EXHIBIT 10.91
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 Gujiaying 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 Xxxxxxx Xxxxxxxxxxx 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
the Design Criteria.
The Parties agree as follows:
1.0 ENGAGEMENT
Owner hereby engages Hebei Electric Power Survey and Design
Institute (hereafter caned "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 Contact.
2.0 PROTECT 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 unit 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
required design codes and regulations required by appropriate
government authorities.
The Institute shall provide "Construction Drawings" in accordance
with 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 Plants site.
- 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 Plant 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 win 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 percent (70%) of
the Lump Sum Price.
Owner shall make payments to the Institute for the Preliminary
Design in accordance to the 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 submitttal,as referenced in Section 2.1 and 3.2 of as
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 payment of RMB
Yuan 350,000.00 to the Institute on or before twenty (20) days
after the conclusion of these hearings.
3.7 Construction Drawings:
EPCC shall be responsible for timely payment of the Construction
Drawing fee and payment schedule below and any changes to the
design made by the EPCC after the assignment of this Contract.
The Institute shall cooperate, within reason, with EPCC to
maintain the overall Project construction schedule and to comply
with the reasonable Construction Drawing requirements; of the
EPCC.
3.8 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 make 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 Right:
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 cost for Services completed and expenses up
to the time of termination. The Institute's cost 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 He
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 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
errors or omissions, the Institute shall be responsible for
correcting the Preliminary Design at its own expense; and
- make payment of an taxes associated with the Institute's
design services in accordance with the tax laws of the
Peoples 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 theme 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 Owner may assign its rights and delegate its obligations
hereunder, including the obligation to pay the Institute the fees
set forth above, to the EPCC, without the consent of the
Institute. On making such assignment, the Owner shall be released
from Owner's obligations under this Contract. The Institute shall
negotiate in good with the Owner and the EPCC at the time of such
assignment to make such changes in this Contract as may be
necessary or desirable to reflect the rights and the obligations
of the EPCC to the Owner under the Engineering, Construction and
Procurement Contract. The Institute shall cooperate with the EPCC
and Owner in performing the Services so as to enable the EPCC to
construct, in a timely manner, the Power Plants in accordance
with the Design Criteria and the Study.
5.3 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 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.
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 form 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 now
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 Xx. Xxx Zhukang
c/o Panda Energy Xx. 0 Xxxxxxx Xxxx
International, Inc. Shijiazhuang
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 0000 Xxxxx 50031
Xxxxxx, Xxxxx 00000 XXX China
Facsimile No. (000) 000-0000 Facsimile No.(000) 000-0000
Telephone No. (000) 000-0000 Telephone No.(000) 000-0000
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 amendment 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 XXXXXXX TANGSHAN PANDA HEAT
AND DESIGN INSTITUTE AND POWER CO., LTD.
TANGSHAN PAN-WESTERN'
HEAT AND POWER CO., LTD.
By ____________________ By _______________________
Name: Xxxx Xxx Name: Xxx X. Xxxxxx
Title: Vice President Title: Legal Representative
City of Shijiazhuang Chen Guard Luannan County
Hebei Province 050031, China Xxxxx Xxxxxxxx 000000, Xxxxx
Facsimile No.: (000)000-0000 Facsimile No.: (000)000-0000
Telephone No.: (000)000-0000 Facsimile No.: (000)000-0000
[PANDA ENERGY LETTERHEAD]
June 21, 1996
Xx. Xxxxx Weizhou
Luannan Project Construction Manager
Harbin Power Engineering Co., Ltd.
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx 000000 Xxxxx
RE: Design Engineering Services
EPC Contract dated April 24, 1996
Dear Xx. Xxxxx:
The fixed price for the subject EPC Contract included a price of
RMB 7,000,000 for the design engineering services provided by the
Hebei Electric Power Survey and Design Institute (Institute), as
described in the Engineering and Design Contract between the
Institute and Tangshan Panda Heat and Power Company, Ltd.and Tan
gshan Pan-Western Heat and Power Company, Ltd. ("Owner") dated
December 21,1995. The Engineering and Design Contract was
assigned to Harbin Power Engineer Company, Ltd. ("EPC
Contractor")in accordance with the Notice of Assignment of the
Engineering and Design Contract as described in one EPC Contract
between the Owner and EPC Contractor which Was agreed to by all
Parties. Such Notice of assignment obligates the EPC Contractor
to make payments to the Institute which arise before and after
the execution of the EPC Contract. Based upon the exchange rate
agreed to in the EPC Contract, the total value of Engineering and
Design Contract is US $840.300.00.
The Institute has invoiced the Owner per the Design Contract for
US $159,665 (RMB 1,330,000.00)for completion of the Preliminary
Design for submittal to the governmental authorities.. Since the
Notice to Proceed cannot be issued prior to Financial Closing,
and Harbin is obligated under the terms of the Notice of
Assignment, the Owner is willing to make payment directly to the
Institute on behalf of the EPC Contractor provided that Harbin
agrees to deduct an amount equal to US $159,665 from the down
payment amount to be submitted by Harbin at the time the Notice
to Proceed occurs.
Evidence of payment in the amount of $159,665 to the Institute
will be provided to you. Your response is required by June 25,
1996 in order to comply with our financial closing schedule.
Sincerely,
Xxx Xxxxxx
Vice PresidentConstruction
AGREED TO AND ACCEPTED THIS 27th DAY OF June, 1996:
OWNER CONTRACTOR:
TANGSHAN PAN-WESTERN HARBIN POWER
HEAT & POWER CO., LTD. ENGINEERING CO., LTD.
By:________________________ By:____________________
Name:______________________ Name:___________________
Title:_____________________ Title:__________________
TANGSHAN PANDA HEAT AND POWER
CO., LTD.
By:_________________________
Name:_______________________
Title:_______________________
