AMSC’s network after he left AMSC, it would have been much more difficult to convict him of any “unauthorized access”.

    But on the other hand, it is perfectly legal for Sinovel to hire former AMSC employees to help with codes that they already cracked.

  14. Black Pheonix
    July 31st, 2013 at 13:50 | #14

    Full Grand jury indictment against Sinovel here: http://www.eenews.net/assets/2013/07/23/document_daily_01.pdf

    Note: the indictment confirmed much of what I wrote before, that AMSC admitted installing “checksum generator” in the firmware/”programmable logic controller”, without Sinovel’s knowledge/consent, which constituted a malware /”ransomware” designed to disable legitimately purchased hardware of Sinovel.

    AMSC admits that Sinovel “legitimately purchased” software and hardware for the wind turbine controllers. That would make Sinovel a legitimate user of any software previously installed on the hardware that came with the purchase, because AMSC did not limit Sinovel’s use of the PLC code by any software licensing agreement.

    The indictment appears to imply that because AMSC and Sinovel has contractual disputes that somehow Sinovel is not authorized to use/modify the codes in the PLC. That’s actually just hot air. Contractual disputes do not invalidate previously authorized software uses, it’s a separate legal issue. In fact, the attempted enforcement of contract by AMSC implies that the use of the code is authorized.

  15. Black Pheonix
    July 31st, 2013 at 14:05 | #15

    Sinovel stopped accepting AMSC shipments in March 2011, Yet the indictment alleges that the code was stolen and transferred sometime in May 2011, 2 months after the stop shipment.

    Also, the indictment alleges, that the whole time Karabasevic transferred “software” to Sinovel, Karabasevic was still working for AMSC until June 2011. But the indictment does not allege “source code” was transferred to Sinovel, only that Karabasevic “adapted” software for Sinovel.

    As previously mentioned, Sinovel was a legitimate user of the “software”, even if the contract is under dispute.

    Indeed, there is nothing in the indictment alleging that Sinovel actually receive any proprietary “source code” or “trade secret”.

    Karabasevic may have used AMSC’s source code and trade secret to produce “adapted” software for Sinovel.

  16. M Elvey
    August 15th, 2013 at 08:52 | #16

    If Sinovel didn’t pay for the hardware and software that it agreed to buy, the ‘checksum generator’ (what Black Phoenix calls ransomware) was there to force Sinovel to do what it had contractually agreed to do. The argument being made here rests on the assertion that AMSC’s efforts to protect its IP were illegal or violated the contract. I think the contract clause “(v) Seller will have continuous and full access to the SCADA system of the respective wind turbines.” may be pivotal, as it sounds like that wasn’t provided.

  17. Black Pheonix
    August 16th, 2013 at 12:02 | #17

    “If Sinovel didn’t pay for the hardware and software that it agreed to buy, the ‘checksum generator’ (what Black Phoenix calls ransomware) was there to force Sinovel to do what it had contractually agreed to do.”

    That’s why it’s called a “ransomware”, and extortion.

    If Sinovel violated contract, it’s up to a court to determine that, not for AMSC to resort to “self-help” to threaten to shut down Sinovel for payments.

    US laws are quite clear about the illegality of that kind of “self-help”.

  18. Black Pheonix
    November 15th, 2013 at 10:06 | #18

    http://s3.amazonaws.com/cdn.orrick.com/files/Trade-Secret-Blog-Sep25-Sinovel-Motion-to-Quash.pdf

    Attorneys for Sinovel China file motion to quash service. Meaning, US government royally screwed up its case.

    If other previous cases are any indication, all US government has left to go after is the empty Sinovel US subsidiary.

  19. Black Pheonix
    November 19th, 2013 at 12:56 | #19

    AMSC funny business: Losing money and Tripling loan.

    http://ir.amsc.com/releasedetail.cfm?ReleaseID=807968

    The terms of the Amendment with Hercules provide, among other things, AMSC with a total borrowing capacity of $15 million, representing $10 million of incremental borrowing capacity based on the outstanding balance of the existing term loan.

    *

    Given the complexity of the new loan arrangement AMSC decided to pull, while busy losing money, I suspect some kind of stock dump coming up.

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