EXHIBIT 10.80
JOINT VENTURE CONTRACT
FOR
TANGSHAN CAYMAN HEAT AND POWER CO., LTD.
TABLE OF CONTENTS
ARTICLE 1 General Principle
ARTICLE 2 Two Parties of the Joint Venture
ARTICLE 3 Name and Address of the Joint Venture Company
ARTICLE 4 Purpose and Business Scope of
the Joint Venture Company
ARTICLE 5 Total Investment and Registered Capital
ARTICLE 6 Responsibilities and Duties of the Parties
ARTICLE 7 Board of Directors
ARTICLE 8 Business Administrative Organization
ARTICLE 9 Purchase of Materials
ARTICLE 10 Preparation Work
ARTICLE 11 Personnel Administration
ARTICLE 12 Foreign Currency Control
ARTICLE 13 Financing, Taxing and Auditing
ARTICLE 14 Terms of the Joint Venture
ARTICLE 15 Insurance
ARTICLE 16 Amendment, Termination and Release of the
Contract
ARTICLE 17 Obligation of the Party Breaching the
Contract
ARTTCLE 18 Force Majeure
ARTICLE 19 Laws Applicable
ARTICLE 20 Arbitration
ARTICLE 21 Validity of the Contract
ARTICLE 22 Language of the Text
ARTICLE 1
GENERAL PRINCIPLE
1.1. In accordance with the stipulations of "The Law of the
People's Republic of China on Chinese-Foreign Equity Joint
Ventures" and other related laws and rules, and on the basis
of equality and mutual benefit, Luannan County Heat & Power
Plant of Tangshan City, Hebei Province, the People's
Republic of China (PRC) , Tangshan Luanhua (Group) Co. Of
Tangshan City, Hebei Province, PRC and Pan-Western Energy
Corp., LLC (a subsidiary of Panda Energy Corp. in Dallas,
Texas, U.S.A.) of Cayman Islands, British West Indies, both
agree to establish a Joint Venture Company with joint
investment and hereby sign this contract.
ARTICLE 2
PARTIES OF THE JOINT VENTURE
2.1. Luannan County Heat & Power Plant (hereinafter referred
to as Party A) is a registered company in PRC, its statutory
address being Benchengzhong Street, Luannan County. Hebei
Providence, PRC and statutory representative being Zhao
Xiuchen, General Manager of Party A, with Chinese
nationality.
Pan-Western Energy Corp. LLC (hereinafter referred to as
Party B) is a registered company in Cayman Islands, British
West Indies with its statutory address being_ ▇▇▇▇▇▇ and
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, P.O. Box 309,
▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands, British West
Indies and statutory; representative ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman and President of Party B, with U.S.A. nationality.
Tangshan Luanhua (Group) Co. (hereinafter referred to as
Party C) is a registered company in PRC, its statutory
address being Benchengzhong Street, Luannan County, Hebei
Province, PRC and statutory representative being Zhao
Changjun, General Manager of Party C, with Chinese
nationality.
ARTICLE 3
NAME AND ADDRESS
OF THE JOINT VENTURE COMPANY
3.1. Full Chinese name for the Joint Venture shall be:
3.2. Full English name for the Joint Venture Company shall
be: TANGSHAN CAYMAN HEAT AND POWER ▇▇.▇▇▇. (hereinafter
referred to as JVC).
3.3. The registered address of JVC shall be at Benchengzhong
Street, Luannan County, Tangshan City, Hebei Province, PRC.
ARTICLE 4
PURPOSE AND BUSINESS SCOPE
OF THE JOINT VENTURE COMPANY
4.1. The company shall be based and run on sound and lawful
business principles and principles of equality and mutual
benefit with the aim of selling its products and services at
profit acceptable to the company.
4.2. The company shall manufacture and sell hot water and
steam to the local heat network of Luannan County through
the construction, management and operation of a water supply
system and a steam and heat production facility.
4.3. The total production capacity of the company shall be
approximately:
(i) Steam generation of 184,200 million kcal. per year
and hot water sales equivalent of 112,000 million
kcal. per year
(ii) The production capacity may be changed from
time to time by agreement of the Parties.
ARTICLE 5
TOTAL INVESTMENT AND REGISTERED CAPITAL
5.1. JVC shall be a limited liability company. The liability
of any Party to the company shall be limited to their amount
of capital investment.
5.2. The total investment of the company shall be US
$29,440,000, and the registered capital of the company shall
be US $11,778,000. The contribution made by Party A shall be
US $1,178,000, accounting for 10% of the registered capital,
the contribution made by Party B shall be US $9,422,000,
accounting for 80% of the registered capital: the
contribution made by Party C shall be US $1,178,000,
accounting for 10% of the registered capital;
The rest of the total investment exceeding the registered
capital shall be settled by international financing and JVC
shall be responsible for the payment of debt obligations,
interests and financing costs.
The Parties shall share the profits, losses and risks in
proportion to their investment contributed.
5.3. Party A, Party B and Party C shall invest in the
following way:
Party A: With cash capital contributions made at or during
the times specified in Section 5.4.
Party B: With cash capital contributions made at or during
the times specified in Section 5.4.
Party C: With cash capital contributions made at or during
the times specified in Section 5.4.
5.4. The total investment shall be fully made by the
Commercial Operation Date of the power and steam production
facility (the "Facility") to be owned by JVC (the
"Commercial Operation Date"), with registered capital
contributions to be made according to the percentage
ownership of each Party.
Each Party shall contribute fifteen percent (15%)of the
registered capital in their respective proportion within
ninety (90) days after the business license is issued. Each
Party shall guarantee the payment of the remaining eighty
five percent (85%) of the registered capital to be
sufficient to meet the requirements of the Joint Venture
project progress and within two years after the
establishment of JVC.
5.5. The registered capital of JVC shall not be reduced
during the joint venture period, but can be increased if any
Party reinvest with their profits distributed.
5.6. In case any party to this JVC contract intends to
transfer its investment share in the JVC to a party which is
not a party to this JVC (Outside Party), it shall require
the prior written consent of all the existing parties
hereto. If a Party desires to transfer its capital
investment to a Outside Party, whether totally or partially,
it should be agreed upon by the other Parties and approved
by the authorities concerned, and the other Parties shall
have the first right of refusal to purchase which right must
be exercised (if exercised), within thirty (30) days after
notice of such proposed transfer is received. The other
Parties may waive its first right of refusal to purchase,
but shall reserve the right to choose a subsidiary or
affiliate Party as the assignee. The conditions for such
transfer from one Party of JVC to a Outside Party shall not
be more favorable than the conditions given to any other
Party of JVC.
5.7. During the preparation period of JVC project and before
formal start of production, no Party shall transfer its
capital investment.
5.8. Any increase, transfer of the registered capital of JVC
should be unanimously agreed upon by the Board of Directors
and approved by the authorities concerned, and must be
registered with the local industrial and commercial
administration bureau.
5.9. The Parties shall agree upon a project development
budget and shall share all costs incurred pursuant to such
budget proportionately (in accordance with registered
capital contributions).
ARTICLE 6
RESPONSIBILITIES AND DUTIES OF THE PARTIES
6.1. Party A and Party C shall, in addition to its
contribution of capital investment, have responsibilities
and duties to assist JVC in the handling of the following
matters concerned:
(i) To assist the company in handling matters such as
the application for approval, registration and the
obtaining of business licenses from relevant Chinese
departments;
(ii) To assist JVC and EPC in applying for and obtaining
all possible tax reductions and exemptions according to
Chinese law;
(iii) To assist JVC and EPC in matters concerning the
purchase of equipment and machinery, the customs
declaration of imported equipment and transportation of
supplies within China;
(iv) To assist JVC in contacting and implementing the
basic facilities of water, electricity transportation
and communication, etc..
(v) To assist JVC in the employment of local Chinese
staff, technicians, workers and other required
personnel;
(vi) To assist foreign personnel sent by Party B to work
in JVC in obtaining necessary entry visas, work permits
and permit for travel on business within China;
(vii) To assist in other matters entrusted by JVC.
6.2. Party B shall, in addition to its contribution of
capital investment, have responsibilities and duties to
assist JVC in the handling of the following matters
concerned:
(i)To assist JVC and the EPC Contractor to procure, per
specifications and instructions of JVC, the advanced and
applicable machinery and equipment from the
international market, and provide related information in
that regard;
(ii) To assign technical personal to be responsible for
the check and test, installation and maintenance of the
machinery and equipment introduced, train technical
personnel and workers of JVC;
(iii) To assist JVC in arranging for financing of the
Facility;
(iv) Subject to the direction of JVC, to manage the
development, construction and operation of the Facility;
(v) To assist in other matters entrusted by JVC.
ARTICLE 7
BOARD OF DIRECTORS
7.1. The official date of obtaining the business license of
JVC is the date of the establishment of the Board of
Directors.
The Board of Directors shall be the highest authority of JVC
and decide all major issues concerning JVC.
7.2. The Board of Directors shall be composed of five (5)
directors, one (1) of which shall be from Party A and four
(4) from Party B, none from Party C. From within the Board
of Directors, Party B shall appoint a chairman. There shall
be two (2) vice chairmen to be respectively appointed by
Party A and Party B. The directors shall hold the office for
a period of four (4) years. The term of office may be
renewed by the nominating Party.
7.3. Issues which require unanimous decision of the Board of
Directors shall include:
(i) Amendment of the Articles of Association of JVC;
(ii) Increase or assignment of the registered capital of
JVC;
(iii) Merger of JVC with another corporation;
(iv) Extension, termination and dissolution of the Joint
Venture and the liquidation and wind-up thereof;
(v) Other major issues that the Board of Directors deems
it necessary to have unanimous affirmative votes.
All issues except for the above shall be decided by majority
vote of the directors then present at any board meeting
(including special board meeting) at which a quorum is
present. Unless waived by Party A's director or Party A, the
quorum shall include one Party A's director.
7.4. The chairman of the board is the statutory
representative of the JVC. When the chairman cannot carry
out his obligations for whatever reason, he can authorize a
vice chairman to act on his behalf.
7.5. The board meeting shall be convened at least once a
year and shall be sponsored by the chairman. At the request
of at least two (2) of the directors, the chairman shall
convene a special board meeting.
ARTICLE 8
BUSINESS ADMINISTRATIVE ORGANIZATION
8.1. JVC shall set up its business administrative
organization which shall be responsible for daily management
of the company.
The business administrative organization shall have one (1)
general manager and two (2) deputy general managers. The
general manager shall be recommended by Party B, and Party A
and Party B shall each recommend one (1) deputy general
manager. General and deputy general managers shall be
appointed by the Board of Directors, and their tenures of
office shall be four (4) years.
The obligation of the general manager is to carry out all
the decisions of the Board of Directors. organize and be
responsible for the routine business administrative work of
JVC. The deputy general managers shall assist the general
manager in his work. Decisions of important issues in the
day-to-day business of JVC shall be valid only when they are
signed by both the general manager and Party A's deputy;
general manager. Issues requiring joint signatures shall be
stipulated by the Board of Directors.
8.2. The business administrative organization of JVC shall
consist of certain departments and the manager of each
department shall be directly responsible to the general
manager (or as otherwise specified by the general manager or
the Board of Directors).
8.3. The general manager and each deputy general manager can
be dismissed at any time through the resolution passed at
the board meeting if they are found to practice graft or be
seriously derelict of their duties or with the approval of
the Party recommending such person for any reason.
ARTICLE 9
PURCHASE OF MATERIALS
9.1. As for the procurement of materials, fuels, fittings,
means of transport and office appliance (hereinafter
referred to as materials) required by JVC, priority should
be given to China under the same condition.
ARTICLE 10
PREPARATION WORK
10.1. During the preparation and construction period of the
Joint Venture, a preparation group should be set up directly
under the Board of Directors, which shall consist of three
(3) persons, one (1) from Party A and two (2) from Party B.
A group leader shall be recommended by Party B, and a deputy
group leader by Party A. The group leader and deputy group
leader should be appointed by the Board of Directors.
10.2. The preparation group shall be responsible for
auditing of engineering design, signing of contract project
agreements, organizing the procurement and checking of the
related equipment, materials and other goods, working out
the general schedule of the construction plan for the
budget, controlling financial payment and design-making on
the construction; responsible for the control and management
of documents, blue prints, files. and data when the
construction is in progress.
10.3. The preparation group shall be responsible for the
auditing, supervision, check and test of the project design,
quality, equipment and materials.
10.4. The staff organization of the preparation group and
their salaries and expenditures shall be entered into the
construction budget upon approval of the Board of Directors.
10.5. The preparation group shall be canceled upon the
approval of the Board of Directors after the construction is
completed and the procedure of transfer is implemented.
ARTICLE 11
PERSONNEL ADMINISTRATION
11.1. With regard to employment, dismissal, wages, labor
insurance, welfare and reward and penalty of the workers of
JVC, the Board of Directors should discuss and work out a
labor contract and then implement it in accordance with the
"Provisions of the People's Republic of China on Labor
Management in Chinese-Foreign Equity Joint Venture" and the
methods of its implementation. The Labor Contract, after its
signing, should be kept in the file of the local labor
administration department.
11.2. Staff members of JVC have the right to establish their
trade union and take part in its activities in accordance
with the stipulations of the "Trade Union Act of the
People's Republic of China".
ARTICLE 12
FOREIGN CURRENCY CONTROL
12.1. Foreign currency of JVC shall be handled according to
the "Interim Provisions of People's Republic of China on the
Administration of Foreign Currency and related stipulations.
12.2. JVC shall open a foreign currency account in the Bank
of China with its business license. All legal income of JVC
may be converted and all the foreign exchanges shall be
deposited in the foreign currency account of its opening
bank, and all expenses and financing payments in foreign
currency of JVC shall be paid out of the foreign currency
account of its opening bank.
ARTICLE 13
FINANCING, TAXING AND AUDITING
13.1. Financial accounting of JVC shall be made in
accordance with the rules and regulations of financial
accounting in PRC as stipulated for joint venture
enterprises using Chinese and foreign investment.
13.2. The fiscal year of JVC starts from the 1st day of
January and ends on the 31st day of December of each year.
All the accounting certificates, documents reports and
account books should be written both in English and Chinese.
13.3. JVC should pay all the taxes required according to the
related laws and stipulations of PRC.
13.4. JVC should draw reserve funds, enterprise development
funds and welfare and reward funds according to the
stipulations of "The Law of the People's Republic of China
on Chinese-Foreign Equity Joint Ventures", the ratio of
which funds to be drawn each year should be decided by the
Board of Directors according to the status of business of
JVC.
13.5. For accounting and auditing, JVC should hire
accountants and auditors registered in PRC, and report these
results to the Board of Directors and the General Manager.
If Party B is willing to hire auditors of another country
for auditing of the annual finance, Party A and Party C
should agree, but all charges shall be paid by Party B.
13.6. Within the first three months of the business year,
the Debit/Credit accounts of the last business year,
documents of profit/loss accounts and profit sharing plan
should be initiated by the General
Manager and submitted to the Board of Directors for review
and approval.
ARTICLE 14
TERMS OF THE JOINT VENTURE
14.1. The term of JVC shall be twenty three (23) years
commencing on the date of establishment of JVC. The date of
the acquisition of the business license for JVC shall be the
date of its establishment. It is necessary to submit an
application to the department in charge for the extension of
the term of JVC twelve (l2) months prior to the expiration
of the term of JVC provided a motion is initiated by one of
the Parties and approved unanimously by the Board of
Directors.
14.2. In accordance with the laws, JVC should be liquidated
upon the expiration of JVC or termination of the business in
advance. The liquidated properties should be distributed
according to the ratio of investment made by Party A, Party
B and Party C. For purpose of liquidation distributions, all
contract rights, land use rights and other tangible or
intangible properties shall be valued on a fair market value
"going concern basis". The liquidation appraisal shall be
conducted by a public accountant registered in PRC.
ARTICLE 15
INSURANCE
15.1 Each engineering project of JVC should be insured by
the People's Insurance Company of China. The procedures
shall be handled by the department in charge.
ARTICLE 16
AMENDMENT, TERMINATION AND RELEASE
OF THE CONTRACT
16.1 When amendment is made to this contract and its
appendixes, it shall not be valid unless a written agreement
is signed by all Parties and submitted to and approved by
the applicable governmental authorities (the "Authorities")
concerned.
16.2 With the unanimous agreement of the Board of Directors
and approval of the Authorities concerned, JVC can be
terminated prior to the original term or the contract be
terminated in advance if the JVC is incapable of going on
with the business for certain reasons.
ARTICLE 17
OBLIGATION OF THE PARTY
BREACHING THE CONTRACT
17.1. If any Party fails to contribute the amount of the
investment committed by the time stipulated in Article 5 of
the contract, the Party breaching the contract shall pay the
Parties observing the contract 0.3% of the total amount of
investment overdue each three (3) months counting from the
30th bank date overdue, allocated based on registered
capital contribution. Should the Party breaching the
contract fail to contribute the amount of capital it
committed for six (6) months, apart from the total sum of
0.6% of above-mentioned fines, the Parties observing the
contract has the right to request the Party breaching the
contract to fully implement the contract within a specified
period or terminate the contract according to Article 16 of
the contract and demand the Party breaching the contract to
compensate for its losses.
17.2. Obligation should go to the Party if it is that
Party's fault that effects the implementation or complete
implementation of the contract and its appendixes. Each
Party shall be liable for the breach of the contract. if the
fault is due to all Parties.
17.3. In order to guarantee its registered capital
contributions, Party B should provide a bank guarantee or
guarantee from Panda Energy Corp. of U.S.A. for its
registered capital contributions.
ARTICLE 18
FORCE MAJEURE
18.1. As the consequence of Force Majeure, such as war,
earthquakes, typhoons, floods, fires or other natural
calamities, which cannot be predicated, or the happening or
consequence of which cannot be prevented or avoided (such as
prolonged strikes), and directly affects the execution of
the contract, or execution of the contract according to the
terms stipulated in the contract, the Party that encounters
the Force Majeure should notify the other Parties by fax or
other most immediate means available of the incident. Valid
documents to certify the detailed happenings of the
accident, and valid documents to certify the reasons of its
inability to fulfill or completely fulfill, or the necessity
to postpone the fulfillment of the contract, should be
submitted to the other Parties within thirty (30) days of
the accident, and should be certified by the notarization
department of the region where the accident took place.
Disputes arising from cases of Force Majeure shall be
resolved through negotiations between the Parties as to
whether to terminate the contact or partially release the
obligations of the affected Party, or postpone the
fulfillment of the contract according to the effect of the
accident on the fulfillment of the contract. If the matter
cannot be resolved within forty-five (45) days through
negotiation, at the request of a Party, it shall be settled
through arbitration.
ARTICLE 19
LAWS APPLICABLE
19.1. The signing, validity, explanation and implementation
of this contract should abide by the laws of the People's
Republic of China.
ARTICLE 2O
ARBITRATION
20.1. Should any dispute arise from the implementation of or
relating to the contact, the Parties shall resolve them
through friendly negotiations. If the discrepancies cannot
be solved by negotiations, they should be submitted to the
Arbitration Committee of China Council for the Promotion of
International Trade for solution, whose decision shall be
final and legally binding on the Parties. The arbitration
shall be conducted in both Chinese and English with both
languages having equal weight.
20.2. During the process of arbitration, the contract should
be executed with no interruption, except for those parts
relating to discrepancies under arbitration.
ARTICLE 21
VALIDITY OF THE CONTRACT
21.1 All the articles of the contact including appendixes
(Articles of Association of JVC and list of equipment to be
imported) are indispensable parts of this contract.
21.2 The contract including its appendixes shall be valid
only when it has been approved by the Ministry of Foreign
Trade and Economic Cooperation or its entrusted inspection
departments.
21.3. Any communication relating to the rights and
obligations of the Parties should be made in written form,
except notices, telegrams and faxes. The addresses stated in
Article 2 of the contract are statutory addresses for
correspondence between the Parties. Any change in the
statutory address should be notified to the other Parties
thirty (30) days in advance.
ARTICLE 22
LANGUAGE OF THE TEXT
22.1. This contract is written both in English and Chinese.
The contract in both languages is of equal validity.
This contract for Tangshan Cayman Heat and Power Co., Ltd.
is signed by the authorized representatives of the Parties
in Beijing China, as follows:
Party A:
Luannan County
Heat & Power Plant
Zhou Dingpeng
Authorized by and on
behalf of Party A
Party B:
Pan-Western Energy Corp., LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
Party C:
Tangshan Luanhua (Group) Co.
Zhou Dingpeng Authorized by
and on behalf of Party C
Witnessed by: China National
Machinery Import & Export Corp.
Yang Shengli
Deputy General Manager of CMC Enterprises Dept.
Dated on May 11, 1996
AMENDMENT
TO
JOINT VENTURE CONTRACT
FOR
TANGSHAN CAYMAN HEAT & POWER CO., LTD.
This amendment is made and entered into on July 19, 1996 by
and among Party A Luannan County Heat & Power Plant of
Hebei Province, China through its duly authorized agent,
Party B Pan-Western Energy Corp., LLC. of British Cayman
Islands through its duly authorized agent, and Party C
Tangshan Luanhua Co. (Group) of Hebei Province, China
through its duly authorized agent, all of which JV Parties
to Tangshan Cayman Heat & Power Co., Ltd.
WHEREAS, adjustments are required for amounts of capital
contributions, their respective proportion to registered
capital and means of such contributions by the Parties to
Tangshan Cayman Heat & Power Co., Ltd.;
NOW THEREFORE, through consultation, the Parties have
agreed to the following amendment to the Joint Venture
Contract for Tangshan Cayman Heat & Power Co., Ltd.
executed by and between the Parties on May 11, 1996:
l. Delete the original Article 5.2 in its entirety, to be
replaced by a new Article 5.2, which stipulates as
follows:
"5.2 The total investment of the JVC shall be
US$29,440,000, and the registered capital of the Company
shall be US$11,776,000. The contribution made by Party A
shall be US$71l,508.3, accounting for 6.04% of the
registered capital; the contribution made by Party B shall
be US$10,352,983.4, accounting for 87.92% of the
registered capital; the contribution made by Party C shall
be US$711,508.3, counting for 6.04% of the registered
capital.
The rest of the total investment exceeding the registered
capital shall be made up by a shareholder loan provided by
Party B to the JVC. JVC shall be responsible for the
payment of debt obligations, interest and financing costs
on such shareholder loan.
The Parties shall share the profits, losses and risks in
proportion to their investment contributed."
2. Delete the original Article 5.3 in its entirety, to be
replaced by a new Article 5.3, which stipulates as
follows:
"5.3 Party A, Party B and Party C shall each invest in the
following way:
Party A: With capital contribution in kind by water ▇▇▇▇▇
and systems at the value of US$180,723 and the rest with
cash capital contributions made at or during the times
specified in Section 5.4;
Party B: With cash capital contributions made at or during
the times specified in Section 5.4."
Party C: With capital contribution in kind by water ▇▇▇▇▇
and systems at the value of US$180,723 and the rest with
cash capital contributions made at or during the times
specified in Section 5.4;
3. The above-cited new Article 5.2 and Article 5.3 shall
take effect from the date upon which the amendment is
approved by the original examination and approval
authority that approved the above JV Contract. This
amendment is made in both English and Chinese, both of
which shall be equally authentic.
IN WITNESS WHEREOF, Parties, intending to be legally
bound, have caused their respective authorized agents
execute this amendment as of the date and year set forth
hereinabove.
Party A: Luannan County Heat &
Power Plant
Hebei Province, China
By: ________________
Position:
Party B: Pan-Western Energy Corp., LLC.
British Cayman Islands
By: _____________
Position:
Party C: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. (▇▇▇▇▇)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
By: ________________
Position:
AMENDMENT
TO
JOINT VENTURE CONTRACT
FOR
TANGSHAN CAYMAN HEAT & POWER CO., LTD.
This amendment is made and entered into this 18th November, 1996
by and among Party A Luannan County Heat & Power Plant of Hebei
Province, China through its duly authorized agent, Party B Pan-
Western Energy Corp., LLC. of British Cayman Islands through its
duly authorized agent, and Party C Tangshan Luanhua Co. (Group)
of Hebei Province, China through its duly authorized agent, all
of which JV Parties to Tangshan Cayman Heat & Power Co., Ltd.
WHEREAS, certain amendments are required for capital
contributions, responsibilities and duties of the Parties
concerning land use right as well as procedures for extension of
term of joint venture for Tangshan Cayman Heat & Power Co., Ltd.;
NOW THEREFORE, through consultation, the Parties have agreed to
the following amendment to the Joint Venture Contract for
Tangshan Cayman Heat & Power Co., Ltd. executed by and between
the Parties on May 11, 1996:
1. Delete the original Article 5.2 in its entirety, to be
replaced by a new Article 5.2, which stipulates as follows:
"5.2 The total investment of the JVC shall be US$29,440,000,
and the registered capital of the Company shall be US$11,778,000.
The contribution made by Party A shall be US$71l,391.20,
accounting for 6.04% of the registered capital; the contribution
made by Party B shall be US$10,355,217, accounting for 87.92% of
the registered capital; the contribution made by Party C shall be
US $711,391.20, counting for 6.04% of the registered capital.
The rest of the total investment exceeding the registered capital
shall be made up by a shareholder loan provided by Party B to the
JVC. JVC shall be responsible for the payment of debt
obligations, interest and financing costs on such shareholder
loan.
The Parties shall share the profits, losses and risks in
proportion to their investment contributed."
2. Delete the original Article 5.3 in its entirety, to be
replaced by a new Article 5.3, which stipulates as follows:
"5.3 Party A, Party B and Party C shall each invest in the
following way:
Party A: With cash capital contributions made at or during the
times specified in Section 5.4;
Party B: With cash capital contributions made at or during the
times specified in Section 5.4."
Party C: With cash capital contributions made at or during the
times specified in Section 5.4."
3. Add to Article 6.1 new sub-section (viii), which stipulates as
follows:
"(viii) for an initial 23 years of the JVC, to obtain in
their own name granted land use right for the land to be
used by JVC and make such granted land use right available
to JVC via transfer, lease or other appropriate means."
4. Delete the original Article 14.1 in its entirety, to be
replaced with a new Article 14.1, which stipulates as follows:
"14.1 The term of JVC shall be for an initial period of
twenty-three (23) years commencing on the date of
establishment of JVC. The date of the acquisition of the
business license for JVC shall be the date of its
establishment. If Party B should notify Party A and Party C
of its intention to continue its participation in the JVC
beyond this initial 23 year term, then Party A and Party C
shall submit an application duly executed by authorized
representatives of the Parties to the department in charge
for an extension of the term of the JVC for the lesser
amount of time, as requested by Party B, or the maximum
period permitted by applicable laws and regulations twenty-
four (24) months prior to the expiration of the term of the
JVC."
5. Add new Article 14.3, which stipulates as follows:
"14.3 Upon expiration of the initial twenty-three (23) year term
of JVC, if no extension is made of such term of the JVC, then the
assets of the JVC (other than land use right) shall be valued as
per their remaining value at that time and distributed in
accordance with the investment share of the Parties at
liquidation, regardless whether such land use right will expire
or not. And such assets shall not be under-valued due to any
such expiration of land use right."
The above-cited new Article 5.2, Article 5.3, Article 6.1 (viii),
Article 14.1 and Article 14.3 shall take effect from the date
upon which the amendment is approved by the original examination
and approval authority that approved the above JV Contract. This
amendment is made in both English and Chinese, both of which
shall be equally authentic.
IN WITNESS WHEREOF, Parties, intending to be legally bound, have
caused their respective authorized agents execute this amendment
as of the date and year set forth hereinabove.
Party A:
Luannan County Heat & Power Plant
Hebei Province, China
By: ____________
Position:
Party B:
Pan-Western Energy Corp., LL.
British Cayman Islands
By: ____________
Position: Sr. VP
Party C:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
By: ____________
Position: