EXHIBIT 10.90
ENGINEERING, PROCUREMENT AND CONSTRUCTION
CONTRACT
AMONG
TANGSHAN PANDA HEAT AND POWER CO., LTD
AND
TANGSHAN PAN-WESTERN HEAT AND POWER CO., LTD.
AND
HARBIN POWER ENGINEERING COMPANY LIMITED
LUANNAN COUNTY, HEBEI PROVINCE
APRIL 24, 1996
TABLE OF CONTENTS
ARTICLE 1 DEFINTIONS 1
ARTICLE 2 RELATIONSHIP OF OWNER, CONTRACTOR, SUBCONTRACTORS
AND VENDORS 9
2.1 STATUS OF CONTRACTOR 9
2.1 STATUS OF CONTRACTOR 9
2.2 SUBCONTRACTORS AND VENDORS 9
2.3 ASSIGNMENT AND ASSUMPTION OF DESIGN CONTRACT 9
ARTICLE 3 CONTRACTOR'S RESPONSIBILITIES 10
3.1 FACILITY DESIGN AND CONSTRUCTION 10
3.2 THE SUBCONTRACTORS AND VENDORS 10
3.3 EMPLOYMENT OF LICENSED PERSONNEL; LOCAL PERSONNEL 10
3.4 CONTROL OF THE WORK 11
3.5 PAYMENT OF COSTS 11
3.6 CLEAN-UP 11
3.7 SAFETY 11
3.8 ACCESS 11
3.9 EMERGENCIES 11
3.10 OBTAINING APPLICABLE PERMISSIONS 11
3.11 LAW & REGULATIONS 12
3.12 STATUS REPORTS 12
3.13 TAX ACCOUNTING 12
3.14 OWNER'S, UTILITY AND LENDER'S RIGHT TO BE
PRESENT DURING TESTS 12
3.15 TAXES 12
3.16 CONTRACTOR'S REPRESENTATIVE 12
3.17 AS-BUILT DRAWINGS AND MANUALS 12
3.18 OWNERSHIP OF DRAWING AND MANUALS 13
3.19 SPARE PARTS 13
3.20 CONTRACTOR'S ENVIRONMENTAL OBLIGATIONS 13
3.21 PERFORMANCE TESTS 14
3.22 OPERATING AND MAINTENANCE MANUALS 14
3.23 TRAINING OF OWNER'S PERSONNEL 14
3.24 CLAIMS AND LIENS FOR LABOR AND MATERIALS 15
3.25 ELECTRICAL AND THERMAL ENERGY DISTRIBUTION FACILITIES 15
3.26 CONSTRUCTION POWER REQUIREMENTS 15
3.27 INSURANCE 15
3.28 TEMPORARY OFFICE QUARTERS 15
3.29 PARENT GUARANTY 15
3.30 BANK GUARANTEE FOR LIQUIDATED DAMAGES 16
3.31 ELECTRICAL INTERCONNECT FACILITIES 16
3.32 OPPORTUNITIES FOR OTHER CONTRACTORS 16
3.33 TRANSPORTATION AND STORAGE OF MATERIALS AND EQUIPMENT 16
3.34 SITE CONDITIONS 17
ARTICLE 4 OWNER'S RESPONSIBILITIES 17
4.1 PAYMENT 17
4.2 ACCESS TO FACILITY SITE 18
4.3 LAND FOR TEMPORARY WORKS 18
4.4 OWNER'S REPRESENTATIVE 18
4.5 DISPOSAL OF WASTE FROM OPERATION OF PLANT 18
4.6 CHANGE IN LAW OR APPLICABLE PERMITS 18
4.7 BOILER FUEL SUPPLY 18
4.8 INSURANCE 18
4.9 TAXES 19
ARTICLE 5 CONSTRUCTION SCHEDULE AND AVAILABLE FUNDS 20
5.1 COMMENCEMENT OF WORK 20
5.2 CONSTRUCTION SCHEDULE 20
5.3 AVAILABLE FUNDS 21
ARTICLE 6 CHANGE ORDERS 22
6.1 REQUEST FOR CHANGE ORDERS 22
6.2 FORCE MAJEURE EVENT 24
6.3 DISPUTES 24
ARTICLE 7 CONTRACT PRICE; PAYMENTS TO CONTRACTOR 25
7.1 CONTRACT PRICE 25
7.2 DOWN PAYMENT 25
7.3 PAYMENT FOR WORK 25
7.4 PAYMENT FOR RETAINAGE 26
7.5 FINANCING OF PLANT 26
7.6 CONTRACTOR'S PAYMENT ACCOUNT 27
7.7 LENDER'S REQUIREMENTS AND LIEN WAIVERS 27
ARTICLE 8 TITLE AND RISK OF LOSS 28
8.1 CLEAR TITLE 28
8.2 RISK OF LOSS 28
ARTICLE 9 INSURANCE 29
9.1 CONTRACTOR'S INSURANCE 29
9.2 GENERAL TERMS 29
9.3 OTHER SPECIFIC TERMS 29
9.4 PROPERTY INSURANCE LOSS ADJUSTMENT 29
9.5 WAIVER OF SUBROGATION 29
9.6 NONWAIVER 29
9.7 RIGHT TO INSURE 30
9.8 NO LIABILITY LIMIT 30
ARTICLE 10 PERFORMANCE TESTS AND FINAL ACCEPTANCE 30
10.1 NOTICE 30
10.2 PERFORMANCE TESTS 30
10.3 PERFORMANCE TEST PROCEDURES 30
10.4 FAILED PERFORMANCE TESTS 30
10.5 NOTICE OF COMMERCIAL OPERATION OF UNIT 1 31
10.6 NOTICE OF COMMERCIAL OPERATION OF THE PLANT 31
10.7 OWNER'S ACCEPTANCE OF COMMERCIAL OPERATION 31
10.8 NOTICE OF FINAL ACCEPTANCE 31
ARTICLE 11 WARRANTIES AND GUARANTEES 32
11.1 MATERIALS AND WORKMANSHIP 32
11.2 ENGINEERING AND DESIGN 33
11.3 VENDORS AND SUBCONTRACTORS 33
11.4 ASSIGNMENT OF WARRANTIES 33
11.5 LIMITATIONS 33
11.6 REMEDIES OF OWNER FOR BREACH OF WARRANTIES 35
ARTICLE 12 COMPLETION GUARANTEE 35
12.1 GUARANTEE OF TIMELY COMMERCIAL OPERATION 35
12.2 DELAY IN COMMERCIAL OPERATION 35
12.3 POSSESSION OF FACILITY FOLLOWING COMMERCIAL OPERATION 36
12.4 PAYMENT OF LIQUIDATED DAMAGES 36
12.5 BONUS FOR EARLY COMPLETION 36
ARTICLE 13 LIQUIDATED DAMAGES FOR FAILURE TO ACHIEVE
GUARANTEED PERFORMANCE 36
13.1 GUARANTEE 36
13.2 LIQUIDATED DAMAGES 37
13.3 NET DEPENDABLE CAPACITY BONUS 38
13.4 NET HEAT RATE BONUS 38
13.5 PAYMENT OF LIQUIDATED DAMAGES 38
ARTICLE 14 CONTRACTOR'S REPRESENTATIONS AND WARRANTIES 38
14.1 REPRESENTATIONS AND WARRANTIES 38
ARTICLE 15 DEFAULT AND TERMINATION 39
15.1 DEFAULT BY CONTRACTOR 39
15.2 SUSPENSION OR TERMINATION FOR CONVENIENCE 42
15.3 TERMINATION BY CONTRACTOR 43
ARTICLE 16 INDEMNITIES 44
16.1 CONTRACTOR'S INDEMNIFICATION 44
16.2 EMPLOYEE CLAIMS 44
16.3 OWNER'S INDEMNIFICATION 44
16.4 CONTRACTOR TAXES 44
16.5 PROPRIETARY RIGHTS 44
16.6 NOTICE OF CLAIM 45
16.7 SURVIVAL OF CLAUSE 45
ARTICLE 17 DISPUTES 46
17.1 ARBITRATION OF DISPUTES 46
17.2 LANGUAGE 46
17.3 ARBITRATOR(S) 46
17.4 NO IMMUNITY 46
17.5 CONTINUATION OF WORK DURING DISPUTE 46
ARTICLE 18 LIMITATION OF LIABITLIY 47
18.1 CONSEQUENTIAL DAMAGES 47
18.2 AGGREGATE LIABILITY OF CONTRACTOR 47
ARTICLE 19 MISCELLANEOUS PROVISIONS 47
19.1 ENTIRE CONTRACT 47
19.2 AMENDMENTS 47
19.3 JOINT EFFORT 47
19.4 CAPTIONS 47
19.5 NOTICE 47
19.6 SEVERABILITY 48
19.7 ASSIGNMENT BY OWNER AND CONTRACTOR 48
19.8 NO WAIVER 49
19.9 GOVERNING LAW 49
19.10 GOVERNING LANGUAGE 49
19.11 EXHIBITS 49
19.12 CONFIDENTIAL INFORMATION 49
19.13 OBLIGATIONS 49
19.14 TIME OF THE ESSENCE 50
19.15 OWNER POWER OF ATTORNEY 50
EXHIBITS
Exhibit Description Page
A Construction Schedule A-1
B Scope of Work B-1
C Design Contract C-1
D Form of Final Acceptance
Certificate D-1
E Interconnection Construction
Agreement E-1
F-1 Form of Progress Payment
Certificate F-1
F-2 Progress Payment Schedule F-2
G Form of Request for Payment G-1
H Pricing Summary H-1
I-1 Form of Bank Guarantee for
Liquidated Damages I-1
I-2 Form of Letter of Credit for
Retainage I-2
I-3 Form of Parent Guaranty I-3
J Form of Certificate for
Waiver of Liens J-1
K Time, Material and Equipment
Rate Schedule K-1
ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
(hereinafter this "Contract") is made and entered into as of
April 24, 1996, by and between HARBIN POWER ENGINEERING COMPANY
LIMITED, a Chinese Company (hereinafter the "Contractor"), and
TANGSHAN PANDA HEAT AND POWER CO., LTD., a Chinese joint venture
company (hereinafter "Panda") and TANGSHAN PAN-WESTERN HEAT AND
POWER CO., LTD., a Chinese joint venture company (hereinafter
"Pan-Western"). Panda and Pan-Western are hereinafter
collectively referred to as "Owner".
WITNESSETH
WHEREAS, Owner wishes to construct, own, and operate two
nominal 50 MW (nameplate) coal-fired electric and thermal energy
cogeneration power plants (as being further defined below, a
"Unit" and collectively, the "Plant"), having the Guaranteed Net
Dependable Capacity (as defined below) of 102,000 kW as corrected
to the Summer Design Conditions (as defined below) on an
approximately 233,100 square meter site in Luannan County, Hebei
Province for the purpose of supplying electric power to North
China Power Group Company (the "Utility") and Thermal Energy to
various industrial users and a district heating plant system
(collectively, the "Thermal Users").
WHEREAS, Owner desires Contractor to perform, and Contractor
has the ability and is willing to perform, design, engineering,
equipment and material procurement, project management,
construction, surveying, start-up and testing services and
operations and maintenance training to make the Facility fully
operational on a lump sum fixed price of U.S. $63,625,832,
turnkey basis, all as hereinafter set forth;
NOW THEREFORE, the parties, intending to be legally bound
hereby, agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the meanings specified in
this Article 1 when capitalized and used in this Contract. The
meanings specified are applicable to both the singular and
plural.
"Acceptable LC Issuer" shall have the meaning described in
Article 3.30 hereof.
"Applicable Laws" means any code, statute, law regulation,
permission (other than Applicable Permissions), ordinance, rule,
judgment, order, decree, directive, guideline or policy (to the
extent mandatory) or any similar form of decision or
determination by, or any interpretation or administration of, any
of the foregoing by any central, provincial or local government,
any political subdivision or any governmental, quasi-
governmental, judicial, public or statutory instrumentality,
administrative agency, authority, body or other entity with
jurisdiction over the Facility, the Facility Site, the
performance of the Work or other services to be performed under
this Contract.
"Applicable Permissions" means all permissions,
certifications, authorizations, approvals and licenses for the
Facility both obtained and applied for, including any variances
or waivers in effect from time to time necessary or desirable to
perform the Work. The contents of the application shall be the
"permission" for all purposes under this Contract until the
permission is obtained in writing from the proper authorities.
"As-Built Drawings" shall mean any Contractor or any
Subcontractor or Vendor engineering drawing, illustration,
diagram, schedule, as revised to reflect the final installation
of any individual Plant equipment or system or the plant as a
whole.
"Business Day(s)" shall mean any calendar Day(s) other than
Saturday or Sunday or any other calendar Day on which central
government offices are authorized or required to close in
Beijing, Peoples' Republic of China.
"Change" or "Changes" shall have the meaning described in
Article 6 hereof.
"Change in Law" shall mean any amendment, modification,
deletion, addition or change in or to any Applicable Law or
Applicable Permission that occurs and takes effect after the
Effective Date that Contractor can demonstrate will materially
and adversely affect Contractor's performance, the Scope of Work,
the Construction Schedule or the Contract Price.
"Change Order" shall mean a written order to Contractor
pursuant to Article 6 hereof, signed by Contractor and approved
by Owner and Lender (to the extent required by Lender)
authorizing an addition, deletion or revision to this Contract.
"Commercial Operation" means that all of the following have
occurred: (i) Mechanical Completion has been achieved; (ii) the
Plant or Unit has successfully completed system checkout, start-
up, and trial operation in accordance with the provisions of the
Scope of Work; (iii) the Plant or Unit is capable of operating
safely in accordance with the requirements of this Contract; (iv)
all Performance Tests have been successfully completed or with
respect to the Plant, Contractor has paid or become required to
pay such Liquidated Damages, under Article 10.4 hereof and
applicable Liquidated Damages under Article 13 hereof, to Owner
to the extent permitted in lieu of the successful completion of
certain Performance Tests; and (v) the Plant has met the 100 ▇▇
▇▇▇▇▇ output (or 50 ▇▇ ▇▇▇▇▇ output for the individual Unit)
testing requirements of the Power Purchase Agreement during the
Plant Acceptance Test
"Commercial Operation Date" shall mean the date on which
Commercial Operation actually occurs at the Plant, as determined
pursuant to Articles 10.5 and 10.6 hereof.
"Construction Drawings" shall mean the final Drawings
prepared by the Institute, as defined in the Design Contract.
"Construction Loan Agreement" shall have the meaning defined
in Article 7.7.1 hereof.
"Construction Schedule" shall mean the projected schedule
for the performance of the Work attached hereto as Exhibit A and
incorporated herein (as revised from time to time pursuant to
Article 5.2 hereof).
"Contract" shall mean this Engineering, Procurement and
Construction Contract (including all Exhibits attached hereto),
as it may be amended and supplemented in writing by mutual
agreement of the parties from time to time.
"Contract Price" shall have the meaning described in Article
7.1 hereof.
"Corporate Guaranty" shall have the meaning described in
Article 3.29 hereof.
"Critical Date(s)" shall have the meaning described in
Article 5.2.3 hereof.
"Day" shall mean a calendar day and shall include Saturdays,
Sundays and holidays.
"Design Conditions" shall mean, a) with respect to the
summer Performance of the Plant, ambient conditions of 38.6
degrees C and 65% relative humidity, and industrial steam flow of
44 tonnes/hour at the Plant fence line and with a delivery
pressure of 0.90 MPa; and b) with respect to the winter
Performance of the Plant, ambient conditions of minus 10 degrees
C and 56% relative humidity, and industrial steam flow to Thermal
Users of 50 tonnes/hour at the Plant fence line and with a
delivery pressure of 0.90 Mpa and c)with respect to both summer
and winter with 36 tonnes/hour of district heating steam plus in-
Plant steam uses, both at a pressure of 0.25 MPa. For either
condition, there shall be 0% condensate return for the industrial
steam.
"Design Contract" shall mean the Engineering and Design
Contract, dated December 21, 1995, between the Institute and the
Owner, as the same may from time to time be amended or
supplemented from time to time, in the form attached hereto as
Exhibit C.
"Design Criteria" shall mean those criteria described in the
Design Contract.
"Design Documents" shall mean specifications, calculations,
plans, Drawings, and other documents which determine and describe
the scope, quantity, and relationship of various components of
the Facility (as updated to reflect all changes) and final plans
created by Contractor, its Vendors or Subcontractors.
"Detailed Design" shall mean all engineering and analysis
required for the preparation of Construction Drawings base on
final, detailed calculations and vendor information.
"Dollars" or "$" shall mean a payment or amount in currency
of the United States of America.
"Drawings" shall mean all drawings, diagrams, illustrations,
schedules and performance charts, including data in the form of
electronic media, prepared by Contractor or any Subcontractor or
vendor in accordance with this Contract which illustrates any
portion of the Work, either in components or as completed.
"Effective Date" shall mean the date on which this Contract
shall have been fully executed by Contractor or Owner.
"Electrical Interconnect Facilities" shall mean the 100 kV
transmission facilities owned by the Grid, required to
interconnect the Plant with the Grid and necessary to transmit
electric energy to their users.
"Equipment" shall mean all of the materials, apparatus,
structures, tools, supplies and other goods provided by
Contractor and each Subcontractor and Vendor to complete the
Work.
"Facility Site" shall mean that real property leased or
otherwise controlled by Owner and on which the Facility is to be
constructed and operated as described in the Scope of Work in
Exhibit B hereto.
"Facility" shall mean the Plant and auxiliary buildings,
water ▇▇▇▇▇, switchyard and dead end structure(s) and offsite
Equipment and buildings, sewage, pipeline and ash disposal
facilities as more fully described in the Scope of Work.
"Feasibility Study" shall mean the "Feasibility Study on
Luannan Power Plant of Tangshan Panda Heat and Power Co., Ltd."
written in Hebei in October, 1994, which is included in and made
a part of the Scope of Work.
"Final Acceptance" shall mean that all of the following have
occurred: (i) the Plant Commercial Operation Date has been
achieved; (ii) all Punch List Items have been completed; and
(iii) the Final Acceptance Certificate has been delivered to
Owner by Contractor and accepted by Owner in accordance with the
requirements of Article 10.8 hereof.
"Final Acceptance Certificate" shall mean a duly completed
and executed certificate, substantially in the form of Exhibit D
attached hereto.
"Final Acceptance Date" shall mean the date on which Final
Acceptance actually occurs.
"Financial Closing" shall mean the completion of all
agreements and satisfaction of all conditions necessary for the
Lender(s) to advance all funds which Owner anticipates will be
necessary to perform the Work.
"Force Majeure Event(s)"shall mean one or more events,
conditions or circumstances beyond the reasonable control and
without the fault or negligence of the party claiming force
majeure, that, despite all reasonable efforts of the party
claiming force majeure to prevent it, causes a material and
adverse delay or disruption in the performance of any obligation
imposed under this Contract. Force Majeure Event(s) shall
include natural disasters, fires, earthquakes, lightning, floods,
cyclones, typhoons, tornadoes, war, civil disturbances, riots,
the action of a court or action of any authority that is binding
upon the parties hereto and has been opposed by all reasonable
means by the party relying thereon as justification for not
performing an obligation or complying with any condition required
of such party under this Contract. Force Majeure Event does not
include: (i) the failure or inability to make payments when due
or (ii) third party strikes, lockouts or other third party labor
disputes (for this Article, "third party" means vendors and
Subcontractors).
"Grid" shall mean the Beijing-Tianjin-Tangshan Regional
Power Network which is owned and operated by the North China
Power Group Company.
"Guaranteed Commercial Operation Date" shall mean September
1, 1998, with respect to the Plant, provided that the Notice to
Proceed is on or before May 1, 1996. If Notice to Proceed is
later than May 1, 1996, there shall be a day for day extension to
the Guaranteed Commercial Operation Date. Contractor will allow
up to ninety (90) days extension of the Guaranteed Commercial
Operation Date with no change in the Contract Price. In
addition, the Guaranteed Commercial Operation Date is subject to
an extension for Change Orders but in no event shall be later
than July 1, 1999.
"Guaranteed Heat Rate" shall have the meaning described in
Article 13.1 hereto.
"Guaranteed Maximum Plant Emission Levels" shall mean the
emission levels and rates described in Article 13.1 hereto.
"Guaranteed Net Dependable Capacity" shall mean, with
respect to the Plant, the Net Dependable Capacity of 102,000 kW
as corrected to Design Conditions.
"Guaranteed Noise Levels" shall have the meaning described
in Article 13.1 hereof.
"Guaranteed Performance Levels" shall mean the applicable
performance test criteria and the levels described in Article 13
hereof.
"Hazardous Materials" shall mean any substance deemed as
toxic, contaminated or hazardous under any Applicable Law or
Applicable Permission
"Institute" shall mean Hebei Electric Power Survey and
Design Institute, a Chinese company, and the entity responsible
for the design of the Facility pursuant to the Design Contract.
"ICA" shall mean International Court of Arbitration (or its
successor).
"ICC" shall mean the International Chamber of Commerce (or
its successor).
"Interconnection Construction Agreement" shall mean the
Construction Agreement, dated February 10, 1996, between Utility
and Owner, relating to the financing, construction, ownership,
operation and maintenance of the Electrical Interconnect
Facilities, attached to this Contract as Exhibit E, as may be
amended or supplemented from time to time.
"Lender(s)" shall mean each and every bank, bond issuer,
trustee or other financial institution or entity providing
construction, leveraged lease or permanent financing for the
Facility, whether directly or indirectly.
"Letter of Credit" shall have the meanings described in
Articles 3.30 and 7.4 hereof.
"Lien" shall mean a lien, security interest, mortgage,
hypothecation, encumbrance or restriction on title or property
interest.
"Mechanical Completion" shall mean that, with respect to the
Facility, except for items of Work that would not affect the safe
performance or operation of the Plant, (i) each Unit has been
installed with the required connections and controls to produce
electrical power and thermal energy; (ii) all other Equipment has
been installed, checked for alignment, lubrication, and rotation;
(iii) all remaining mechanical and electrical systems, have been
checked out and are ready for operation without voiding or
impairing any warranties; (iv) all electrical continuity and
ground fault tests and all mechanical tests and calibrations have
been completed; (v) all instrumentation has been loop checked and
calibrated; (vi) each Unit has been flushed and cleaned out as
necessary and can be operated in a safe manner in accordance with
the Power Purchase Agreement, Applicable laws and Applicable
Permissions; and (vii) systems have been released and accepted
for start-up and testing of components and systems in accordance
with procedures to be agreed to between Contractor and Owner.
"Net Dependable Capacity" shall mean the electrical power
output of the Plant of 102,000 in kilowatts (kW) (51,000
kilowatts (kW) per Unit), measured at the output (high voltage
side) of the main transformer under all conditions.
"Notice to Proceed" shall mean a written notice from Owner
to Contractor directing Contractor to commence the performance of
the Work.
"O&M Personnel" shall mean those operating and maintenance
personnel who shall be experienced in operating and maintaining
facilities similar to the Facility.
"Operating Costs" shall mean all expenses incurred in
connection with the operation of the Facility.
"Operator" shall mean the entity which operates and
maintains the Facility.
"Parent Company" shall have the meaning described in Article
3.29 hereof.
"Performance Tests" shall mean the tests set forth in
Article 3.0 of the Scope of Work.
"Performance Tests Report" shall mean Contractor's written
report describing the results of the Performance Tests.
"Plant" shall mean collectively both ▇▇▇▇ ▇ and Unit 2.
"Plant Acceptance Test" shall mean the Seventy-Two (72) Hour
Performance Test set forth in Article 3.0 of the Scope of Work.
"Power Purchase Agreement" shall mean, collectively, the
General Interconnection Agreement and the Electric Energy
Purchase and Sales Agreement, each dated September 22, 1995,
between the Utility and Owner, the Supplemental Agreement and all
Sub-Agreements referred to in the General Interconnection
Agreement.
"Preliminary Design" shall mean the preliminary flow
diagrams, general arrangement drawings, and Equipment sizing as
described in the Design Contract.
"Progress Payment" shall mean an installment of the Contract
Price to be paid by Owner in accordance with Article 7.
"Progress Payment Certificate" shall mean that certificate,
substantially in the form of Exhibit F-1 attached hereto, which
is submitted by Contractor to Owner prior to the making of a
Progress Payment by Owners.
"Progress Payment Schedule" shall mean the schedule of
Progress Payments which is substantially in the form of Exhibit F-
2 attached hereto.
"Project Funding" means the advance of funds by Lender on,
and/or from time to time on or after, the Financial Closing, to
pay for the Contract Price.
"Project Procedures Manual" shall mean the document
developed by Contractor and approved by Owner, in English and
Chinese, that describes the administrative procedures to be used
for Contractor and Owner interface during the performance of the
Work.
"Punch List Item(s)" means only those items of unfinished
Work that do not affect the safety, reliability, performance or
operation of the Facility under all Design Conditions.
"Qualified Insurer" means an insurance company or companies
licensed to provide insurance in the People's Republic of China
(PRC) reasonably acceptable to Owner and, if required, Lender to
provide insurance coverage under this Contract.
"Reference Rate" shall mean the rate of interest equal to
12% per annum.
"Request(s) for Payment" shall mean the monthly written
requests from Contractor to Owner for payment, which requests
shall be in substantially the form of Exhibit G attached hereto.
"Retainage" shall mean the amount which is equal to ten
percent (10%) withheld by the Owner from (1) the Down Payment
which is as defined in Article 7.2, and (2) each Progress Payment
according to Article 7.3.
"Rules of Conciliation" shall mean the rules of conciliation
of the ICC, as construed and in effect from time to time.
"Scope of Work" shall mean the aggregate of all Work
required to complete the Facility, included in the Scope of Work
and all attached Addendums described in Exhibit B and as
otherwise expressly set forth in this Contract.
"Subcontractor" shall mean any contractor or constructor who
performs construction services on the Facility Site for
Contractor or any sub-contractor thereto pursuant to Article 2.2
hereof, including Hebei (pursuant to the Design Contract and this
Contract).
"Substantial Subcontractor" shall have the meaning described
in Article 7.7.4 of this Contract.
"Substantial Vendor" shall have the meaning described in
Article 7.7.4 of this Contract.
"Thermal Energy Distribution Facilities" shall mean the
pipeline, valves, regulations, instrumentation provided by third
parties necessary to deliver steam to the Thermal Users at Design
Conditions.
"Thermal Energy Output" or "Thermal Energy" shall mean the
export of saturated steam delivered to the Thermal Users.
"Thermal Users" shall have the meaning described in the
recitals to this Contract.
"Unit" means a Unit described in the first recital to this
Contract, which is one 50 MW nameplate generation train
consisting of one boiler, main and auxiliary transformer, steam
turbine and electric generator, coal and ash handling systems and
the necessary accessories dedicated to operate this Equipment as
part of the Plant for the export of electrical thermal energy, as
more fully described in the Scope of Work.
"Utility" shall have the meaning as described in the first
recital to this Contract.
"VAT" shall mean any Value Added Tax (or similar or
successor tax).
"Vendor" shall mean any supplier, manufacturer or vendor of
Equipment or services to Contractor or any Subcontractor thereof
pursuant to Article 2.2 hereof.
"Work" shall mean all obligations, duties and
responsibilities to be performed by Contractor and its
Subcontractors under this Contract including, but not limited to,
the furnishing of all Equipment, tools, labor, supplies, material
services and the provision of all design, engineering,
procurement, support, construction, start-up, performance testing
and other services pursuant to this Contract, including the Scope
of Work.
ARTICLE 2
RELATIONSHIP OF OWNER, CONTRACTOR,
SUBCONTRACTORS AND VENDORS
2.1 Status of Contractor. Contractor shall be an
independent contractor with respect to any and all Work to be
performed under this Contractor.
2.2 Subcontractors and Vendors. Contractor shall have the
right to have any of the Work accomplished by a Subcontractor or
a Vendor. Nothing in any such subcontracts and purchase orders
shall in any way diminish or relieve Contractor from any duties
and obligations under this Contract; and all such subcontracts
and purchase orders must provide that, the rights thereunder are
assignable to Owner and Lender at any time. No Subcontractor or
Vendor is intended to be or shall be deemed a third-party
beneficiary of this Contract. Owner shall have the right to
reasonable consent to the selection of the Substantial Vendors
and Substantial Subcontractors, which consent shall not be
unreasonably withheld or delayed. Contractor shall provide
lists, describing the Work to be performed by all Substantial
Contractors, until all Substantial Contractors and Substantial
Vendors have been identified and approved by Owner.
2.3 Assignment and Assumption of Design Contract. Pursuant
to Article 5.0 of the Design Contract, Owner hereby assigns all
of its rights and benefits in, and delegates all of its
obligations arising under, the Design Contract to Contractor, and
Contractor hereby accepts such rights and benefits and assumes
all such obligations from Owner, including the obligation to make
payments to Institute in accordance with the Design Contract
arising before or after the date of this Contract.
Notwithstanding the foregoing sentence, Owner reserves the right
under Article 4.1 of the Design Contract to require an
arbitration between the Institute and the Contractor. All
amendments to or supplements of the Design Contract shall first
be approved by Owner in writing. Contractor acknowledges that,
even though Owner originally entered into the Design Contract
with Institute, Institute is now and shall continue to be a
Substantial Subcontractor and shall have no further rights
against Owner. Contractor indemnifies Owner from and against any
claim, action, proceeding, liability or expense (including legal
fees and expenses) arising or in any way relating to Institute or
the Design Contract. Contractor's indemnification shall survive
the termination of this Contract.
ARTICLE 3
CONTRACTOR'S RESPONSIBILITIES
3.1 Facility Design and Construction. Contractor shall
furnish, on a turnkey basis, all products and services required
to perform the Work and turn over to Owner the Facility in a
manner which shall: (a) enable the Plant to meet the Performance
Tests by the Plant's Guaranteed Commercial Operation Date; (b) be
in conformance with the Scope of Work, the Addendums to the Scope
of Work, the Design Contract attached hereto as Exhibit C, and
(c) all Applicable Permissions and Applicable Laws.
3.2 The Subcontractors and Vendors. Contractor shall be
solely responsible for the engagement and management of the
Subcontractors and Vendors in the performance of the Work.
3.3 Employment of Licensed Personnel; Local Personnel
3.3.1 Contractor agrees, where required by Applicable
Law, to employ only licensed personnel in good standing with
their respective trades and licensing authorities to perform
professional services in the performance of Work.
3.3.2 The Contractor is expected to employ unskilled staff
and, to the extent practicable and reasonable, skilled labor from
within Luannan County. For the purposes of these requirements,
unskilled labor shall mean persons performing Work with common
hand tools and skilled labor shall include equipment operators
and persons having knowledge to lay out and supervise Work of a
complex character.
(a) The Contractor shall increase or decrease wages and
salaries for his local Employees in accordance with any changes in the
laws and regulations of China and the provincial government which
might occur during the validity period of this Contract Price.
(b) The Contractor shall not recruit his staff and labor
from any persons in the service of the Owner or the Owner's
representatives.
(c) The Contractor shall be responsible for the return
to the place of recruitment or to their domicile of all such persons as
he recruited and or to their domicile of all such persons as he
recruited and employed for the purposes of or in connection with
this Contract and shall maintain such persons as are to be so
returned in a suitable manner until they shall have left the
Facility Site or, in the case of persons who are not nationals of
China and have been recruited outside China, shall have left
China.
3.4 Control of the Work. Subject to the provisions of this
Contract, Contractor shall be solely responsible for all
construction and engineering means, construction surveying
methods, techniques, sequences, procedures, and safety and
security programs in connection with the performance of the Work.
3.5 Payment of Costs. Contractor shall pay for all labor,
construction utilities, supervision, inspection, other costs and
Equipment as may be necessary to complete the performance of the
Work.
3.6 Clean-Up. Contractor shall at all times during the Work
keep the Facility Site reasonable free from waste and rubbish
relating to its Work (and shall perform all clean-up work at the
Facility Site reasonable requested by Owner). As soon as
practicable after the earlier of (i) the Final Acceptance Date;
and (ii) an earlier termination of this Contract by Owner in
accordance with the provisions of Article 15 hereof, Contractor
shall remove all of its Equipment, materials and temporary
facilities from the Facility Site (other than Equipment and
materials incorporated in the Plant or necessary or useful to the
operation or maintenance of the Facility), and shall complete
removal and disposal of all waste and rubbish from and around the
Facility Site.
3.7 Safety. Contractor shall be responsible for the safety
of all persons and property in connection with the Work. The
Contractor shall initiate and maintain reasonable safety
precautions and programs which shall comply with Applicable Laws,
and Applicable Permissions, to prevent injury to persons or
damage to property on, about, or adjacent to the Facility Site.
3.8 Access. Contractor shall provide access to the Work to
the Owner, Owner's contractors, Owner's representatives or
Lender.
3.9 Emergencies. In the event of any emergency endangering
life or property, Contractor shall take such action as may be
reasonable and necessary to prevent, avoid or mitigate injury,
damage, or loss and shall, as soon as possible, report any such
incidents, including Contractor's response thereto, to Owner.
3.10 Obtaining Applicable Permissions. Contractor shall
timely obtain the Applicable Permissions. Contractor shall
deliver to Owner and Lender true and complete copies of such
Applicable Permissions upon receipt thereof and keep Owner fully
apprised of Applicable Permissions for which Contractor is
responsible under this Contract. Prior to initial Project
Funding, Contractor shall identify in writing all necessary
Applicable Permissions for construction. All Applicable
Permissions shall be issued in the name of Owner unless otherwise
required by Applicable Law. Owner and Contractor agree to assist
and cooperate with the other in obtaining Applicable Permissions
necessary for the performance of the Work.
3.11 Laws and Regulations. Contractor shall conform with
all Applicable Laws and Applicable Permissions that affect or
govern Contractor's performance of Work under this Contract.
Contractor agrees to indemnify, defend and hold Owner harmless
from and against all fines, penalties and related costs and
expenses, including attorneys' fees and costs, arising from or
related to any failure of Contractor or its Subcontractors,
employees, or Vendors to conform with such Applicable Laws and
Applicable Permissions. Contractor's indemnification obligation
shall survive the Final Acceptance Date or the earlier
termination of this Contract.
3.12 Status Reports. Contractor shall prepare and submit to
Owner, Lender and their authorized representatives within fifteen
(15) days after the end of each calendar month, written progress
reports, in a form reasonably acceptable to Owner, which reports
shall include a description of the status of material and
Equipment deliveries and scheduled deliveries, the
Subcontractors' activities, engineering and construction
progress. Photographs shall also be included documenting the
construction progress. Each photograph shall show the date,
Contractor's name and description of the view taken.
3.13 Tax Accounting. If required by Owner, after the Final
Acceptance Date, but in no event later than one (1) year after
the Final Acceptance Date, Contractor shall provide to Owner with
appropriate and reasonable information necessary in connection
with Owner's preparation of tax returns or claims for tax
exemptions.
3.14 Owner's, Utility and Lender's Right To Be Present
During Tests. Owner, the Utility and Lender and their authorized
representatives, shall have the right to inspect the Work and to
be present during testing. Contractor shall provide the notices
thereof as required under this Contract including Article 10.1.
3.15 Taxes. Contractor shall pay all taxes required by
Applicable Laws and Applicable Permissions in connection with the
Work.
3.16 Contractor's Representative. Contractor shall appoint
one individual, with the prior written consent of Owner, who
shall be authorized to act on behalf of Contractor and with whom
Owner may consult at all reasonable times, and whose instruction,
request and decisions in writing will be binding upon Contractor.
Contractor shall not remove such representative without Owner's
prior written consent. Contractor shall furnish a Project
Procedure Manual within fifteen (15) Days after the initial
Project Funding for review and approval by Owner.
3.17 As-Built Drawings and Manuals. Contractor shall
deliver to Owner, the number of complete sets of operations and
maintenance manuals and of the As-Built Drawings and Design
Documents, as reasonably requested by Owner or otherwise
prescribed in the Scope of Work, all on or before the final
payment is made by owner for the Work. Contractor shall also
provide such operating and maintenance information as is
reasonably requested by Owner's Operator for start-up and testing
purposes.
3.18 Ownership of Drawings, Information, and Other
Materials. All Drawings, shop Drawings. Trade prints, Design
Document, reports, calculations and other information of any kind
furnished to Contractor, or prepared by it, its Subcontractors,
or others in connection with the performance of the World, except
financial, accounting and payroll records, are the property of
Owner and are furnished to, or held by, Contractor for its use in
performing the Work. All such information shall be returned or
delivered to Owner concurrently with issuance of the Final
Acceptance Certificate or immediately upon termination of
Contractor's services under this Contract, whichever occurs
first. Contractor and any of its Subcontractors, as applicable,
may, however, retain one (1) set of all such documents for their
records.
Contractor shall maintain at the Facility Site one copy of
all Design Documents, (including detailed construction
drawings), Change Orders and other modifications in good order
and marked to record all changes made during performance of the
Work.
Contractor shall furnish Owner with documents that
correctly reflect, with substantial completeness, the Facility
or the portion of the Work against which a Request for Payment
is issued. Final Design Documents, including As-Built
Drawings, if not furnished earlier, shall be furnished to Owner
upon Contractor's request for a Final Acceptance Certificate of
the Facility.
3.19 Spare Parts. Contractor shall be responsible for
obtaining and for the cost of all spare parts required for
start-up and testing of the Plant Owner shall be responsible
for obtaining all spare parts required for the normal operation
of the Plant. Owner shall have ordered such operational spare
parts by the commencement of start-up operations at the Plant.
Contractor may use Owner's operational spare parts in stock in
connection with its start-up and testing of the Plant; provided
that such spare parts used by Contractor shall be promptly
replaced at Contractors expense.
3.20 Contractor's Environmental Obligations. Contractor
shall, and shall cause its Subcontractors and Vendors to, (i)
comply with all Applicable Laws regarding Hazardous Materials;
(ii) apply for, obtain, comply with, maintain and renew all
Applicable Permissions required of Contractor by Applicable
Laws; and (iii) comply with the requirements of any Lenders
with respect to Hazardous Materials.
3.20.1 Contractor shall conduct its activities under
this Contract, and shall cause each of its Subcontractors and
Vendors to conduct its activities, in a manner designed to
prevent pollution of the environment or any other prohibited
release of any Hazardous Materials by Contractor and its
Subcontractors and Vendors.
3.20.2 Contractor shall not cause or allow the
release or disposal of Hazardous Materials at the Facility
Site, bring Hazardous Materials to the Facility Site, or
transport Hazardous Materials from the Facility Site, except in
accordance with the Scope of Work, Applicable Laws and
Applicable Permissions regarding Hazardous Materials.
Contractor shall cause all Hazardous Materials generated by
Contractor or any of its Subcontractors or Vendors at the
Facility Site, if any, (i) to be transported only in accordance
with Applicable Laws and Applicable Permission and (ii) to be
treated and disposed of only in compliance with Applicable Laws
and Applicable Permissions.
3.20.3 If Contractor or any of its Subcontractors or
Vendors releases any Hazardous Material on, at, or from the
Facility Site, or becomes aware of any third person who
releases Hazardous Material on, at, or from the Facility Site
during the Work, Contractor shall immediately notify Owner in
writing. If Contractor's Work involves the area where such
release occurred, Contractor shall immediately stop any Work
affecting the area. Contractor shall, at its sole expense,
diligently proceed to take all necessary or desirable remedial
action to clean up fully the contamination caused by any such
release.
3.20.4 If Contractor discovers any Hazardous Material
stored, released or disposed of at the Facility Site, prior to
the date of this Contract, by a person or entity other than
Contractor, its Subcontractors and Vendors, Contractor shall
immediately notify Owner in writing. If Contractor's Work
involves the area where such a discovery was made, Contractor
shall immediately stop any Work affecting the area and Owner
shall determine a reasonable course of action. Contractor
shall not, and shall prevent its Subcontractors and Vendors
from, knowingly or negligently taking any action that may
exacerbate any such contamination. Contractor shall cooperate
with and assist Owner in making the Facility Site available for
taking necessary remedial steps to clean up any such
contamination at Owner's request and expense.
3.21 Performance Tests. Contractor shall be responsible
for notifying any Supplier or Vendor which must be present at
the Performance Tests.
3.22 Operating and Maintenance Manuals. Contractor shall,
by no later than Mechanical Completion, supply Owner with
manuals or handbooks in both English and Chinese, which
provide, either in such a single manual or handbook or
collectively, complete operating and maintenance instructions
for each major piece of Equipment and system of the Facility.
Each such manual or handbook shall comply with the requirements
of the Scope of Work.
3.23 Training of Owner's Personnel. During the
construction of the Plant, and at least one hundred twenty
(120) days prior to start-up and testing of the Plant in
accordance with the terms hereof, Contractor shall provide a
training program in operation and maintenance for Owners Plant
personnel and the O&M Personnel. The training program provided
by Contractor shall (i) include classroom and field training,
(ii) include all manuals, Drawings, and other educational
materials necessary or desirable for the adequate training of
the O&M Personnel, and (iii) establish quality controls so that
O&M Personnel are suitably trained and capable of operating and
maintaining the Plant during start-up and testing and after
Commercial Operation.
Owner is responsible for providing qualified non-
supervisory O&M Personnel who will normally staff the Facility
for use by Contractor during the testing and start-up phases of
operation of the Plant. Contractor will cooperate with Owner
and the supervisory O&M Personnel in all respects, including
reasonable scheduling of Operator's non-supervisory staffing
requirements for the Facility. Contractor will direct and have
complete responsibility for the activities performed by non-
supervisory O&M personnel for start-up and testing activities.
Contractor shall not use O&M Personnel for construction
activities.
3.24 Claims and Liens for Labor and Materials. Contractor
shall, at Contractor's sole expense, pay and discharge and
cause to be released on a written demand from Owner, any Lien
in respect to the Facility, this Contract, the Facility Site,
the Plant or the Equipment created by, through or under
Contractor or any Subcontractor or Vendor. Contractor shall
indemnify Owner against, and hold it harmless from, any
liability, damage, loss, claim, demand, cost or expense
(including attorneys' fees from legal professionals that Owner
retains) suffered or incurred by Owner in connection with any
such Lien, charge or security interest. This Article 3.24
shall survive Final Acceptance or the earlier termination of
this Contract.
3.25 Electrical and Thermal Energy Distribution
Facilities. Contractor shall cooperate with Owner and the
constructors of the Electrical Interconnection Facilities and
the Thermal Energy Distribution Facilities, including providing
information and access to the Facility Site to enable such
constructors to complete construction of such facilities as
required by Owner.
3.26 Construction Power Requirements. Contractor is
responsible for the cost, supply and availability of electric
power and transmission requirements during construction, start-
up and testing of the Plant. Contractor, at its sole expense,
shall furnish all lubricants and chemicals for start-up and
testing.
3.27 Insurance. Contractor shall provide the insurance
required by Article 9 hereof.
3.28 Temporary Office Quarters. Contractor shall provide
Owner, Owner's representatives and Lender with reasonably
adequate office space, including western style toilets and
fixtures, at the same time as Contractor creates its site
office on the Facility Site. Contractor shall submit plans and
Design Documents for such office space to Owner for its prior
written approval. Contractor shall be responsible for
maintenance and cleaning of these site offices. Contractor
shall provide daily lunches for Owner's on-site representatives
and O&M personnel, and twice daily beverage service during
normal construction days.
3.29 Parent Guaranty. Contractor shall provide prior to
the initial Project Funding to Owner, substantially in the form
of Exhibit I-3 attached hereto, a corporate guaranty of China
Harbin Power Equipment Company, Limited a Chinese company
("Parent Company"), for the benefit of Owner and Lender under
terms and conditions acceptable to Owner and Lender ("Parent
Guaranty"). In order to provide Owner and Lender with evidence
of Contractor's and Parent Company's financial ability to
complete the Facility, Contractor agrees to provide the
financial statements of Parent Company within twenty-one (21)
days of the date such statements are published. The failure of
Contractor to provide a suitable Parent Guaranty of Parent
Company prior to initial Project Funding shall constitute a
default by Contractor pursuant to Article 15 and will give rise
to the remedies set forth in Article 15. Any Parent Guaranty
shall require Parent Company to pay the reasonable costs and
expenses, including attorneys' fees, of collection from Parent
Company in the event of a default by Contractor or Parent
Company.
3.30 Bank Guarantee for Liquidated Damages. At Project
Funding, Contractor shall provide Owner with a Bank Guarantee,
issued in the form, attached hereto as Exhibit I-l and from a
financial institution acceptable to Owner and Lender, in their
sole discretion ("Acceptable Guarantor"), in an amount equal to
the product of the Contract Price (to be adjusted if the
Contract Price changes) multiplied by 0.35 (the "Bank
Guarantee"). Owner shall have the unconditional right to draw
upon such Bank Guarantee for damages, compensation or otherwise
under Articles 12, 13, and 15, or for any other purpose
specified in the draw certificate to the Bank Guarantee.
Within twenty (20) days after Owner's acceptance of Commercial
Operation Date of the Plant as defined in Article 10.7 or
twenty (20) days after payment of all liquidated damages
pursuant to Particles 12, 13, and 15, whichever is later, but
in no event beyond six (6) months after Owner's acceptance of
Commercial Operation Date of the Plant, ▇▇▇▇▇▇ shall return the
Bank Guarantee to the issuing bank with instructions for
cancellation.
3.31 Electrical Interconnect Facilities. Neither
Contractor nor its Subcontractors shall tamper with the
Utility's Electrical Interconnect Facilities without the prior
written consent of Owner and Utility; except in situations
where such actions are taken to prevent immediate injury, death
or property damage, and Contractor uses all reasonable efforts
to provide Owner and Utility with advance notice of the need
for such actions.
3.32 Opportunities for Other Contractors. The Contractor
shall, upon written request from the Owner, give all reasonable
opportunities to any other contractors employed by the Owner
for carrying out their Work on or near the Facility Site,
except where and to the extent that any such Work may cause any
delay in Contractor's Work.
3.33 Transportation and Storage of Materials and Equipment.
3.33.1 Unless otherwise provided under this Contract,
Contractor shall procure and transport to the Facility Site all
domestic and foreign materials and Equipment in an expeditious
and orderly manner.
3.33.2 The Contractor shall, at its own risk and
expense, transport all the materials and Equipment to the
Facility Site required for it to perform the Work by the mode
of transport which the Contractor judges most suitable under
all circumstances.
3.33.3 Upon dispatch of each shipment of foreign
materials Contractor shall notify the Owner in writing of the
description of foreign materials, the point and means of
dispatch and the estimated time and point of arrival in the
People's Republic of China applicable, and at the Facility
Site. The Contractor shall furnish the Owner with relevant
shipping documents to be agreed upon between the parities.
3.33.4 The Contractor shall be responsible for
obtaining, if necessary, approvals from the competent
authorities for transportation of the foreign materials to the
Facility Site. The Owner shall use reasonable efforts in a
timely and expeditious manner to assist the Contractor and
Contractor shall indemnify and hold harmless the Owner from and
against any claim for damage to roads, bridges or any other
damages caused by the transportation of materials to the
Facility Site. This indemnity shall survive any termination of
this Contract.
3.33.5 The Contractor shall, at its own expense,
handle ad foreign materials at the point(s) of import, and any
formalities for customs clearance, provided that if applicable
laws or regulations require any application or act to be made by
or on behalf of Owner, Contractor shall prepare and submit to
Owner, for its approval, each such application.
3.34 Site Conditions.
3.34.1 Contractor shall have the sole responsibility
for Facility Site conditions and of satisfying itself concerning
the nature and location of Work and the general and local
conditions, and particularly, but without limitation, with
respect to the following: those affecting transportation,
disposal, handling and storage of materials; availability and
quality of labor; availability and condition of roads; climatic
conditions and seasons; river hydrology and river as a whole,
topography and ground surface conditions; nature and quantity of
surface materials to be encountered; Equipment and facilities
needed preliminary to and during performance of the Contract; and
all other matters which can in any way affect performance of the
Contract, or the cost associated with such performance.
3.34.2 The failure of the Contractor to acquaint
itself with the aforementioned applicable conditions will not
relieve it from the responsibility for properly estimating either
the difficulties, the time required, or the costs of successfully
performing the Contract.
3.34.3 Contractor will be solely responsible for
interpretation of data or information set forth in the "Luannan
Thermal Electric Power Plant Geotechnical Report," Document
Number 13-F032K-G0001-10.
ARTICLE 4
OWNER'S RESPONSIBILITIES
4.1 Payment. Owner shall timely pay all sums required to
be paid by it to Contractor pursuant to the terms of this
Contract.
4.2 Access to Facility Site. So long as Contractor is not
in default under this Contract, Owner shall provide Contractor
with free and clear access to the Facility Site until the later
of (i) the Final Acceptance Date (in its entirety) and (ii) the
date upon which Contractor shall no longer have any obligations
under this Contract (other than continuing indemnity or warranty
obligations), provided, however, and subject to the rights of
Owner on account of a default by Contractor under this Contract,
that Owner shall grant Contractor reasonable access to recover
Equipment belonging to Contractor used to complete the Work and
to perform Warranty Services.
4.3 Land for Temporary Works. The Owner shall provide
areas of land necessary to complete the Work, including those
areas of work activities, for offices, accommodation and missing
facilities, areas for temporary access roads, for the extension
to the right-of-way and for some other temporary works.
4.4 Owner's Representative. Owner shall appoint one
individual who shall be authorized to act on behalf of Owner
either to approve, reject or otherwise facilitate the orderly
execution of the Work, and with whom Contractor may consult at
all reasonable times, and whose instructions, requests, and
decisions in writing will be binding upon Owner as to all matters
pertaining to this Contract and the performance of the parties
under this Contract. Owner may substitute a different Owner's
representative upon prior written notice to Contractor. In the
event of such substitution, the Owner agrees to use best efforts
to maintain consistency in administration of the Contract and in
subsequent decisions.
4.5 Disposal of Waste from Operation of Plant. Owner shall
be responsible, at Owner's cost and expense, for the disposal of
wastes from the operation of the Facility.
4.6 Change in Law or Applicable Permits. If, after the
Effective Date, any Change in Law is adopted, or occurs, then
such Change in Law may be treated as a Change Order if such
change in Law meets the requirements in Article 6 hereof. If
the parties are unable to agree on the result of the Change in
Law, then the dispute shall be resolved in accordance with
Article 17 hereof, but Contractor shall continue its Work,
talking into account such Change in Law, until such dispute is
resolved.
4.7 Boiler Fuel Supply. Owner shall, at its expense, on
forty-five (45) Days prior notice from Contractor, supply fuel
oil and coal for boiler fuel at the Facility Site needed by
Contractor in connection with the start-up, adjustment and
testing and completion of the Performance Tests. Such notice
from Contractor shall include the amount and desired delivery
timing of such fuel.
4.8 Insurance.
4.8.1 Owner, at its sole cost and expense, shall
provide and maintain an All Risk Installation and Builder's Risk
Insurance Policy acceptable to Owner and Lender, if required
(the "Builder's Risk Policy") including any endorsements needed
to reflect coverage for flood and windstorm, in an amount at
least equal to the full replacement value of the Facility. The
required deductible shall be no more than fifty thousand dollars
($ 50,000) Owner shall provide to Contractor a copy of the
Builder's Risk Policy or other evidence reasonably satisfactory
to Contractor evidencing the Builder's Risk Insurance coverage
and the Delay in Opening and Start-up insurance Policy
endorsements therein prior to mobilization at the Facility Site.
4.8.2 Each "all risk" policy shall: (i) name Owner or
its assigns as the sole loss payee with respect to the Work;
(ii) provide for each insurer's waiver of its right to
subrogation against Contractor and the Subcontractors, and
(iii) provide that such insurance (A) shall not be invalidated
by any action of, or breach of warranty by, Contractor or any
Subcontractor of a provision of any of its insurance policies,
(B) shall waive set-off, counterclaim or offset against
Contractor, the Subcontractor and Lender, (C) provide that
Owner's insurance shall be primary without a right of
contribution of Contractor's insurance, if any, or any
obligation on the part of Contractor to pay premiums of Owner,
and (D) shall contain a clause requiring the insurer to give
Contractor and Lender at least 30 days' prior written notice of
its cancellation (other than cancellation for non-payment for
which 10 days' notice shall be sufficient). All insurance
shall be provided by a Company or other person authorized to
issue insurance in the Peoples' Republic of China. Contractor
further agrees to give Owner and Lender immediate notice of any
damage to, or loss of, the Equipment or any part thereof.
4.8.3 Should a loss be sustained under the Builder's
Risk Policy, to the extent permitted by Lender and at no cost
to Contractor and Lender, Owner, with the assistance of
Contractor, shall act on behalf of Owner and Contractor for the
purpose of adjusting the amount of loss with the insurance
companies. Contractor shall replace or repair any loss or
damage and complete the Work in accordance with the Contract
and Owner shall be responsible for making funds available for
such Work. An appropriate Change Order shall be executed, if
necessary, to reflect resulting extension of time or costs
associated with acceleration of Work requested by Owner.
4.8.4 Owner or Contractor may obtain such other
coverages as each desires so long as such coverages in no way
limit or modify the coverages to be provided under this Article
4.
4.8.5 The foregoing provision of this Article 4.8
notwithstanding, if any insurance coverage specified above is
unavailable, or is available only in an amount less than that
required, Owner shall in the event of such unavailability,
provide the most nearly comparable coverage reasonably
acceptable to Owner and Lender that is available, or in the
event of any such limited availability, provide the maximum
amount of coverage that is available at a reasonable cost and
use its continual best efforts to obtain the required insurance
and to keep Contractor advised of such efforts.
4.9 Taxes. Owner shall pay all real property taxes
assessed against the Facility Site and any permanent use
charges assessments such as water or sewer, but excluding
temporary charges for construction utilities which shall be
Contractor's responsibility.
ARTICLE 5
CONSTRUCTION SCHEDULE AND AVAILABLE FUNDS
5.1 Commencement of Work. Contractor shall commence
performance of the Work under this Contract after Owner receives
Preliminary Design approval from the Hebei Provincial
Construction Commission pursuant to Applicable Laws and
immediately upon receiving (l) the Notice to Proceed and (2) the
Down Payment as set forth herein in Article 7.2.
5.2 Construction Schedule.
5.2.1 Contractor shall perform the Work in compliance
with the Construction Schedule, including completing the Work
required by the Critical Dates, provide the reports
contemplated by Article 3.12, and provide any further
information as Owner or Lender may reasonably request to verify
actual progress and predict future progress. Contractor shall
promptly notify Owner and Lender in writing of any occurrence
that Contractor has reason to believe will adversely affect the
Construction Schedule. Contractor will specify in said notice
the corrective action planned by Contractor.
5.2.2 Contractor shall, commencing twenty (20)
Business Days after the Notice to Proceed, unless otherwise
required by Owner, submit to Owner for its approval, any
Changes to such Construction Schedule that provide for the
orderly, practicable and expeditious completion of the Work by
the Guaranteed Commercial Operation Date and that take into
account the relationship of the Work to other activities at the
Facility Site. Within twenty (20) Business Days of Owners
receipt of such a revised Construction Schedule, unless
otherwise specified, Owner will either approve such
Construction Schedule or return it to Contractor for revision.
If returned, Contractor will submit a revised Construction
Schedule for approval. The Construction Schedule will be
presented in reasonable detail and in a form appropriate to
cover substantially all of the Work. If at any time during the
Work, Contractor's actual progress appears to Owner to be
inadequate to meet the requirements of this Contract, Owner may
notify Contractor of such imminent or actual noncompliance.
Contractor will thereupon submit a recovery plan for approval
and take such steps as may be necessary to improve its
progress. Such notice will not relieve Contractor from its
obligation to achieve the quality of Work and rate of progress
required hereby.
5.2.3 Upon the failure of Contractor to achieve any of
the milestones set forth below by the date set forth opposite
thereof (each a "Critical Date"), Owner may notify Contractor
in writing to show cause why Contractor should not be held in
default under Article 15 hereof for failure to achieve any one
of the milestones by the date set forth. Within three (3) Days
of receipt of such written notice to show cause, Contractor
shall deliver to Owner the Contractor's plan of recovery which
shall reasonably demonstrate what steps Contractor shall take
to achieve such milestone within fifteen days of the date of
receipt by Contractor of the Owner's notice to show cause. If,
however, the Work necessary to achieve such milestone cannot,
with all best efforts by Contractor, be achieved within such
fifteen (15) Day period, Contractor's plan of recovery shall
reasonably demonstrate what special steps Contractor plans to
take to assure the earliest possible achievement of such
milestone and recovery of schedule (not to exceed ninety [90]
Days). Upon approval by Owner of Contractor's plan of recovery,
Contractor shall commence the special steps agreed upon
immediately and shall pursue such steps to completion. In the
event Owner and Contractor are unable to agree on the special
steps to be taken in the recovery plan, Owner, in its sole
discretion, may declare Contractor to be in default as
prescribed in Article 15.1.2 and may assert such remedies as
are set forth In Article 15.1.3.
Critical Dates Milestones
Unit 1 Unit2/Plant
May 1, 1996 May 1, 1996 Notice to Proceed/
Commencement of
Construction
August 1, 1996 August 1, 1996 Construction Drawings
Approval
November 1, 1996 November 1, 1996 Complete Turbine House
Foundation
July 15, 1997 November 15, 1997 Major Equipment Delivery
Complete*
August 15, 1997 August 15, 1997 Complete Turbine House
August 1, 1997 November 15, 1997 Complete Setting of
Boiler Drum
August 15, 1997 August 15, 1997 Complete Chimney
(including Liner)
November 1, 1997 February 1, 1998 Boiler Hydrotest
Complete
February 15, 1998 May 15, 1998 Mechanical Completion
Achieved
March 1, 1998 June 1, 1998 Synchronization to Grid
January 1, 1998 April 1, 1998 Coal Firing of Boiler
April 15, 1998 July 1, 1998 Start of first 72 hour
Full Load Test
May 1, 1998 September 1, 1998 Commercial Operation
November 1, 1998 November 1, 1998 Freeze Protection
Complete
March 1, 1999 Final Acceptance -
Facility
* "Major equipment" shall include Boiler, Precipitator,
Steam Turbine Generator, and Main Transformer.
Each such Critical Date shall be subject to delays caused
by Force Majeure Events and Change Orders.
5.3 Available Funds. Owner represents and covenants
that, as of the date of the initial Project Funding, there
will be sufficient funds allocated to it from Lenders to pay
the Contract Price and to complete construction of the
Facility in accordance with the Construction Schedule and that
Contractor will be promptly notified by Owner of any material
change in the availability of sufficient funds and Owner's
ability to make such full and timely payments.
ARTICLE 6
CHANGE ORDERS
6.1 Request for Change Orders. Owner or Contractor may
submit a written request to the other party to alter, add to or
deduct from, or otherwise change (a "Change" or "Changes") the
Scope of Work, without invalidating this Contract. If such Change
has the effect of increasing or decreasing the Contract Price,
shortening or lengthening the Guaranteed Commercial Operation
Date, modifying Contractor's warranty obligations under this
Contract' or requiring modification of Contractor warranties in
Article 11 hereof, equitable adjustment may be made to the
Contract Price and the Construction Schedule (including the
Guaranteed Commercial Operation Date). In addition, Contractor
shall provide Owner with written notice, as soon as possible but
in no event more than ten (10) Business Days of (i) any knowledge
of Contractor of any Change in Law or Force Majeure Event that
Contractor believes will involve a change in the Cost of the
Work, the Contract Price and/or the Construction Schedule, which
notice shall include a request for a Change Order setting forth
the proposed changes, and (ii) any Change Order to be requested
by Contractor pursuant to Article 5.2 above for a change in the
Construction Schedule. All such changes in the Scope of Work
shall be authorized by Change Order and shall be performed under
all applicable conditions of this Contract. The Contract Price,
the Critical Dates, Guaranteed Commercial Operation Date, the
Performance Tests and the Final Acceptance Date may be changed by
Change only.
6.1.1 Owner may at any time, by written notice to
Contractor request a Change. Contractor shall make a written
response to any requested Change within ten (10) days after
receiving it or, if it fails to do so, shall be deemed to have
accepted the proposed Change unconditionally and without
additional consideration or schedule change, in which event
such Change shall be deemed to become part of this Contract.
If Contractor believes that giving effect to such Change will
increase or decrease its cost of performing the Work, shorten
or lengthen the time needed for completion of the Work, or
require modification of its warranties in Article 11 or require
a modification of any other provisions of this Contract, its
response to the Change request shall set forth the Change or
Changes that Contractor deems necessary and its justification
for such Changes together with any necessary alterations or
amendments to this Contract. If Contractor does not provide a
written response to Owner specifying the effect of such Changes
as to cost, time and warranty obligations of Work within ten
(10) Days of Owner's notice under this Article 6.1.1, then
Contractor waives any claims or offsets against Owner as a
result of the Change Order, provided, however, that
notwithstanding the foregoing, if such Changes as to cost, time
and warranty obligations of the Work cannot be determined
within the ten (10) Day period, and Contractor submits notice
within such ten (10) Day period that the Changes will have an
effect on costs, time or warranty obligations and provides the
expected date (which shall be as soon as reasonably
practicable) for cost, time or warranty effect response,
Contractor shall not be deemed to have waived such claims or
offsets. If Owner accepts the Change(s) (together with any
necessary alterations or amendments to this Contract) proposed
by Contractor, or if the parties agree upon a modification of
such proposed Change(s), the parties shall then sign a change
order ("Change Order") setting forth the agreed upon Change in
the Work and agreed upon amendments to this Contract, and such
Change Order shall operate as an amendment to this Contract.
If there occurs a Change of Law that has a material impact on
the Work, each party shall bargain reasonably and in good-faith
for the execution of a mutually acceptable Change Order. Owner
may request a Change Order to require Contractor's compliance
with such Change of Law.
6.1.2 Owner may at any time, by written notice to
Contractor, propose Changes in the Work or the Construction
Schedule due to a Force Majeure Event. If there is a material
impact on Work or the Construction Schedule as a result of such
Force Majeure Event, then the parties agree to bargain
reasonably and in good-faith for the execution of a mutually
acceptable Change Order.
6.1.3 Contractor may at any time, by written notice
to Owner, propose Changes in the Work and if such proposed
Changes are agreed to by Owner they shall be set forth in a
Change Order signed by the parties. If Contractor believes
that such Change will increase or decrease its cost of
performing the Work, lengthen or shorten the time needed for
completion of the Work, or require modification of its
warranties in Article 11 hereof or require a modification of
any other provisions of this Contract, it shall set forth its
justification for such Changes and the effect of such Changes.
If Contractor does not provide a written notice to Owner
specifying the effect of such Changes as to cost, time and
warranty obligations of Work within five (5) Days of proposing
a Change Order under this Article 6.1.3, then Contractor waives
any claims or offsets against Owner as a result of the Change
Order.
6.1.4 Contractor may at any time, by written notice
to Owner, propose Changes in the Work to the extent of a Force
Majeure Event; provided, however, such Force Manure Event will
have a schedule impact that will actually, demonstrably,
adversely and materially affect Contractor's ability to meet
agreed project milestones.
6.1.5 Any Contractor response to a Change proposed by
Owner under Article 6.1.1 or Article 6.1.2 and any Contractor
proposed Change Order under Article 6.1.3 or 6.1.4 shall be
accompanied by a proposed all-inclusive final lump sum cost to
Owner. In the event that the parties are unable to reach a
mutually acceptable agreement on an all-inclusive final lump
sum cost to Owner, Contractor shall perform the Change Order
using a cost plus ten percent (10%) in accordance with the
Time, Material and Equipment Schedule attached hereto as
Exhibit K, basis to the extent acceptable to Owner, as
consideration for the Change Order.
6.1.6 A Change initiated by either party may have the
effect of either increasing or decreasing the Contract Price.
Any Contract Price increase or decrease resulting from a Change
Order taking effect under this Article 6.1 shall become an
addition or deletion to the Progress Payment or Payments to
which it properly belongs. In the event that Owner and
Contractor are unable to reach agreement on Change Orders under
this Contract as proposed by either Owner or Contractor, at the
direction of the Owner, Owner's proposed Changes shall become
effective, Contractor shall continue to perform the Work in
accordance with Owner's Change Order on a cost plus ten percent
(10%) price basis to the extent acceptable to Owner, and the
parties will resolve such Changes in accordance with Article 17
of this Contract.
6.2 Force Majeure Event. If either party to this Contract
because of a Force Majeure Event is rendered wholly or partly
unable to perform its obligations under this Contract, other
than the obligation of that party to make payments of money,
that party shall to the extent provided in this Contract, be
excused from the performance directly affected by the Force
Majeure Event, provided that:
6.2.1 The non-performing party, as soon as possible
but in no event more than ten (10) Days after it becomes aware
of its inability to perform, shall declare that a Force Majeure
Event has occurred and give the other party written notice of
the particulars of the occurrence(s), including, without
limitation, the nature, cause and date and time of commencement
of the occurrence(s), the anticipated scope and duration of any
delay, and any date(s) that may be affected thereby. If it is
impracticable to specify the length of such delay at the time
such notice is delivered, the non-performing party shall
provide the other party and Lender with periodic (not less
frequently than weekly) supplemental notices during the period
the Force Majeure Event continues. Such supplemental notices
shall keep such other party and Lender informed of any change,
development, progress or other relevant information concerning
the Force Majeure Event.
6.2.2 The suspension of performance is of no greater
scope and of no longer duration than is required by the Force
Majeure Event.
6.2.3 Obligations of either party which arose before
the Force Majeure Event causing the suspension of performance
are not excused as a result of the Force Majeure Event
6.2.4 The non-performing party immediately and
continuously uses its best efforts to remedy its inability to
perform with all reasonable dispatch.
6.2.5 When the non-performing party is able to resume
performance of its obligations under this Contract, that party
shall promptly so notify the other party in writing.
6.2.6 No Force Majeure Event declared by Contractor
shall delay the Guaranteed Commercial Operation Date beyond
March 1, 1999. During and following the occurrence of any
Force Majeure Event, Contractor and Owner each shall use its
best efforts to minimize the delay and costs caused by such
Force Majeure Event and shall continue actively and in good
faith consider the need for and, when appropriate, execute a
Change Order covering such event, which may result in the
extension of such March 1, 1999 Guaranteed Commercial
Operation Date.
6.3 Disputes. If a dispute arises between Owner and
Contractor relating to the change in the Construction Schedule
incurred by reason of a Force Majeure Event, then such change
shall be made as directed by Owner, but Contractor shall not
be deemed to have waived any subsequent right to challenge or
contest Owner's determination.
ARTICLE 7
CONTRACT PRICE; PAYMENTS TO CONTRACTOR
7.1 Contract Price. Contractor shall, at its own expense,
design, engineer, manage, supply all labor, Equipment and
materials for, construct, start up, and carry out Performance
Tests on the Plant, all on a turn-key lump sum fixed price basis
for a lump sum equal to U.S. $63,625,832 (the "Contract Price"),
based on Contractor's pricing summary attached hereto as Exhibit
H and in accordance with the Contractor's Critical Date Schedule
set forth in Article 5.2, the Scope of Work and other
performance requirements of Contractor set forth in this
Contract, all as may be modified or amended by Change Order,
under Article 6.
7.2 Down Payment. The Owner shall make a Down Payment in
an amount equal to ten percent (10%) of the Contract price
("Down Payment") at the time of giving the Notice to Proceed.
The Owner shall withhold ten percent (10%) of the Down Payment
as the initial Retainage.
7.3 Payment for Work. On or about the first Day of each
month (but in no event later than the seventh Day thereof),
Contractor shall submit to Owner for approval a Request for
Payment for Work performed. Within seven (7) days of receipt
of Request for Payment, Owner shall notify Contractor of
acceptance of such Request for Payment.
7.3.1 Subject to the provisions of Article 7.3.3, the
Contract Price shall be payable in accordance with the Progress
Payment Schedule, such that (i)payment for the civil and
installation portion of the Work shall be for Work actually
completed, and (ii) payment for the equipment portion of the
Work shall not exceed the percentages set forth in such
Schedule for Equipment, and after the Contractor's project
manager has delivered to Owner's representative a Progress
Payment Certificate. No payment shall be made for the civil
and installation portion of the Work until the actual percent
complete of such portion of the Work exceeds the ten percent
(10%) Down Payment.
7.3.2 Within thirty (30) days after its receipt of a
Request for Payment on or before the 16th day of the month for
all Work performed and certified in the month represented by
the Request for Payment, Owner shall pay to Contractor the
amount that remains after the deduction from the Progress
Payment requested of (i) any portion thereof that Owner
disputes as not being due and owing, (ii) any overpayment made
by Owner for any previous period, (iii) any past-due Contract
Price adjustment amount due Owner hereunder plus interest
thereon at the Reference Rate from the due date thereof and
(iv) Retainage. The payment made by Owner shall be accompanied
by a written notice to Contractor specifying the amount of each
deduction and setting forth the reason(s) why the deduction is
justified. Failure or forbearance on the part of Owner in
withholding, any amounts due under a Progress Payment shall not
be construed as accepting or acquiescing to any disputed
claims. If any such amount deducted from the requested amount
is subsequently determined, by agreement of the parties or by
arbitration pursuant to Article 17, to have been unjustifiably
so deducted, Contractor shall be entitled to payment of such
amount, plus interest thereon, at the Reference Rate from the
date that such amount should have been paid, in an invoice
submitted by it to Owner after the determination or if final
payment thereunder has been previously made, then in a written
demand. Pending the resolution of any disputed Progress
Payment, Contractor shall continue performance of the Work.
7.3.3 The making of any Progress Payment by Owner
shall not constitute an admission by it that the Work covered by
such payment (or any Work previously performed) is satisfactory
or timely performed, and it shall have the same right to
challenge the satisfactoriness and timeliness of such Work as if
it had not made such payment. If, after any such payment has
been made, it is subsequently determined by agreement of the
Parties or by arbitration pursuant to Article 17 that Contractor
was not entitled to all or a portion of any such payment,
Contractor shall refund all or a portion of such payment to
Owner with interest thereon at the Reference Rate from the date
that Contractor received such payment to the date of refund.
7.3.4 Notwithstanding any of the above, in the event
that Owner fails to make a payment in accordance with Article
7.3.2 above, if Owner does not make a payment within thirty (30)
days, interest shall accrue on the amount of the payment at the
Reference Rate beginning on the twentieth day (20th) day until
the payment is made to Contractor. If Owner does not pay within
sixty (60) days of the Request for Payment, Contractor may, upon
written notice to the Owner, suspend the performance of Work
until payment is made and may submit a Change to the
Construction Schedule in accordance with Article 5.2.
7.4 Payment of Retainage. Commercial Operation Date of
Unit 1, Contractor shall provide Owner with a Letter of Credit
in the form acceptable to Owner and Lender issued from a
financial institution acceptable to Owner and Lender attached
hereto as Exhibit I-2 (the "Letter of Credit for Retainage"),
in an amount equal to the product of the Contract Price
multiplied by 0.025. Upon the issuance of this Letter of
Credit, Owner shall pay to the Contractor a portion of the
Retainage in an amount equal to the product of the Contract
Price multiplied by 0.025. At Commercial Operation Date of the
Plant, Contractor shall increase the Letter of Credit for
Retainage by an amount equal to the product of the Contract
Price multiplied by 0.025 (Total amount equal to the product of
the Contract Price multiplied by 0.05). Upon issuance of the
adjusted Letter of Credit for Retainage by the Contractor, the
Owner shall pay to the Contractor a portion of the Retainage
equal to the product of the Contract Price multiplied by 0.025.
Owner shall have the unconditional right to draw upon such
Letter of Credit for Retainage for (i) damages, (ii)
compensation, (iii) the completion of Punch List Items if
Contractor has failed to complete such Punch List Items, (iv)
any reason set forth in under Article 11 and 15, or (v) any
other purpose specified in the draw certificate to the Letter
of Credit of Retainage. Within thirty (30) days after the Final
Acceptance Date, Owner shall return the remaining amount of
cash Retainage. At the end of twelve (12) calendar months and
twenty (20) days of the Final Acceptance Date, Owner shall
return the remaining Letter of Credit for Retainage to the
issuing bank with instructions for cancellation.
7.5 Financing of Plant
7.5.1 This Contract shall be the document referred to
in the Construction Loan Agreement as the agreement between the
Owner and Contractor for the Work.
7.5.2 The Construction Loan Agreement will require
that so long as Owner is not in default under the Construction
Loan Agreement and Contractor is not in default hereunder, and
provided that all other conditions precedent set forth in the
Construction Loan Agreement been satisfied, the Lender shall,
under the terms of the Construction Loan Agreement, disburse
funds for the purpose of Owner making the payments called for
by this Contract, except for those payments that are disputed
in accordance with this Contract.
7.5.3 Contractor shall promptly execute any
additional customary documentation reasonably requested by
Lender, including but not limited to documents evidencing
Contractor's consent to assignment of this Contract to Lender.
7.6 Contractor's Payment Account. Each payment made
pursuant to this Article shall be paid directly to Contractor.
Such payment shall be wire-transferred to an account designated
in writing by Contractor.
7.7 Lenders Requirements and Lien Waivers
7.7.1 Contractor acknowledges that Owner will borrow
certain funds from Lender for the construction of the Facility
and that, as a condition to making loans to Owner, Lender may
from time to time require amendments to this Contract and
certain documents from Contractor and its subcontractors,
materialmen and suppliers. In that connection, Contractor
agrees to furnish to Lender such written information,
certificates, copies of invoices and such receipts, Lien
waivers (upon payment), affidavits and other like documents as
Lender may reasonably request. Contractor shall negotiate in
good faith amendments to this Contract reasonably requested by
Lender. Upon Lender and Owner memorializing their legal rights
and obligations to each other in a final loan agreement, (the
"Construction Loan Agreement"), Contractor shall, on Lender's
request, state in writing as a condition precedent to
financing, whether or not it is satisfied with Owner's
performance to that date.
7.7.2 As a condition precedent to the making of any
payment under this Contract, Owner may require that Contractor
and each of its Substantial Subcontractors and Substantial
Vendors supply Owner with a certificate, in substantially the
same form as Exhibit J attached hereto, stating that all
amounts due to Contractor and its Subcontractors and Vendors
have been paid. Contractor shall obtain such certificates
simultaneously with the payment to a Substantial Subcontractor
or Substantial Vendor and submit the same upon request of
Lender.
7.7.3 Contractor hereby subordinates any Liens or
security interests to which it may be entitled by law or under
the provisions of this Contract to any Lien or security
interest granted in favor of Lender. In addition, Contractor
shall submit proof satisfactory to Owner that it has included
in each subcontract entered into by it with a Substantial
Subcontractor a requirement that any Lien or security interest
to which such Substantial Subcontractor may be entitled
thereunder or by law shall be subordinate and inferior to any
Lien and security interest granted in favor of Lender.
7.7.4 A "Substantial Subcontractor" is a
subcontractor, materialman or supplier, whose initial contract
or contracts (in the aggregate) with Contractor call for a
payment or payments by Contractor totaling at least $250,000.
A "Substantial Vendor" is a Vendor whose initial contract or
purchase orders (in the aggregate) with Contractor calls for a
payment by Contractor of at least $250,000.
7.7.5 In the event of Owner's default under this
Contract, Lender shall have the right within not more than one
hundred eighty (180) days to cure Owner's default and, in such
event, Contractor's duties and obligations under this Contract
shall be unaffected. Contractor further agrees to perform its
obligations under this Contract for the benefit of Lender in
the event of Owner's default under this Contract or under the
Construction Loan Agreement, provided that Lender (or its
assignee) shall have cured all defaults of Owner's obligations
under this Contract which Lender is reasonably capable of
curing and shall have paid all amounts then due, including
costs to cure.
7.7.6 Contractor shall promptly execute any
additional documentation as may be mutually agreed upon in
form and substance, reasonably requested by Lender, including,
but not limited to, documents evidencing Contractor's consent
to assignment of this Contract as security to Lender or
otherwise upon the occurrence of events specified in such
documents and any reasonable modifications to this Contract.
ARTICLE 8
TITLE AND RISK OF LOSS
8.1 Clear Title. Unless and to the extent earlier elected
by Owner following payment thereof under Article 7 or otherwise
under this Contract, Contractor warrants and guarantees that
legal title to and the ownership of the Work (including all
Design Documents, As-Built Drawings, specifications and
operations and maintenance manuals and spare parts required by
Owner in connection with the operation and maintenance of the
Facility) shall pass to Owner, free and clear of any and all
Liens at the Commercial Operation Date, except for those Liens
that may be created by the actions of Owner.
8.2 Risk of Loss. From initial mobilization by
Contractor under this Contract to the Commercial Operation
Date, Contractor shall assume the risk of loss for the
Facility including: (a) any Equipment (whether on the Facility
Site or in storage off Facility Site), (b) any other Work
completed at such site, and (c) any Work in progress. All
Equipment in storage but not yet incorporated into the
Facility shall be stored in secured areas. Contractor shall
bear the responsibility of preserving, safeguarding, and
maintaining such Equipment and any such other completed Work.
Except to the extent covered by Builders Risk Insurance
pursuant to Article 4.8 hereof, if any loss, damage, theft or
destruction occurs at the Facility Site prior to the
Commercial Operation Date for which Contractor so assumed the
risk of loss, Contractor shall, at its cost, promptly repair
or replace the property subject thereto.
ARTICLE 9
INSURANCE
9.1 Contractor's Insurance. Prior to commencing any
construction pursuant to this Contract and continuing until
Owner has issued Final Acceptance Date, Contractor shall
maintain in force insurance policies providing insurance
coverage including (i) Worker's Compensation (or equivalent)
that complies with the Laws of the People's Republic of China,
(ii) General Liability Insurance covering property damages of
all property owned by Contractor and personal injury subject to
the approval of Owner and Lender, and (iii) automobile
Liability including coverage for all owned, leased. or non-
owned licensed automobile Equipment.
9.2 General Terms. Each insurance policy required by this
Article 9, except the Worker's Compensation coverage, shall be
in a form reasonably satisfactory to Owner and Lender.
9.3 Other Specific Terms. Contractor shall request the
issuers of the Comprehensive General Liability Insurance to
amend such insurance policy required by this Article 9 to (i)
include Owner, Lender and the Utility, their directors,
officers and employees as additional insureds, (ii) include a
waiver of all rights of subrogation against the Utility, Lender
and Owner, their directors, officers and employees, (iii)
provide that complete copies of all inspection or other reports
required or performed for the insurer shall be provided to
Owner within thirty (30) Days of delivery to Contractor, and
(iv) provide that Owner, Lender and the Utility must be given
at least thirty (30) Days prior written notice of cancellation.
Contractor shall request all insurers under this Article 9 to
provide Owner, Lender and the Utility with certificates of
insurance evidencing the policies and endorsements upon the
earlier of the initial mobilization as contemplated in Article
5.1 or the Financial Closing (unless, Owner consents to a later
date) and on each issuance anniversary while such insurance is
in effect.
9.4 Property Insurance Loss Adjustment. Any insured loss
shall be adjusted with Contractor and any payment made by any
insurance carrier concerning an insured loss to property shall
be paid to the party entitled thereto.
9.5 Waiver of Subrogation. All policies of Subcontractors
shall include a waiver of any right of subrogation of the
insurers thereunder against Owner, Lender, Institute, the
Utility and Contractor, and any right of the insurers to any
set-off or counterclaim, offset or any other deduction, whether
by attachment or otherwise, in respect of any liability or any
such person insured under such policy.
9.6 Nonwaiver. Failure of Contractor to comply with the
foregoing insurance requirements shall in no manner waive its
respective obligations or liabilities under this Contract or
the rights of Owner under this Contract against Contractor.
9.7 Right to Insure. Should Contractor fail to provide or
maintain any of the insurance coverage required under this
Article 9, Owner shall have the right to provide or maintain
such coverage at Contractor's expense, either by direct charge
or set off.
9.8 No Liability Limit. Nothing in this Article 9 shall
be deemed to limit Contractor's liability under this Contract
to the insurance coverages required by this Article 9.
ARTICLE 10
PERFORMANCE TESTS AND FINAL ACCEPTANCE
10.1 Notice. Contractor shall provide Owner with at least
forty-five (45) Days advance notice of the initial testing of
each Unit of the Plant that involves delivering energy to the
Utility or the Thermal Users. Contractor shall deliver another
notice within five (5) Business Days prior to the actual
commencement of Performance Tests. Contractor shall provide
Owner, Utility and Lender with at least forty-five (45) Days
written notice prior to the start of the Performance Tests and
the commencement of any other test performed by or on behalf of
Contractor pursuant to this Contract, or as required by the
Power Purchase Agreement, Owner, the Utility and Lender shall
leave the option to witness any such tests. All test
procedures and initial start-up procedures conducted by
Contractor shall be in accordance with the Design Criteria,
this Contract, the Power Purchase Agreement, applicable thermal
energy supply contracts, applicable manufacturers' instructions
and warranty requirements, generally recognized and accepted
engineering principles and practices, Applicable Laws and
Applicable Permissions, and any and all applicable rules and
procedures described herein and as otherwise Creed to by Owner,
Lender and Contractor.
10.2 Performance Tests. All Performance Tests shall be
performed In accordance with the requirements set forth In the
Scope of Work.
10.3 Performance Test Procedures. The Contractor will be
required to provide to the Owner and Lender, for review and
acceptance, a detailed Performance Test Procedure which will
include but not be limited to (i) description of the test
procedures; (ii) list of all data to be collected; (iii)
instrumentation and location for taking all data points; (iv)
correction curves; (v) instrument and test accuracies; and (vi)
sample calculations. The draft performance test procedure shall
be submitted for review at least one hundred and eighty (180)
Days before the expected test date. Performance Tests shall
not start until the Owner and Lender have accepted the test
procedure and agreed to the sample calculation. Comments shall
be provided by Owner within ten (10) working Days. If no
comments are received within the ten (10) Day period, approval
by Owner shall be presumed.
10.4 Failed Performance Tests. If either Unit or the Plant
fails, as determined by the performance requirements in the
Scope of Work (Exhibit B) and Article 13 of this Contract, any
part of its original Performance Tests, Contractor shall take
appropriate corrective action and the failed or incompleted
Performance Tests shall then be performed again. If ▇▇▇▇ ▇
fails any part of the retest, the Contractor shall take
appropriate action and the Performance Tests shall be repeated.
If the Plant fails any part of the retest, Contractor shall
take appropriate corrective action and the Performance Tests
shall be repeated, unless Contractor pays required liquidated
damages hereunder relating thereto; provided, however, that on
and after first anniversary of the Guaranteed Commercial
Operation Date, no further Performance Tests shall be allowed
and Liquidated Damages, based on most recent Performance Tests,
shad be paid.
10.5 Notice of Commercial Operation of Unit 1. Once
Contractor has completed (i) the Performance Testing for Unit
1, (ii) has performed all of the requirements in accordance
with Article 10.2 hereof, (iii) and Unit 1 is capable of being
operated safely in accordance with this Contract and the Power
Purchase Agreement, the Contractor shall submit to Owner a
written notice for Unit 1 so stating and specifying the date
that Commercial Operation for Unit 1 was achieved. The
Performance Tests Reports shall be made a part of, and be
submitted with, such notices for Unit 1.
10.6 Notice of Commercial Operation of the Plant. Once
Contractor (1) has completed the Performance Testing for the
Plant, and (ii) performed all of the requirements in accordance
with Article 10.2 hereof, and the Plant is capable of being
operated safely in accordance with this Contract and the Power
Purchase Agreement, the Contractor shall submit to Owner a
written notice for the Plant so stating and specifying the date
that Commercial Operation for the Plant was achieved. The
Performance Tests Reports shall be made a part of, and be
submitted with, such notices for the Plant.
10.7 Owner's Acceptance of Commercial Operation. Within
fifteen (15) Business Days following receipt by Owner of such
notice of Commercial Operation for Unit 1 or for the Plant,
Owner shall notify Contractor in writing whether Contractor has
fulfilled the requirements of this Contract sufficient to
successfully achieve such Commercial Operation. If Owner
determines that Contractor has not fulfilled the requirements
for Commercial Operation, Owner shall so notify Contractor,
specifying in reasonable detail the manner in which the
requirements for Commercial Operation had not been met. With
regard to the Plant, Contractor shall promptly act to correct
such deficiencies so as to achieve Commercial Operation by the
Guaranteed Commercial Operation Date. In addition, if
Contractor fails to achieve such Commercial Operation by the
Guaranteed Commercial Operation Date, Contractor shall be
liable for the damages payable pursuant to Article 13 hereof.
Following any such remedial action, Contractor may deliver to
Owner a new Commercial Operation notice (including the forty-
five (45) Day notice) conforming to the requirements of this
Article 10, and the provisions of this Article 10.7 shall apply
with respect to such new Commercial Operation notice in the
same manner as they applied with respect to the original
Commercial Operation notice. The foregoing procedure shall be
repeated as often as necessary until Owner no longer rejects
Contractor's Commercial Operation notice and provides its own
notice to Contractor that the Commercial Operation Date has
occurred.
10.8 Notice of Final Acceptance. Once Contractor has
completed all of the requirements for Final Acceptance,
Contractor shall submit a proposed Final Acceptance Certificate
to Owner. A team consisting of representatives of Owner,
Lender and Contractor shall as soon as practicable make a final
inspection of the Facility and determine whether the Facility
meets all requirements of this Contract. Within fifteen (15)
Business Days following such final inspection, Owner, with the
consent of Lender, shall notify Contractor in writing whether
Contractor has fulfilled the requirements of this Contract to
reach Final Acceptance. If Owner determines in good faith
that, notwithstanding Contractor's delivery of the Final
Acceptance Certificate, the Facility has not fulfilled the
requirements for Final Acceptance for the Facility, then Owner
shall deliver its written notice to such effect to Contractor
describing in reasonable detail the deficiencies noted and
corrective action recommended, including projected target dates
for the completion of such incomplete or remedial Work, but in
no event later than six (6) months from the Commercial
Operation Date and, in the case of freeze protection, it shall
be completed by November 1, 1998. Contractor shall promptly
act to correct any such deficiencies. The procedure set forth
in this Article 10 shall be repeated as necessary until Owner
accepts the Final Acceptance Certificate and provides its own
notice to Contractor that the Final Acceptance Date has
occurred. If Contractor has not completed the requirements for
Final Acceptance within six (6) months after the Commercial
Operation Date Owner may, upon notice to Contractor, complete
any remaining Punch-List Items and charge (or deduct from
Retainage and/or Contractor's Letter of Credit) all expenses
incurred by Owner to complete such items.
ARTICLE 11
WARRANTIES AND GUARANTEES
11.1 Materials and Workmanship.
11.1.1 Contractor warrants to Owner that all
Equipment and other items furnished under this Contract by
Contractor (either directly or indirectly) shall be new and of
good quality, shall be free from improper workmanship and
defective materials, and shall conform to the Design Criteria
set forth in the Scope of Work. Contractor agrees, as soon as
reasonably possible after receipt of notice from Owner
specifying any defects or deficiencies with respect to the
Facility, promptly to correct or cause to be corrected, any
Work performed under this Contract that, at any time for a
period of one (1) year after the Final Acceptance Date proves
to be improper or defective with regard to the Scope of Work in
design, material or workmanship for the Facility. The warranty
period for such repaired deficiencies or defects in the
Facility shall extend for an additional one year period from
the date of the repair. In addition, if any item of Equipment
(or part thereof) or other specific item of the Work is
repaired or replaced during the applicable warranty period, the
warranty on such specific item (but not the Equipment, if any,
of which such item is a part) shall extend for an additional
one year from the completion of such repair or replacement.
Contractor shall bear all costs and expenses associated with
correcting any warranted Work, including, without limitation,
necessary disassembly, transportation, reassembly and
retesting, as well as reworking, repair or replacement of such
Work, and disassembly and reassembly of adjacent Work when
necessary to give access to improper, defective or non-
conforming Work, together with all reasonable attorneys' fees,
engineering fees, and other costs and expenses incurred by
Owner in enforcing the provisions of this Article 11.
11.1.2 If a particular item is repaired, replaced
or renewed one time and becomes defective again during the
applicable warranty period, then Contractor agrees that unless
Contractor can demonstrate to Owner's reasonable satisfaction
that there is not an unreasonable risk of the reoccurrence of
such problem, Contractor will undertake a technical analysis
of the problem and clear the "root cause" to Owner's
reasonable satisfaction.
11.2 Engineering and Design. Contractor guarantees that
it shall perform or have performed all of the construction
surveying, engineering and design services as of the Final
Acceptance Date, with respect to the Facility in accordance
with sound engineering practice, Design Documents and
Construction Drawings, plans and specifications for the
Facility (including the as-built Drawings provided under
Article 3.18 hereof), and that, when complete, the Facility
will be free of all defects and deficiencies and will be
operational in compliance with this Contract, the Power
Purchase Agreement, the Scope of Work, Applicable Permissions
and all Applicable Laws in effect as of the Final Acceptance
Date. Contractor warrants that, as of the Final Acceptance
Date, no design or other service provided under this Contract
shall infringe on any patent or constitute a misappropriation
of any trade secret. Except to the extent any Change in Law
results in a change in the Scope of Work and is payable by
Owner pursuant to Article 7, Contractor shall at its own
expense promptly correct any errors and omissions and resulting
deficiencies in the Facility as soon as reasonably possible
after receipt of notice from Owner specifying such
deficiencies.
11.3 Vendors and Subcontractors. Except as otherwise
provided herein, Contractor shall, for the protection of
Contractor and Owner, obtain from the Vendors and
Subcontractors such guarantees and warranties with respect to
Work performed and Equipment used and installed under this
Contract as are reasonably obtainable, which guarantees and
warranties shall equal or exceed those named in Article 11.1 or
Article 11.2 above and shall be made available and assignable
to Owner to the full extent of the terms thereof. Such
guarantees and warranties shall extend for a period of at least
one year after the Commercial Operation Date. In addition, if
more complete warranty or guarantee protection is available
than as set forth above with respect to the turbine generator
or any other principal Equipment, Contractor shall notify Owner
of the availability of such additional protection and of the
cost thereof, and Owner shall have the right to require
Contractor to secure such additional warranty or guarantee
protection pursuant to a Change Order issued in accordance with
the provisions of Article 6 above. Upon the earlier of the
Final Acceptance Date or termination of this Contract,
Contractor shall deliver to Owner copies of all relevant
contracts providing for the guarantees and warranties.
11.4 Assignment of Warranties. Contractor shall provide
Owner with, and hereby assigns to Owner effective at the
expiration of the warranty provided by Contractor (or at such
earlier date as Owner may request), all warranties and/or
guaranties relating to the Work or the Equipment that
Contractor receives from any and all of the Vendors and
Subcontractors.
11.5 Limitations. The express warranties and guarantees
contained herein shall be subject to the following terms and
conditions:
11.5.1 The term "defective" or "deficient" shall not
be construed to include damage caused exclusively by Owner's
misuse, negligence or failure to follow (i) generally accepted
and approved industry practices in the operation and
maintenance of the Facility, (ii) Contractor's written
operating and maintenance instructions accepted by Owner.
11.5.2 Owner's remedies with respect to such
warranties and guarantees shall be limited to those expressly
set forth In this Article 11.
11.5.3 Repair, adjustment, modifications or
replacement provided herein and reimbursement to Owner for
costs, charges and expense incurred (but not revenue lost) due
to the occurrence of a warranty claim event and, when
applicable, the supply of corrected technical information and
recommendations shall constitute fulfillment of all warranty
liabilities of Contractor to Owner under this Article 11 for
the Facility, whether based on contract or negligence of any
kind, strict liability or tort on the part of Contractor or of
its suppliers, engineers, or Subcontractors of any tier or
otherwise.
11.5.4. In the event, unless mutually agreed to the
contrary, Owner observes a defective occurrence in relation to
any Equipment, which Owner believes is covered by the Warranty
set forth in this Article 11, Owner shall promptly, and within
the Warranty period set forth herein, notify Contractor of the
occurrence believed to be defective in order that Contractor,
or its representative may have an opportunity to observe, as
provided above, test and examine the Equipment or part of such
Equipment believed to be defective. Contractor or its
representative shall, upon confirming the defect cause the
repair, allotment, modification or replacement which
Contractor, or its representative believe is required,
provided, however, upon receiving such notice, if Contractor
and Owner mutually agree to the amount of the total costs of
such necessary repair, adjustment, modification or replacement,
including Owner's costs, charges and expenses attributed
thereto as identified above, Contractor may, on Owner's
request, immediately consent to Owner making such repairs,
adjustments, modification or replacement at Contractor's
expense.
11.5.5 In the event of any emergency and, in the
reasonable judgment of Owner, the delay that would result from
giving formal notice to Contractor would cause serious loss or
damage which could be prevented or mitigated by immediate
action, any action including correction of defects and
deficiencies may be done by Owner or a third party chosen by
Owner, without giving prior notice to Contractor, and the cost
of correction shall be paid by Contractor in the case of a
defect or deficiency. In the event such action is taken by
Owner, Contractor shall be promptly notified, and shall assist
whenever and wherever possible in making the necessary
correction.
11.5.6 In the event that it is necessary (in order to
fulfill Contractor's warranty obligations under Article 11 or
otherwise) to dismantle piping, ducts, machinery, Equipment or
other Work furnished or performed by Contractor in order to
obtain access to the Work, to correct a defect or deficiency,
the cost of all such dismantling and reassembly will be borne
by Contractor.
11.5.7 THE EXPRESS WARRANTIES OF CONTRACTOR SET FORTH
IN THIS CONTRACT, AND THE REMEDIES OF OWNER FOR BREACH THEREOF,
INCLUDING, WITHOUT LIMITATION, THOSE EXPRESS WARRANTIES SET
FORTH IN THE EXHIBITS HERETO, ARE EXCLUSIVE AND ARE GIVEN BY
CONTRACTOR AND ACCEPTED BY OWNER IN LIEU OF ANY AND ALL IMPLIED
WARRANTIES.
11.6 Remedies of Owner for Breach of Warranties. If
Contractor fails to diligently commence, continue or complete
the making good of such materials or workmanship in a manner
fulfilling its obligations under Articles 11.1, 11.2, 11.3, and
11.4 hereof within a reasonable period of time after written
request of Owner to perform such obligations, then Owner may
correct such defective workmanship in accordance with this
Contract, and Contractor shall be liable (either by direct
charge or set-off) for all reasonable costs, charges, and
expenses incurred by Owner in connection with such repair or
replacement and shall within fifteen (l5) Days after request
therefor pay to Owner an amount equal to such costs, charges,
and expenses, upon receipt of invoices certified by Owner, and
each Day thereafter as such amounts accrue from the due date,
interest shall accrue thereon at two percent (2%) per annum
above the Reference Rate, until paid.
ARTICLE 12
COMPLETION GUARANTEE
12.1 Guarantee of Timely Commercial Operation. Contractor
hereby guarantees that Commercial Operation shall occur not
later than the Guaranteed Commercial Operation Date. In the
event that Commercial Operation shall not occur by the
Guaranteed Commercial Operation Date, Owner may exercise all
remedies provided it under this Article 12.
12.2 Delay in Commercial Operation.
12.2.1 Delay in Commercial Operation Caused by
Contractor. Owner and Contractor acknowledge and agree that
any failure to achieve Commercial Operation by the Guaranteed
Commercial Operation Date will directly cause substantial
damage to Owner, which damage cannot be ascertained with
reasonable certainty. The damage Owner would suffer would
include, but not be limited to, increased construction loan
interest costs and lost revenues. Accordingly, if Contractor
shall fail to achieve Commercial Operation by the Guaranteed
Commercial Operation Date, it shall pay, as liquidated damages,
commencing with September 1, 1998, subject to the extensions
provided for in the definition of "Guaranteed Commercial
Operation Date" herein above and, subject to extension as may
be provided for by Change Order, the sum of (i) $50,000 per Day
for each subsequent Day that Commercial Operation is delayed
after the Guaranteed Commercial Operation Date. In no event
shall liquidated damages payable pursuant to this Article
12.2.1 exceed Eighteen Million Dollars ($18,000,000).
12.2.2 Delay in Commercial Operation Caused By Other
Parties. Owner and Contractor acknowledge and agree that if
any delays are caused solely by Owner which results in the
failure to achieve Commercial Operation by the Guaranteed
Commercial Operation Date, Owner shall pay to Contractor the
actual bank fees charged by the Acceptable Guarantor to keep
the Bank Guarantee, as defined in Article 3.30, in full force
and effect from the period between (i) Owner's receipt of
Contractor's Notice of Commercial Operation Date of the Plant
and (ii) the release of the Bank Guarantee (hereafter referred
to as the "Bank Fees"). In the event that delays are caused by
third parties not associated with either Owner or Contractor,
or by a Force Majeure Event which results in the failure to
achieve Commercial Operation by the Guaranteed Commercial
Operation Date, Owner and Contractor agree to share equally the
Bank Fees.
12.3 Possession of Facility Following Commercial
Operation. Owner shall take possession of the Facility after
achievement of Commercial Operation Date by Contractor.
Contractor shall thereafter use its best efforts to minimize
interference with Owner's operation of the Facility while
completing the Work under this Contract. The Contractor shall
not perform any additional Performance Tests after achievement
of Commercial Operation Date. Damages and/or Bonuses due shall
be based upon the last Performance Test completed prior to the
Commercial Operation Date.
12.4 Payment of Liquidated Damages. Liquidated damages,
if any, under this Article 12 shall accrue on a daily basis for
each Day of delay. Within thirty (30) Days after the end of
each month during which such compensation accrues under this
Article 12, Owner shall provide Contractor with a statement of
the amount of liquidated damages owed for such month.
Contractor shall pay any liquidated damages pursuant to this
Article 12 within ten (10) Days after receipt of the statement
referred to above in this Article 12.4. If Contractor fails to
make payment within ten (10) Days, Contractor shall pay
interest thereon at the Reference Rate plus two percent (2%)
from the due date (that is, within ten Days after the notice
referred to above) until paid. The total and cumulative
liquidated damages payable under Articles 12.2, 13.2.1, 13.2.2,
and 13.2.3 shall not exceed thirty-five percent (35%) of this
Contract Price.
12.5 Bonus for Early Completion. In the event that
Commercial Operation occurs prior to the Guaranteed Commercial
Operation Date, the Contractor shall be compensated Twelve
Thousand and Five Hundred Dollars ($12,500) per day for every
day between August 15, 1998 and August 31, 1998 that Commercial
Operation is achieved. If Commercial Operation is achieved
prior to August 15, 1998, the Contractor shall be compensated
Twenty-Four Thousand and Nine Hundred Dollars ($24,900) per day
for every day between August 1, 1998 and August 15, 1998 that
Commercial Operation is achieved. No early completion bonus
shall be paid for any early completion date prior to August 1,
1998.
ARTICLE 13
LIQUIDATED DAMAGES FOR FAILURE
TO ACHIEVE GUARANTEED PERFORMANCE
13.1 Guarantee. Contractor warrants and guarantees that,
before the Commercial Operation Date (i) the Net Dependable
Capacity of the Plant shall be, as corrected to Design
Conditions, equal to, or greater than 102,000 kW, (ii) the heat
rate of the Plant operating as corrected to summer Design
Conditions shall be equal to, or less than 12,817 KJ/KWHR (LHV)
("Guaranteed Heat Rate"); (iii) the emission levels from the
Plant operating at full load conditions on coal, of the quality
and quantity specified, shall be equal to or less than, the
emissions limitations (as demonstrated through the use of air
quality sampling criteria and the techniques referenced
therein) of the Applicable Permissions and Applicable Laws as
more fully described in Chapter 7 of the Feasibility Study and
Article 3.0 of the Scope of Work ("Guaranteed Maximum Plant
Emission Level"); and (iv) the noise level at the Facility
shall not exceed that required by Applicable Permissions and
Applicable Law under all normal operating conditions and in any
case at levels established in accordance with Article 3.0 of
the Scope of Work (the "Guaranteed Maximum Noise Level").
Items (I) through (iv) of this paragraph constitute the
"Guaranteed Performance Levels."
13.1.1 Contractor's compliance with the guarantees set
forth in Article 13.1 or the degree of its failure to comply with any
such guarantee, shall be determined on the basis of the
Performance Tests in Article 10 and the results of such tests
shall be conclusive for such purpose.
13.2 Liquidated Damages. If, as of the Guaranteed
Commercial Operation Date, the Performance Tests have not been
successfully completed such that the actual Net Dependable
Capacity, heat rate and the emission levels of the Plant (as
corrected to Design Conditions) meet the Guaranteed Performance
Levels, Contractor shall be able to declare commercial Operation
not withstanding its failure to achieve the Guaranteed
Performance Levels, provided all other requirements for
Commercial Operation are met, by electing to make liquidated
damage payments in accordance with Articles 13.2.1, 13.2.2, and
13.2.3. The parties have agreed that Owner's actual damages, in
the event of a failure to achieve the Guaranteed Performance
Levels, would be extremely difficult or impractical to
determine.
13.2.1 Penalty for Deficiency in Net Dependable
Capacity. If the Plant Acceptance Tests demonstrate that the
Net Dependable Capacity is less than the Guaranteed Net
Dependable Capacity, Contractor shall pay Owner or an amount of
Seven Hundred Dollars ($700)/kW below 102,000 kW Net Dependable
Capacity as corrected to summer Design Conditions.
13.2.2 Liquidated Damages for Failure to Meet Heat
Rate Guarantee. If the Plant Acceptance Test demonstrates that
the Heat Rate, at summer Design Conditions, is greater than one
hundred and one percent (101%) of the Guaranteed Heat Rate,
Contractor shall pay to Owner the applicable liquidated damages
of Five Thousand Dollars ($5,000) for each KJ/kWh in excess of
the Net Heat Rate Guarantee.
13.2.3 Liquidated Damages for Failure to Meet
Emissions Guarantee. Contractor and Owner agree that the Plant
must only be operated in compliance within the Guaranteed
Maximum Facility Emission Levels, Applicable Law and Applicable
Permissions. If, at summer Design Conditions, the Plant cannot
be operated with an output of 102,000 net kilowatts and with
emissions limitations of less than the Guaranteed Maximum
Facility Emission Levels, then Contractor shall pay Owner at
Seven Hundred Dollars ($700)/kW shortfall necessitated by
operating the Plant at a reduced electrical output such that it
is in compliance with such emissions limitations.
13.3 Net Dependable Capacity Bonus. If Contractor
achieves a Guaranteed Net Dependable Capacity (as corrected to
Design Conditions as contemplated in Article 13.1) in excess of
the Guaranteed Net Dependable Capacity as such Guaranteed Net
Dependable Capacity is determined by the last Plant Acceptance
Test, then in such event, a bonus shall be owing to Contractor
from Owner in an amount that is the aggregate of Five Hundred
Fifty Dollars ($550) per kilowatt by which such Net Dependable
Capacity exceeds the Guaranteed Net Dependable Capacity
provided, however, that such Net Dependable Capacity bonus shall
not exceed One Million Dollars ($1,000,000). Such bonus shall
be paid within thirty (30) Days after the Final Acceptance Date.
13.4 Net Heat Rate Bonus. If Contractor achieves a Net Heat Rate
(as corrected to Design Conditions as contemplated in Article
13.1) that is less than the Net Heat Rate Guarantee (as such Net
Heat Rate is determined measured by the last Plant Acceptance
Test), then in such event, a bonus shall be owning to Contractor
from Owner in an amount that is the aggregate of One Thousand One
Hundred and Sixty-Five Dollars ($1,165) per KJ per kilowatt hour
by which such Net Heat Rate is less than ninety-nine percent
(99%) of the Net Heat Rate Guarantee provided, however, that such
Net Heat Rate bonus shall not exceed One Million Dollars
($1,000,000). Such bonus shall be paid within thirty (30) days
after Final Acceptance Date.
13.5 Payment of Liquidated Damages. Contractor shall pay any
liquidated damages pursuant to this Article 13 within fifteen
(15) Days after the date on which such damages are due and
payable, together with interest thereon at the Reference Rate
plus two percent (2%) from the due date until paid. The total
and cumulative liquidated damages payable under Articles 12.2,
13.2.1, 13.2.2, and 13.2.3 shall not exceed thirty-five percent
(35%) of this contract Price.
ARTICLE 14
CONTRACTOR'S REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties. Contractor represents and
warrants that:
14.1.1 Corporate Standing and Authorization. It is a
corporation duly organized, validly existing, and in good
standing under the laws of the People's Republic of China; and
the execution, delivery and performance of this Contract have
been duly authorized by all requisite corporate action and will
not violate any provision of any governmental rule, regulation,
or ordinance, its charter or by-laws, or any indenture,
agreement, or instrument to which it is a party or by which it or
its property may be bound or effected.
14.1.2 No Violation of Law. Contractor is not in violation
of any Applicable Law which violations, individually or in the
aggregate, would affect its performance of its obligations under
this Contract.
14.1.3 Licenses. Contractor is the holder of all central,
provincial and local and other governmental consents, licenses,
permissions, and other authorizations and Applicable Permissions
required to operate and conducts its business now and as
contemplated by this Contract.
14.1.4 Litigation. Except as otherwise disclosed to both
Owner and Lender, Contractor is not a party to any legal,
administrative, arbitral, investigatorial (to the best of its
knowledge), or other proceeding or controversy pending, or the
best of its knowledge, threatened, that could adversely affect
its ability to perform under this contract.
14.1.5 Qualifications. It has (a) examined this Contract,
together with all Exhibits attached hereto, thoroughly, and
become familiar with all their respective terms and provisions;
(b) by itself and through its Subcontractors and vendors, the
full experience and proper qualifications to perform the Work and
to construct the Facility in accordance with the Scope of Work
and Drawings and Design Document therefor; (c) visited and
examined the Facility Site and is fully familiar with such site
and based on such visit and examination has no reason to believe
that Contractor will be unable to complete the Work in accordance
with this Contract; and (d) to the best of its knowledge,
reviewed all other documents and information necessary and
available to Contractor in order to ascertain the nature,
location and Scope of the Work, the character and accessibility
of the Facility Site, the existence of obstacles to construction,
the availability of facilities and utilities, the location and
character of existing or adjacent Work or structures.
14.1.6 Waiver of Liens. Contractor will, subject to
Applicable Laws to the extent payment for work is received,
unconditionally waive and release any and all partial Liens,
claims or rights that it or its Subcontractors have or may have
against Owner or the Facility on account of Work performed and
paid for pursuant to this Contract. Subject to requirements
under local law, before any Subcontractor performs Work pursuant
to this Contract, Contractor shall obtain the consent of each
such Subcontractor to such waiver of partial Lien rights. In
lieu thereof and as approved by Owner, Contractor may furnish
such other form of assurance (such as, a bond issued by a bonding
company acceptable of Owner) indemnifying Owner against any such
partial Lien or claim, which bond shall remain in full force and
effect until any such partial Lien or claim is discharged of
record or otherwise satisfied.
14.1.7 Access Rights. Access rights granted to Contractor
to the Facility Site are adequate for the performance of the Work
and operation of the Facility.
ARTICLE 15
DEFAULT AND TERMINATION
15.1 Default by Contractor.
15.1.1 Termination for Contractor's Inability to
Perform. If (i) Contractor consents to the appointment of or
taking possession by, a receiver, a trustee, custodian, or
liquidator of itself or of a substantial part of its property,
or fails or admits in writing its inability to pay its debts
generally as they become due, or makes a general assignment for
the benefit of creditors; (ii) Contractor files a voluntary
petition in bankruptcy or a voluntary petition or an answer
seeking reorganization in a proceeding under any applicable
bankruptcy or insolvency laws (as now or hereafter in effect) or
an answer admitting the material allegations of a petition filed
against it in any such proceeding or seeks relief by voluntary
petition, answer or consent, under the provisions of any now
existing or future bankruptcy, insolvency or other similar law
providing for the liquidation, reorganization, or winding up of
corporations, or providing for an agreement, composition,
extension, or adjustment with its creditors; (iii) a substantial
part of Contractor's property is subject to the appointment of a
receiver, trustee, liquidator, or custodian by court order and
such order shall remain in effect for more than thirty (30)
Days; or (iv) Contractor is adjudged bankrupt or insolvent, has
any property sequestered by court order and such order shall
remain in effect for more than thirty (30) Days, or has filed
against it a petition under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in
effect, and such petition shall not be dismissed within thirty
(30) Days of such filing; then Owner may request assurances
satisfactory to Owner of Contractor's future performance in
accordance with the terms and conditions of this Contract,
including strict compliance with the Construction Schedule. If
Contractor fails to provide such assurances within ten (10) Days
of a request therefor, Owner may without prejudice to any other
of its rights or remedies under this Contract, terminate
Contractor's employment and his Contract.
15.1.2 Termination for Contractor's Failure to
Perform. If Contractor refuses or fails except in cases for
which extension of time is provided by Owner, to perform in
accordance with this Contract including, but not limited to,
under Article 5.2.3 (relating to achieving milestones in the
applicable Critical Dates) or as a result of a breach of any of
any other of Contractor's covenants, agreements, representations
and warranties, then, if Contractor fails to correct such
condition within fifteen (15) Days after written notice of such
condition from Owner, or if not capable of being corrected
within such fifteen (15) Day period, to commence to correct such
condition within such fifteen (15) Days after receipt of notice
of such condition from Owner and to thereafter diligently
prosecute such corrective action to completion (in a time period
not to exceed ninety (90) Days) in a manner satisfactory to
Owner in its sole discretion, Owner may, at its option, without
prejudice to any other right or remedy under this Contract,
terminate Contractor's employment and this Contract.
15.1.3 Termination for Insufficiencies in Bank
Guarantee
(a) If Contractor fails to secure the Bank Guarantee
for Liquidated Damages, as required pursuant to Article 3.30 above,
at the time of Project Funding, Owner may provide Contractor with
written notice of intent to terminate and if Contractor fails to
secure such Bank Guarantee within ten (10) Days of written
notice, Owner may, at its sole option, without prejudice to any
other rights or remedies under this Contract, terminate
Contractor's employment and this Contract.
(b) If, at any time, between the date of completion of
the Bank Guarantee for Liquidation Damages and the expiration date set
forth in the Bank Guarantee, the Bank Guarantee is canceled, not
renewed, terminated, or in any way is not in full force and
effect, Owner may, at its sole option, upon written notice to
Contractor without prejudice to any other rights or remedies
under this Contract, terminate Contractor's employment and this
Contract, or, in the alternative, may, upon written notice to
Contractor suspend all payments under this Contract until the
Bank Guarantee is replaced or renewed in a manner satisfactory to
Owner and Lender.
15.1.4 Owner's Rights. In the event that Owner elects to
terminate Contractor's employment pursuant to Article 15.1.1,
15.1.2, or 15.1.3 hereof, Contractor shall provide Owner with the
right to continue to use any and all patented and/or proprietary
information Owner deems necessary to complete the Facility.
Furthermore, Owner shall have the right to take possession and
use without compensation all of Contractor's Equipment located at
the Facility Site on the date of such termination for the purpose
of completing the Work and may employ any other person, firm or
corporation to finish the Work by whatever method that Owner may
deem expedient. Owner may make such expenditures as in Owner's
sole judgment will best accomplish the timely completion of the
Facility without limitation under the provisions of Article 13 or
otherwise. Contractor shall not be entitled to receive any
further payments under this Contract except for payments for Work
performed prior to such termination, but such payment shall only
be made after completion of the Facility and to the extent that
the cost to complete does not exceed the Contract Price.
However, Contractor shall nonetheless continue to be bound by
such provisions of this Contract that survive such date.
15.1.5 General Obligations. If Owner elects to terminate
Contractor's employment pursuant to Article 15.1.1, 15.1.2, or
15.1.3 hereof, Contractor shall, at Owner's request and at
Contractor's expense, perform the services relative to the Work
so affected including (i) assist Owner in preparing an inventory
of all Equipment in use or in storage at the Facility Site; (ii)
assign to Owner or its nominee all subcontracts and warranties
and other contractual agreements as may be designated by Owner,
which assignment shall occur automatically upon notice from Owner
to Contractor; provided, however, that Contractor shall execute
such documents as may be reasonably requested by Owner to
evidence such assignment; and (iii) remove from the Facility Site
all such Equipment and rubbish and Hazardous Materials as Owner
may request.
15.1.6 Termination Payment Obligations. If Owner
terminates Contractor's employment pursuant to Article 15.1.1, 15.1.2,
or 15.1.3 hereof, as soon as practicable after the Final Acceptance
Date (as if Contractor were still employed under this Contract),
Owner shall determine the total expense reasonably incurred and
accrued in completing the Work, including, without limitation,
additional overhead and legal and other professional expenses
incurred and accrued by Owner to effect such takeover and to
complete the Work. Contractor shall be liable for, and shall pay
to Owner, the amount by which the actual cost of the Work plus
Owner's expenses exceed the Contract Price, within ten (10) Days
following receipt of Owner's demand for such payment. Contractor
shall pay interest at the Reference Rate plus two percent (2%) on
any such amount which is not paid within ten (10) Days following
such demand, until such amount is paid in full.
15.1.7 Indemnification. If any event or condition
specified in Article 15.1.1 or, due to Contractor's acts or
omissions specified in Article 15.1.2, occurs, Contractor agrees
to indemnify and hold Owner harmless from any and all claims,
obligations and liabilities, including judgments, expenses,
costs, fines, and/or penalties of whatever nature arising from or
related to any such event or condition, except to the extent
resulting from Owner's negligence or willful misconduct.
15.2 Suspension or Termination for Convenience
15.2.1 Suspension for Owner's Convenience. Owner
may, by notice in writing to Contractor, suspend at any time the
performance of all or any portion of Work or terminate this
Contract. Upon receipt of such notice, Contractor shall, unless
the notice requires otherwise: (i) immediately discontinue the
Work on the date and to the extent specified in the notice; (ii)
place no further orders or subcontracts for material, services
or facilities with respect to suspended Work other than to the
extent required in the notice; (iii) promptly make every
reasonable effort with the concurrence of Owner to obtain
suspension with terms satisfactory to Owner of all orders,
subcontracts, and rental agreements to the extent they relate to
performance of suspended Work; (iv) continue to protect and
maintain the Work performed, including those portions on which
Work has been suspended; and (v) take any other reasonable steps
to minimize costs associated with such suspension or
termination. As full compensation for any suspension under this
Article 15.3, Contractor will be reimbursed by Owner for the
following costs, reasonably incurred, without duplication of any
item, to the extent that such costs directly result from such
suspension of the Work and do not reflect reimbursement for
Contractor's, Vendors' or Subcontractors' anticipated profit
from other Work: (i) a standby charge, sufficient to compensate
Contractor for keeping, to the extent required in the suspension
notice, its organization and Equipment committed to the Work on
a standby basis; (ii) all reasonable costs associated with
mobilization and demobilization of Contractor's facility,
forces, and Equipment; and (iii) an equitable amount to
reimburse Contractor for the cost of maintaining and protecting
that portion of Work upon which Performance has been suspended.
Upon delivery of notice by Owner to Contractor to resume
suspended Work (or reinstating this Contract), Contractor shall
immediately resume performance under this Contract to the extent
required in the notice. If contractor intends to assert a claim
for equitable adjustment under this clause, it must, within
twenty (20) Business Days after receipt of notice to resume
Work, submit to Owner a written statement setting forth the
schedule impact and monetary extent of such claim in sufficient
detail to permission thorough analysis and adjustment pursuant
to Article 6. Contractor shall permit access by Owner to
pertinent records for purposes of documenting such claims. In
the event that Owner suspends the performance of any portion of
the Work pursuant to Article 15.3 hereof, the Guaranteed
Commercial Operation Date shall be extended for the number of
Days' delay caused by the suspension. No adjustment shall be
made for any suspension to the extent that performance would
have been suspended, delayed or interrupted by Contractor for
noncompliance with the requirements of this Contract.
Suspension of the Work under this Contract may be accomplished
only by the written notice described in this Article 15.2.
15.2.2 Termination for Owner's Convenience. Owner
may terminate this Contract at any time for its convenience.
This Contract may be terminated under this Article 15.2.2 by
giving Contractor written notice of termination. Upon receiving
any such notice of termination, Contractor shall stop performing
the Work and shall cancel as quickly as possible all orders
placed by it with subcontractors and suppliers and shall use all
reasonable efforts to minimize cancellation charges. Contractor
shall be entitled to receive a termination payment (the
"Termination Payment") equal to the sum of (i) that portion of
the Contract Price that is applicable to Work completed up to
the date of termination that has not previously been paid to
Contractor, (ii) the costs reasonably incurred by Contractor in
withdrawing its equipment and personnel from the Job Site and in
otherwise demobilizing, and (iii) the costs reasonably incurred
by Contractor in terminating contracts with subcontractors and
suppliers pertaining to the Work. Representatives of Owner and
Contractor shall determine the Contract Price amount referred to
in clause (i) above in accordance with the Progress Payment
Schedule in Exhibit F, and Contractor shall document the costs
claimed under clauses (ii) and (iii) above to Owner's
satisfaction and shall supply Owner copies of the subcontractor
and supplier invoices covering amounts claimed under clause
(iii) above. Contractor shall submit an invoice to Owner for
the Termination Payment with the supporting information and
documents referred to above, and Owner shall pay such invoice
within thirty (30) Days after its receipt of same unless it
disputes certain elements thereof, in which event only the
undisputed portion of the Termination Payment need be made
within such thirty (30) Day period and the dispute over the
remainder of the claimed Termination Payment may be submitted to
arbitration pursuant to Article 17. Pursuant to this Article
15.2.2, within twenty (20) days after (1) payment of any and all
liquidated damages, compensation or otherwise under Articles 12,
13, and 15, and (2) the resolution of any dispute or arbitration
proceedings pursuant to Article 17, Owner shall return the Bank
Guarantee to the issuing bank with instructions for
cancellation.
15.3 Termination by Contractor.
15.3.1 If during the course of construction all or
substantially all of the Facility is damaged or destroyed for
any reason, other than as a result of Contractor's actions or
failure to act, and Owner notifies Contractor that neither
insurance proceeds nor any other adequate source of funds will
be made available for the repair or restoration of such damage,
then Contractor shall have the right to terminate this Contract
upon twenty (20) Days prior written notice to Owner, but
Contractor shall not be entitled to any payments for the cost of
termination (e.g. demobilization costs and costs of cancellation
of Contracts with Subcontractors or Vendors), and demobilization
shall occur only in accordance with the instructions of Owner.
15.3.2 Upon written notice to Owner, Contractor may
terminate this Contract if initial Project Funding has not
occurred by August 1, 1997.
15.3.3 Termination for Owner's Failure to Pay. If
Owner fails to make a payment pursuant to Article 7.3,
Contractor may, after thirty (30) days of giving notice to
suspend Work according to Article 7.2.4, give written notice to
Owner of its intent to terminate the Contract. Owner shall have
thirty (30) days after receipt of such termination notice to
make such late payment, otherwise, Contractor may terminate this
Contract.
ARTICLE 16
INDEMNITIES
16.1 Contractor's Indemnification. Contractor shall defend,
indemnify and hold harmless Owner, the Utility, Institute, or
Lender, their respective corporate affiliates and their
respective employees, agents, partners, officers, and directors
("Indemnitees"), from and against all claims, damages, losses,
liabilities, and expenses (including court costs and reasonable
attorneys' fees) which directly or indirectly arise out of or
result from any negligent act or negligent omission, during the
performance of the Work or any curative action under any warranty
following performance of the Work, of Contractor or any
Subcontractor or Vendor or anyone directly or indirectly employed
by any of them or anyone for whose acts any of them may be
liable.
16.2 Employee Claims. In any and all claims against an
Indemnitee, by any employee of Contractor or any Subcontractor or
by anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be liable, the
indemnification obligation stated above shall not be limited in
any way by any limitation on the amount or type of damages,
compensation, or benefits payable by or for Contractor or any
Subcontractor under the applicable workers' compensation act,
disability acts or other employee benefit acts.
16.3 Owner's Indemnification. Owner hereby agrees to indemnify,
defend and hold harmless Contractor, its officers, directors,
agents, servants and employees from any claims, suites, damages,
and costs directly resulting from the negligence or willful
misconduct by Owner which materially and adversely affects this
Contract with the understanding that Owner shall be entitled to
control and direct the defense of any such claim or litigation.
16.4 Contractor Taxes. Contractor shall defend, indemnify and
hold harmless Indemnitees from and against all claims by any
governmental or taxing authority claiming taxes based on income
of Contractor or any of its Subcontractors or Vendors or any of
their respective agents or employees with respect to any payment
for the Work made to or earned by Contractor or any of its
Subcontractors or any of their respective agents or employees
under this Contract.
16.5 Proprietary Rights.
16.5.1 Contractor shall defend, indemnify and hold harmless
Indemnitees against all claims, damages, losses, liabilities, and
expenses (including court costs and reasonable attorneys' fees)
arising from any claim or legal action by a third party for
unauthorized disclosure or use of any trade secrets, proprietary
rights, or intellectual property rights, or of patent, copyright
or trademark infringement arising from Contractor's performance
(or that of its Subcontractors or Vendors) under this Contract
and/or asserted against an Indemnitee that either (a) concerns
any of the Work or Equipment or other items provided by
Contractor or any Subcontractor or Vendor under this Contract; or
(b) is based upon the performance of the Work by the Contractor
or any Subcontractor or Vendor, including the use of any tools,
implements or construction by Contractor or any Subcontractor or
Vendor; or (c) is based upon the design or construction any item
or Unit specified by Contractor under this Contract or the
operation of any such item or Unit in accordance with directions
provided by Contractor.
16.5.2 If Owner is prevented from completing the Facility
or any part thereof, or from the use, operation, or enjoyment of the
Facility or any part thereof as a result of such claim or legal
action or any litigation based on a claim for which Contractor is
obligated to indemnify as set forth above, Contractor shall
promptly arrange to have such prevention removed.
16.5.3 Owner's acceptance of Contractor's engineering
designs, Drawings or Design Document and/or Contractor's
selections of Equipment shall not be construed to relieve
Contractor of any obligation under this Article 16.
16.6 Notice of Claim. An Indemnitee shall, within ten (10)
Business Days of the receipt of notice of the commencement of any
legal action or of any claims against such Indemnitee in respect
of which indemnification will be sought, notify Contractor in
writing thereof. Failure of the Indemnitee to give such notice
will not reduce the liability of the other party providing such
indemnity ("Indemnitor") unless and to the extent Indemnitor can
demonstrate that it is precluded from defending such claim or
litigation as a result of the failure of the Indemnitee to give
such notice to Indemnitor. In any case, the failure to so notify
shall not relieve Indemnitor from any liability that it may have
to such Indemnitee otherwise than under the indemnity agreements
contained in this Article 16. In case any such claim or legal
action shall be made or brought against an Indemnitee and such
Indemnitee shall notify Indemnitor thereof, Indemnitor may, or if
so requested by such Indemnitee, shall assume the defense
thereof, without any reservation of rights and after notice from
Indemnitor to such Indemnitee of an election to assume the
defense thereof and approval by the Indemnitee of such counsel,
and Indemnitor will not be liable to such Indemnitee under this
Article 16 for any legal fees or expenses subsequently incurred
by such Indemnitee in connection with the defense thereof. No
Indemnitee shall settle any indemnified claim over which
Indemnitor has not been afforded the opportunity to assume the
defense without Indemnitor's reasonable approval. Indemnitor
shall control the settlement of all claims over which it has
assumed the defense; provided, however, that Indemnitor shall not
conclude any settlement which shall not be unreasonably withheld
or destroyed without the prior approval of the Indemnitee. The
Indemnitee shall provide reasonable assistance to Indemnitor, at
Indemnitor's expense, in connection with such legal action or
claim. Notwithstanding anything to the contrary in this Article
16.6, the Indemnitee shall have the right, at its expense, to
retain counsel to monitor and consult with Indemnitor's counsel
in connection with any such legal action or claim; provided,
however, if counsel for Indemnitor has an actual conflict with
the interests of Indemnitee, Indemnitee may retain counsel at
Indemnitor's expense.
16.7 Survival of Clause. The indemnification provisions
contained in this Article 16 shall survive the Final Acceptance
Date and any earlier termination of this Contract.
ARTICLE 17
DISPUTES
17.1 Arbitration of Disputes. Any dispute arising out of or in
connection with this Contract, including Change Orders, the
Contract Price or the Construction Schedule, shall be settled
through friendly consultation or conciliation between the parties
promptly upon the written request of one party to the other
party. If the parties do not reach an amicable resolution within
thirty (30) Days from the notice of such dispute, either party
may, with notice to the other party, submit the dispute to the
ICA of the ICC, as the exclusive forum, for binding arbitration
to be held in Singapore for all disputes. For convenience
purposes, the parties may mutually agree to hold arbitration in
Beijing, China for disputes with a value below one million
Dollars (U.S. $1,000,000). In each case the Rules of
Conciliation of the ICC shall govern the proceedings. Any
settlement and award rendered through such an arbitration
proceeding shall be final and binding upon the parties.
17.2 Language. The arbitration shall be conducted and the
judgment shall be rendered in both English and Chinese.
17.3 Arbitrator(s). The parties may select one mutually
agreeable arbitrator within thirty (30) Days following a demand
for arbitration; and failing such selection there shall be three
arbitrators. In the latter case, each Party shall select one
arbitrator within forty-five (45) Days after giving or receiving
the demand for arbitration. Such arbitrators shall be freely
selected, and the parties shall not be limited in their selection
to any prescribed list. The ICA shall select the third
arbitrator. If a party does not appoint an arbitrator who has
consented to participate within thirty (30) Days after the
selection of the first arbitrator, the relevant appointment shall
be made by the ICA. The costs of arbitration shall be borne by
the parties as determined by the arbitration tribunal, taking
into account the relative merits of the positions of the parties.
17.4 No Immunity. Each of the parties is subject to civil and
commercial law and irrevocably agrees that this Contract is a
commercial rather than public or governmental activity and
neither party is entitled to claim immunity form legal
proceedings with respect to itself or any of its assets on the
grounds of sovereignty or otherwise under any law or in any
jurisdiction where an action may be brought for the enforcement
of any of the obligations arising under or relating to this
Contract. Each party hereby irrevocably waives rights to
immunity it may now have or later acquire with respect to its
obligation arising under or relating to this Contract.
17.5 Continuation of Work During Dispute. Unless otherwise
agreed in writing, Contractor shall continue the Work in
accordance with the Construction Schedule and Owner shall
continue to make payments of undisputed amount in accordance with
this Contract during any dispute resolution proceedings. Any
disputed amount ultimately paid shall be paid with interest from
the date of withholding to the date of payment at the Reference
Rate.
ARTICLE 18
LIMITATION OF LIABILITY
18.1 Consequential Damages. Except as otherwise specifically set
forth herein and excluding damages resulting from the gross
negligence or intentional misconduct of a party, neither party
shall be liable to the other party or any of its Subcontractors,
Vendors or agents for consequential loss or damage, including but
not limited to loss of use or loss of revenue or profit, and each
party hereby releases the other party and its Subcontractors,
Vendors and agents from any such liability (except as described
above).
18.2 Aggregate Liability of Contractor. Except for express
limits of liability herein and excluding indemnification
obligations hereunder for liabilities, expenses or damages
resulting from claims of third parties (where no limit of
liability shall apply) the aggregate limit of liability of
Contractor under this Contract shall be forty five percent (45%)
of the Contract Price.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Contract. This Contract contains the entire
understanding of the parties with respect to the subject matter
hereof and reflects the prior agreements and commitments with
respect thereto. There are no other oral understandings, terms
or conditions except as expressly stated herein, and neither
party has relied upon any representation, express or implied, not
contained in this Contract.
19.2 Amendments. No change, amendment or modification of this
Contract shall be valid or binding upon the parties hereto unless
such change, amendment, or modification shall be in writing and
duly executed by both parties hereto, to the extent required, and
consented to by Lender.
19.3 Joint Effort. Preparation of this Contract has been a joint
effort of the parties, and the resulting document shall be
construed as fairly as practicable in accordance with its terms.
19.4 Captions. The captions contained in this Contract are for
convenience and reference only and in no way define, describe,
extend or limit or modify this Contract or the intent of any
provision contained herein.
19.5 Notice. Any notice, demand, offer, approval, change order,
consent or other written instrument (each a "Notice") required or
permitted to be given pursuant to this Contract shall be in
writing signed by the party giving such Notice and shall be hand-
delivered or sent by overnight delivery with evidence of
delivery, or telex or telecopy, with electronic confirmation of
receipt, to the other party at such address as set forth below.
19.5.1 If delivered to Owner:
Tangshan Pan-Western Heat and Power Co., Ltd.;
And Tangshan Panda Heat and Power Co., Ltd.
at ▇▇▇▇▇ ▇▇▇▇, Luannan County
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
with copies to:
Tangshan Pan-Western Heat and Power Co., Ltd.
and Tangshan Panda Heat and Power Co., Ltd.
c/o Panda Energy International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Managing Partner/General Counsel
19.5.2 if delivered to Contractor:
Harbin Power Engineering Company Limited
▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Dongli District, Harbin, China
Fax: ▇▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇▇-▇▇▇-▇▇▇▇
Each party shall have the right to change the place to
which Notice shall be sent or delivered by similar notice sent
or like manner to the other party. The effective date of Notice
issued pursuant to this Contract shall be as of the earlier of
addressee's receipt of such Notice or three (3) Days after
deposit in the mail.
19.6 Severability. The invalidity of one or more phrases,
sentences, clauses or Articles contained in this Contract shall
not affect the validity of any remaining portion of the Contract.
19.7 Assignment by Owner and Contractor.
19.7.1 Except as provided in Articles 19.7.2, the rights
and obligations of the Parties under this Contract may not be
assigned or delegated by either party except upon the express
written consent of the other party.
19.7.2 For the purpose of Owner securing financing to
construct and operate the Facility (i) Owner may, without the
consent of Contractor, assign or create security over its rights
and interest under this Contract; and (ii) Contractor agrees to
sign and seal in good faith and on a fair and equitable basis a
"Consent to Assignment" or similar documents with the lenders to
Owner (including changes or clarifications to this Contract
requested by such lenders).
19.7.3 This Contract shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and
permitted assigns.
19.8 No Waiver. Any failure of any party to enforce any of the
provisions of this Contract or to require compliance with any of
its terms at any time during the pendency of this Contract shall
in no way affect the validity of this Contract, or any part
hereof, and shall not be deemed a waiver of the right of such
party thereafter to enforce any and each such provisions.
19.9 Governing Law. This contract shall be governed by,
construed, and enforced in accordance with the laws of the
People's Republic of China.
19.10 Governing Language. This Contract shall be executed by
the parties in English. Although a certified Chinese translation
of the Contract shall be provided, in the event of a dispute
between the parties, the English version shall govern.
19.11 Exhibits. All Exhibits referenced in this Contract
shall be incorporated into this Contract by such reference and
shall be deemed to be an integral part of this Contract;
provided, however, in the event of any inconsistency, Articles 1
through 19 shall prevail over any Exhibit.
19.12 Confidential Information. Contractor agrees, subject
to Article 17, to hold in confidence for a period of three (3)
years from the date of first disclosure or for such other period
as the parties may from time to time agree in writing, and except
as may be necessary to perform the services under this Contract,
any information supplied to Contractor by Owner and designated in
writing as confidential. Contractor further agrees to require
its Subcontractors, Vendors, and employees to enter into
appropriate nondisclosure agreements relative to such
confidential information as may be communicated to them by
Contractor. The provisions of this Article 19.12 shall not apply
to information within any one of the following categories or any
combination thereof: (a) information that was in the public
domain prior to Contractor's receipt thereof from Owner or that
subsequently becomes part of the public domain by publication or
otherwise except by Contractor's wrongful act; (b) information
that Contractor can show was lawfully in its possession prior to
receipt thereof from Owner through no breach of any
confidentiality obligation; or (c) information received by
Contractor from a third party having no obligation of secrecy
with respect thereto. Contractor shall not publish information
regarding the Facility and shall not permit or accompany any
third party not connected with construction of the Facility onto
the Facility Site without the express written permission of
Owner. Owner may seek and obtain injunctive or equitable relief
against Contractor for any breach of this Article 19.12.
19.13 Obligations. Nothing contained in this Contract shall
be construed as constituting a joint venture or partnership
between Contractor and Owner.
19.14 Time of the Essence. Time is of the essence in the
performance by each party of its obligations under this Contract.
19.15 Owner Power of Attorney. For administrative
convenience, Pan-Western hereby irrevocably appoints Panda as its
exclusive agent on behalf of Owner to make any payments, exercise
rights and remedies and otherwise administer this Contract, in
its sole discretion, as necessary and desirable.
IN WITNESS WHEREOF, the parties have hereto set their hands
and seals as of this 24th Day of April, 1996.
OWNER: CONTRACTOR:
TANGSHAN PAN-WESTERN HARBIN POWER
HEAT AND POWER CO., LTD. ENGINEERING COMPANY LTD.
By: _______________________ By: ________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇ ▇▇▇▇ Qing
Title: Legal Representative Title: Chairman and General
Manager
TANGSHAN PANDA HEAT AND
POWER CO., LTD.
By: _______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Legal Representative
EXHIBIT A
CONSTRUCTION SCHEDULE
EXHIBIT B
SCOPE OF WORK
EXHIBIT C
DESIGN CONTRACT
ENGINEERING AND DESIGN CONTRACT
BETWEEN
HEBEI ELECTRIC POWER SURVEY AND DESIGN INSTITUTE
AND
TANGSHAN PANDA HEAT AND POWER COMPANY, LTD.
AND
TANGSHAN PAN-WESTERN HEAT AND POWER COMPANY, LTD.
DATED: DECEMBER 21, 1995
Tangshan Panda Heat and Power Company, Ltd. and Tangshan Pan-
Western Heat and Power Company, Ltd. (hereafter collectively
called "Owner) each plan to build, own and operate a 50 MW
(nameplate) pulverized coal-fired power plant with a combined
capability of producing 100 MW (nameplate) power and steam/hot
water for export (each unit hereafter called a "Power Plant" and
collectively called the "Power Plants"). The Power Plants site
is located near Guyiaying in Luannan County, Hebei Province,
People's Republic of China. The name of the Power Plants is
Luannan Thermal Power Plant (hereafter called "Project").
The Design Criteria prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Energy
Services, Inc. (hereafter called "Owner's Engineer") is in
accordance with the Hebei Electric Power Survey and Design
Institute Feasibility Study and all relevant government
authorities comments and or approvals (hereafter called "Study"),
however, specific design criteria and more detailed requirements
are presented for the major systems and components where the
Study did not adequately address these items. The Study is
considered adequate for all areas not specifically addressed in
Design Criteria.
The Parties agree as follows:
1.0 ENGAGEMENT
Owner hereby engages Hebei Electric Power Survey and Design
Institute (hereafter called "Institute" and collectively with the
Owner, called the "Parties" and each is a "Party") to perform all
surveys, design and engineering work including the Preliminary
Design and Construction Drawings described below (sometimes
hereafter called the "Services") necessary for Owner to permit
and construct the Project in accordance with Chinese codes and
regulations, and with the Project Design Criteria detailed in
this Contract. the Institute represents that it is qualified and
licensed by appropriate authorities to perform the Services in
this Contract.
2.0 PROJECT DESIGN BASIS
The Institute shall design the Project on the basis of two (2) 50
MW (nameplate) units located on Site # 2 of the Study together
with the Scope of Work For the Engineering, Procurement and
Construction of Luannan Thermal Power Project (attached hereto
and hereafter called "Design Criteria") prepared by Owner's
Engineer. In the event of a conflict, the Design Criteria shall
take precedence over the Study. If the conflict(s) between the
Design Criteria and the Study impacts the government approval
process, the Institute shall immediately notify the Owner in
writing of the conflict(s). Owner and Institute shall cooperate
with each other to resolve the conflict(s) with the appropriate
government authority.
Facilities and systems to support future 2x50 MW units shall be
included only where specifically identified in the Design
Criteria.
2.1 Preliminary Design and Construction Drawings:
The Institute shall provide the "Preliminary Design" which shall
include, at a minimum, general layout arrangement of the Power
Plants, major equipment list and specifications, budgetary costs
of construction, single line electrical drawings, heat and mass
balance diagrams, process flow diagrams, and any other drawings
and documents required to obtain relevant government submittals
and approvals. Preliminary Design shall be performed in
accordance with the Design Criteria and in accordance with the
required design codes and regulations required by appropriate
government authorities.
The Institute shall provide "Construction Drawing" in accordance
with the proper design procedures and practices and in accordance
with the approved Preliminary Design.
2.2 Design Exclusions:
Items that are not included in the Services provided by the
Institute:
Survey and design of the heating distribution network,
including heat exchange station, outside the fenced or walled
area of the Power Plant site.
Environmental and hydrological studies.
Survey and design of social buildings.
Survey and design of transmission lines and substations,
interconnect systems and facilities required by the North China
Power Group that are outside the fenced or walled area of the
Power Plants site.
Roads outside the fenced or walled area of the Power Plants
site.
3.0 TERM, DESIGN SCHEDULE AND FEES
3.1 This contract shall become effective on the date of signing
by both Parties and shall remain in effect unless earlier
terminated by owner for any reason pursuant to Section 4.1, until
the end of the construction period which shall be deemed complete
upon final acceptance of the Project by Owner from the
Engineering, Procurement and Construction Contractor (hereafter
called "EPCC").
3.2 The Institute shall provide a completed Chinese version of
the Preliminary Design with Owner's acceptance prior to submittal
to relevant government authorities on or before April 15, 1996.
Institute shall modify or correct the Preliminary Design based on
the comments received from the relevant government authorities
and Owner and shall promptly resubmit for approval, if required,
at no additional cost to Owner. The English version of the
Preliminary Design shall be submitted to Owner as it is available
throughout the design process. However, the first draft of
English translation shall be completed and submitted to Owner no
later than April 30, 1996.
3.3 The "Lump Sum Price" of this Contract is Renminbi Yuan (RMB)
seven million (7,000,000), of which the Preliminary Design fee
shall be equal to thirty percent (30%) of the Lump Sum Price and
the Construction Drawings shall equal seventy (70%) of the Lump
Sum Price.
Owner shall make payments to the Institute for the Preliminary
Design in accordance to schedule in Section 3.6 of this Contract.
3.4 Owner has previously submitted a representative coal
analysis, herein attached, to the Institute for the basis of
design of the Power Plants. If the Owner provides the Institute
with a significant new coal analysis (excluding abrasive test
results) on or before December 31, 1995, the Institute shall
complete the Preliminary Design within the Lump Sum Price and
schedule stated in this Contract.
If the Owner provide the Institute with a significant new coal
analysis (excluding abrasive test results) between January 1,
1996 and January 15, 1996, the Institute shall be entitled to a
price increase of no more than RMB Yuan 100,000.00 without impact
to schedule. Owner shall provide the Institute with the new
abrasive test results when available to Owner.
If the Owner provide the Institute with a significant new coal
analysis after January 15, 1996, the Institute, subject to
negotiations with Owner, shall be entitled to price and or
schedule variance.
3.5 In addition to the Lump Sum Price described in section 3.3
above, the Owner shall pay the Institute a fee equal to RMB Yuan
150,000.00 for the English translation of the Preliminary Design
documents and general Construction Drawings, excluding detailed
installation drawings which shall be mutually determined at a
later date by Owner and Institute, described in Section 3.6 of
this Contract. Owner shall make payments to the Institute in
accordance with the following schedule:
The Owner shall pay RMB Yuan 100,000.00 on or before twenty
(20) days upon submission of the first draft translation of the
Preliminary Design documents by the Institute.
The remaining fee of RMB Yuan 50,000.00 will be paid by
Owner, or its assigns, on or before twenty (20) days after
submission of the final translation. The final translation shall
include approval comments from the relevant government
authorities pertaining to the Preliminary Design documents.
3.6 Preliminary Design Fee:
All payments made by Owner under this Contract shall be made by
Tangshan Panda Heat and Power Co., Ltd.; and
An advance payment of RMB Yuan 420,000.00 shall be made to the
Institute on or before twenty (20) days after signing this
Contract.
On or before twenty (20) days after the Institute submits the
Preliminary Design which shall be acceptable to the Owner prior
to its submittal, as referenced in Section 2.1 and 3.2 of this
Contract, the Owner shall remit payment of RMB Yuan 1,330,000.00.
After Owner obtains approval comments at the Preliminary Design
hearings by the relevant government authorities and the Institute
complies with Section 3.2 above, Owner shall remit RMB Yuan
350,000.00 to the Institute on or before twenty (20) days after
the conclusion of these hearings.
3.7 Construction Drawings Schedule and Fee:
The EPCC shall remit payment of RMB Yuan 1,000,000.00 to the
Institute ten (10) days after signing the assignment and
assumption of this Contract by the EPCC. Owner shall not be
obligated to made the payments under this Section 3.8.
Ten (10) days after the Institute submits approximately twenty
five percent (25%) of the total required number of construction
drawings to the Owner and EPCC, the EPCC shall remit payment of
RMB Yuan 1,000,000.00 to the Institute.
Ten (10) days after the Institute submits approximately sixty
percent (60%) of the total required construction drawings to the
EPCC and Owner, the EPCC shall remit payment of RMB Yuan
1,000,000.00 to the Institute.
Ten (10) days after the Institute submits one hundred percent
(100%) of the total required construction drawings to the Owner
and EPCC, the EPCC shall remit payment of RMB Yuan 1,400,000.00
to the Institute.
Ten (10) days after the EPCC has achieved Final Acceptance of the
Power Plants from the Owner, the EPCC shall remit RMB Yuan
500,000.00 to the Institute.
4.0 RIGHTS AND RESPONSIBILITIES OF OWNER & INSTITUTE:
4.1 Owner's Responsibilities and Rights:
The Owner shall:
provide Institute with relevant information necessary to
prepare and complete the Preliminary Design, Construction
Drawings and relevant government approvals. The Institute shall
provide the Owner and EPCC with their respective written list of
information required to complete the Preliminary Design and or
Construction Drawings. Failure to provide the Institute with the
required information in a timely manner, the Owner shall be
responsible for the cost of corrections to the Preliminary Design
and the EPCC shall be responsible for the cost of corrections to
the Construction Drawings as specified under this Contract; and
effect timely payment for Preliminary Design fee upon review
and acceptance of Owner's Engineer and in accordance with the
stipulations of this Contract; and
make payment of any reasonable expenses or fees to the
relevant authorities incurred by the Institute on behalf of the
Owner, and subject to Owner's prior written approval; and
have the right to terminate this Contract in writing for any
reason at any time. Should Owner terminate this Contract,
Institute shall immediately stop all Services. Owner shall pay
reasonable costs for Services completed and expenses up to the
time of termination. The Institute's costs shall include
reasonable profit; and
require the EPCC to provide reasonable living and working
accommodations and transportation to and from these
accommodations and local rail station, at no cost to the
Institute, for the Institute's on site personnel during the
construction stage of the Power Plants when the Institute's
personnel are required to be on site by the EPCC. This
responsibility is subject to final negotiations between the EPCC
and the Institute which requires Owner's approval; and
include, at Owner's option, the Owner's rights to require of
arbitration (similar to Section 6.0) between the Institute and
EPCC regarding the Services and price provided by the Institute
as contained in this Contract during the construction stage of
the Project.
have the right to approve the Preliminary Design. This
right does not relieve the Institute of its responsibilities and
guarantees described in this Contract.
4.2 Institute's Responsibilities:
The Institute shall:
accomplish the Preliminary Design, Construction Drawings and
their relevant government and Owner approvals in accordance with
the current design codes and regulations in China and in
accordance with the above Project Design Criteria provided in
Section 2.0 of this Contract. If there is a conflict with any
information provided by the Owner to the Institute with respect
to Chinese codes and regulations, it is the responsibility of the
Institute to inform the Owner in writing of such conflict prior
to implementing any design affected by this information. Failure
to provide adequate written notice in a timely manner, the
Institute shall be responsible for costs of any corrections to
the Services specified under this Contract; and
be responsible for any modifications required by the
relevant government authorities after examination of the
Preliminary Design. If changes resulting from the Institute's
errors or omissions, the Institute shall be responsible for
correcting the Preliminary Design at its own expense; and
make payment of all taxes associated with the Institute's
design services in accordance with the tax laws of the People's
Republic of China; and
be responsible for attending meetings that are necessary to
perform the Preliminary Design and Construction Drawings, and
that are necessary to submit and obtain government approvals; and
provide on-site personnel to support the EPCC construction
efforts during the construction stage of the Project. The
equivalent labor for the Institute's on-site personnel is
established at twenty four (24) man months. It shall be the
responsibility of the EPCC to utilize this allocation of on-site
personnel in an effective manner. The labor and expenses beyond
the twenty four (24) man months shall be reimbursed by the EPCC
to the Institute in accordance with relevant government
regulations; and
translate all materials produced as part of the Services
into English, including the Preliminary Design and its
specifications and the Construction Drawings as described in
Section 3.5 above.
4.3 Institute's Guarantee:
The Institute guarantees that the Preliminary Design and
Construction Drawings shall meet the requirements contained in
the Design Criteria and the Study, with such changes therein as
the Owner and the EPCC may approve, for the design of the Power
Plants, including power output and thermal output, heat rate and
emissions limits from such plants. The Institute makes this
guarantee specifically for the benefit of the Owner and its
permitted successors and assigns including the EPCC as provided
in Section 5.0 below.
If there is any error or omission in the Services provided by the
Institute or any breach of guarantee given in this Section 4.3,
the Institute shall perform such additional Services and design
work at its own expense, on Owner's request, as may be deemed
necessary to correct such error or omission; and the Institute
shall also be responsible for the relevant loss/damage of Owner.
5.0 ASSIGNMENTS
5.1 For purposes of securing financing, Owner may, without the
consent of the Institute assign or create security over its
rights and interests herein. The Institute agrees to negotiate
in good faith and on fair and equitable basis a consent to
assignment with the lenders to Owner. Such consent to assignment
shall provide that any person or entity which elects to assume
any or all of the rights of the Owner under this Contract shall
also assume all of the Owner's obligations hereunder. The
Parties acknowledge and agree that any assignment to a secured
party pursuant to any financing Contracts shall be subject to,
and shall not relieve either Party of their performance
obligations to, each other under this Contract except as provided
in Section 5.2 below.
5.2 This Contract shall be binding upon and shall inure to the
benefit of the Parties and their respective successor and
permitted assigns, except that the Institute shall not assign
this Contract without the prior written consent of Owner.
6.0 DISPUTE RESOLUTION
6.1 Settlement Arbitration. Except as otherwise provided in
this Contract, any dispute arising out of or in connection with
this Contract shall be settled through friendly consultation or
conciliation between the Parties promptly upon the written
request of one Party to the other Party. If the Parties do not
reach an amicable solution within 30 days from the notice of such
dispute, either Party may submit, with notice to the other Party,
the dispute to the International Chamber of Commerce's
International Court of Arbitration in Beijing, China under the
Rules of Conciliation and Arbitration of the International
Chamber of Commerce (the "ICC"). Except as otherwise provided in
this Contract, all disputes shall be submitted exclusively to
arbitration. Any settlement and award rendered through such an
arbitration proceeding shall be final and binding upon the
Parties. This Contract and the rights and obligations of the
Parties shall remain in full force and effect pending the award
in such arbitration proceeding, which award shall determine
whether and when any termination shall become effective.
6.2 Language. The arbitration shall be conducted and the
judgment shall be rendered in both English and Chinese.
6.3 Arbitrators. There shall be three arbitrators. Each Party
shall select one arbitrator within 30 days after being or
receiving the demand for arbitration. Such arbitrators shall be
freely selected, and the Parties shall not be limited in their
selection to any prescribed list. This International Court of
Arbitration (the "ICA") of the ICC shall select the third
arbitrator. If a Party does not appoint an arbitrator who has
consented to participate within 30 days after the selection of
the first arbitrator, the relevant appointment shall be made by
the ICA. The cost of arbitration shall be borne by the Parties
as determined by the arbitration tribunal, taking into account
the relative merits of the positions of the Parties.
6.4 No Immunity. Each of the Parties is subject to civil and
commercial law and irrevocably agrees that this Contract is a
commercial rather public or governmental activity and neither
Party is entitled to claim immunity from legal proceedings with
respect to itself or any of its assets on the grounds of
sovereignty otherwise under any law or in any jurisdiction where
an action may be brought for the enforcement of any of the
obligations arising under or relating to this Contract. Each
Party hereby irrevocably waives rights to immunity it may have or
later acquire with respect to its obligation arising under of
relating to this Contract.
7.0 NOTICES
7.1 Notices: Communications. Except as otherwise expressly
provided hereunder, all notices or other communications which are
required or permitted in this Contract shall be in writing and
sufficient if delivered personally or sent by registered or
certified mail, mail, facsimile, telex or telegram to the
addressees as set forth below.
Owner: Institute
Project Manager ▇▇. ▇▇▇ Zhukang
c/o Panda Energy ▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇▇▇
International, Inc. Shijiazhuang,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
7.2 Change of Address. Any Party may, by notice to the other,
change the addresses and/or facsimile.
8.0 MISCELLANEOUS
8.1 Governing Law. This Contract and the rights and obligations
hereunder shall be interpreted, construed and governed by the
laws of the People's Republic of China.
8.2 Amendments. No amendments or modification of the terms of
this Contract shall be binding on any Party unless it is in
writing and signed by all Parties.
8.3 Representative Authority. For administrative convenience,
Tangshan Pan-Western Heat and Power Co., Ltd. has appointed
Tangshan Panda Heat and Power Co., Ltd. as its agent with power-
of-attorney to represent and bind Tangshan Pan-Western Heat and
Power Co., Ltd. on all matters herein or relating to its Power
Plant.
IN WITNESS WHEREOF, the Parties, intending to be legally bound,
have caused this Contract to be signed by their respective
officers thereunto duly authorized as of the day and year first
set forth above.
For and on behalf of
HEBEI ELECTRIC POWER SURVEY TANGSHAN PANDA HEAT AND
AND DESIGN INSTITUTE POWER CO., LTD.
TANGSHAN PAN-WESTERN
HEAT AND POWER CO., LTD.
By: By:
Name: ▇▇▇▇ ▇▇▇ Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: Legal Representative
City of Shijiazhuang ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Hebei Province ▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT D
FORM OF FINAL ACCEPTANCE CERTIFICATE
EXHIBIT D
FINAL ACCEPTANCE CERTIFICATE
Reference is made to that certain Agreement for the
Engineering, Procurement and Construction dated , 1996
(as the same may been amended, hereinafter called the
"Agreement") entered by Harbin Power Engineering Co. (hereinafter
called the "Contractor") and Tangshan Pan-Western Heat and Power
Co., Ltd. and Tangshan Panda Heat and Power Co., Ltd.
(hereinafter called the "Owner"). All terms defined in the
Agreement shall have the same meanings when used in this Final
Acceptance Certificate.
I. Contractor hereby certifies and represents that:
A. The Facility is complete, operable and capable of
generating kW (net) of electrical power on a
reliable and safe basis;
B. All Work has been performed and completed in accordance
with the requirements of the Agreement;
C. The performance Tests have been conducted and
documented in accordance with the requirements set
forth in the Agreement.
II. The total amounts remaining to be paid to Contractor under
the Agreement or otherwise with regard to Work are:
III. Upon receipt of the amount described in paragraph II above,
Contractor shall promptly pay all retention under the
contracts with its Subcontractors and Venders and provide
Owner with such releases of claims, waivers of liens and
other documents as may be reasonably requested by Owner to
evidence such payment and the release and discharge of any
and all claims and liens.
IV. Except only those obligations of Owner which the Agreement
provides shall survive Final Acceptance Date and earlier
termination of the Agreement, effective upon Contractor's
receipt of the amount specified in paragraph II above,
Contractor hereby unconditionally releases and discharges
Owner and its property from all claims, liens and
obligations of every nature arising out of or in connection
with the Agreement or any Work performed, costs incurred or
items furnished in connection with the Agreement.
V. Contractor shall defend, indemnify and hold harmless Owner
from and against all claims, liabilities, damages, costs and
expenses (including, but not limited to reasonable
attorney's fees) in any manner directly or indirectly
arising out of or in connection with any claim or lien
arising through Contractor.
VI. Contractor's warranties, guarantees and indemnities arising
under the Agreement or in connection with any Work, which
provide that they shall survive the Final Acceptance Date
and earlier termination of the Agreement shall survive the
Final Acceptance date and earlier termination of the
Agreement shall survive the execution and delivery of this
Final Acceptance Certificate as provided in the Agreement.
Contractor:
Harbin Power Engineering Co. COMPANY CHOP
By:
Title:
Dated:
EXHIBIT E
INTERCONNECTION CONSTRUCTION AGREEMENT
CONSTRUCTION AGREEMENT
The Parties to this Construction Agreement, dated February
10, 1996 (this "Agreement"):
North China Power Group Company (hereinafter referred to as
"Party A"), and Tangshan Panda Heat and Power Co., Ltd. ("Panda")
and Tangshan Pan-Western Heat and Power Co., Ltd. ("Pan-Western")
(collectively referred to as "Party B"). Party A and Party B are
collectively referred to as the "Parties." Panda has been
appointed agent of Pan-Western to act on behalf of Pan-Western
for all matters under this Agreement.
The Parties have entered into a General Interconnection
Agreement dated September 22, 1995 (the "General Interconnection
Agreement") and the Sub-Agreements described therein. This
Agreement sets forth the terms and conditions to design,
construct and maintain the Facilities. This Agreement is subject
to and complies with the "Approval Notice on the Transmission
System Design Hearing of the Luannan Heat and Power Plant"
(Document-Huabeidianshe [1995] No. 65 dated July 13, 1995 issued
by North China Electric Power Administration of the Ministry of
Electric Power) and "Approval Comments on the Scope of Work of
the 110kV Transmission and Substation System for 2 x 50 MW Units
of the Luannan Heat and Power Plant" (Document - Huabeidianjishe
p1995] No. 75 dated August 24, 1995 issued by Party A)
(collectively the "Approvals"). Copies of such Approvals are
attached hereto.
1. SCOPE OF WORK AND DEFINITIONS
(a) The "Scope of Work" shall mean all designs, plans,
specifications, technical requirements and drawings, and mutually
agreeable changes or modifications therein, all as prepared by
Party A in consultation with Party B, together with all labor,
management, procurement, land use and other permissions and land
acquisitions, needed to design, engineer, construct,
interconnect, test-run and operate the Facilities capable of
transmitting safely and adequately the design capacity of the
Power Plans to the Grid. The telemetering equipment used to read
meters from remote locations, the wire between the dead end
support structure of the Power Plants (the "Dead End Structure")
and the main switch Interconnection Point, and the wire between
such structure and the first tower outside the fence line of the
Power Plants (on Party A's land), shall be party A's
responsibility, within the Scope of Work. The Dead End Structure
itself shall not be within the Scope of Work and shall be Party
B's responsibility. The Scope of Work shall comply with the
Approvals.
(b) Work (the "Work") shall mean the performance of the
Scope of Work and all other obligations of Party A. hereunder.
(c) Party B shall give Party A a written notice of when to
proceed with the Work (the "Notice to Proceed with Preliminary
Design") at least 19 months prior to the scheduled
Interconnection Date of the Facilities. Party A confirms that
Party B has delivered to Party A, such information about the
Power Plants as Party A requires to prepare the Scope of Work,
Party A shall deliver a written report containing the
interconnection plan, construction schedule (including timely
completion date), technical analysis confirming such completion
date and the feasibility of the interconnection plan for Party
B's confirmation as soon as possible but in no event more than 6
months after receiving the Notice to Proceed with Preliminary
Design from Party B.
(d) Party A shall design the Facilities so as to ensure an
adequate reverse supply of electric energy to the Power Plants
necessary for the Test Period as well as the needs of the Power
Plants for transmission of their generated electric energy from
the Interconnection Point to the Grid.
(e) Party A shall give Party B at least 30 days prior
written notice that the facilities are available at the
Interconnection Point.
(f) In accordance with Article Seven of the General
Interconnection Agreement, Party A will provide construction
power to Party B at the Power Plants prior to and during
construction. Party B shall file relevant applications in
accordance with the relevant rules of the Grid for electric
energy supply for construction, and bear the relevant costs.
(g) Unless defined herein, all terms in this Agreement
shall have the same meanings as the ones in the General
Interconnection Agreement and Sub-Agreements or any supplemental
agreements thereunder.
2. TOTAL CONSTRUCTION COST, OTHER COSTS
party B shall loan to Party A the total construction cost
for the Work equal to U.S. dollar equivalent of RMP Yuan
78,218,000 (converted according to the exchange rate on the loan
date) as adjusted by the change in the Price Index for Investment
determined by the State Planning Commission from December 31,
1994 to the date of issuance of the Notice to Proceed with
Preliminary Design (the "Total Construction Cost") pursuant to a
separate loan agreement. Unless the Scope of Work changes at the
request of Party B or the Total Construction Cost is adversely
affected by an event of Force Majeure of a breach by Party B of
its obligations under this Agreement or the loan agreement
relating hereto, no adjustment of the Total construction Cost
shall be permitted (excluding the index adjustment described
above). The Total Construction Cost will cover the cost of all
of the Work.
3. GUARANTEES
3.1 Party A hereby guarantees (the "Party A Guarantees") the
following:
(a) It shall provide adequate reverse supply of electric
power to the Power Plants in compliance with voltage requirements
so as to satisfy the needs of the gneeral contractor of the Powre
Plants for test-runs of the Power Plants during power-on and
interconnecting, within not more than 17 months from the date on
which Party B gives Party A the Notice to Proceed with
Preliminary Design.
(b) It shall complete the Work, including the construction
of Facilities so that the Power Plants can transmit continuously
and/or intermittently on the Facilities all electric energy that
can be generated by the Power Plants and thereby meet the
requirements of the interconnecting system within not more than
18 months from the date on which Party B gives Party A the Notice
to Proceed with Preliminary Design.
(c) Design, construction and installation of the Facilities
shall be completed with new materials and in a good and
workmanlike manner in accordance with the standard for the same
category of transmission lines and sub-stations adopted by the
Grid on the date of the Notice to Proceed with Preliminary
Design.
3.2 Party B guarantees that it will make punctual loans of the
Total Construction Cost in accordance with the requirements of
the loan agreement relating hereto.
4. OWNERSHIP, MAINTENANCE AND SERVICE
(a) Party A shall be solely responsible for (excluding
problems caused by party B or by Force Majeure) and own the
Facilities.
(b) Party A shall perform all operation, maintenance and
repair of the Facilities during the term of the General
Interconnection Agreement, including the supply, procurement,
storage and installation of the usual spar=parts needed in the
maintenance of interconnecting systems. Party A shall schedule
and perform normal and routine maintenance of the Facilities
during the scheduled maintenance of the Power Plants. part A
shall perform all maintenance so as to avoid any interference
with the full operation of the Power Plants pursuant to the
General Interconnection Agreement and the Sub Agreements.
5. DAMAGES: OTHER REMEDIES
(a) In case of a breach of this Agreement, the breaching
Party shall be liable for the loss/damage of the other Party. In
addition, if Party B breaches this Agreement or the loan
agreement relating hereto, Party A shall be entitled to receive
appropriate schedule relief required because of the breach by
Party B. Party A shall also be entitled to charge Party B for
any increased costs in performing the Work resulting from the
breach of Party B.
(b) If Party A fails to meet any Party A Guarantee, Party B
may on written notice to Party A, assume responsibility for
completing all or any portion of the Work. In this case, Party A
shall have a 60 day cure period during which Party A must correct
the stated problem. If Party A does not correct such problem and
Party B assumes the responsibility for any portion of the Work,
Party B shall do so at Party A's expense with payments of
expenses by Party B for such Work treated as loans of a portion
of the Total Construction Cost to Party A. In the event that
such expenses exceed any balance not yet loaned on the Total
construction Cost, Party A shall promptly pay or reimburse Party
B for such expenses.
6. COOPERATION
Party A acknowledges that payment for the Work shall be made
with loans obtained by Party B from international financial
entities. Such entities may require that relevant documents be
provided by the signatory parties of this Agreement. In order to
guarantee the obtaining of the loan, Party A agrees to cooperate
with Party B in this respect.
7. MISCELLANEOUS
The relevant terms of the General Interconnection Agreement
and the Sub Agreements are hereby incorporated into and made a
part of this Agreement with this Agreement treated as a "Sub-
Agreement" for such purposes.
IN WITNESS WHEREOF, the Parties, intending to be legally
bound, have caused this Agreement to be signed by their duly
authorized representatives, as of the day and year above written.
Legal Representative of Legal Representative of
Party A: Party B:
North China Power Group Company Tangshan Panda Heat
and Power Co. Ltd.
By: By:
Name: Zhao ▇▇▇▇ ▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President Title:Authorized Legal
Representative
Tangshan Pan-Western
Heat and Power Co. Ltd.
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:Authorized Legal
Representative
EXHIBIT F-1
FORM OF PROGRESS PAYMENT CERTIFICATE
Harbin Power Engineering Co.
Date:
▇▇.
▇▇▇▇ ▇▇▇ 2X50 MW Thermal Power Plant Project
Project Manager
Reference: Project No.
Subject: Construction Progress Certification Letter
Month:
Percent Complete:
Total Percent Complete to Date:
Dear Mr.
HPE certifies that ____ percent (____%) of the Civil Construction
and ____ percent (____%) of the Construction Erection for the
total of ____ percent (____%) construction complete has been
completed. For the Month of ____, the total completion of
construction to date is ____ percent (____%). As evidence of
achievement, the following documentation is offered:
item 1
item 2
item 3 and on
Very Truly Yours,
HPE Project Manager
Form F-1 attachment
FIELD MILESTONE
CERTIFICATE
To:
From:
Subject: Construction Progress for the Month of .
This is to certify that the following ____ percent (____%) of the
Civil Construction and ____ percent (____%) of the Construction
Erection was completed on .
Total ___ percent (___%) of Construction Complete for
month.
Total ___ percent (___%) of Date of Construction Complete.
SIGNED: DATE:
CONTRACTOR SITE MANAGER
SIGNED: DATE:
OWNER SITE REPRESENTATIVE
EXHIBIT F-2
PROGRESS PAYMENT SCHEDULE
EXHIBIT G
FORM OF REQUEST FOR PAYMENT
REQUEST Owner: _____________________________
FOR PAYMENT Contractor: ________________________
Field: _____________________________
Other: _____________________________
Subject: ▇▇▇▇ ▇▇▇ 2X50 MW Thermal Power Plant
Agreement Date: ____________
Agreement No.: _____________
Owner: _______________________ Owner Project No.: _________
1. Guarantee Lump Sum Price $__________
Change Orders
Total Additions $__________
Total Deductions $__________
2. Contract Sum to Date $__________
3. Total Complete to Date $__________
Less Retainage $__________
4. Total Earned Less Retainage $__________
5. Less Previous Certificates $__________
6. Amount Due This Certificate $__________
The undersigned certifies that the Work covered by this
Certificate for Payment was completed in accordance with the
Contract Documents and current payment shown here is now due.
Contractor:
Harbin Power Engineering Co. COMPANY CHOP
By: ________________________
Title: _____________________
Dated: _____________________
EXHIBIT H
PRICING SUMMARY
[***] MATERIAL UNDER THIS EXHIBIT H FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
EXHIBIT I-1
FORM OF LETTER OF CREDIT FOR LIQUIDATED DAMAGES
Exhibit I-1
B A N K G U A R A N T E E
THIS BANK GUARANTEE is given on the ___ day of _________, 1996
BY
THE EXPORT-IMPORT BANK OF CHINA (the "Guarantor")
of ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
IN FAVOUR OF
TANGSHAN PANDA HEAT AND POWER CO., LTD. ("Panda"), of West
Guyiaying, Bencheng, Luannan County, Hebei Province, China
and TANGSHAN PAN-WESTERN HEAT AND POWR CO., LTD. ("Pan-
Western"), of ▇▇▇▇▇ ▇▇▇▇▇, Bencheng, Luannan County, Hebei
Province, China (both Panda and Pan-Western hereinafter
collectively the "Owner", or alternatively the "Creditor")
and Jefferies & Co., trustee or the issuer of the bond (the
"Permitted Assignee").
WHEREAS:
(a) By a Contract for the Engineering, Procurement and
Construction of the Project in Luannan County, Hebei
Province (the "EPC Contract") dated as of April 24, 1996
between the Owner and Harbin Power Engineering Company
Limited (the "Contractor"), the Contractor shall provide an
irrevocable, unconditional bank guarantee with joint and
several liability from a financial institution acceptable to
Owner in an amount equal to thirty-five percent (35%) of the
Contract Price (subject to increase or decrease under
Article 6.1 of the EPC Contract in case of change orders),
and the Guarantor, upon request by the Contractor, agrees to
provide such Guarantee for the Contractor in favour of the
Owner and its Permitted Assignee;
(b) It is a condition precedent to the Owner's obligation under
the EPC Contract to employ the Contractor or to continue
such employment anytime during the term of the EPC Contract
that the Guarantor enters into this Bank Guarantee in favour
of the Owner and its Permitted Assignee of such 35% of the
Contract Price (subject to increase or decrease under
Article 6.1 of the EPC Contract in case of change orders).
NOW THEREFORE, THIS BANK GUARANTEE WITNESSETH as follows:
1. Unless otherwise defined herein, all capitalised terms used
herein shall have the same meanings set forth in the EPC
Contract.
2. This Bank Guarantee shall be issued at the initial Project
Funding, and shall automatically become effective upon
written acceptance by the Owner, without any further action
or confirmation by the Guarantor or the Contractor. This
Bank Guarantee shall be a continuing guarantee remaining in
full force and effect until six (6) months after Owner's
acceptance of Commercial Operation Date of the Plant as
defined in Article 10.7 of the EPC Contract.
3. This is an irrevocable and unconditional guarantee issued by
the Guarantor, whereby the Guarantor, as primary obligor,
and not merely as guarantor under an ordinary guarantee,
shall assume joint and several liability with the Contractor
as if it were the sole principal debtor for the thirty-five
percent (35%) of the Contract Price (subject to increase or
decrease under Article 6.1 of the EPC Contract in case of
change orders), namely U.S. $22,269,041.20 (United Stated
Dollars Twenty-Two Million Two Hundred Sixty-Nine Thousand
Forty-0ne And Cents Twenty Only) (the "Guaranteed Amount").
Should there be an increase or decrease of the Contract
Price pursuant to Article 6.1 of the EPC Contract, the
Guaranteed Amount shall be adjusted accordingly upon written
notice from the Owner to the Guarantor.
4. Under this Bank Guarantee, the Owner and its Permitted
Assignee are hereby granted with unconditional rights, to
make multiple drawings from time to time for damages,
compensation, indemnities or otherwise under Articles 12,
13, 15, and 16 of the EPC Contract or for any other purpose
related to the Contractor's obligations thereunder and
specified in the draw certificate up to an aggregate amount
not to exceed the Guaranteed Amount, upon presentation of a
Creditor's Certificate [as per Exhibit A] and a Draft [as
per the form of the attached Exhibit B] bearing the original
handwritten signatures of two purportedly authorized
officers of the Owner in confirmance with the specimen
signatures of such officers [as per Exhibit C] (which may be
replaced or re-designated form time to time by the Owner
upon written notice to the Guarantor) and each such drawing
shall reduce the cumulative amount of the Guaranteed Amount
of a dollar-for-dollar basis.
5. Under this Bank Guarantee, the Guarantor is hereby committed
to honour such Draft accompanied by such Creditor's
Certificate immediately upon presentation (with a grace
period of ten (10) business days), and the Owner shall not
be required to exercise its recourse against the Contractor
first or to exhaust its remedies against the Contractor
first before being entitled to demand payment from the
Guarantor. In particular, the Guarantor shall not be
permitted hereunder to raise any contractual defense by the
Contractor under the EPC Contract, but shall honour its
obligations hereunder as an indebtedness independent of the
EPC Contract or any obligations of the Contractor
thereunder.
6. This Bank Guarantee is not transferable by either the
Guarantor or the Owner, except upon delivery to the
Guarantor of a completed transfer certificate, signed by the
authorized signatories of the Owner and counter-signed by an
authorized signatory of the Permitted Assignee. This
Guarantee shall be binding on the Guarantor and its
successors and shall inure to the benefit of the Owner and
its Permitted Assignee.
7. The obligations of the Guarantor hereunder shall not be
discharged by anything which would not discharge it or
affect its liability as if it were the sole principal debtor
in the case of (i) any time, grace, indulgence, waiver or
consent at any time given to the Contract, (ii) any
amendment to any clause of the EPC Contract, provided that
any amendment to the EPC Contract which involves the
Guarantor's assuming greater obligation for the Guaranteed
Amount (with the exception of any increase of such amount
pursuant to Article 6.1 in the case of change orders) will
require the prior written consent of the Guarantor, (iii)
any failure or delay in the enforcement or release of any
rights of or under the EPC Contract or any other related
documents thereto. Without limiting any other provisions of
this Bank Guarantee, the Guarantor acknowledges and agrees
that it will remain liable hereunder notwithstanding that
the Contractor may cease to exit or for any other reason the
Owner may no longer be able to deal with the Contractor.
8. The Guarantor hereby represents and warrants to the Owner
and its Permitted Assignee as follows:
(a) The Guarantor is a state-owned sole propritory bank
organised and validly existing under the laws of the
People's Republic of China and has full power,
authority and legal capacity to execute and delivery
this Bank Guarantee and to assume and perform the
obligations provided for herein;
(b) The Guarantor has taken all appropriate and necessary
legal actions to authorize the execution, delivery and
performance of this Bank Guarantee;
(c) This Bank Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable in
accordance with its terms;
(d) The obligations of the Guarantor hereunder rank and
will rank at least pari passu in priority of payment
and in all other respects with all other unsecured
indebtedness of the Guarantor.
(e) The Guarantor shall supply to the Owner and its
Permitted Assignee as soon as they are available copies
of the annual financial statements of the Guarantor.
9. This Bank Guarantee is a commercial act of the Guarantor in
relation to a commercial transaction and all obligations of
the Guarantor arising under this Bank Guarantee are
commercial in nature. The Guarantor hereby irrevocably
agrees not to raise any claim of immunity (if any) from
suit, attachment or execution in respect of any claims which
may be made against it at any time concerning its
obligations under this Bank Guarantee.
10. Any notice to or Draft accompanied by a Creditor's
Certificate drawn on the Guarantor from the Owner or its
Permitted Assignee must be in written form, delivered to the
Guarantor at the following address (or any new address
designated by the Guarantor in writing duly notified to the
Owner or its Permitted Assignee in future) in the following
manner.
(a) Method of delivery: (i) personally delivered, (ii)
transmitted by postage prepaid registered mail (airmail
if international), and (iii) transmitted by
internationally recognized courier service, or (iv)
transmitted by telex or facsimile (with postage prepaid
mail confirmation).
(b) Address of Guarantor:
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
the People's Republic of China
Telex No.: 210292
Answerback: EXIM CN
Fax No.: 86-10-6523,6641
Attention: Insurance Department
IN WITNESS WHEREOF the undersigned Guarantor has executed this
Bank Guarantee by its duly authorised officer the day and
year first above written.
THE EXPORT-IMPORT BANK OF CHINA
By:
Name:
Title:
Exhibit A: Creditor's Certificate
We hereby certify that the attached draft represents the amount
which Creditor has the unconditional right to draw pursuant to that certain
Contract for the Engineering, Procurement and Construction dated as of
_______, 1996 (the "EPC Contract") relating to Creditor's project located in
Luannan County, Hebei Province, the People's Republic of China under [specify
appropriate Article of the EPC Contract].
EXHIBIT B: Form of Draft
[Reference Number] [Place and Date of Issue]
D R A F T
Pay unconditionally to the order of [name of Creditor] immediately upon
presentation the amount of the United States Dollars [amount in numbers
and also in words], drawn under a Bank guarantee [dated , 1996]
issued by [name of bank] in favour of the [name of Creditor].
To: [name of Bank] For and on behalf of:
[address of Bank] [name of Creditor]
[insert authorized signature 1]
[insert authorized signature 2]
Exhibit C: Specimen signatures of authorized signatures of
the Creditor
Name:
Title:
Signature:
Name:
Title:
Signature:
EXHIBIT I-2
FORM OF LETTER OF CREDIT FOR RETAINAGE
[FORM OF LETTER OF CREDIT]
Irrevocable Documentary Letter of Credit Number:
Issuing Bank:
Advising Bank:
Beneficiary:
Applicant:
Amount: United States Dollars
Available With:
Available By:
We hereby issue this irrevocable documentary credit in favor of
the above-named Beneficiary, which is available by acceptance of
your draft(s) drawn on us marked "drawn under [BANK DESIGNATION]
documentary credit number [ ], accompanied by:
1. A Beneficiary Certificate stating: "We hereby certify
that the attached draft represents the amount which
Beneficiary has the unconditional right to draw
pursuant to that certain Contract for the Engineering,
Procurement and Construction dated as of ,
1996 (the "Contract") relating to Beneficiary's project
located in Luannan County, Hebei Province, People's
Republic of China under Article [SPECIFY APPROPRIATE
ARTICLE OF CONTRACT]."
2. Multiple drawings may be made under this Letter of
Credit and each such drawing shall reduce the
cumulative amount on a dollar-for-dollar basis.
3. Each Draft and Beneficiary Certificate must bear: (a)
the original handwritten signatures of two purportedly
authorized officers of the beneficiary in conformance
with the specimen signatures of such officers contained
in Exhibit A.
4. Each Draft must be in the form of the attached Exhibit B.
5. Presentations of the Beneficiary Certificate and each
Draft shall be made at our office located at [ ],
by physical delivery. All drafts drawn in conformity with
the terms of this Letter of Credit will be duly honored
immediately upon presentation. If any demand for payment
does not confirm to the terms of this Letter of Credit, we
shall give Beneficiary prompt, written notice of the reason(s)
for the non-conformity, and provide Beneficiary an opportunity
to correct any such non-conformity.
6. Communications concerning this Letter of Credit shall
be addressed to Bank at [ ].
7. Communications concerning this Letter of Credit shall
be addressed to Beneficiary at [ ].
8. This Letter of Credit shall expire at the close of
business on [ ], but such expiration date
shall be automatically extended for a period of one (1)
year from the original or each future expiration date,
unless notice to Beneficiary is provided not less than
thirty (30) days prior to any such expiration date, by
telephone and by registered mail at the above address,
that this Letter of Credit shall not be extended beyond
the expiration date. In any such event, Beneficiary's
Certificate shall only state: "Beneficiary is drawing
the entirety of the amount available to be drawn
hereunder due to non-renewal of the Letter of Credit,
and to be applied in accordance with the terms of the
Contract."
Notwithstanding the foregoing, this Letter of Credit
shall be cancelled at any time prior to its then-
applicable expiration date upon Beneficiary's return to
us of the original Letter of Credit, with a request
that it be cancelled.
9. It is a condition of this Letter of Credit that this
Letter of Credit may be amended (a) to extend the
expiration date, or (b) to increase the Available
Amount, upon the written advice of Applicant, with a
copy to Beneficiary and subject to concurrence by
Issuer, but shall not be otherwise amended except with
the written concurrence of Beneficiary.
10. This Letter of Credit shall be governed, except so far
as otherwise expressly stated, by the Uniform Customs
and Practice for Documentary Credit (1993 Revision),
International Chamber of Commerce Publication No. 500.
[AUTHORIZED BANK SIGNATURE]
EXHIBIT B
FORM OF DRAFT
[REFERENCE NUMBER] [PLACE, DATE]
Pay to the Order of [BENEFICIARY] on [DATE] THE AMOUNT OF United
States Dollars [AMOUNT IN NUMBERS AND WORDS], drawn in terms of
documentary credit [REFERENCE NUMBER] issued by [NAME OF BANK].
To: [NAME OF BANK] For and on behalf of:
[ADDRESS OF BANK] [NAME OF BENEFICIARY]
[INSERT AUTHORIZED SIGNATURE 1]
[INSERT AUTHORIZED SIGNATURE 2]
EXHIBIT I-3
FORM OF PARENT GUARANTEE
GUARANTY
This Guaranty is executed as of , 1996.
R E C I T A L S
1. China Harbin Power Equipment Group Company, a Chinese
company with its principal place of business located at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Post Code 150046, Dongli District Harbin, China,
is the parent corporation of Harbin Power Engineering Company,
Ltd. (the "Contractor"). Contractor and Tangshan Panda Heat and
Power Co., Ltd., a Chinese Joint Venture Company with offices at
▇▇▇▇▇ ▇▇▇▇, Luannan County, Tangshan City, Hebei Province 063500,
People's Republic of China, and Tangshan Pan-Western Heat and
Power Co., Ltd., a Chinese Joint Venture Company, with offices at
▇▇▇▇▇ ▇▇▇▇, Luannan County, Tangshan City, Hebei Province 063500,
People's Republic of China (together the "Companies") entered
into that certain Engineering, Procurement and Construction
Agreement, dated as of (the "EPC Contract").
2. Pursuant to the terms of the EPC Contract, Contractor
is to provide engineering, procurement and construction services
relating to the Companies' Luannan County 2x50 MW Thermal Power
Plant Project, in Luannan County, Hebei Province, People's
Republic of China. As a consequence of providing the services
and guaranties required pursuant to the EPC Contract, Contractor
may become indebted to the Companies;
NOW THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the undersigned (the
"Guarantor") hereby irrevocably and unconditionally guarantees to
the Companies the prompt payment of the Guaranteed Indebtedness
(hereinafter defined) in accordance with the terms of this
Guaranty, being upon the following terms:
1. The term "Guaranteed Indebtedness," as used herein,
means all liabilities and obligations of the Contractor
(including, without limitation, the obligation of the Contractor
to pay liquidated damages and other performance or delay costs
that may be incurred pursuant to the EPC Contract, together with
interest thereon and at the rates designated in the EPC Contract,
and attorneys' fees incurred in connection with the collection
thereof under the EPC Contract or this Guaranty) arising in
connection with the EPC Contract (as the same may be amended from
time-to-time, with or without notice to the Guarantor.
2. This instrument shall be irrevocable, absolute and a
continuing guaranty on payment (and not merely of collection),
and the Guarantor shall remain liable on its obligations
hereunder until the payment in full of its Guaranteed
Indebtedness.
3. If Guarantor becomes liable for any indebtedness owing
by the Contractor to the companies, by endorsement or otherwise,
other than under this Guaranty, such liability shall not be in a
any manner impaired or affected hereby, and the rights of the
Companies hereunder shall be cumulative of any and all other
rights that the Companies may ever have against the Guarantor.
The exercise by the Companies of any rights hereunder or under
any other instrument, or at law or in equity, shall not preclude
the concurrent or subsequent exercise of any other rights.
4. In the event of any failure to pay or default by the
Contractor in payment of the Guaranteed Indebtedness, or any part
thereof, when such indebtedness becomes due, either by its terms
or as the result of exercise of any power to accelerate, the
guarantor shall, on demand by the Companies (or either of them)
and without further notice, without notice having been given to
the Contractor previous to such demand, of the acceptance by the
Companies (or either of them) of this Guaranty, and without any
notice having been given to the Guarantor previous to such demand
of the creating or incurring of such indebtedness, pay the amount
due thereon to the Companies, and it shall not be necessary for
the Companies, in order to enforce such payment by the Guarantor,
first to institute suit or exhaust its rights against the
Contractor or others liable on such indebtedness.
5. The Guarantor hereby agrees that its obligations under
the terms of this Guaranty shall not be released, diminished or
affected for any reason including, without limitation, the
occurrence of any one or more of the following events: (a) the
taking or accepting of any other security or guaranty for any or
all of the Guaranteed Indebtedness; (b) any release, surrender,
exchange, subordination, non-perfection or loss of any other
security or guaranty at any time existing in connection with any
or all of the Guaranteed Indebtedness; (c) any partial or
complete release of the liability of any Person (other than the
Contractor) at any time liable for the payment of any or all of
the Guaranteed Indebtedness (a "Guarantor"); (d) the insolvency,
bankruptcy, or lack of corporate power of the Contractor or any
Guarantor, whether now existing or hereafter occurring; (e) any
renewal, extension, and/or rearrangement of the payment of any or
all of the Guaranteed Indebtedness, either with or without notice
to or consent of the Guarantor, or any adjustment, indulgence,
forbearance, or compromise that may be granted or given by the
Companies to Contractor, Guarantor or any other guarantor; (f)
any neglect, delay, omission, failure or refusal of the Companies
(or either of them) to take or prosecute any action for the
collection of any of the Guaranteed Indebtedness or to take or
prosecute any action in connection with any instrument or
agreement evidencing or securing all or any part of the
Guaranteed Indebtedness; (g) any failure by the Companies (or
either of them) to notify Guarantor of any renewal, extension, or
assignment of the Guaranteed Indebtedness or any part thereof, or
the release of any security or of any other action taken or
refrained from being taken by the Companies against the
Contractor, or any new agreement between the Companies and the
Contractor, it being understood that the Companies shall not be
required to give the Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with
the Guaranteed Indebtedness; (h) the unenforceability of all or
any part of the Guaranteed Indebtedness against the Contractor by
reason of the fact that the Guaranteed Indebtedness exceeds the
amount permitted by law, the act of creating the Guaranteed
Indebtedness, or any part thereof, is ultra ▇▇▇▇▇ (outside the
scope of authority by the person creating the same), or that the
officers creating the same acted in excess of their authority or
for any reason whatsoever; (i) the fact that the outstanding
principal balance under the EPC Contract may from time to time be
zero; (j) if for any reason the Companies shall be required to
refund such payment or pay the amount thereof to someone else;
(k) any amendment of the EPC contract or any collateral document
pursuant to which the Guaranteed Indebtedness is created; (l) any
extension of time for performance of any covenant or condition is
effected; or (m) the waiver of performance under the EPC Contract
or failure or omission to enforce any right thereunder.
6. This Guaranty is for the benefit of each of the
Companies and their respective successors and assigns, and in the
event of an assignment of the guaranteed Indebtedness, or any
part thereof, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty is binding not only on the
Guarantor, but on the Guarantor's successors and assigns, and, if
this Guaranty is signed by more than one Person, then all of the
obligations of each Guarantor arising herein shall be jointly and
severally binding on all Guarantors, and their respective
successors and assigns, provided that, without the prior written
consent of the Companies no Guarantor may assign any of its
rights or obligations hereunder to any other Person.
7. The Guarantor represents and warrants that the value of
the consideration received and to be received by the Guarantor is
reasonably worth at least as much as the liability and obligation
of the Guarantor hereunder, and such liability and obligation may
reasonably be expected to benefit the guarantor directly or
indirectly.
8. By execution hereof, the Guarantor covenants and agrees
that the terms, representations, warranties, covenants and
conditions set forth in the EPC Contract (as amended from time to
time) shall be imposed upon the Guarantor, and the Guarantor
makes and confirms such representations and warranties and
covenants and agrees to promptly and properly perform, observe
and comply with each such term, covenant or condition. All of
the terms, representations, warranties, covenants, conditions,
and provisions of the EPC Contract (as amended from time to time)
are incorporated herein by reference, to the same extent as if
stated verbatim herein, and all terms defined in the EPC Contract
(as amended from time to time) shall have the same meaning
herein, unless specifically defined otherwise herein.
9. The Guarantor covenants and agrees that it will not
assert any rights arising from payment or other performance
hereunder until all of the Guarantor's liability hereunder shall
have been discharged in full and all of the Guaranteed
Indebtedness existing at the time of such discharge shall have
been paid and performed in full.
10. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire,
telecopy or similar writing) and shall be given to such party at
its address or telex number set forth on the signature page
hereof (or if to the Companies, at their addresses or telecopy
numbers set forth in the EPC Contract) or such other address or
telecopy number as such party may hereafter specify for such
purpose by notice to the other party. Each such notice, request
or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy
number specified herein and the appropriate answerback received,
(ii) if given by mail, then upon actual acknowledged written
receipt, prepaid addressed as aforesaid, or (iii) if given by any
other means, when delivered at the address specified in this
paragraph.
11. Upon the occurrence and during the continuance of any
"Event of Default" (as defined in the EPC Contract) the Companies
(or either of them) are hereby authorized at any time and from
time to time, to the fullest extent permitted to set off and
apply any and all other funds paid to and held or at any time
owing by the Companies to or for the credit or the account of the
Guarantor now or hereafter existing under this Guaranty or the
EPC Contract and although such obligations may be unmatured. The
Companies agree promptly to notify the Guarantor after any such
set-off and application made, provided that the failure to give
such notice shall not affect the validity of such set-off and
applications. The rights of the Companies under this paragraph
are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Companies may
have.
12. The Guarantor will promptly upon demand pay to the
Companies the amount of any and all reasonable out-of-pocket
expenses, including, without limitation, the reasonable fees and
disbursements of counsel and of any agents or experts, which the
Companies (or either of them) may incur in connection with the
(i) administration of this Guaranty, (ii) the exercise by the
Bank of any of the rights confined upon it hereunder, or (iii)
any default on the part of the Guarantor hereunder.
13. This Guaranty shall be governed by and construed in
accordance with the laws of___________________.
EXECUTED as of the day and year first above written.
GUARANTOR
By:
Name:
Title:
Address:
EXHIBIT J
FORM OF CERTIFICATE FOR WAIVER OF LIENS
WHEREAS, a Subcontractor identified as No. _________ was entered
into the day of , 199__, by , a
corporation organized and existing under the laws of the State of
__________________, hereinafter referred to as the "CONTRACTOR" and
____________________________________________________________
hereinafter referred to as the "SUBCONTRACTOR"; and
WHEREAS, the CONTRACTOR had, prior thereto, to with, on the ___
day of , 199_, entered into a Contract with
____________________________________________________________
hereinafter referred as the "OWNER" for the construction of
____________________________________________________________
WHEREAS, the parties, by such Subcontractor have agreed that the
SUBCONTRACTOR would, for and in the stead of the CONTRACTOR,
fulfill and perform each part of said contract as is set forth in
said Subcontract in the amount of , and in Change Order
numbered to said Subcontract in the amount of ($ ).
Now, THEREFORE, SUBCONTRACTOR, for and in consideration of a
payment made herewith in the sum of ______________________ DOLLARS
($ ), does for itself, its successors, heirs and assignees,
here state, affirm and agree that, with respect to all of such work performed
to date and for which payment has been made or is being made
pursuant to this Partial Waiver and Release, except as identified
below in paragraph 3:
1. All labor employed thereon or in connection therewith
and all payroll taxes and charges (such as withholding
taxes, social security taxes and worker's compensation,
disability and unemployment taxes and/or insurance
premiums) have been paid in full; and
2. All materials, tools, equipment, supplies and services
furnished and used upon or in connection with said work
have been paid for in full; and all sales, use, excise
and similar taxes on or in connection with the same
have been fully paid; and
3. Upon receipt by the undersigned of a check from the
CONTRACTOR in the above amount, payable to the
undersigned, and when the check has been paid, this
document shall become effective to release and forever
discharge the CONTRACTOR AND OWNER and their respective
officers, directors, agents, servants and employees,
and all lands, improvement, chattels, and other real
and personal property connections with or a part of
said project from any and all claims, demands, liens
and claims of lien whatsoever arising out of the
performance of all work for which payment has been made
which it now has or hereafter might, or could have
except for the following:
(If there are no exceptions, write "None in the
following space):
Before any recipient of this document relies upon it,
he should verify evidence of a payment to
SUBCONTRACTOR; and
4. Except as provided in paragraph 3 above, SUBCONTRACTOR
warrants that it has completed all work performed to
date as required under the above-identified
Subcontractor and all charges and amendments thereto,
if any; and that it has complied with all the terms and
conditions of said Subcontractor; and
5. SUBCONTRACTOR will, at its sole cost and expense,
forever defend and hold harmless CONTRACTOR AND OWNER
from any and all claim and demands and will defend
against and obtain the discharge of any and all liens
and claims of liens of others arising out of or in
connection with said work, including, without
limitation, those claimed or asserted by an employee,
supplier or subcontractor of the SUBCONTRACTOR (or by
an employee or supplier of any subcontractor of the
undersigned) or by any governmental agency or an
insurance carrier; and
6. In the event that any of the work performed by the
SUBCONTRACTOR on the said project (including the
materials used incorporated therein and the workmanship
thereof) is the subject of any guarantee or warranty by
the undersigned, the giving of this Release and Waiver
of Lien by the Under signed shall not operate in any
way to reduce or modify such guarantee or warranty or
to release the undersigned therefrom. SUBCONTRACTOR
further agrees that if it hereafter performs any labor
or furnishes any materials, tools, equipment, supplies
or services pursuant to such guarantee or warranty, it
will fully paid for the same, will pay any or all taxes
and charges in connection therewith and will release,
discharge, defend and hold harmless CONTRACTOR AND
OWNER, and the said all lands, improvement, chattels,
and other real and personal property from any and all
claims, demands, liens and claims of lien arising in
connection therewith all in like manner and to the same
extent as is herein provided with respect to labor,
materials, etc., heretofore furnished. This Partial
Release and Waiver of Lien shall inure to the benefit
of CONTRACTOR AND OWNER and their respective successors
and assigns and shall be binding upon the undersigned
SUBCONTRACTOR and its or their successors, heirs and
assigns.
7. The work covered by this Partial Release and Partial
Waiver of Lien includes all work for which payment has
been received.
Dated this ____ day of __________, 19__ at _________.
Subcontractor: COMPANY CHOP
_________________
By:
Title:
Dated:
EXHIBIT K
TIME, MATERIAL AND EQUIPMENT RATE SCHEDULE
[***] FILED SEPARATELY WITH THE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT.
MEMORANDUM
[Amendment No. 1 to EPC Contract]
1. Since the preliminary design hearing was just completed on July 4,
1996, the Tangshan Panda Heat & Power Co., Ltd. and Tangshan Pan-
Western Heat & Co., Ltd. (hereafter collectively referred to as Owner)
may not achieve financing of the Luannan Project by August 1, 1996.
The Owner requests Harbin Power Engineering Co., Ltd.
(hereafterreferred to as Contractor) to extend the EPC price
effectiveness date to September 15, 1996. The Contractor expresses his
understanding and agrees not to change the EPC contract price before
September 15, 1996.
2. The Owner agrees to pay 420,000 RMB Yuan for the test-pile 20,
1996 and such amount of money will not be a part of the EPC contract
price.
Tangshan Panda Heat & Power Harbin Power Engineering
Co., Ltd. Co., Ltd.
______________________________ _____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇
General Manager Contractor's Representative
Tangshan Pan-Western Heat
& Power Co., Ltd.
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
July 5, 1996
AGREEMENT
[EPC Amendment #2]
THIS AGREEMENT (the "Agreement") is executed this 14th day
of September, 1996, by and between Tangshan Panda Heat and Power
Company, Ltd. and Tangshan Pan-Western Heat and Power Company
Limited, both of which are Sino-foreign equity joint venture
companies (collectively referred to herein as the "Owner"), and
Harbin Power Engineering Company Limited ("Harbin").
RECITALS:
1. Owner and Harbin are parties to a certain Engineering,
Procurement and Construction Contract dated April 24, 1996
the"EPC Contract").
2. The EPC Contract includes a turnkey fixed price payment due
to Harbin (upon performance in accordance with the EPC
Contract) in the amount of US $ 63,625,832 ( "Original
Contract Price").
3. The Original Contract Price is required to be paid in
accordance with the terms of the EPC Contract and according to
the terms of the EPC Contract was initially effective through
August 1, 1996.
4. By Memorandum dated July 5,1996, Owner and Harbin agreed to
extend the effective date of the Original Contract Price to
September 15, 1996.
5. Owner and Harbin now wish to provide for the escalation of
the Original Contract Price, as provided below.
6. Terms that have their original letter capitalized herein,
have the same meaning as given thereto in the EPC Contract
unless they are defined in this Agreement.
NOW THEREFORE, based upon the mutual benefits to be derived
by the Owner and Harbin as a result of this Agreement, Owner and
Harbin hereby agree as follows:
AGREEMENT:
1. In the event that the Notice to Proceed is not given prior
to September 16, 1996, the Original Contract Price shall
escalate at the pro-rated rate of 0.5% (five-tenths of one
percent) per month, calculated on a daily basis and without
compounding, up through and including December 31, 1996 such
that the "New Contract Price" at December 31, 1996 would be
US $64,739,284 (or the lesser pro-rated amount, calculated
daily and without compounding, as of any date prior thereto
on which Notice to Proceed is actually given). The "New
Contract Price" as used herein shall mean the calculated
escalated price at the date the Notice to Proceed is given.
2. In the event that the Notice to Proceed is not given prior
to January 1, 1997, then beginning as of such date, the
Original Contract Price as adjusted for escalation through
December 31, 1996 (US$64,739,284) shall escalate at the pro-
rated rate of 1.2% (one and two tenths of one percent) per
month, calculated on a daily basis and without compounding
from that date until the Notice to Proceed is issued.
3. This Agreement shall constitute a Change under the EPC
Contract and upon issuance of the Notice to Proceed and
determination of the New Contract Price a Change Order shall be
executed by Owner and Harbin to reflect the New Contract Price as
provided herein.
4. In all other respects the terms and conditions of the EPC
Contract are hereby affirmed.
This Agreement is executed by the persons designated below, being
the duly authorized representatives of Owner and Harbin,
respectively, as of the day and year first above written.
TANGSHAN PANDA HEAT HARBIN ENGINEERING
AND POWER COMPANY, LTD. COMPANY LIMITED
_____________________________ ________________________
By: J.▇▇▇▇ ▇▇▇▇▇▇▇▇, By:
Owner's Representative
TANGSHAN PAN-WESTERN HEAT
AND POWER COMPANY, LTD.
_____________________________
By: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇,
Owner's Representative
This shall acknowledge the discussions and agreement of the below
named parties on September 14, 1996 wherein Tangshan Panda Heat
and Power Company, LTD and Tangshan Pan-Western Heat and Power
Company Limited (collectively referred to herein as the"Owner")
and Harbin Power Engineering Company Limited ("Contractor")
agreed and do hereby agree as follows:
The Bid Security issued in favor of the Owner at the request
Harbin and utilized as security for Contractor's performance
under that certain Engineering, Procurement and Construction
Contract dated April 24,1996 between Owner and Contractor (the
"EPC Contract") shall be extended by Contractor to be effective
until January 1,1997 and evidence of such extension shall be
immediately delivered to the Owner.
Contractor shall cause EXIM Bank to execute its Guaranty as
required under the EPC Contract prior to October 1, 1996 and
immediately furnish a copy thereof to the Owner. Contractor
further represents that said Guaranty will be provided to Owner
in New York City, New York USA (or at such other place as Owner
may direct it to be delivered by written notice) upon receipt of
notice from Owner that the original copy thereof is required due
to its intent to close financing in at least two weeks.
HARBIN POWER AND ENGINEERING COMPANY
_______________________
BY: ▇▇. ▇▇▇▇▇ WEIZHOU
TANGSHAN PANDA HEAT AND POWER COMPANY, LTD.
_______________________
BY: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇,
OWNER'S REPRESENTATIVE
TANGSHAN PAN-WESTERN HEAT AND POWER COMPANY LIMITED
_______________________
BY: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇,
OWNER'S REPRESENTATIVE
Amendment No.3
Engineering. Procurement and Construction Contract
Among
Tangshan Panda Heat and Power Co., Ltd.
Tangshan Pan-Western Heat and Power Co., Ltd.
And
Harbin Power Engineering Company Limited
This amendment No. 3 ("Amendment No. 3) to that certain
Engineering, Procurement and Construction Contract dated April
24, 1996 (the "EPC Contract") by and between Tangshan Panda Heat
and Power Co., Ltd. and Tanghshan Pan-Western Heat and Power Co.,
Ltd both of which are Sino-foreign equity joint venture companies
(collectively, the "Owner") and Harbin Power Engineering Company
Limited, ("Harbin"), a company formed pursuant to the laws of the
People's Republic of China (the "PRC") is made as of the 17th day
of December, 1996. Each of the Owner and Harbin may be referred
to herein as a "Party" or collectively as the "Parties".
RECITALS:
1. The EPC Contract was entered by the Parties to set forth the
terms and conditions pursuant to which Harbin would provide its
services to the Owner relating to that certain 2X50 MW coalfired
power generation facility to be constructed in Luannan County,
Tangshan City, Hebei Province, PRC.
2. The EPC Contract provided for a fixed price turnkey payment
to Harbin (upon its performance in accordance with the terms of
the EPC Contract) in the amount of US $63,625,832 (the "Original
Contract Price"). The Original Contract Price was initially
effective through August 1, 1996.
3. By Memorandum dated July 5, 1996 ("Amendment No.1") the EPC
Contract was amended to extend the fixed price payment
established under the EPC Contract to September 15, 1996.
4. By Agreement dated September 14, 1996 ("Amendment No.2") the
Parties provided for a prorata escalation in the Original
Contract Price of 0.5% (five-tenths of one percent) per month, to
be calculated on a daily basis without compounding. The Original
Contract Price as escalated pursuant to Amendment No. 2 and
determined as of December 31, 1996 is US$ 64, 739,284 and shall
be referred to herein as the "New Contract Price".
5. The Owner gave notice to Harbin of their willingness to
provide this limited notice to proceed conditioned upon the
willingness of Harbin to deliver the Bank Guarantee described in
Section 3.30 of the EPC Contract. It is intended, pursuant to
this Amendment No.3 that the Owner will advance to Harbin (upon
receipt by the Owner of additional "Bank Security", in form and
substance and from a financial institution acceptable to the
Owner additional security (the "Bank Security") to secure that
the Bank Guarantee will not be revoked prior to the date
stipulated in the form of Attachment I) certain monies to allow
Harbin to begin to perform certain work under the EPC Contract.
The Bank Security shall be furnished in the form of Attachment I.
6. The Owner and Harbin wish to enter into this Amendment No. 3
to evidence their further agreement relating to the matters
described herein.
7. Terms that have their initial letter capitalized herein,
have the same meaning as given thereto in the EPC Contract unless
such term is defined differently herein.
AGREEMENT:
NOW THEREFORE, based upon the mutual benefits to be derived
by the Owner and Harbin as a result of this Amendment No.3 and in
the interest of cooperation, the Owner and Harbin agree as
follows:
1. The representations set forth in the above Recital No. 1
through No. 7 are hereby confirmed and agreed to be true and
correct, as if restated in their entirety hereunder, and
constitute the agreement of the Owner and Harbin to the matters
set forth in such representations.
2. The New Contract Price is confirmed and agreed by the
Parties to be US$64,739,284. Said New Contract Price shall
constitute the "Contract Price" for all purposes under the EPC
Contract and shall not be subject to any additional escalation
under the provisions of Amendment No.2. after December 31, 1996
unless Notice to Proceed is given after May 1, 1997 or Owner
fails to perform its obligations under Section 7(f) below, in
which event the terms of escalation provided in said Amendment
No.2 shall be applied retroactively to January 1, 1997.
Notwithstanding anything herein to the contrary, in the event
that Harbin has not furnished a fully effective (in accordance
with its terms) Bank Guarantee in accordance with this Amendment
No.3, Harbin shall not be entitled to any schedule or cost relief
under the EPC Contract. This Performance Security shall not be
revoked by Harbin or the issuer thereof prior to its
effectiveness.
3. Following the execution hereof and following receipt of the
Bank Security, Owner shall pay to Harbin the sum of US $2,000,000
in consideration of Harbin's work under this Amendment No.3 Owner
shall make an additional payment to Harbin of US $1,000,000 on or
before February 28, 1997. Owner shall make an additional payment
to Harbin of US $1,000,000 on or before March 31, 1997. All work
referred in this Amendment No.3 shall be performed in accordance
with the requirements of the EPC Contract and shall be subject to
the conditions stated therin. Notwithstanding the above, no
further payments shall be made hereunder effective immediately
upon issuance of the Notice to Proceed under the EPC Contract and
all further work shall be performed in accordance with the
requirements of the EPC Contract.
4. The sums paid under Section 3, immediately above shall be
credited against the New Contract Price and the down payment
under the EPC Contract, In addition, Owner shall receive a credit
against the New Contract Price for the amount determined to be
attributable to insurance that was to have been provided by
Harbin pursuant to Article IV of the EPC Contract, but that will
now be provided by the Owner (as described in the letter dated
April 22, 1996), and against the Down Payment in the amount of US
$159,665 (which is the sum attributable to payment made to the
Hebei Design Institute by the Owner at the request of Harbin)such
5. That the Down Payment shall be 10% of the New Contract
Price, as adjusted for Owner provided insurance,(less retainage)
minus the amounts paid through the date of the Notice to Proceed.
6. In the event that Notice to Proceed is given under the EPC
Contract prior to February 22, 1997 a Change Order will be
executed that will provide for an additional 30 days under the
Construction Schedule. In the event that Notice to Proceed is
given on or after February 22, 1997 there shall be no change to
the Construction Schedule that currently exists in the EPC
Contract. In the event that the Notice to Proceed is not given
prior to May 1, 1997, the EPC Contract (and this Amendment No.3)
shall terminate and the Contractor shall have the remedies
provided to it under Section 15.2.2. of the EPC Contract.
7. The first sentence of Section 3.30 of the EPC Contract will
be restated in its entirety to read as follows: "Prior to
Financial Closing, Contractor shall provide to Owner a Bank
Guarantee (which shall automatically become effective at the
initial Project Funding) issued in the form attached hereto as
Exhibit I-1(REVISED) and from a financial institution acceptable
to Owner and Lender in their sole discretion ("Acceptable
Guarantor"), in an amount equal to the product of the Contract
Price (to be adjusted if the Contract Price changes)multiplied by
0.35 (the"Bank Guarantee")."
8. The requirements of the Owner to make any payment under this
Amendment No.3 are as follows:
a) The Bid Security shall immediately be extended to expire on
January 20, 1997;
b) Owner shall furnish its original formal business license to
the Guarantor, under the Bank Guarantee, for inspection, and
allow said Guarantor to retain a copy thereof for its records, by
December 26, 1996.
c) Subject to Section 7 (a) above the Bank Guarantee shall be
issued by The Export and Import Bank of China ("Eximbank") in the
form confirmed by Eximbank by letter to ▇▇. ▇▇▇ Chunsheng dated
July 9, 1996 (as revised to reflect 35% of the New Contract
Prices as the new "Guaranteed Amount" thereunder).
d) The original Bank Guarantee, together with a duplicate
marked "Copy for Advising Bank", both duly executed and issued by
Eximbank shall be delivered to the firm of Cai, Zhang & Lan,
Attention: ▇▇. ▇▇▇ Chunsheng. Harbin has previously made a formal
request that the Bank Guarantee be issued. The "Copy for Advising
Bank" copy of the Bank Guarantee shall be furnished to Owner
immediately upon receipt by ▇▇. ▇▇▇.
e) The original of the Bank Security, substantially in the form
attached as Attachment I hereto, shall be delivered to Owner at
the same time as the "Copy for Advising Bank" of the Bank
Guarantee.
f) Provided that the Bank Security has been furnished by Harbin
to the Owner, and following completion of the requirements of the
immediately preceeding sections (a),(b),(c) and (d), the initial
payment in Section 3 above shall be paid. Owner shall furnish a
copy of an instrument issued by the transferring bank showing
implementation of a wire transfer for said amount to Harbin
within three (3) business days and cause the payment to be
completed within fifteen (150 days. Such funds shall be paid to
the account of Harbin at: Harbin Power Engineering Co., Ltd.,
Bank of China, Harbin Branch, Dongli Subbranch, Address: ▇▇. ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Dist. Harbin, Account No. 148240000008.
g) Owner shall cause a joint notice to be issued by Owner and
the initial Lender to the Project. This joint notice shall be
addressed to ▇▇. ▇▇▇ Chunsheng and shall indicate the financial
closing is expected to occur within approximately two weeks from
the date of such notice and also provide the anticipated date of
initial Project Funding under the EPC Contract. Owner shall
provide a copy of said notice to the Guarantor and to Harbin at
the same time. Immediately upon receipt by ▇▇. ▇▇▇ of this
notice, the original Bank Guarantee shall be delivered by ▇▇. ▇▇▇
to the Owner.
9. The Parties hereto agree to work cooperatively each with the
other to resolve all matters in reconciliation of the issues
presented under the Preliminary Design Approval and to resolve
all of such issues in a cost effective manner so long as such
reconciliation does not materially adversely effect the safety,
quality and operability of the Project and to otherwise comply
with the performance standards and requirements under PRC law, of
any Lender to the Project and any insure of the Project.
10. In all other respects, the terms and conditions of the EPC
Contract are hereby ratified and confirmed.
IN WITNESS WHEREOF, the Parties have caused this Amendment
No.3 to be executed by their duly authorized representatives,
effective as of the day and date first above written.
TANGSHAN PANDA HEAT AND POWER COMPANY, LTD.
__________________________________________
BY: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
TITLE: Owner's Representative
TANHSHAN PAN-WESTERN HEAT AND POWER COMPANY LTD.
__________________________________________
BY: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
TITLE: Owner's Representative
HARBIN POWER ENGINEERING COMPANY LIMITED
__________________________________________
By:
Title: Contractor's Representative
[FORM OF OUR IRREVOCABLE LETTER OF GUARANTEE NO.]
To: Tangshan Panda Heat and Power., Ltd and
Tangshan Pan-Western Heat and Power Co., Ltd.
Ref: [ ]
Date: DEC 19,1996
Bank Security No.[ ] for turnkey construction of 2X50
MW (nameplate) coal-fired, cogeneration power plant in Luannan
County, Tangshan City, Hebei Province, People's Republic of China
(the"PRC").
This guarantee is hereby issued to serve as "Bank
Security" of Harbin Power Engineering Co., Ltd., ▇▇.▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Harbin")
For performance under that certain engineering, procurement and
construction contract, as amended,(the "EPC Contract") for thr
turnkey construction of a 2X50MW Coal-Fired, Cogeneration Power
Plant in Luannan County, Tangshan City, Hebei ▇▇▇▇▇▇▇, PRC, in
favor of Tangshan Panda Heat and Power Co., Ltd, and Tangshan Pan-
Western Heat and Power Co., Ltd (hereinafter called the "Owner").
Terms that have their initial letter capitalized herein shall
have the meaning given to that term in the EPC Contract (as
amended), unless that term is defined differently herein.
We,_______________________, on behalf of Harbin, hereby
unconditionally and irrevocably guarantees and binds itself, is
successors and assigns to pay Owner, immediately without
recourse, the aggregate sum of US $4,000,000 (Four Million United
States Dollars). The Preceeding amount is referred to hereunder
as a "Guaranteed Amount". The Guaranteed Amount shall be payable
immediately upon receipt of written notification from Owner
stating the following:
The Bank Guarantee was not provided in accordance
with Amendment No.3 or was revoked by the issuer
(or has otherwise not become effective) prior to
becoming effective pursuant to the terms of the
Bank Guarantee for any reason other than initial
Project Funding not occurring or the EPC Contract
and its Amendment No.3 are terminated by the Owner
on or before May 1, 1997.
It is fully understood that this Bank Security shall take effect
from the date when Harbin receives the first payment (i.e. US
$2,000,000) which is effected by the Owner according to the
Amendment No.3. The Guaranteed Amount under this Bank Security
shall be automatically increased with the amount received by
Harbin from Owner pursuant to the payment schedule in the
Amendment No.3. This Bank Guarantee shall remain valid for a
period ending the earlier of two (2) days following effectiveness
of the Bank Guarantee (in accordance with the terms thereof)
delivered pursuant to the EPC Contract, or May 2, 1997, or
through any period of extension hereof that may agreed upon
between Owner and Harbin with Notice to the Bank, or unless
sooner terminated or released by Owner.
Issued By:___________________________