Huanghugang Hydropower Station Development Agreement (“this Agreement”)
Exhibit
10.10
Huanghugang
Hydropower Station Development Agreement
(“this
Agreement”)
Party A:
Shimen County Government of Hunan Province
Legal
Address: Chujiang Town, Shimen County, Hunan Province
Legal
Representative: ▇▇▇▇▇▇ ▇▇▇▇
Party B:
Hunan Sanjiang Electric Power Co., Ltd.
Hunan Zhaoheng Hydropower Co., Ltd.
Legal
Address: No. 1 South Power Station Road, Chujiang Town, Shimen County, Hunan
Province
Legal
Representative: ▇▇▇▇ ▇▇▇
In
accordance with the relevant laws and regulations in "General Principles of
Civil Law", "Contract Law of PRC” ; the No. 29 [2003] "Opinions on accelerating
the development of hydropower in rural areas” from the General Office of the
Hunan Provincial Government; and the principle of “negotiation on a case-by-case
basis” under the policy of attracting investments to Shimen County, the Shimen
County Government (hereinafter referred to as Party A) and Hunan Sanjiang
Electric Power Co., Ltd., Hunan Zhaoheng Hydropower Co., Ltd. (hereinafter
referred to as Party B, collectively) agree to the following terms regarding the
development of Small Huanghugang Hydropower Station (hereinafter referred to as
“Huanghugang Hydropower Station”) after amicable negotiations.
1. The
Purpose of the Huanghugang Project
Adhering
to the principle of sustainable development, the purpose of the Huanghugang
project (“the Project”) is to scientifically develop and utilize water resources
in Dieshui Basin to achieve the goals of flood control, ecology protection,
clean power generation, and economic development, with emphasis on flood control
and electric power generation. Party B will recover its investment from the
sales of electricity.
2.
Project Development Right
2.1
According to No. 202 [2007] letter of the Hunan Provincial Government regarding
the “Review Report of the Development Plan of Water Resource From Huanghugang to
Zhangjiadu River in Dieshui Basin”, Party A has agreed to grant the development
right of Huanghugang Hydropower Station (“the development right”) to Party B,
when Party B invests in and commences the construction of Huangyantou Rubber
Dam-type hydropower station. The construction site is within the
boundaries of the towns of Suojie, Luoping and Hupingshan in Shimen
County, Hunan Province. The specific location shall be subject to the approval
of relevant government agencies.
2.2 The
development right takes effect as of the date on which Party B receives all
approvals from relevant government agencies. Party B shall commence the
construction in accordance with the construction schedule set forth in this
Agreement, otherwise, Party A may grant the development right to a third party
and not bear responsibility for any loss of Party B.
3.
Project Execution
Party B
shall execute the Project under an independent legal entity set up in Shimen
County. The independent accounting entity shall pay taxes in accordance with
relevant laws.
4.
Construction Scale
The
initial planned total installed capacity of the Project is 50MW, with an average
of 125.8 million kilowatt hour per annum and total investment of approximately
RMB401.08 million (exact figure to be determined in accordance with the project
design and construction budget).
5.
Hydropower Station Property Right and Land Use Right
5.1 The
property right of Huanghugang Hydropower Station (including auxiliary buildings
and equipment) belongs to Party B. In addition, Party B owns the land use right
for 50 years from the date when the land use right contract is signed. After 50
years, the land use right shall be renewed in accordance with relevant
regulations.
5.2 Party
A shall protect the legitimate rights of Party B.
6.
Construction Land for the Project
6.1 Party
A and its administrative departments shall complete land requisition and
demolition in accordance with relevant laws and regulations and the project
design requirements and provide Party B with construction land by means of land
assignment.
6.2
During the project execution process, Party B shall use land based on the
principal of conservation. Exact land use area is subject to the approval of the
land administrative department.
7.
Construction Schedule
Party B
shall commence construction of the main body within three (3) months from the
date when the Project, design, land requisition and construction, etc. are
approved by the relevant government agencies, use best efforts to complete the
main body of the Project and commence operation in accordance with the schedule
set forth in the project design plan. In the event that Party B does not
commence work on the construction within nine (9) months from the date when
relevant approvals are obtained and land requisition and demolition are
completed, Party A may grant the development right to a third party. Under these
circumstances, Party B shall transfer all construction and relevant documents to
Party A without cost as compensation for the Project delay.
8. The
Project’s Feasibility Studies and Approval
8.1 Party
B shall complete the Project’s feasibility studies, and Party A shall not bear
any related cost and any risk associated with it.
8.2 In
determining the final project plan (“the Plan”), Party B shall strictly adhere
to the plan and design implemented by authorities in Shimen County and consider
the interests of upstream and downstream hydropower stations. The Plan shall be
based on the principals of ecology protection, maximum water resource use and
flood control.
8.3 Party
B shall employ qualified design and construction companies for the
Project.
8.4
Relevant project approvals shall be obtained within two (2) years from the date
this Agreement is signed. Party B shall be responsible for obtaining relevant
approvals with the assistance of Party A. If the Project is not approved due to
Party B’s default, Party A may terminate this Agreement and not bear relevant
losses. If the Project is not approved due to Party A’s default, Party B may
terminate this Agreement and claim from Party A for fees in relation to
approvals. If the Project is not approved due to state policy changes and
reasons of related administrative authorities, neither party shall be
responsible for the losses and the relevant administrative authorities shall
bear the losses.
9.
Project Coordination
Party A
designates Shimen County Small Hydropower Development Team and Huanghugang
Hydropower Station Coordination and Service Team of Shimen County as
coordinators to assist Party B to obtain project approvals, and
complete land requisition, demolition, compensation and other related approvals,
etc. Party B shall fully cooperate to ensure the construction is smoothly
executed and in accordance with the design requirements.
10.
Support Policies
10.1 The
Project is one of the key investment projects to attract foreign investment in
Shimen County. The Project enjoys preferential tax treatment during the
construction and operation period. The preferential treatment may be stipulated
in government meeting minutes and implemented by the tax authority.
10.2
Preferential policies not stipulated in this Agreement but required by Party B
shall be negotiated on a case-by-case basis by both parties and confirmed in
government meeting minutes. Such government meeting minutes govern
the obligations of both parties and define the responsibilities of the
subordinate government agencies of Party A.
11. Other
Rights and Obligations of Both Parties
11.1
Party A’s Rights and Obligations
11.1.1
Party A is responsible for creating a favorable construction and operating
environment; timely mediating environment related conflicts; promoting smooth
implementation of the Project; and safeguarding legitimate rights and interests
of Party B.
11.1.2
Due to the large investment of the Project, downstream hydropower stations
benefit directly from the relatively large storage capacity of Huanghugang
Hydropower Station. Party A shall assist Party B in acquiring part or all equity
interests of downstream hydropower stations from Huanghugang to Zao
City.
11.1.3 Party
A shall help Party B prepare relevant documents including feasibility studies,
project design, etc. for the purpose of project approval. All relevant costs
shall be assumed by Party B.
11.1.4
Party A shall help Party B receive construction land use certificate. All
relevant costs shall be assumed by Party B.
11.1.5
Party A shall attend panel meetings for project feasibility studies and project
design plan.
11.1.6
Party A shall help Party B complete all preparation work before the commencement
of the construction. All relevant costs, including RMB1.8 million paid to
Zhangjiadu Company for initial preparation work, shall be assumed by Party
B.
11.1.7
Party A shall issue meeting minutes to its subordinate departments in a timely
manner to ensure that all of its obligations are fulfilled.
11.1.8:
Party A guarantees that there is no major flaws that might affect project
implementation at the time this Agreement is signed.
11.2. Rights and Obligations of Party B
11.2.1
Party B shall be responsible for initial preparation work, project tendering and
construction, and assume all relevant fees.
11.2.2
The design, implementation and schedule of the Project shall be in accordance
with relevant regulations regarding planning requirements, flood control from
hydropower administration.
11.2.3
After the Project is completed, Party B can transfer the property right and
operating rights to a third party so long as the transferee is a legal entity
registered in Shimen County.
11.2.4
Party B shall be responsible for project financing to ensure the timely
commencement and completion of the Project according to the Plan.
11.2.5
Party B shall be responsible for and assume all relevant costs of obtaining
approvals on project review, design, on-grid tariff, land use and water resource
permit, etc.
11.2.6
Party B shall ensure construction quality and meet strict quality
standards.
11.2.7
Party B shall comply with state laws and regulations and protect ecological
environment during the construction and operation periods.
11.2.8
Party B shall comply with the relevant safety laws and regulations, accept
supervision and inspection from relevant government agencies, and timely
implement safety improvement measures.
11.2.9
Party B shall strengthen the management of blasting materials and blasting sites
in accordance with safety norms and procedures to ensure operation safety.
Furthermore, Party B shall be responsible for the consequences of all safety
related accidents.
11.2.10
Party B shall not transfer or sell the development right of the Project to a
third party prior to completion and operation of the Project.
11.2.11:
Party A owns the development right of tourism resources formed during the
implementation of the Project to ensure overall protection and utilization of
Hupingshan Nature Reserve. However, Party B has the priority to develop the
resources.
12:
Liabilities for Breach of this Agreement
12.1 The
Agreement is automatically terminated if Party B transfers or sells the
development right of the Project to a third party. Furthermore, Party B shall be
liable for Party A’s economic losses due to its breach of the
Agreement.
12.2 In
case the Project is not put into operation two (2) years beyond the schedule set
forth in the project design plan, Party A may recover the development right and
land use right from Party B without any compensation.
12.3: In
the event that the Project is not commenced or completed on time due to Party
A’s default, Party A shall be liable for all of Party B’s economic
losses.
12.4 In
the event that neither party fulfills its obligations due to force majeure, both
parties are exempted from liabilities of all damages caused by the breach of
this Agreement.
13.
Dispute Settlement
13.1
During the project preparation and construction period, Party A and Party B may
sign a supplemental agreement as appendix to this Agreement if there are other
issues not covered in this Agreement. The supplemental agreement has the same
legal effect as this Agreement (and may be submitted to departments in the form
of government meeting minutes).
13.2 Both
parties shall try to settle any dispute through amicable negotiations. If no
agreement can be reached, either party may submit the case to the local court
where this Agreement is executed.
14.
Signing and Effectiveness of This Agreement
14.1 This
Agreement is in 4 copies, Party A and Party B each will keep two
copies.
14.2 This
Agreement becomes effective after being signed and sealed by both
parties.
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Party
A (seal):
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Party
B (sealed):
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Legal
Representative
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Legal
Representative
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(signature):
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(signature):
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Signed:
December 3, 2008