Heads of Terms of the Design Agreement for the Moscow Kazan Section of the Moscow Kazan Ekaterinburg High-Speed Railway Line

Transcription

1 Heads of Terms of the Design Agreement for the Moscow Kazan Section of the Moscow Kazan Ekaterinburg High-Speed Railway Line October 2013 Moscow

2 Key Information These heads of terms (the Heads of Terms) have been prepared exclusively for information purposes for review by and preliminary notification of the market participants of the principal commercial, legal and technical aspects of the Contract for Engineering Surveys and Design Documentation Development for the Construction of the Moscow Kazan section of the Moscow Kazan Ekaterinburg high-speed railway (the Contract). OJSCo High-Speed Rail Lines reserves the right to amend any provisions of these Heads of Terms. These Heads of Terms do not constitute a preliminary contract, offer or invitation to make an offer and shall not be considered a legally binding instrument. Neither OJSCo High-Speed Rail Lines, nor any other entity accept any obligations in relation to these Heads of Terms and do not accept any civil liability for the contents of this document. These Heads of Terms have been drafted in Russian and translated into English. In case of any inconsistency between the Russian and English text, the Russian version shall prevail. 3_

3 1. Parties: Open Joint Stock Company High-Speed Rail Lines, incorporated under the laws of the Russian Federation, with its location at 34 Masha Poryvaeva Street, Moscow, Russia (the Employer); and [successful bidder for the right to enter into the Contract] (the Contractor) (hereinafter collectively referred to as the Parties, and each of them, a Party). 2. Subject of the Contract: Completion by the Contractor of: an engineering survey with the aim of developing design documentation for the construction of the Moscow Kazan section of the Moscow Kazan Ekaterinburg high-speed railway line (the Engineering Survey); and development of the design documentation for the construction of the Moscow Kazan section of the Moscow Kazan Ekaterinburg high-speed railway line (the Design Documentation), in each case, in accordance with the assignment to perform the Engineering Survey and the assignment to develop the Design Documentation which will be annexed to the Contract (the Assignments), (the Works). 3. Joint and Severable Liability: 4. Performance of the Works: Where the Contractor is an association of persons (a simple partnership or any other similar association) then each member of such association will agree to bear joint and several liability for the Contractor s obligations under the Contract. The Contractor shall perform the Works independently of and without any assistance from the Employer, unless expressly provided otherwise by the Contract. The Contractor shall be liable for fulfilling all conditions, compliance with which is required for the performance of the Works including those which relate to obtaining and maintenance of all authorisations, approvals and licences necessary to implement the Contract. The Contractor shall perform the Works on the basis of the target construction cost, amounting to 855,000,000,000 roubles, excluding VAT and other applicable taxes. This amount is based on prices anticipated for the construction Page 4 of 15

4 period. If the Contractor needs, for the purposes of the performance of the Works, to take any action on behalf of the Employer (including those which relate to obtaining any authorisation, approval or licence in the name of the Employer) the Contractor shall request that the Employer issue a power of attorney authorising the Contractor to take such action. However, all of the Contractor s expenses as well as its remuneration in connection with taking the above actions shall be deemed to be covered by the Contract Price, and no additional compensation will be provided. The Contractor shall, on behalf of the Employer, apply to the Federal Autonomous Institution Main State Expert Authority of Russia (Glavgosexpertiza, the GGE) to obtain a favourable opinion with respect to the Design Documentation (the GGE Favourable Opinion), and shall provide all necessary comments and clarifications in response to the GGE s requests and remedy all the GGE s criticisms in accordance with the above provisions. 5. Information Provided by the Employer: 6. Works Completion Time Period: The Employer shall provide the Contractor with information materials in accordance with the relevant annex to the Contract. The Contractor shall commence the Works not later than on the business day immediately following the effective date of the Contract. The Contract shall become effective following provision by the Contractor to the Employer of the bank guarantees and the Contractor s liability insurance contracts set out in the Contract, but not earlier than receipt of the Employer s notice to the effect that the funding of the Contract has been started. If the Contract becomes effective after the date of commencement of the Works set out in the Works Schedule (as defined below), the actual commencement of the Works by the Contractor shall be postponed for the same number days from the effective date of the Contract. The Contractor shall provide the GGE with the complete Design Documentation which has been reviewed by the Employer in order to obtain the GGE Favourable Opinion, by 24 December The Contractor shall ensure that the GGE Favourable Opinion is granted not later than on 15 March The Works set out in the Contract shall be performed in accordance with a calendar plan (the Calendar Plan). Prior to the date of the Contract, the Contractor shall be obliged to provide the Employer with a softcopy (in the format agreed with the Employer) of a works schedule (work programme) containing the details of the sequence and Page 5 of 15

5 timing of completion of the Works under the Contract (the Works Schedule). The Works Schedule shall be prepared in full conformity with the Calendar Plan and shall include key dates for project implementation. The Contractor shall regularly update the Works Schedule and, once every two weeks, provide the Employer with the same or amended version of the Works Schedule based on the actual circumstances. In the event of a failure by the Contractor to complete any Works on time, the Contractor shall immediately notify the Employer thereof stating the reasons for such failure, and shall provide the Employer with its proposal with respect to the actions which the Contractor proposes to take (at its own expense), in order to remedy the delay. The Contractor may complete the Works under the Contract ahead of the Calendar Plan (before the deadline), provided that, unless otherwise agreed with the Employer, payment for the completed Works will be made at the time set out in the Contract irrespective of early delivery of the results thereof, and no additional compensation will be provided. 7. Applicable Requirements: The Works set out in the Contract shall comply with: all applicable current Russian laws and regulations, including construction and technical regulations, and technical safety standards; (c) (d) the requirements of specific technical conditions for design, construction and operation of the Moscow Kazan Ekaterinburg high-speed railway line; Contract requirements; and good industry practice, i.e., the Contractor shall make all reasonable efforts and, exercise the professionalism and due care appropriate for a contractor with experience in providing services for projects of a similar scope, scale and complexity, acting efficiently, expediently and reliably in accordance with best industry practice. The Contractor shall ensure that the Works comply with the applicable requirements of laws and regulations including construction and technical regulations, regardless of when such requirements were adopted or entered into force, including, for the avoidance of doubt, requirements that will be adopted or enter into force after the entry into the Contract). Any expenses incurred by the Contractor in relation to meeting such requirements shall be deemed to be covered in the Contract Price and no additional compensation will be provided. Page 6 of 15

6 8. Monitoring and Supervision by the Employer of the Performance of the Works: The Employer, including its employees and representatives, and other persons authorised by the Employer, may, at any time, be present during the performance of the Works, monitor and supervise the progress and quality of the Works and the timeframes of such performance (the Works Schedule). The Contractor shall ensure that the said persons have access to the location at which the Works are being performed, to any available documents related to the project and drafted during the course of the Works. The Contractor shall give advance notice to the said persons regarding the commencement of the relevant phase of the Works in order to ensure that they may supervise and monitor performance thereof. The Contractor shall provide the Employer or its authorised representative with monthly reports prepared in the format set out in the relevant annex to the Contract specifying detailed information regarding the progress of the Works and any other documents requested by the Employer for the purposes of monitoring and supervision of the performance of the Works. Once every two weeks, the Contractor shall arrange a meeting with the Employer in order to discuss progress of the Works and compliance with the Works Schedule. The Employer may change the frequency of the meetings as it sees appropriate. Any expenses incurred by the Contractor in relation to the above shall be deemed to be covered in the Contract Price and no additional compensation will be provided. 9. Acceptance of Works: The Contractor shall provide the Employer with the results of the Works in relation to the relevant stage of the Works as specified in the Calendar Plan. The Employer shall review the results of the Works within 14 business days and may provide criticisms thereto, specifying the deadline by which the same should be remedied. The Employer shall accept the final results of the Works following receipt of the GGE Favourable Opinion. No examination, comment, approval, or acceptance of Works (milestones) by the Employer shall release the Contractor from its obligations and liability under the Contract. The Employer has the right to appoint an inspector (a technical adviser) for supervision and acceptance of the Works. 10. Contract Price: The price payable by the Employer in favour of the Contractor under the Contract (the Contract Price), shall be determined Page 7 of 15

7 on the basis of the Tender results. It is proposed that the Contract Price be fixed (firm), paid in roubles and include VAT and any other applicable taxes. The Contract Price shall not be adjusted, unless such adjustment is expressly provided for in the Contract. 11. Advance Payment: The Contractor may require an advance payment from the Employer out of the cost of the Works, amounting to not more than 5% of the Contract Price. An advance payment shall be made to the Contractor within 15 business days of receipt by the Employer of: (c) an advance payment invoice; an original Advance Payment Bond (as defined below); and the Works Schedule agreed with the Employer. The advance payments shall be paid to the Contractor subject only to the Employer having been provided with an irrevocable and unconditional bank guarantee securing the Contractor s obligations to return the full amount of the advance payment. Such guarantee shall be issued by a bank with a minimum credit rating of at least BBB by Standard & Poor s or an equivalent rating by a reputable international rating agency and assets for the most recent reporting period of at least 500 billion roubles, in the form set out in the relevant annex to the Contract (the Advance Payment Bond). Advance Payment Bonds shall be issued under Russian law. An Advance Payment Bond shall be returned to the Contractor after successful final acceptance by the Employer of the completed Works under the Contract. 12. Payments: Considering the advance payment and the moneys retained as a security, payment for the completed Works shall be made on the basis of the Works delivery/acceptance act and invoices. Due completion of the Works milestones is to be confirmed by the Employer in accordance with the acceptance procedure set out in the Contract. Payment shall be made within 30 calendar days of the date on which the Employer signs the delivery/acceptance act (of a milestone) and the receives by the Employer of the invoice. Payment shall be made through transfer by the Employer of funds to the Contractor s settlement account. The Contractor shall deliver the VAT invoice within five calendar days following execution of the Works delivery/acceptance act. The Employer is entitled to retain or offset amounts due to it from the Contractor (including amounts of penalties and Page 8 of 15

8 losses), against a payment which is due to the Contractor. 13. Taxes and Duties: The Contractor shall pay all taxes, duties and levies related to the Works. All such costs shall be deemed included in the Contract Price and shall not be subject to additional compensation. Where the Contractor is a foreign entity, and the Employer, as a tax agent, is obliged to assess, withhold and pay any tax payable by the Contractor in the RF out of the fees due to the Contractor pursuant to the currently effective RF tax laws and regulations, such tax shall be withheld by the Employer from the payments under the Contract and shall be deemed to be covered by the Contract Price. 14. Penalties: The Contractor shall pay penalties in the following amounts for a failure to perform its obligations under the Contract: for a failure to meet the deadline for a given Works milestone under the Contract, 0.1% of the cost of such milestone for each day of delay, but not more than 15% of the cost of the given stage of the Contract; upon termination of the Contract due to a breach by the Contractor of its obligations thereunder, or occurrence of circumstances for which the Contractor is liable, 10% of the Price of the Contract. The aggregate amount of penalties to be paid under the Contract shall not exceed an amount which is equal to 25% of the Price of the Contract. 15. Defects and Guarantee Periods: The Contractor shall be liable for any defects in the completed Works, and for any damage incurred by the Employer (or by the Employer s contractors) as the result thereof. Such obligation shall remain in force throughout the entire period of the Works, during the time of construction, and for five years after the commissioning of the object. Where defects in the Works are discovered prior to completion of the Works under the Contract, then, at the Employer s request, the Contractor, shall, by the deadline set by the Employer and without compensation, remedy such defects and take account of other comments made by the Employer. Where defects in the Works are discovered after completion of the Works under the Contract at the construction stage and, therefore, require any amendment of the Design Documentation at the construction stage, then the Contractor shall, without compensation, amend the Design Documentation to remedy such defects, including the carrying out of additional Engineering Surveys, amend the results of the Engineering Survey for this purpose, or, if no Page 9 of 15

9 such amendment is possible, develop new Design Documentation and perform any Engineering Survey necessary for its development, and compensate the Employer for all losses incurred. Where necessary, the Contractor shall obtain a new Favourable Opinion from GGE in relation to such amended, or newly prepared, Design Documentation. 16. Performance Bond: The Contractor shall provide the Employer with the following security: an Advance Payment Bond (see clause 11 of these Heads of Terms); an irrevocable and unconditional bank guarantee in favour of the Employer in an amount equal to 10% of the Contract Price, issued by a bank with a minimum credit rating of at least BBB by Standard & Poor s or an equivalent rating by a reputed international rating agency and assets for the most recent reporting period of at least 500 billion roubles, in the form set out in the relevant annex to the Contract (the Performance Bond). The Performance Bond shall, inter alia, cover the Contractor s liability for defects in the Works, and the Contractor s liability for failing to meet its obligations under the Contract, including with regard to payment of penalties, fines and other charges specified in the Contract. If the amount of the Performance Bond is reduced in connection with any claim, the Contractor shall, within the time period established by the Contract, pay up the Performance Bond to its limit or provide a new bond in the required amount. The Contractor shall maintain the Performance Bond in force throughout the entire term of the Contract. All bank guarantees provided by the Contractor in connection with the Contract shall be issued pursuant to Russian law and shall be assignable to a third party. In the case of the Performance Bond, the Contract shall provide for the option of a renewable (revolving) guarantee (i.e., a guarantee which may be issued for a fixed period (shorter than the term of the Contract) upon condition that, at the end of such fixed term, the guarantee will be extended or a new guarantee will be issued so that the Performance Bond covers the entire term of the Contract; a breach of the requirements for the extension or the issuance of a new guarantee shall be grounds for a claim in relation to the Performance Bond and termination of the Contract). 17. Retention Bond: The Employer is entitled to retain 30% of the amount of each payment to the Contractor. The amount of all such retained amounts shall be returned to the Contractor within three months of receipt of the GGE Page 10 of 15

10 Favourable Opinion. The Employer may deduct or enforce, out of court, payment of the amount of all penalties, fines and other charges, payable by the Contractor under the Contract, for a failure to fulfil its obligations under the Contract, from the amount of the retained amounts to be returned to the Contractor. 18. Contractor Personnel: The Contractor shall provide the Employer with details of its personnel who will perform the Works under the Contract, indicating key specialists, and provide documents confirming their qualifications. The Contractor shall not replace key specialists without the Employer s prior written consent, unless such specialists stop working with the Contractor. 19. Additional Works: The Employer is entitled to request that the Contractor perform works which are not specified in the Assignments, but are connected with the Works in terms of their purpose and/or scope (the Additional Works). Where the cost of the Additional Works does not exceed 15% of the Contract Price, such Additional Works shall be deemed included in the Contract Price and shall not be paid for additionally. Where the cost of the Additional Works exceeds 15% of the Contract Price, then payment of the cost of such Additional Works shall be effected as follows: in accordance with regulations governing the determination of the cost of the project, survey and other works (services) for the construction, reconstruction and renovation of capital construction projects of JSCo RZD s railway infrastructure and other facilities, approved by JSCo Russian Railways dated 28 December No. 2697r (the Base Price List), or (c) in the absence of the corresponding Additional Works in the Base Price List in accordance with the standardised time input pursuant to the calculation of the Contract Price which was submitted by the Contractor in the Tender Proposal (but not more than the applicable market prices), or where it is impossible to determine the cost of such Additional Works pursuant to para. above in accordance with market prices. Upon receipt by the Contractor of a demand from the Employer as to the necessity of performing Additional Works, the Contractor shall provide the Employer with a detailed reply giving a calculation of the cost of the Additional Works and the deadline for performance thereof. The Employer may accept the Contractor s statement of costs of the Page 11 of 15

11 Additional Works or carry out an expert review. If, as a result of such review, the Employer does not agree with the cost stated by the Contractor, the cost of such Additional Works shall be agreed between the Parties. The value of the Additional Works under the Contract cannot exceed 30% of the Contract Price. 20. Postponed Deadlines: The deadlines for performance of the Works set out in the Contract are fixed and may not be changed, unless the Contract expressly provides otherwise. The Contractor has the right to a proportionate extension of the time period for performance of the Works in the event of: a breach by the Employer of a payment deadline, as stipulated in the Contract, by more than 30 business days; and fulfilment of the Employer s request to complete the Additional Works, strictly by the deadline agreed with the Employer for performance of such Additional Works. The Contractor shall use its best endeavours to reduce the duration of any extension in relation to any of the Works. 21. Force Majeure: Force Majeure means any event that is extraordinary or unavoidable under the relevant circumstances which occurs after the date of the Contract, i.e.: hostilities or military conflicts, if the Russian Federation participates in the same, or the same affect the Russian Federation directly; revolution, disorder, rebellion, civil commotion, sabotage or terrorism, provided, in each case, that the same occur in the Russian Federation or affect the Russian Federation directly; (c) epidemics, environmental or technological catastrophes resulting in nuclear, chemical or biological contamination, unless the source of or the reason for the same result from any action or omission by the Contractor or its sub-contractors; and (d) an act of God, such as lightning, a typhoon, flood or earthquake, provided, in each case, that such event materially prevents the performance of the Contract. Any event which may be described as Force Majeure shall Page 12 of 15

12 not be deemed a Force Majeure event, where: occurrence of the same could have been foreseen or prevented by the Party that is affected by such event (the Affected Party) through any reasonable and bona fide effort including receipt of such replacement goods, works or services which were required under the circumstances for the purposes of the performance of the Contract; and/or occurrence of the same has been caused, whether in whole or in part, by the Affected Party s breach of any of its obligations under the Contract or applicable law, or by any of its actions or omission, or where the Contractor is the Affected Party, by any action or omission of its sub-contractors. 22. Insurance: The Contractor shall, at its own expense, effect professional liability insurance (including liability for performance of its obligations under the Contract). The total sum insured shall not be less than 30% of the Contract Price. The insurance period shall cover the entire term of the Contract. 23. Limitations on Liability: The overall liability of the Contractor under the Contract (including the payment of all penalties, fines and other charges payable by the Contractor under the Contract for a failure to meet its obligations under the Contract) shall not exceed the Contract Price. This limitation does not apply to liability arising as a result of: (c) (d) breach of the Contract as the result of wilful default or gross negligence, and likewise for termination of the Works under the contract without reasonable cause; submission of claims by third parties and claims relating to a breach of intellectual property rights; the duty to pay penalties; and insured events, where the insurance proceeds from the relevant insured event exceed the Contract Price (and in that event the scale of liability shall be limited to the amount of such proceeds). Liability of the Employer under the Contract is limited to the scale of actual damage incurred by the Contractor, save for cases of wilful breach of the obligations under the Contract. Page 13 of 15

13 24. Engagement of Subcontractors: The Contractor is entitled to subcontract up to 20% of the Works under the Contract. The Contractor is entitled to engage subcontractors to perform its obligations under the Contract provided it obtains the prior written consent of the Employer. The Contractor shall be liable to the Employer for acts and/or omissions by its subcontractors just as for its own acts and/or omissions. 25 Assignment of Rights under the Contract: The Contractor is not entitled to assign its rights and obligations under the Contract without the Employer s prior written consent. The Employer is entitled, at any time, to assign its rights under the Contract, whether in whole or in part. 26. Rights to the Intellectual Property: The Contractor undertakes to transfer to the Employer, in full, the exclusive rights to intellectual property (that which has arisen and that which has been used in the Works) in relation to all the results of the Works under the Contract, including Engineering Surveys and the Design Documentation. Payment for such rights is included in the Contract Price. While performing the Works, the Contractor shall comply with currently effective laws and regulations in relation to intellectual property rights and shall compensate the Employer for the amount of any third party claim in connection with a breach of intellectual property rights in the course of performing the Works. 27. Dispute Resolution: Any dispute arising out of or in connection with the Contract or its interpretation, application, implementation, validation, breach or termination that cannot be resolved by the good faith negotiation of the Parties, shall be resolved by arbitration at the permanent Court of Arbitration at CJSCo Professional Legal Assistance Association (Office 147, 4/10 Stepana Supruna Street, Moscow). The award will be final and binding upon the parties and enforceable by any court having appropriate jurisdiction. 28. Employer Termination Events: The Employer termination events are, inter alia, the following: bankruptcy of the Contractor; the Contractor failing to: (i) (ii) maintain the Advance Payment Bond and/or the Performance Bond in force; or replace any guarantee which is about to expire Page 14 of 15

14 with another guarantee, 30 calendar days before the expiry of the first guarantee (where the Contract provides for an obligation to maintain any guarantee for a certain period of time); (c) the Contractor s perpetration of material breaches of its obligations under the Contract listed below, where the corresponding breach is not remedied by the Contractor within 30 calendar days (unless a different period is stipulated in the Contract): (i) (ii) breach by the Contractor of the Contract requirements in relation to assignment of the rights and transfer of the obligations under the Contract; breach by the Contractor of the provisions of the Contract on engagement of subcontractors; (iii) multiple breaches by the Contractor of any of its obligations under the Contract; (iv) the Contractor delays the delivery of any stage of the Works by more than 30 calendar days; (v) unjustified cessation by the Contractor of the Works under the Contract; (vi) any change in the participants or shareholders of the Contractor in breach of the Contract; or any changes to the membership of the Contractor at any stage of the Contract (in the event that the Contractor is made up of several members); (vii) reaching the limit of the Contractor s liability established by the Contract; (viii) repudiation, termination, or declaration as void, of any of insurance contracts entered into by the Contractor in accordance with the Contract, or the insurance company having (or acquiring) the right not to perform the corresponding insurance contract or otherwise reduce the scope of the insurance coverage under the corresponding insurance contract; and (ix) other material breaches (set out in the Contract) by the Contractor of its obligations under the Contract. In the event of early termination of the Contract due to a breach by the Contractor of its obligations, the Employer shall pay for the duly performed and accepted milestones of the Works but not for unfinished parts of stages of the Works, Page 15 of 15

15 offsetting advance payments which have been made and all payable penalties, fines and other charges. If, for proper completion of the Works set out in the Contract, the Employer is forced to engage third parties at a higher price than that of the old price of the Contract, the Contractor shall pay the Employer the difference between the old and the new price of the Contract. The Employer is entitled, at any time prior to the transfer to it of the results of the Works, to terminate the Contract, having sent a notice to the Contractor 30 calendar days prior to the Contract termination date. In this event, the Contractor shall be entitled to claim payment from the Employer for all of the Works milestones duly completed by the Contractor and accepted by the Employer before the date of receipt by the Contractor of such termination notice. No other compensation payments to the Contractor in connection with such termination of the Contract are stipulated. 29. Contractor Termination Events: The Contractor termination events are, inter alia, the following: a failure to meet a deadline for payment to the Contractor of any undisputed amount in excess of 100,000,000 roubles for more than 60 business days after the scheduled date of payment; or bankruptcy of the Employer. 30. The Contractor s other Obligations The Contractor shall provide the Employer with information about the beneficiaries (including the ultimate beneficiaries) in accordance with the Contract. 31. Applicable Law: The Contract will be governed by Russian law. 32. Language and Notices: All notices which are to be sent in accordance with this Contract shall be sent in writing. Submission of any results of the Works, and likewise any written communication between the Employer and the Contractor shall be in Russian, unless otherwise agreed with the Employer. Page 16 of 15