EXHIBIT 10.5
(English Translation)
POLYCRYSTALLINE SILICON SUPPLY AGREEMENT
Party A: Canadian Solar Inc.
Address: Mississauga, Ontario, Canada
Party B: Luoyang Zhong Gui High-Tech Co., Ltd.
Address: Yanshi City, Luoyang, Henan Province, China
Whereas:
1. Party A intends to invest in and form a silicon solar cell or panel
component company in Luoyang;
2. Party B agrees to supply polycrystalline silicon products to Party A after
the polycrystalline production commences and achieves a certain production
capacity; after friendly discussion, Party A and Party B hereby reach the
following agreement on Party B's supply of polycrystalline silicon to
Party A:
Article 1 Product Supply
Party B agrees to supply polycrystalline silicon products ("Products") to Party
A according to this Agreement in such quantity as determined in accordance with
the relevant provisions of this Agreement.
Party A will carry out the actual procurement through a wholly-owned subsidiary
in China designated by Party A.
Article 2 Quantity of Supply
Year Quantity
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1 2006 No less than 50 tons (to be supplied in equal monthly quantity in principle)
2 2007 No less than 50 tons
3 2008 If Phase II Expansion proceeds as scheduled, no less than 300 tons; if it does not proceed as
scheduled, no less than 50 tons.
4 2009 If Phase II Expansion proceeds as scheduled, no less than 400 tons; if it does not proceed as
scheduled, no less than 50 tons.
5 2010 If Phase II Expansion proceeds as scheduled, no less than 500 tons; if it does not proceed as
scheduled, no less than 100 tons.
Article 3 Supply Undertaking
Party B undertakes to begin delivery to Party A no later than February 2006.
1. On the basis of same quality and same price, Party B will supply the
Products to Party A in priority except it will first satisfy the needs of
such other entities as Luoyang Monocrystalline Silicon Limited Liability
Company for the agreed quantities.
2. Party B agrees that the unqualified bits of material resulting in the
course of the crushing of polycrystalline silicon will be purchased by
Party A.
3. Party B may unconditionally terminate this Agreement if Party A fails to
form a silicon solar cell or panel component company in Luoyang in 2006.
Article 4 Quality Standard and Specifications
Party B shall make deliveries to Party A according to the following quality
standard and specifications:
1. Quality Standard
Acceptor (B): [Angle]1ppb equivalent to P type resistivity: 260 (Omega). cm.
Donor (P): [Angle]1ppb equivalent to N type resistivity: 43 (Omega). cm.
Carbon (C): [Angle]1ppma
2. Range of size and packaging specifications: compliant with National
Standard GB/T12963-1996 The standard Products supplied by Party B to Party
A shall be washing free.
The above quality standard is only the reference standard for the Products to be
supplied by Party B to Party A and does not form a compulsory production
standard for the quality of Party B's products. Party A will accept the
non-washing free products of Party B in other specifications.
Article 5 Principle for Determination of Supply Price and Payment
1. The price of the Products to be supplied by Party B to Party A: subject to
the same quality standard, the price of the Products shall be determined
by Party A and Party B on the basis of the market price in accordance with
Article 6 hereof.
2. When the market price changes, the supply price shall be adjusted by the
Parties on the basis of the changed market price in the first month of the
quarter in which the change occurs; if the change of the market price does
not occur in the first month of the quarter, the adjustment shall be made
by the Parties on the basis of the changed market price in the first month
of the next
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quarter. The price of the Products shall remain unchanged for one quarter
after such price adjustment.
3. Party A agrees to make an advance payment of RMB30 million Yuan for the
product price to Party B in three installments after this Agreement duly
comes into effect:
(1) RMB10 million Yuan within 7 days after this Agreement duly comes
into effect;
(2) Party A will pay RMB10 million Yuan to Party B within 7 days after
the first furnace in Party B's production line has successfully
completed the first heat; Party B shall notify Party A one week in
advance according to its funding need;
(3) Party A will pay RMB10 million Yuan to Party B within one month
after all six furnaces of Party B have successfully completed the
first heat.
4. Party A shall pay 30% of the product price in advance within one week of
receipt of the delivery notice from Party B, and the remaining 70% of the
product price shall be deducted from the advance payment of Party A.
5. Party A agrees to make an advance payment of RMB30 million Yuan each year
into Party B's account as requested by Party B at any time in 2007 and
2008; subject to this condition, the payment of the product price by Party
A to Party B will be discussed separately.
Article 6 Procedure of Supply
1. Party A and Party B shall agree in writing on the material terms of the
supply, such as the price of the Products, quantity, quality,
specifications and delivery schedule, under separate covers prior to each
delivery period.
2. Party A shall issue an order to Party B 30 days prior to a delivery
specifying the delivery quantity, quality, specification, delivery
schedule and current price of the Products.
3. Upon receipt of Party A's order, Party B shall confirm the order in
writing within 5 days. The order finally confirmed by both Parties in
writing shall be the final basis of the supply of the Products for the
delivery period concerned. If any Party proposes to change the delivery
quantity or delivery time after such confirmation, that Party shall notify
the other Party 10 days in advance and obtain the written consent of the
other Party, otherwise it shall be liable for breach of contract.
4. Mode of delivery: Delivery shall be taken by Party A itself according to
the delivery date and quantity finally confirmed by the Parties and, when
Party A takes delivery, the Parties shall confirm the quantity of the
Product and complete the delivery formalities in writing onsite.
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Article 7 Acceptance and Objection
Party A shall carry out acceptance on the very day of receipt of the Product and
shall raise any objection it may have with regard to the quality of the Product
within 30 days of delivery of the Product. If it fails to do so within this
period, it shall be deemed to have no objection.
Article 8 Liability for Breach of Contract
If any Party violates any provision of this Agreement, it shall be liable for
breach of contract accordingly. If the quality of any Product supplied by Party
B does not conform to that agreed to by the Parties, Party A has the right to
return the Products to Party B within 30 days and Party B shall promptly replace
the Products upon receipt from Party A.
The Parties agree that in the following circumstances Party A has the right to
demand the return of the advance payment:
(1) The Parties fail to reach an agreement on the specific price of the
goods for a long period;
(2) Party B suspends production for a long period (over three months),
becomes bankrupt or encounters other material changes;
(3) Party B fails to perform its obligations as required by this
Agreement.
Article 9 Governing Law and Jurisdiction Over Disputes
1. The conclusion, validity, interpretation and performance of and the
resolution of disputes relating to this Agreement shall be governed by the
laws of the mainland area of the People's Republic of China.
2. All disputes arising from or in connection with the performance of this
Agreement shall be resolved by the Parties through amicable consultation;
if such consultation fails to resolve a dispute, either Party may apply to
the Luoyang Arbitration Commission for arbitration by an arbitration
tribunal formed by the arbitration commission in accordance with the
arbitration rules of that arbitration commission in effect at the time of
the application. The arbitration award shall be final and binding on both
Parties.
Article 10 Effectiveness of Agreement
This Agreement shall come into effect after it is signed by the legal
representatives or authorized representatives of the Parties.
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Article 11 Miscellaneous
This Agreement shall be written in quadruplicate with Party A and Party B each
holding two copies (including one original and one duplicate), and all four
copies of the Agreement shall have equal legal effect.
(No text of the main body hereafter)
Party A: Canadian Solar, Inc.
Legal representative or authorized representative: [signature]
September 12, 2005
Party B: Luoyang Zhong Gui High-Tech Limited Liability Company
Legal representative or authorized representative: [signature]
September 11, 2005
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