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EXHIBIT 10.8
C O N T R A C T
OF
20,000 METRIC TON/YEAR SODIUM BICHROMATE PRODUCTION PLANT
IMPORTATION OF TECHNOLOGY & EQUIPMENT FROM THE UNITED STATES
FOR CHONGQING DONGFENG CHEMICAL PLANT
BETWEEN
CHINA NATIONAL CHEMICAL CONSTRUCTION CHONGQING BRANCH
AND
THE BRIGHTON INDUSTRIES CORPORATION
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THE CONTRACT OF 20000 MT/Y
SODIUM BICHROMATE PRODUCTION PLANT IMPORTATION OF
TECHNOLOGY & EQUIPMENT FROM THE UNITED STATES
FOR CHONGQING DONGFENG CHEMICAL PLANT
CONTRACT NO.: 94HNXH/3901 US
SHIPPING MARKS: 94HNXH/3901 US
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US TO HK
THE BUYER: CHINA NATIONAL CHEMICAL CONSTRUCTION
CHONGQING CO.
ADDRESS: NO. 24 YU BEI ER CUN JIANG BEI QU
CHONGQING, CHINA
TELEPHONE: (0811)752494
FAX NO.: (0811)750579
POSTAL CODE: 630020
BANK: BANK OF CHINA CHONGQING BRANCH
ACCOUNT NO.: 01809817
THE SELLER: THE BRIGHTON INDUSTRIES CORPORATION
ADDRESS: 15 ESSEX ROAD, CENTURY PLAZA BUILDING,
PARAMUS, NJ 07652 USA
TELEPHONE: (201)368-8463
FAX NO.: (201)368-1623
BANK: BANK OF CHINA, NEW YORK BRANCH
ACCOUNT NO.: 5011-4018567-001
THE ENDUSER: CHONGQING DONGFENG CHEMICAL FACTORY IN
CHINA
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THE CONTRACT PRODUCT:
Means that the Seller sells to the Buyer a complete set of productive
technology and whole basic engineering design package of 20000 MT/Y Sodium
Bichromate, 6000 MT/Y Chromic Anhydride (Chromic Acids) and 5000 MT/Y basic
Chromium Sulfate. The Seller, as the contractor, will also conduct
installations, commissioning and test run for the plant. The Seller will
supply the Allied- Signal's existing technology information of all Chromate
products. In addition, the Seller is responsible for supplying the key
equipment of the production plant made in the United States.
THE CONTRACT PLANT
Means the plant which consists of production facility, auxiliary facility
and utility within the battery limit which is defined in the Contract
Attachment 1.
GENERAL PRINCIPLE:
Being entrusted by Chongqing Dong Feng Chemical Factory,
China National Chemical Construction Chongqing Co. signed
the contract with The Brighton Industries Corporation.
The Seller is to apply to the U.S. Export & Import Bank a loan on behalf of
the Buyer for the total amount of the software and the hardware of the
contract, including shipping and insurance fee.
The Seller performs basic engineering design for this contract plant in
accordance with Allied-Signal's technology. The detailed responsibilities
for both parties and the scopes of supply will be shown in the technical
attachment.
The Seller and the Buyer through their substantial technical exchanges and
commercial negotiations agreed on the following clauses and the contract
signed will be enforced accordingly.
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C O N T E N T S
CONTRACT CLAUSES
Clause 1 Scope of Supply
Clause 2 Delivery, Packing and Transportation
Clause 3 Contract Price
Clause 4 Technical Services Provided by the
Seller
Clause 5 Installation, Commissioning, Test Run &
Acceptance
Clause 6 Payment and Terms of Payment
Clause 7 Guarantee and Claims
Clause 8 The Customs Duty and other Taxes
Clause 9 Force Majeure
Clause 10 Disputes Settlement
Clause 11 Effectiveness of the Contract &
Miscellaneous
TECHNICAL ATTACHMENTS
Attachment 1 Battery Limit & Process Description
Attachment 2 Basic Engineering Design
Attachment 3 Performance Guarantee and Test
Attachment 4 Technical Service Provided by the
Seller in China
Attachment 5 Technical Training of the Buyer's
Personnel
Attachment 6 Design and Design Contact
Attachment 7 List of the Seller's Specialists
for Technical Services in China and
Treatment Conditions to be Provided
by the Buyer
Attachment 8 Procurement Service for Equipment
and List of Equipment to be
procured abroad
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CLAUSE 1 SCOPE OF SUPPLY
1.1 The Seller's responsibility is to supply basic
engineering design, technical guidance for installation
commissioning, and test run. The Seller will also
provide technical service to the Buyer, the Buyer has
agreed to obtain the basic engineering design package
of the contract plant and the above mentioned guidance
and the technical service. The products description,
production capacity and quality index of the plant are
shown in technical attachment 2.2 and 2.3.
1.2 The Seller shall be responsible for providing the technical
documentation of the contract product. The specific content, quantity
and delivery will be shown in technical attachment 2.5 and 2.6.
1.3 The Seller shall dispatch experts to the job-site to provide
technical guidance and service for the Buyer's detailed engineering
design, construction acceptance, etc. The contents and the
requirement are shown in technical attachment 4.
1.4 The Seller shall dispatch the experts to the site to
train Buyer's technicians and main operators of the
contract plant in order for the Buyer to be familiar
with the technology provided by the Seller, production
operation, analysis and examination in the plant. The
contents and requirement are shown in technical
attachment 5.
1.5 The Seller shall dispatch the experts to the site to provide
technical guidance during the period of the test run until products
tested qualified. The contents and requirement of the test run and
products qualification is shown in technical attachment 3.
1.6 The U.S. key equipment purchasing service provided by the Seller for
the Buyer's Contract Plant is shown in Contract Attachment 8.
1.7 Authorization from AlliedSignal Inc. to the Chongqing Dong Feng
Chemical Plant to utilize the transferred technology exclusively for
the proposed production plant.
The transfer of the production license on chrome technology from
AlliedSignal Inc. ("Licensor") is via and signed by the Seller to
Chongqing Dongfeng Chemical Plant ("Licensee"). The Seller is,
through legal procedure, to acquire the production license from the
Licensor which is the legal owner of the technology. The Seller also
has the right to transfer the license
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to the Licensee, and guarantees that such transference is not to be
charged by any third party. In case that a third party contests the
legitimacy of the transference, the Seller should assume all legal
and economic liability.
1.7.1 SCOPE
Sodium Bichromate, Chromic Anhydride, Chromium Sulfate technical
know-how and related technology which includes utilizing the
technology for production and selling products in worldwide markets.
1.7.2 LICENSE
Exclusive transferred within the People's Republic of China and
non-transferable worldwide.
1.7.3 DURATION
Ten (10) years for withholding technical secrecy, indefinate for
utilzation of the technology.
1.7.4 PRODUCTION CAPABILITY
Total production of the license is 57,000 metric tons per year with
an initial production license of 20,000 metric tons per year.
1.7.5 RESPONSIBILITIES OF THE LICENSEE
1.7.5.1 The Licensee is not allowed to further transfer or provide the
technology to any third party without the written consent of the
Licensor.
1.7.5.2 The Licensee agrees to hold all transferred
information and technology from the Licensor in
strict secrecy. If any third party is able to
obtain this transferred technical secrecy without
the written consent from the licensee, then the
Buyer shall have the right and obligation to take
legal action against such third party on behalf of
the Seller.
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CLAUSE 2 DELIVERY, PACKING AND TRANSPORTATION
2.1 The Seller shall deliver the technical documentation in chongqing,
China in accordance with the contents, quantities and times
stipulated in the technical attachment 2.6.
2.2 After each shipment of the documentation, the Seller shall advice the
Buyer the name, quantity, transportation way of the shipment within 2
days and send the packing list, invoice and bill of lading, etc.
by express mail at the same time.
2.3 Upon receipt of the delivery, the Buyer will check it against the
items in the technical attachment. If any item missing or damaged
during the transportation, the Buyer should advice the Seller in five
(5) days. In return, the Seller should make up and re-ship the
missing or damaged item to the Buyer within 30 days.
2.4 These technical documents shall be packed in new and strong cases
which are suitable for long distance transportation to protect from
damage. Two copies of detailed packing list for the batch shall
content item number, name and number of total page of the document.
Such packing list should be enclosed in each package.
2.5 Delivery, Packing and transportation of the equipment shall be in
accordance within the specifications of the equipment orders.
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CLAUSE 3 CONTRACT PRICE
The contract price is US$11,000,000.00 CIF China main ocean port. The
price consists of three parts: technology transfer fee, overseas
equipment procurement fee and technical services fee.
3.1 Contract Price and Fees
3.1.1 Technology Transfer Fee is US $4,785,000.00. The goods shall be
delivered at Chongqing Airport. The production technology transfer
contract price consists of the following segments:
3.1.1.1 The technology transfer license fee of 20000 MT/Y Sodium Bichromate
is US$2,200,000.00.
3.1.1.2 Fee for Seller to provide basic engineering design and technical
documentation related to the technology is US$985,000.00.
3.1.1.3 Fee for Seller to provide basic engineering design and technical
documentation related to the equipment and material is
US$1,600,000.00.
3.1.2 Overseas Equipment Procurement Fee is estimated at US$6,000,500.00
CIF China main ocean port. The final equipment price will be
determined based upon the equipment purchase order. The Overseas
Equipment Procurement List is attached as APPENDIX 3-1.
3.1.3 Technical service fee is US$214,500.00. The payment term of the
technical service fee is shown in the technical attachment 7. The
payment is to be calculated at the rate of US$858.00 man/day
according to actual man/day serviced by the Seller's technical
personnel on the end user site. The Technical Services Schedule is
attached as APPENDIX 3-2.
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Contract Attachment 8 - Hardware Equipment List & Price [APPENDIX 3-1]
Contract Number # 94 HNXH/3901 US
US Dollars Expressed In Thousand
Description Equipment # Spec's Vendor Quantity Unit Price
Material Feeder FE-125 [3-5 ton/hr] Koppers 2 6.75 13.5
Ball Mill MI-130 [5-10 ton/hr] Hardinge 1 900 900
Double Ribbon Blender MX-198 [20 ton/hr] Mixing 2 60 120
Double Screw Feeder CV-207 [3-5 ton/hr] Fluor Daniel 1 30 30
Continuous Treator w/Control System TK-315 [10-20 m3/hr] AlliedSignal 1 517 517
Evaporation Recycle Pump PU-330 [10-15 m3/hr] Struthers 1 65 65
Continuous Crystallizer CZ-360 [2-5 ton/hr] Struthers 1 270 270
Sulfate Centrifuge CG-520 [6 ton/hr] Baker 1 355 355
Acid Solution Filter FL-350 [30 m2] US Filter 2 240 480
Sodium Bichromate Centrifuge CG-410 [6 ton/hr] Baker 2 350 700
Packing Machine PG-430 [5-10 ton/hr] Fluor Daniel 2 80 160
Sodium Bichromate Anhydrous Dryer CG-650 [6 ton/hr] Baker 1 348 348
Crystallizer (Anhydrous Crystallizer) CZ-630 [2-5 ton/hr] Swenson 1 165 165
Chromic Acid Reator w/Control System RR-720 [1-5 ton/hr] AlliedSignal 1 485 485
Chromic Acid Packing Machine PG-741 [1-5 ton/hr] Fluor Daniel 1 82.5 82.5
Cloudy Liquor Muds Filter FL-750 [20 m2] Dorr 1 350 350
Oleum Supply Pump PU-725 [10-15 m3/h] Liquiflo 1 12 12
Basic Chromium Sulfate Spray Dryer DR-830 [1-5 ton/hr] Fluor Daniel 1 80.5 80.5
Basic Chromium Sulfate Packing Machine PG-866 [1-5 ton/hr] Fluor Daniel 1 85 85
Mix Scales SG-135 N/A K-Tron 10 35 350
Export Packing/Land & Ocean Freight/ N/A N/A Brighton 1 432 432
Grand Total 6000.5
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Attachment to Contract No. # 94 HNXH/3901 US [APPENDIX 3-2]
Technical Services Provided By The Seller
For 20,000 MT/Y Sodium Bichromate Plant
Time-Range (1) No. of People Specialities (2) No. of Times Man-days
Phase 1--Contraction & Installation [156 - 182] 1 PE 1 15
1 Process Engineer [156 - 182] 1 ME 1 15
2 Mechanical Engineer [156 - 182] 1 IE 1 15
3 Instrument Engineer 3 3 45
Subtotal
Phase 2--Training
1 Process Engineer [156 - 182] 2 PE 1 40
Phase 3--Commissioning
1 Process Engineer [156 - 182] 1 PE 1 30
2 Mechanical Engineer [156 - 182] 1 ME 1 30
3 Instrument Engineer [156 - 182] 1 IE 1 30
Subtotal 3 3 90
Phase 4--Test Run/Acceptance
1 Process Engineer [156 - 182] 3 PE 1 75
Grand Total 5 11 250
Note: (1) Expressed in weeks.
(2) PE = Process Engineer, ME = Mechanical Engineer, IE = Instrument
Engineer
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Attachment to Contract # 94 HNXH/3901 US
Technology Transfer Documentation List
Item Description Quantity
- ---- ----------- --------
1) Process description 1 set
2) Process flowsheets 27
3) Piping and instrument diagrams (P&ID's) 14
4) Supervisors' and operating manuals
and Engineering Directives 36
5) Research and plant research reports 8
6) Baltimore plant layout drawings 24
7) Baltimore plant equipment arrangement
drawings 70
8) Cardex file of equipment which contains detailed
equipment 1 set
9) Description of laboratory analytical
procedures 1 volume
10) General information on process piping, valves &
fittings *
11) Safety data sheets for products & chemicals
used 1 set
12) General information for the prevention of major
incidents 1 set
13) Recommended spare equipment or parts *
14) Physical Data 4 Books
* Denotes Not Available - Will be reviewed during Technology
Transfer Phase.
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CLAUSE 4 TECHNICAL SERVICES PROVIDED BY THE SELLER
4.1 According to the stipulation in the contract, the Seller should
dispatch the technical engineers with experience to the job-site to
provide technical service. The number of people, specific tasks and
duration on the site is shown in the technical attachment 4,5,7.
4.2 During the period of basic engineering design by the Seller in the
United States, the Seller shall assist the Buyer for its engineers to
apply travelling document to enter, to work and to stay in U.S. The
specific requirement is shown in the technical attachment 6.
4.3 Forty five (45) days before arriving to the job-site in China, the
Seller shall advice the Chinese party so as for the Buyer to issue
invitation letter, to arrange accommodation, place of working and
transportation, etc. The details is shown in the technical attachment
7.
4.4 During the Basic Engineering Design, the Buyer will send their
specialists to the United States, to participate in the design phase,
equipment procurement services and contract work acceptance. The
details of this participation are shown in Technical Attachment 6 and
8.
4.5 The technicians from both the Seller and the Buyer should obey the
laws and the regulations in either country where and during their
stay.
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CLAUSE 5 INSTALLATION, COMMISSIONING, TEST RUN & ACCEPTANCE
5.1 During the installation period of the contact plant, the Seller shall
dispatch experts to the job-site to supervise the job. The Buyer will
cooperate with the Seller to perform the erection work according to
the Technical Attachment 4.
5.2 After the installation is completed, both the Seller and the Buyer
will perform adjustment, commissioning, test run and acceptance of
the trial products. The details for the test run, including testing
item, quantity, time and acceptance standard are shown in the
Technical Attachment 3.
5.3 When the test running of the plant and the quality of
the products qualified to the acceptance standard
stipulated in the technical attachment after the test
run which is performed by both parties, the authorized
representatives from the Seller and the Buyer will sign
the certificate of acceptance for the contract
products. This certificate will be in four copies,
each party will keep two copies.
5.4 If the technical property of the products is not fully qualified to
the standard after test run and acceptance of the plant, the methods
of solving the problem for both parties shall be determined according
to the Contract Clauses 5.5.2, 5.5.3, 5.7 and 7.4.
5.5 During the commissioning period, the Buyer will provide written
production monthly report in English to the Seller. The Seller will
decide whether the production facility is stable and ready to perform
the test run.
5.5.1 During the test run period, if the running can not be
completed in two running circles due to external cause,
such as power, gas, water failure, mechanical
malfunction or, improper operation, both parties will
consult and decide to suspend the running. If and when
both parties decide to start another running, and if
that requires to have Seller's specialist(s) come to
the contract plant, the incurred expenses, including
air tickets, accommodation, transportation,
communication and etc. will be borne by Buyer.
However, the salary will be calculated and paid
according to US $800 per person per working day.
5.5.2 In case that the test run cannot be completed after three tries under
the direction of Seller's specialist(s) due to the causes described
in 5.5.1, both parties shall decide not to try any more. Thus, the
contract is fully fulfilled and completed.
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5.5.3 In case that the test run can not be started due to nontechnical
cause (Except for force majeure) twelve months after commissioning
takes place, both parties shall decide not to perform the test run.
Thus, the contract is fully fulfilled and completed.
5.5.4 Within three (3) months after both the Seller and the Buyer decide to
finalize the contract, both parties should settle the account of the
contract.
5.6 After the test run and the acceptance of both parties according to
the technical attachment 3, the Seller and the Buyer will sign a
certificate of acceptance in four (4) copies. Each party keep two (2)
copies. The Buyer shall then pay to the Seller the remaining balance
of the total contract price.
5.7 If the test run index is not totally qualified after the test run,
penalty fine shall be imposed according to the Contract Clause 7.6.
5.8 The Seller undertakes to dispatch AlliedSignal's technical personnel
to the China site to provide technical services before December 31,
1996. After December 31, 1996, the Seller will organize its own
technical team to provide such services which shall be satisfactory
to the technical attachment 4.
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CLAUSE 6 PAYMENT AND TERMS OF PAYMENT
6.1 All the payments either by the Buyer to the Seller or
by the Seller to the Buyer under this Contract shall be
made by telegraphic transfer. Payments by the Buyer to
the Seller shall be effected through Buyer's bank to
Seller's bank and payments by the Seller to the Buyer
shall be effected through Seller's bank to Buyer's
bank. All the documents of payment made by either the
Buyer or the Seller shall be transferred through both
parties' banks.
The total Contract price specified in the Clause 3 of the Contract
shall be paid by means of
6.1.1 The payment of fifteen percent (15%) of the total Contract price as
indicated in Clause 3 shall be made by the Buyer to the Seller within
thirty (30) days by cash payment through way of telegraphic transfer
remittance after the Buyer has received the documents specified in
Clause 6.2.1.1 and found them in order.
The payment of eighty-five percent (85%) of the total Contract price
shall be made in accordance with Loan Agreement signed by and between
the Buyer's Bank and Export-Import Bank of the United States
(hereinafter referred to as the US Bank) by way of Irrevocable Letter
of Credit issued in favor of the Seller by the Buyer's Bank within
three (3) months after the Effective Date of the Contract.
6.2 The total Contract price stipulated in Clause 3 shall be paid by the
Buyer to the Seller according to the following schedule, terms and
proportions:
6.2.1 Technology Transfer Fee specified in Contract Clause
3.1.1.
6.2.1.1 Within thirty (30) days after the Effective Date of Contract, fifteen
percent (15%) of the total Contract price, which is US$1,650,000,00
(say: one million six hundred fifty thousand US dollars only)
Shall be paid by the Buyer to the Seller, as downpayment for the
technology transfer fee, within thirty (30) days after the Buyer has
received the following documents submitted by the Seller and found
them in order:
(a) Export License issued by the relevant authorities of the
Seller's country, authorizing the Seller to export the
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Equipment, Materials, License and Know-how, Technical
Documentation or a certificate issued by the Licensor stating
that such export license is not required;
(b) One (1) original and one (1) copy of an irrevocable Letter of
Guarantee issued by the Seller's Bank (Specimen as per
Appendix 6-1);
(c) Four (4) copies of proforma invoice issued by the Seller
covering the total Contract price;
(d) Four (4) copies of commercial invoice;
(e) Two (2) copies of sight draft.
6.2.1.2 Nine (9) weeks after the first payment, ten percent (10%) of the
total Contract price, which is US$1,100,000.00
(say: one million one hundred thousand US dollars
only)
shall be paid by the Buyer to the Seller within thirty (30) days
after the Buyer has received the following documents and found them
in order:
(a) Two (2) copies of the certificate of technology data
confirmation signed by the ultimate user;
(b) Four (4) copies of commercial invoice;
(c) Two (2) copies of sight draft.
6.2.1.3 Five (5) months after the first payment, four percent (4%) of the
total Contract price, which is US$440,000.00
(say: four hundred forty thousand US dollars only)
shall be paid by the Buyer to the Seller upon delivery by the Seller
of the equipment specification list in accordance within the
Technical Attachment of the Contract and within thirty (30) days
after the Buyer has received the following documents and found them
in order:
(a) Two (2) copies of the receipt of the Equipment Specification
List signed and accepted by the ultimate user;
(b) Four (4) copies of commercial invoice;
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(c) Two (2) copies of sight draft.
6.2.1.4 Seven months after the first payment, four percent (4%) of the total
Contract price, which is US$440,000,00
(say: four hundred forty thousand US dollars only)
shall be paid by the Buyer to the Seller upon delivery by the Seller
to the Buyer of the instrument list in accordance within the
Technical Attachment of the Contract and within thirty (30) days
after the Buyer has received the following documents and found them
in order:
(a) One (1) copy of the Authorization Letter issued by
AlliedSignal, Inc. to Chongqing Dongfeng Chemical Factory of
utilizing the transferred chrome technology to produce
products as specified within the contract.
(b) Two (2) copies of the receipt of the Instrument Specification
List signed and accepted by the ultimate user;
(c) Four (4) copies of commercial invoice;
(d) Two (2) copies of sight draft,
6.2.1.5 Eleven (11) months after the first payment, eight point thirty-three
percent (8.33%) of the total Contract price, which is US$916,300,00
(say: nine hundred sixteen thousand and three
hundred US dollars only)
shall be paid by the Buyer to the Seller upon delivery by the Seller
to the Buyer of the whole basic engineering design package in
accordance within the Technical Attachment of the Contract and within
thirty (30) days after the Buyer has received the following documents
and found them in order:
(a) Two (2) copies of the Acceptance Certificate of the Basic
Engineering Design Package signed by the ultimate user;
(b) Full set of the Airway Bill delivering of the
package;
(c) Four (4) copies of commercial invoice;
(d) Two (2) copies of sight draft.
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6.2.2 Overseas Equipment Procurement Fee specified in
Contract Clause 3.1.2
6.2.2.1 Within six (6) months after the first payment, fifteen percent (15%)
of the total Contract price, which is US$1,650,000,00
(say: one million six hundred fifty thousand US
dollars only)
shall be paid by the Buyer to the Seller, as downpayment for the
American made equipment procurement, within thirty (30) days after
the Buyer has received the following documents and found them in
order:
(a) One (1) copy of the List of Purchase Orders signed and
confirmed by the ultimate user.
(b) Four (4) copies of commercial invoice;
(c) Two (2) copies of sight draft,
6.2.2.2 Within twelve (12) months after the first payment, twenty percent
(20%) of the total Contract price, which is US$2,200,000.00
(say: two million two hundred thousand US dollars
only)
shall be paid by the Buyer to the Seller, as the second payment for
the American made equipment procurement, within thirty (30) days
after the Buyer has received the following documents and found them
in order:
(a) Four (4) copies of commercial invoice;
(b) Two (2) copies of sight-draft.
6.2.2.3 Within eighteen (18) months after the first payment, nineteen point
fifty five percent (19.55%) of the total Contract price, which is
US$2,150,500.00
(say: two million one hundred fifty thousand and
five hundred US dollars only)
shall be paid by the Buyer to the Seller within thirty (30) days
after the Buyer has received the following documents and found them
in order:
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(a) Full set clean on board ocean Bill of Lading made out to order
marked "Freight Prepaid";
(b) One (1) original and two (2) copies of ocean transportation
insurance policy covering the amount of 110% of the invoice
value of the equipment and material shipped;
(c) Packing list in four (4) copies;
(d) Four (4) copies of commercial invoice;
(e) Two (2) copies of sight draft.
6.2.3 Technical Service Fee specified in Contract Clause
3.1.3
6.2.3.1 When the Buyer and the Seller both agree that the contract plant is
ready for technical services, such as site inspection, training,
commissioning and test run, then zero point ninety five percent
(0.95%) of the contract price as of the Technical Service Fee, which
is US $104,500.00
(say: One hundred four thousand and five hundred
US dollars only)
shall be paid by the Buyer to the Seller within ten (10) days after
the Buyer has received the following documents submitted by the
Seller and found them in order :
(a) One (1) copy of the notification from the Seller to the Buyer
advising the number of technical specialists and the arrival
time to the job site to perform the contracted technical
services;
(b) Four (4) copies of commercial invoice;
(c) Two (2) copies of sight draft.
6.2.3.2 The remaining of the Technical Service Fee or one percent (1%) of the
contract price, which is US $110,000.00
(say: One hundred ten thousand US dollars only)
shall be paid by the Buyer to the Seller within ten (10) days after
the Buyer has received the following documents submitted by the
Seller and found them in order:
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(a) Two (2) copies of the time sheets signed by the
representatives of both parties confirming the actual workdays
performed by the Seller for the contracted technical services
and the final compensation calculation for the technical
services;
(b) Four (4) copies of commercial invoice;
(c) Two (2) copies of sight draft.
6.2.3.3 In the event that the actual workdays of the
technical services performed by the Seller differ
from the contracted 250 workdays, then the amount
of the last payment of the Technical Services Fee
shall be adjusted at the rate for the workday
specified in Contract Clause 3.1.3 and Clause 7
against the actual workdays performed by the
Seller.
6.3 Contract Remaining Balance Settlement
6.3.1 Upon satisfying Contract Clause 7 of the Performance Guarantee, after
the last shipment of the equipment procured in the United States of
America as per Contract Clause 3.1.2, and after qualified products
produced from the test run of the plant, the last payment of the
total Contract price, which is US $238,700.00
(say: two hundred thirty-nine thousand and two hundred US dollars
only)
shall be paid by the Buyer to the Seller after the Buyer has received
the following documents and found them in order :
(a) Two (2) copies of the Certificate of the result of the Test
Run and final Contract Settlement Calculation signed by the
ultimate user;
(b) one (1) original and one (1) copy of an irrevocable Letter of
Guarantee issued by the Seller's Bank for Performance
Guarantee for the commissioning and test run of the contract
plant in favor of the Buyer (Specimen as per
Appendix 6-1);
(c) Four (4) copies of commercial invoice;
(d) Two (2) copies of sight draft.
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6.3.2 In the event that the Seller shall pay any amount for penalty as of
the failure of the performance test specified in Contract Clause 7,
then the Seller shall make the penalty payment to the Buyer within
thirty (30) days after the two parties reach agreement on the testing
result and receiving the formal written notice from the Buyer.
6.4 All the banking charges and fees for the execution of this contract
incurred in P.R. China shall be borne by the Buyer, while those
incurred outside of P.R. China shall be borne by the Seller.
6.5 Agreement on postponing payment
If the Buyer fails to pay the Seller on the payment schedule
stipulated in the Contract Clause 6, the failure of the payment shall
be treated as follows:
6.5.1 If the Buyer fails to pay the Seller exceeding the payment schedule
specified within Contract Clause 6 for more than four (4) weeks, then
the Seller shall have right to delay the execution of the contract.
In addition, the Buyer shall compensate the Seller all associated
financial losses.
6.5.2 If the Seller re-starts the contract according to the specific
request from the Buyer after the contract has been postponed due to
the f act that the Buyer fails to pay the Seller according to the
payment schedule, then the Buyer shall pay the Seller the Contract
re-starting fee. The actual amount of the Contract re-starting fee
shall be determined and agreed by both parties.
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APPENDIX 6-1 Letter of Guarantee Specimen
Date :
To : The Buyer
Address
Letter of Guarantee for Contract No. _________________________
This Guarantee is hereby issued to serve as the Performance Guarantee of The
Brighton Industries Corporation (hereinafter called "the Seller") for contract
No. _________________ dated __________________, 1994, between you and the Seller
for supply of technology transfer and related services, overseas equipment
procurement, technical services for Sodium Bichromate Chemical Plant
(hereinafter called "the project").
(The Seller's Bank) in the State of _______________________, the United States
(hereinafter called "the Bank") hereby irrevocably guarantees and binds itself,
its successors and assigns to pay you up to the total amount US$ _____________
(say United States Dollars _______________________________) representing the
exact amount of the fund which you will deposit into the Bank in care of the
Seller's bank account and accordingly agrees as follows:
(1) On the Seller's failure of the faithful performance of the contract and
determined by you, the Bank shall, on your demand in a written notification
stating the failure of performance by the Seller, pay you such amount or amounts
as required by you not exceeding the aggregate total as stated above. All
demands notifications and statements must bear the confirmation of a bank in
P.R, China that the signatories thereon are authorized to sign.
(2) On your written notification, the Bank shall pay the amount or amounts to
the Seller as specifically instructed by you not exceeding the aggregate total
as stated above. All written notifications and payment instructions must bear
the confirmation of a bank in P.R. China that the signatories thereon are
authorized to sign.
(3) This guarantee shall only be valid in full force and effect from the date
that the Bank shall receive the exact amount of fund deposited from you to the
Bank in care of the Seller and remain valid in full force until _____________,
199x after which date the Bank's liability hereunder shall absolutely cease and
this Guarantee will be of no further effect. All claims or demands hereunder
must be received by the Bank at its registered office in the State of
___________, the United States of America on or before the said date of expiry
of this Guarantee.
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This Guarantee is personal to you and is not assignable or transferable.
It is a condition of this Guarantee that this Guarantee shall be returned to the
Bank for cancellation upon payment or upon expiry, as the case may be.
This Guarantee shall be governed by and construed in accordance with the laws in
the State of ___________________, the United states of America.
Your faithfully,
For and on behalf of
The Seller's Bank
Authorized signature(s)
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CLAUSE 7 GUARANTEE AND CLAIMS
7.1 The Seller guarantees that the technical documentation of basic
engineering design provided by the Seller according to the contract
is to be verified and confirmed by the Buyer, The Seller further
guarantees that the technical documents will be delivered on schedule
according to the technical attachment 2.6.
7.2 After the validity of the contract, upon Buyer's request, the Seller
will continue to provide technical guidance to the contract plant if
and when condition allows in order to improve technical level and
quality of the contract products.
7.3 If the technical documents delivered by the Seller are not in
accordance with the stipulation in the technical attachment 2.5, the
Seller must mail related technical documents to the Buyer free of
charge within thirty (30) days after receipt of Buyer's written
notice.
7.4 During the commissioning, test run and acceptance
period, if the production and product quality is not
stable due to improper process and selection of
equipment provided by the Seller, then the Seller will
continue to provide technical services free of charge
until the production and the product quality is stable
and qualified.
7.5 If the Seller does not deliver the technical documents
on the schedule according to the technical attachment
2.6, and when the delay exceeds four (4) weeks, a
maximum penalty of (0.1%) of the contract software
price for each week may be charged starting the fifth
week. However, the penalty will not release Seller's
liability of continuing to deliver the technical
documents.
If the delay exceeds seventy (70) days, the Buyer has the right to
cancel the contract, and the Seller must reimburse the Buyer the
whole amount paid by the Buyer.
7.6 If the technical property guarantee stipulated in the
technical attachment 3 (production capability, product
quality, chrome ore recoverability, chrome yield,
chromium residue discharge rate, and chrome loss)
cannot be qualified within six (6) months after the
beginning of the test run, the Seller shall pay penalty
fines to the Buyer according to the following
percentage table. But the total penalty fine will not
exceed five percent (5%) of the total contracted
technology transfer and related services price.
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TEST ITEMS PENALTY PERCENTAGE
(% of total software price)
1 Total Production output
(90% of the designed capacity) 1.5%
2 Sodium Bichromate production 1.5%
(90% of the designed capacity)
3 Sodium Bichromate quality
(100% as qualification) 2.0%
4 Chromic Acids quality
(100% as qualification) 2.0%
5 Chromium Basic Sulfate quality 1.0%
(100% as qualification)
6 Chromium total recoverability 1.0%
(86.52% as qualification)
7 Chromic Residue discharge 0.5%
(1.53 T/1.0 T Sodium Bichromate) 0.5%
8 Chromium in process waste water of workshop 0.5% (0 as qualification)
If the above item does not meet the qualification figure, penalty fine will
be calculated according to the following:
7.6.1 Total production output, Sodium Bichromate production, product
quality, chrome yield, once one percent (1%) below the qualification
figure, the penalty will be ten percent (10%) of the penalty
percentage listed in the above table, respectively.
7.6.2 Chromium Residue discharge, once one percent (1%) higher than the
qualification figure, the penalty will be ten percent (10%) of the
penalty percentage listed in the above table.
7.6.3 Chromium in process waste water of workshop, if it can not reach zero
in the waste water discharge, the penalty will be the total penalty
percentage listed in the above table.
7.6.4 If the test run items above exceed the lowest penalty level [item 1,
2, 3, 4, 5, 6 lower than ten percent (10%) of the designed; item 7
higher than ten percent (10%); item 8 higher than 1000g/sec.], the
Buyer has the right to refuse to accept.
7.7 Upon validity of the contract, the Seller and the Buyer
must strictly comply with the contract. If one party
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cancels the contract without permission of the other except the
equipment procurement contract, the one who cancels the contract must
pay the other party economic compensation.
7.8 Within ten (10) years after the contract comes into
force, both parties have the liability to keep secrecy
to the productive technology of scope of the contract
product. Neither party is allowed to transfer or to
provide the technology to any third party. If any
party breaks the contract, the other party has the
right to impose penalty of twenty percent (20%) of the
technology transfer price of the contract.
7.9 The guarantee and the claim for the overseas equipment will be in
accordance with relevant clauses in each equipment purchasing
contract.
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CLAUSE 8 THE CUSTOMS DUTY AND OTHER TAXES
8.1 A treaty between the US and the Chinese government was signed on the
30th of April, 1984 regarding avoiding double taxation between the
two countries. Both parties shall obey the regulation and provision
of the treaty.
8.2 The duty and the taxation related to the contract collected by the
People's Republic of China from the Buyer according to the country's
current tax law will be borne by the Buyer.
8.3 The duty and the taxation related to the contract collected by the
People's Republic of China from the seller according to the country's
current tax law will be borne by the Seller. The Seller agrees to
pay the Buyer within ten (10) days the taxation referred in Contract
Clause 8.1 when the Buyer produces a notification of taxation payment
from the Taxation Authority of the Chinese Government. The Buyer
agrees to provide to the Seller the original copy of the certificate
or receipt of the taxation payment from the Taxation Authority of the
Chinese Government when the Buyer receives it.
8.4 The duty and the taxation related to the contract collected outside
Chinese boundary will be borne by the Seller.
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CLAUSE 9 FORCE MAJEURE
9.1 Both Parties shall extend the execution period of the contract in
case of war, water or fire disaster, earthquake and/or such natural
disasters of force majeure that affected to either party.
9.2 The party affected by the force majeure shall inform, by fax or
telex, the other party, and send within fourteen (14) days, by
certifies air mail, the other party an authorized testimonial for the
other party to confirm.
9.3 In case that the influence of the force majeure lasts more than one
hundred twenty (120) days, both parties shall consult to each other
in order to decide how to continue executing the contract.
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CLAUSE 10 DISPUTES SETTLEMENT
10.1 During the performance of the contract, both parties will attempt to
settle any and all dispute first through friendly consultation. If
there is no agreement reachable after such consultation, the dispute
shall be submitted to arbitration.
10.2 The arbitration will be conducted in Beijing, the People's Republic
of China by the arbitration institute of the China Foreign Trade
Promotion Committee in accordance with the arbitration procedures and
rules of the institute.
10.3 The award of the arbitration will be final and binding, and parties
will abide by such award.
10.4 When arbitration takes place in Beijing, the Chinese law is the
applicable law.
10.5 The arbitration fee shall be borne by the failure party except
otherwise decided by the arbitrator.
10.6 In the course of arbitration, the contract will be continuously
executed by both parties except for matters which are under
arbitration.
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CLAUSE 11 EFFECTIVENESS OF THE CONTRACT & MISCELLANEOUS
11.1 This contract is signed by the representatives authorized by both
parties on the 15th day of April, 1994. The Buyer will then apply to
the Chinese government authorities for approval. Upon such
governmental approval, then the buyer's Bank and the Export-Import
Bank of USA will negotiate and sign a loan agreement according to the
contract. The date for such loan agreement execution is the date when
the contract becomes valid. The Buyer shall duly inform the Seller of
the contract approval by fax and then air mail.
11.2 If the contract does not become valid three months after the signing,
both parties shall have right to cancel the contract. The
cancellation shall be confirmed by air mail.
11.3 The term of the validity of the contract is five (5) years beginning
the date that the contract comes into effect. When the term of
validity expires, the contract will loss its effect.
11.4 When the contract expires, outstanding creditor's rights and debts of
both parties will not be influenced by the expiration of the
contract. The debtor shall continue to fulfil its obligation of
paying the outstanding debts to the creditor.
11.5 The contract shall be in English and Chinese. Each party keeps two
(2) sets of originals. If there is any discrepancy(ies) between the
English and Chinese versions of the contract, then the English
version of the contract shall prevail.
11.6 This contract consists of Clauses 1 through 11, and technical
attachment 1 through 8. The Contract Clauses and the technical
attachments to it are inalienable, all of them are equally legal and
valid.
11.7 In case that any item of the contract is to be revised, expanded or
deleted in the future, it shall be in form of written document which
shall be signed by the representatives of both parties and then shall
become inalienable and equally valid as the contract.
11.8 In the process of execution of the contract, the communication
between both parties may be in either English or Chinese. Any formal
notice shall be in writing, and mailed by certified air mail in two
(2) sets.
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Signed for and on behalf of the Buyer
CHINA NATIONAL CHEMICAL CONSTRUCTION CHONGQING CO.
/s/ (in Chinese characters) 1994/4/15
- ------------------------------------- -----------------------------
Authorized Signature Date
Signed for and on behalf of the Seller
THE BRIGHTON INDUSTRIES CORPORATION
/s/ Kit Kung April 15, 1994
- ------------------------------------- -----------------------------
Authorized Signature Date
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