UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
FOR THE QUARTERLY PERIOD ENDED MAY 31, 1996
COMMISSION FILE NUMBER: 0-23148
AES CHINA GENERATING CO. LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 98-0152612
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3/F., JINQIAO BUILDING
#1 JIANGUOMENWAI AVENUE
BEIJING 100020, PEOPLE'S REPUBLIC OF CHINA
(Address of principal executive office)
TELEPHONE NUMBER (86 10) 65089619
(Registrant's telephone number, including area code)
AMENDMENT NO. 1
The undersigned Registrant hereby amends, as set forth in the pages
attached hereto, its Quarterly Report on Form 10-Q for the fiscal quarter ended
May 31, 1996:
The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended May 31, 1996 is hereby amended to file revised versions of Exhibits 10.28,
10.29 and 10.30 for which Registrant has requested that the Securities and
Exchange Commission grant confidential treatment for certain information
identified therein. The amended versions of such exhibits are attached hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AES China Generating Co. Ltd.
-----------------------------
(Registrant)
October 17, 1996 /s/ Jeffery A. Safford
- ---------------- -----------------------------
Date Vice President
Chief Financial Officer and Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DOCUMENT NUMBERED PAGE
- ------ -------- -------------
10.28* Shareholder Loan Contract dated April 26, 1996
between Jiaozuo Wan Fang Power Company Limited
and AES China Power Holding Co.(L), Ltd.
10.29* Power Purchase and Sale Contract dated April
26, 1996 between Jiaozuo Wan Fang Power Company
Limited and Jiaozuo Aluminum Mill
10.30* Power Purchase and Sale Contract dated April 25,
1996 between Jiaozuo Wan Fang Power Company
Limited and Henan Electric Power Corporation
- ----------------
* Confidential treatment has been requested for certain information indentified
in this exhibit.
Exhibit 10.28
SHAREHOLDER LOAN CONTRACT
This SHAREHOLDER LOAN CONTRACT (this "Contract") is made and entered into
as of April 26, 1996 by and between JIAOZUO WAN FANG POWER COMPANY LIMITED
("Borrower"), a Sino-foreign cooperative joint venture enterprise organized and
existing under the laws of the People's Republic of China (Business License
number is 00037-1) with its registered office in Jiaozuo City, Henan Province,
China (telephone no: 391-329-3144) and AES CHINA POWER HOLDING CO. (L), LTD.
("Lender"), a Labuan company wholly-owned by AES China Generating Co. Ltd.
(Company no: LL00460).
1. The Loans.
---------
Subject to the terms and conditions of this Contract, Lender agrees to make
to Borrower loans in an aggregate amount not to exceed US$ 68,584,000 (including
interest during construction as provided in Section 3 hereof) in accordance with
the Joint Venture Contract dated as of March 27, 1996 between Jiaozuo Power
Partners, L.P. and Jiaozuo Aluminum Mill (the "Joint Venture Contract") and
based on the exchange rate of US$ 1 to RMB 8.3, which loans will be divided into
the Tranche A Loans to be used mostly for the first unit in an aggregate amount
not to exceed US$ 34,292,000 (the "Tranche A Loans") and the Tranche B Loans to
be used mostly for the second unit in an aggregate amount not to exceed US$
34,292,000 (the "Tranche B Loans"; each such Tranche A or Tranche B Loan
individually a "Loan" and collectively the "Loans") from time to time between
April 26, 1996 and July 1, 1998 (the "Termination Date"). The Loans shall be
evidenced by a promissory note of Borrower, substantially in the form of Exhibit
A (the "Note"). Subject to the conditions set forth in Section 6, each Loan
shall be made (a) in accordance with the drawdown schedule attached as Exhibit B
and (b) on a day on which banks are authorized to open for business in New York,
New York, the United States of America (a "Banking Day").
2. Maturity.
--------
(a) Borrower shall repay the aggregate outstanding principal amount of the
Loans in accordance with the amortization schedule attached as Exhibit C. In any
event, Borrower shall repay such Loans in full by July 1, 2006. Borrower shall
take all necessary actions to ensure that its cash on hand due to depreciation
may be used to repay the principal of the Loans and shall so use such available
cash.
(b) Borrower shall have the right to prepay the Loans at any time or from
time to time. Each of such optional prepayments shall be in an amount not less
than US$ 5 million and shall be made with at least six months prior written
notice to Lender. A Loan prepaid may not be reborrowed. The prepayments of the
Loans will be applied in inverse order of maturity to the then remaining
installments of principal to become due as set forth in Exhibit C.
3. Interest and Fees.
-----------------
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<PAGE>
[*** Filed separately with the Commission pursuant to a request for
confidential treatment.]
(a) Borrower shall pay interest on the Loan(s) outstanding from time to
time at the rate of 11% per annum. Interest on the Loans shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. Interest
on the Tranche A Loans shall accrue until the Unit One Commercial Operation Date
(as defined in the Power Purchase and Sale Contract dated as of April 26, 1996
between Borrower and the Henan Electric Power Corporation (the "Power Purchase
and Sale Contract")) and be added to principal. Interest on the Tranche B Loans
shall accrue until the Unit Two Commercial Operation Date (as defined in the
Power Purchase Agreement) and be added to principal. Interest payments shall
begin after the Unit One Commercial Operation Date in the case of the Tranche A
Loans and after the Unit Two Commercial Operation Date in the case of the
Tranche B Loans. Interest payments shall be payable quarterly in arrears on the
first day of each January, April, July and October starting from the second such
date to occur after the Unit One Commercial Operation Date in the case of the
Tranche A Loans and after the Unit Two Commercial Operation Date in the case of
the Tranche B Loans and on final maturity of the Loans (each such date, a
"Payment Date"). Lender shall calculate and notify Borrower of the actual amount
of each interest payment 15 days prior to each Payment Date.
(b) Borrower shall pay to Lender a guarantee fee of [***]% per annum on the
Loan(s) outstanding, which shall be computed on the basis of the actual number
of days elapsed in a year of 360 days. Such guarantee fee shall accrue until the
Unit One Commercial Operation Date in the case of the Tranche A Loans or until
the Unit Two Commercial Operation Date in the case of the Tranche B Loans and be
added to the principal of the Loans. Payment of the guarantee fee shall begin
after the Unit One Commercial Operation Date in the case of the Tranche A Loans
or after the Unit Two Commercial Operation Date in the case of the Tranche B
Loans and shall be payable quarterly in arrears on each Payment Date. Lender
shall calculate and notify Borrower of the actual amount of each payment of the
guarantee fee 15 days prior to each Payment Date.
(c) If Borrower fails to pay any sum payable under this Contract when due,
Borrower shall from time to time on demand pay interest on such sum from and
including the due date to the date of actual payment (after as well as before
judgment) at a per annum interest rate equal to [***]% above the interest rate
specified in Section 3(a).
4. Method of Payment.
-----------------
All sums, including all principal, interest and fees, payable to Lender
shall be payable in US Dollars not later than 10:00 a.m. Beijing time on each
Payment Date to the account of Lender in Hong Kong (no. 08611939) at Citibank,
N.A., or such other account within or outside of China as Lender notifies to
Borrower.
5. Representations and Warranties.
------------------------------
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<PAGE>
Borrower represents as of this date and the date each Loan is made that:
(a) Borrower is a Sino-foreign cooperative joint venture enterprise duly
established and existing in good standing under the laws of the People's
Republic of China;
(b) the execution, delivery and performance of this Contract, the Note and
each other document delivered in connection herewith or therewith are within
Borrower's power, have been duly authorized by all necessary legal action, and
do not contravene any law or any contractual restriction binding on Borrower;
(c) this Contract is, and the Note and each other document delivered in
connection herewith or therewith when executed will be, the legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms;
(d) all governmental approvals necessary for the execution of this
Contract, the Note and each other document delivered in connection herewith or
therewith have been obtained and all governmental approvals necessary for the
performance and enforceability hereof and thereof shall have been obtained prior
to and shall be in full force and effect on the date of each drawdown hereunder;
(e) the obligations of Borrower hereunder and under the Note and any other
document executed in connection herewith or therewith constitute the direct,
unconditional and general obligations of Borrower and the sum of all of
Borrower' other indebtedness does not exceed RMB five million except the loans
provided by other shareholders of Borrower in the amount of not exceeding RMB
243,963,000, the working capital loans or the list of debts of over RMB one
million each specified in Appendix D hereto;
(f) Borrower is not in default under any agreement or obligation to which
it is a party or by which it may be bound; and
(g) no Event of Default (as hereinafter defined), and no event which with
the giving of notice or the passing of time, or both, would constitute an Event
of Default, has occurred and is continuing.
6. Conditions Precedent.
--------------------
The obligation of Lender to make each Loan hereunder is subject to the
fulfillment, as determined solely by Lender, of the following conditions
precedent at least three Banking Days prior to the proposed date of each
drawdown of such Loan (except as otherwise indicated below) and the continued
fulfillment of such conditions on the date of such drawdown:
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<PAGE>
(a) All documents, licenses, approvals and permits required in connection
with the establishment of Borrower as a Sino-foreign cooperative joint venture
and the design, construction, ownership, operation and management of the Power
Plant (as defined in the Power Purchase and Sale Contract) shall have been
obtained and are in full force and effect; without limiting the generality of
the foregoing, such approvals shall include approval by the Ministry of Foreign
Trade and Economic Cooperation of China of the Joint Venture Contract and
Borrower's Articles of Association, approval by the Henan Provincial Pricing
Bureau of the pricing formula set forth in Appendix A to the Power Purchase and
Sale Contract, approval by the relevant government department of the Land Use
Rights (as defined in the Joint Venture Contract), approval by the relevant
government department of the early return of the registered capital to the
Foreign Party (as defined in the Joint Venture Contract), issuance of Borrower's
business license, approval regarding access to the foreign exchange adjustment
center or foreign exchange banks, and approvals referred to in Article 2.3(a) of
the Joint Venture Contract;
(b) All registered capital and other loans required to be funded under the
Joint Venture Contract by any party as of such date shall have been funded in
full;
(c) Lender shall have received the Note, duly executed by Borrower, which
shall be in full force and effect;
(d) Lender shall have received satisfactory evidence of the due
authorization, execution and delivery of this Contract, the Note and each other
document delivered in connection herewith or therewith by Borrower;
(e) Lender shall have received certified copies of all governmental
approvals and filings required for the execution, delivery, performance and
enforceability of this Contract, the Note and each other document delivered in
connection herewith or therewith and such approvals and filings are in full
force and effect;
(f) Each of the representations and warranties set forth in Section 5 shall
be true and correct in all material respects;
(g) Borrower shall have performed in all material respects its obligations
required to be performed under this Contract, the Note and all other documents
delivered in connection herewith or therewith;
(h) All contracts referenced in the Joint Venture Contract including
without limitation all Project Contracts (as defined in the Joint Venture
Contract) and all other material contracts required in connection with the
construction of the Project (as defined in the Power Purchase and Sale Contract)
shall have been executed and delivered by all parties thereto and are in full
force and effect;
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<PAGE>
(i) Lender's independent engineer or, at the request of Lender, Borrower,
shall have certified in a manner satisfactory to Lender that all applicable
construction milestones as set forth in Exhibit B have been met;
(j) Borrower shall have purchased the insurance policies required by Lender
and such policies shall be in full force and effect;
(k) Borrower shall have received from Jiaozuo Aluminum Mill evidence in
form and substance satisfactory to Lender that Chinese banks have committed to
provide Renminbi loans needed for the Project;
(l) Lender shall have received a favorable opinion of Zheng, Liu, Yuan &
Zhou Law Office with respect to the transactions contemplated hereby and such
other approvals, opinions and documents as Lender may reasonably request; and
(m) Fifteen Banking Days prior to each requested date of borrowing,
Borrower shall submit an application for borrowing to Lender in form and
substance reasonably satisfactory to Lender. Each such application shall state
the requested amount and date of the borrowing which date shall not be earlier
than the relevant drawdown date specified in Exhibit B, shall be signed by
Borrower and shall constitute a representation and warranty by Borrower that it
is in compliance with all the conditions precedent set forth herein and a
reaffirmation as of the requested drawdown date of all of Borrower's
representations and warranties contained herein.
7. Covenants.
---------
(a) Borrower shall at all times (i) preserve and maintain in full force and
effect its existence as a cooperative joint venture under the laws of China, its
qualification to do business in Henan Province, China and in each other
jurisdiction in which the conduct of its business requires such qualification
and (ii) obtain and maintain in full force and effect all governmental approvals
required at any time in connection with the construction, maintenance, ownership
or operation of the Facility (as defined in the Power Purchase and Sale
Contract).
(b) Borrower shall (i) perform and observe all of its covenants and
agreements contained in any Project Contract or any other document relating to
the Facility to which it is a party and (ii) maintain in full force and effect
each of those project documents.
(c) Borrower shall comply, and shall ensure that the Facility is
constructed and operated, with governmental requirements.
(d) Borrower shall promptly provide to Lender copies of Borrower's
construction, operation and financial reports and other information relating to
the construction or operation of the Facility.
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<PAGE>
(e) Borrower shall promptly register the Loans (no later than 15 days after
the date hereof) with Jiaozuo foreign exchange control departments and obtain a
registration certificate (the "Registration Certificate").
(f) Borrower shall use the proceeds of the Loans solely for the purpose of
financing the construction and start-up of the Facility and funding the working
capital for the operation of Borrower.
(g) Borrower shall notify Lender immediately of the occurrence of any Event
of Default or of any event which would become an Event of Default with the
passage of time or giving of notice or both.
(h) Borrower shall not, without the prior written consent of Lender,
assign, sell, mortgage, encumber or otherwise transfer any interest in any
assets of Borrower other than transfers in the ordinary course of its business
that would not have a materially adverse effect on Borrower or the performance
of its obligations hereunder.
(i) Prior to any due date for any repayment of the principal of and/or the
payment of interest on the Loans, Borrower shall (A) use the Registration
Certificate and the notice regarding such repayment and/or payment to obtain
from the registration department a verification and approval certificate with
respect to such repayment and/or payment; and (B) use such verification and
approval certificate and the Registration Certificate to handle matters
regarding the remittance from the foreign debt account of the principal of and
interest on the Loans outside of China at the relevant bank.
(j) At the beginning of each year, Borrower shall submit to the local
foreign exchange administration a report stating the amount of foreign currency
purchased in the preceding year for the purpose of repaying the principal of
and/ paying the interest on the Loans and a plan regarding the purchase of
foreign currency for the current year.
8. Events of Default.
-----------------
(a) Each of the following events and occurrences shall constitute an Event
of Default under this Contract:
(i) any representation or warranty of Borrower proves to have been
untrue when made or renewed;
(ii) Borrower fails to repay when due any principal amounts of the
Loans, or Borrower fails to pay within three Banking Days after the date
due any interest or fee payment, due pursuant to the terms of this
Contract, the Note or any document delivered in connection herewith or
therewith;
(iii) Borrower fails to perform or violates any other provision of
this Contract (including without limitation the covenants), the Note or any
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<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
document delivered in connection herewith or therewith, which continues
unremedied for 30 days after notice thereof from Lender;
(iv) except as otherwise provided in clause (ii) above, Borrower fails
to pay when due any indebtedness for which it is liable, contingently or
otherwise, or any such indebtedness is accelerated or is required to be
prepaid prior to the stated maturity thereof;
(v) any approval or permit required for the performance or
enforceability of the obligations of Borrower under this Contract, the Note
or any other document delivered in connection herewith or therewith expires
or is not renewed upon expiration or is terminated or revoked or modified
in any material respect;
(vi) any approval or permit required in connection with the Project
expires or is not renewed upon expiration or is terminated or revoked or
modified in any material respect;
(vii) any Project Contract is materially breached by a party thereto
or such contract ceases to be in full force and effect;
(viii) Borrower becomes insolvent or unable to pay its debts when due,
or commits any act of bankruptcy including filing any petition in any
bankruptcy, winding-up or reorganization proceeding, or acknowledges in
writing its insolvency or inability to pay its debts, or any petition
relating to bankruptcy is filed with respect to it by its creditors; or
(ix) One or more judgments aggregating at least US$100,000 (or its
equivalent) that is not covered by insurance is entered against Borrower
and is not satisfied, vacated or bonded pending appeal within 60 days after
entry.
(b) If an Event of Default shall occur and be continuing, Lender shall have
no further obligation to make Loans to Borrower and Lender may by notice to
Borrower declare all outstanding Loans and accrued interest thereon and other
amounts payable hereunder to be immediately due and payable, whereupon all such
amounts shall become forthwith due and payable without demand or notice of any
kind and without the consent, decree or authorization of any governmental
entity. In the event of an Event of Default, Lender shall also have the right to
liquidate Borrower and its assets.
9. Intercreditor Arrangements.
--------------------------
Borrower and Lender each acknowledge that Borrower has also entered into a
loan contract with Jiaozuo Aluminum Mill for a loan amount up to RMB 243,963,000
(the "Other Loan Contract"). Borrower represents that all loans under the Other
Loan Contract shall be made at an interest rate (including all fees and other
charges) of equal to or less than [***]% per cent per annum, and that the term
of the Other Loan Contract shall be no shorter than eight
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<PAGE>
years. The drawdown schedules for the Loans and the loans under the Other Loan
Contract shall be determined by Borrower's Board of Directors. Any amounts due
under this Loan Contract and the Other Loan Contract shall rank in equal
priority. If Borrower has insufficient funds available to repay in full amounts
due under the Loan Contract and the Other Loan Contract, such available funds
shall be distributed pro rata on the basis of the total amount of loans
outstanding under this Contract and under the Other Loan Contract, provided that
at the time of such distribution Loans due to Lender under this Contract shall
be computed on US Dollar cash basis and loans due to lender under the Other Loan
Contract shall be calculated on Renminbi cash basis.
10. Entire Agreement; Amendments.
----------------------------
This Contract constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and may be amended only by an instrument in
writing signed by the parties hereto.
11. Indemnity.
---------
(a) Borrower shall pay all stamp duties in connection with this Contract,
the Note and each other document delivered in connection herewith and therewith
and shall reimburse Lender for any other cost, loss or damage (including without
limitation any taxes excluding taxes imposed on the net income of Lender by the
jurisdiction of its registration and other costs resulting from changes in law
after the date hereof) incurred by Lender in connection with any Loan (including
interest and fees), this Contract, the Note or any other document delivered in
connection herewith or therewith. The payment of such stamp duties by Borrower
and the reimbursement by Borrower of such other cost, loss or damage (including
taxes as stated above) shall be in addition to Borrower's obligation to pay
interest as set forth in Sections 3 (a) and (c).
(b) Without limiting the generality of clause (a) above, if Borrower shall
be obligated to withhold and pay any taxes required under the applicable laws of
China or under any agreement between China and any country which has
jurisdiction over Lender or Borrower, the interest rate hereunder shall be
automatically and accordingly increased and Borrower shall make such additional
interest payment so that the net amounts received by Lender after such
withholding shall equal the amounts which would have been received by Lender had
no such withholding been made.
(c) The indemnity provisions of this Section 11 shall survive the repayment
of the Loans and the termination of this Contract.
12. Notice.
------
All notices hereunder shall be in writing and shall be either personally
delivered, or transmitted by postage prepaid registered air mail, or by
facsimile to the party addressed at the relevant address set forth above. Either
party may change its address by notice to the other.
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<PAGE>
13. Governing Law.
-------------
This Contract shall be governed by and interpreted in accordance with the
laws of England without regard to its procedural rules which would lead to the
adoption of laws of other countries due to conflicts of laws.
14. Submission to Jurisdiction.
--------------------------
(a) Borrower hereby irrevocably consents that any legal action or
proceeding against it or any of its assets with respect to any of the
obligations arising under or relating to this Contract may be brought in any
English court, as Lender may elect, and by execution and delivery of this
Contract, Borrower hereby irrevocably submits to and accepts with regard to any
such action or proceeding, for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
Borrower hereby irrevocably designates, appoints and empowers AES Electric in
England (address: Burleigh House, 17-19 Worple Way, Richard TW10 6AG, U.K.), as
its agent to receive for and on its behalf service of process in England in any
legal action or proceeding with respect to this Contract, the Note or any other
document delivered in connection herewith or therewith. The foregoing, however,
shall not limit the rights of Lender to serve process in any other manner
permitted by law or to bring any legal action or proceeding or to obtain
execution of judgment in any jurisdiction, including without limitation the
People's Republic of China.
(b) Borrower hereby waives any right it may have under the laws of any
jurisdiction to commence by publication any legal action or proceeding with
respect to this Contract, the Note or any other document delivered in connection
herewith or therewith.
(c) Borrower hereby irrevocably waives any objection which it may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Contract, the Note or any other document
delivered in connection herewith or therewith in England and hereby further
irrevocably waives any claim that England is not a convenient forum for any such
suit, action or proceeding.
15. Arbitration.
-----------
(a) Notwithstanding Section 14, Lender may, in its sole discretion, choose
to submit any dispute arising out of or in connection with this Contract for
binding arbitration in Stockholm, Sweden under the auspices of the International
Chamber of Commerce in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce as in effect on the date of this
Contract (except to the extent this Section 15 specifies different procedures in
which event such procedures will govern the arbitration to the extent so
specified). Lender may choose arbitration with respect to any dispute at any
time either before or after any filing of any claim, action or proceeding with
any court by either party, provided, however, that once Lender
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<PAGE>
makes such a choice, the relevant dispute will be settled finally and
exclusively by arbitration irrespective of (i) whether any claim, action or
proceeding has already been commenced in any court, (ii) the magnitude of such
dispute or (iii) whether such dispute would otherwise be considered justiciable
or ripe for resolution by a court or arbitral tribunal. In the event that a
claim, action or proceeding has already been commenced in a court when Lender
chooses to submit the relevant dispute for arbitration, both parties hereto will
immediately discontinue and withdraw the claim, action or proceeding from the
court so that the dispute may be handled exclusively by arbitration. Once a
dispute is submitted by Lender to arbitration, Borrower shall not have any right
to file any claim, action or proceeding in any court in respect of such dispute
or any matter relating to such dispute so that the dispute may be handled
exclusively by arbitration. Any action by Lender to submit any dispute for
arbitration shall not prevent Lender from bringing any claim, action or
proceeding in any court with respect to any other dispute. Borrower shall not
have any right to submit any dispute to arbitration. Any settlement and award
rendered through arbitration proceeding will be final and binding upon the
parties hereto if the decision is in writing and contains a reasoned analysis
explaining the arbitrators' reasons for rendering the award. This Contract and
the rights and obligations of the parties hereto will remain in full force and
effect pending the award in such arbitration proceeding, which award will
determine whether and when termination of this Contract shall become effective.
(b) The arbitration will be conducted in English and Chinese.
(c) There will be three arbitrators. Each party will select one arbitrator
within 30 days after Lender elects to commence arbitration. Such arbitrators
will be freely selected, and the parties hereto will not be limited in their
selection to any prescribed list. Within 30 days after the selection of the
latter of the two arbitrators selected by the parties, the two arbitrators shall
select the third arbitrator; if the two arbitrators do not select the third
within such 30 day period, the arbitrating body will 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 will be made by the arbitrating body. The costs of the
arbitration will be borne by the parties hereto as determined by the arbitration
tribunal taking into account the relative merits of the positions of the
parties.
(d) The parties hereto agree that the arbitral award may be enforced
against the parties or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof. Accordingly, the parties hereto irrevocably agree that any action to
enforce such judgment may be instituted wherever appropriate and each party
hereby irrevocably waives, to the fullest extent permitted by law, any objection
which it may have now or hereafter to the laying of the venue or the
jurisdiction or the convenience of the forum of any such action and irrevocably
submits generally and unconditionally to the jurisdiction of any such court in
any such action.
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<PAGE>
16. Banking Day Adjustment.
----------------------
If the date on which a payment is due is not a Banking Day, such date shall
be changed to the next succeeding Banking Day (or to the first preceding Banking
Day if the next succeeding Banking Day is in another calendar month).
17. Information.
-----------
Borrower shall provide Lender with such information concerning the
condition and operation of Borrower, financial or otherwise, as Lender may from
time to time request.
18. Waiver; Cumulative Rights.
-------------------------
The failure or delay of Lender to require performance by Borrower of any
provisions of this Contract shall not affect its right to require performance of
such provision unless and until such performance has been waived in writing by
Lender. Each and every right granted to Lender hereunder or under any other
document delivered in connection herewith, or allowed to it at law or in equity,
shall be cumulative and may be exercised in part or in whole from time to time.
19. Assignment.
----------
This Contract shall be binding upon and shall be enforceable by Borrower
and Lender and their respective successors and assigns, except that Borrower
shall have no right to assign or transfer its rights or obligations hereunder.
20. Set-Off.
-------
Nothing herein contained shall limit the right of set-off, lender's lien or
counterclaim which may be available to Lender under applicable law.
21. Severability.
------------
If any or more of the provisions contained in this Contract, the Note or
any other document delivered in connection herewith shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired.
22. Counterparts.
------------
This Contract may be signed in any number of counterparts. Any single
counterpart or a set of counterparts signed, in either case, by both parties
hereto shall constitute a full and original contract for all purposes.
23. Language.
--------
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<PAGE>
This Contract shall be written and executed in both Chinese and English
versions, each of which shall have equal force and effect.
24. Construction.
------------
Unless otherwise stated, all references made in this Contract to "Sections"
and "Exhibits" shall refer, respectively, to Sections of, and Exhibits to, this
Contract. References herein to this Contract include the Exhibits hereto.
25. Effectiveness.
-------------
This Contract shall become effective upon the signing hereof and upon the
registration of the Loans with the State Administration of Exchange Control.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused this Contract to be executed by their respective duly authorized
signatories as of the day and year first written above.
BORROWER JIAOZUO WAN FANG POWER COMPANY LIMITED
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By: /s/ [SIGNATURE ILLEGIBLE]
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Name:
Title:
LENDER AES CHINA POWER HOLDING CO. (L), LTD.
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By: /s/ Edwared C. Hall, III
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Name:
Title:
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EXHIBIT A
Form of Promissory Note
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US$ _________________ Date:
FOR VALUE RECEIVED, Jiaozuo Wan Fang Power Company Limited ("Borrower")
hereby unconditionally promises to pay to the order of AES China Power Holding
Co. (L), Ltd. ("Lender") at the account of Lender (no. ________________) at
__________________________, the principal sum of [amount of Loans in words] (US$
[_________]) or, if less, the unpaid principal of the Loans made by Lender
pursuant to the Loan Contract dated as of [ ______ ] between Borrower and Lender
(the "Loan Contract") in the amounts and at the times specified in the Loan
Contract.
Borrower hereby promises also to pay interest on the unpaid principal
amount of the Loans from the date such Loans are made until paid at the rates
and at the times provided in the Loan Contract.
All payments of principal and interest under this Note shall be paid in the
currency and at the place specified in the Loan Contract.
If Borrower fails to pay any sum payable under this Note when due, Borrower
shall from time to time on demand pay interest on such sum from and including
the due date to the date of actual payment (after as well as before judgment) at
the rate provided in the Loan Contract.
If an Event of Default shall occur and be continuing, the principal of and
accrued interest on this Note may be declared to be due and payable in the
manner and with the effect provided in the Loan Contract.
Borrower hereby waives presentment, demand, protest or notice of any kind
in connection with this Note.
Terms not otherwise defined in this Note have the same meaning herein as in
the Loan Contract.
This Note shall be governed by and interpreted in accordance with the laws
of England without regard to its procedural rules which would lead to the
adoption of laws of other countries due to conflicts of laws.
JIAOZUO WAN FANG POWER
COMPANY LIMITED
By: ________________________
Name:
Title:
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EXHIBIT B
Drawdown Schedule
[To be determined by Borrower's Board of Directors]
Date Amount Construction Milestone
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EXHIBIT C
AMORTIZATION SCHEDULE
TRANCHE A TRANCHE B
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NUMBER DATE PAYMENT AMOUNT
1 1-Jan-98 70% of 1997 DEPRECUAITON
PAYMENT PAYMENT
AMOUNT AMOUNT
(PERCENT (PERCENT OF
OF PRINCIPAL PRINCIPAL
OUTSTANDING OUTSTANDING
NUMBER DATE AS OF 2-JAN-98) NUMBER DATE AS OF UNIT 2 COD)
2 1-Apr-98 0.21%
3 1-Jul-98 0.23% 1 1-Jul-98 0.23%
4 1-Oct-98 0.26% 2 1-Oct-98 0.26%
5 1-Jan-99 0.30% 3 1-Jan-99 0.30%
6 1-Apr-99 0.34% 4 1-Apr-99 0.34%
7 1-Jul-99 0.38% 5 1-Jul-99 0.38%
8 1-Oct-99 0.43% 6 1-Oct-99 0.43%
9 1-Jan-00 0.49% 7 1-Jan-00 0.49%
10 1-Apr-00 0.55% 8 1-Apr-00 0.55%
11 1-Jul-00 0.62% 9 1-Jul-00 0.62%
12 1-Oct-00 0.70% 10 1-Oct-00 0.70%
13 1-Jan-01 0.79% 11 1-Jan-01 0.80%
14 1-Apr-01 0.90% 12 1-Apr-01 0.90%
15 1-Jul-01 1.01% 13 1-Jul-01 1.02%
16 1-Oct-01 1.15% 14 1-Oct-01 1.15%
17 1-Jan-02 1.30% 15 1-Jan-02 1.30%
18 1-Apr-02 1.46% 16 1-Apr-02 1.47%
19 1-Jul-02 1.65% 17 1-Jul-02 1.66%
20 1-Oct-02 1.87% 18 1-Oct-02 1.87%
21 1-Jan-03 2.11% 19 1-Jan-03 2.12%
22 1-Apr-03 2.39% 20 1-Apr-03 2.39%
23 1-Jul-03 2.70% 21 1-Ju1-03 2.70%
24 1-Oct-03 3.05% 22 1-Oct-03 3.05%
25 1-Jan-04 3.44% 23 1-Jan-04 3.45%
26 1-Apr-04 3.89% 24 1-Apr-04 3.90%
27 1-Jul-04 4.40% 25 1-Jul-04 4.41%
28 1-Oct-04 4.97% 26 1-Oct-04 4.98%
29 1-Jan-05 5.61% 27 1-Jan-05 5.63%
30 1-Apr-05 6.34% 28 1-Apr-05 6.36%
31 1-Jul-05 7.17% 29 1-Jul-05 7.18%
32 1-Oct-05 8.10% 30 1-Oct-05 8.12%
33 1-Jan-06 9.15% 31 1-Jan-06 9.17%
34 1-Apr-06 10.34% 32 1-Apr-06 10.36%
35 1-Jul-06 11.69% 33 1-Jul-06 11.71%
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Total 100.00% Total 100.00%
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EXHIBIT D
LIST OF BORROWER'S DEBTS OF OVER RMB ONE MILLION EACH
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Exhibit 10.29
POWER PURCHASE AND SALE CONTRACT
BETWEEN
JIAOZUO WAN FANG POWER COMPANY LIMITED
AND
JIAOZUO ALUMINUM MILL
Dated as of April 26, 1996
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND EXPLANATION OF TERMS
SECTION 2. TERM OF CONTRACT
SECTION 3. CONDITIONS TO OBLIGATIONS
SECTION 4. SALE AND PURCHASE
SECTION 5. OPERATION AND MAINTENANCE
SECTION 6. OUTAGES
SECTION 7. EMERGENCIES
SECTION 8. INTERCONNECTION
SECTION 9. MEASUREMENT OF ELECTRIC ENERGY
SECTION 10. CHANGE IN LAW
SECTION 11. METHOD OF PAYMENT
SECTION 12. FORCE MAJEURE
SECTION 13. EVENTS OF DEFAULT
SECTION 14. WAIVER
SECTION 15. CONCILIATION AND ARBITRATION
SECTION 16. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
SECTION 17. LIABILITY OF PARTIES
SECTION 18. ASSIGNMENT
SECTION 19. AMENDMENT OF CONTRACT
SECTION 20. LANGUAGE
SECTION 21. NOTICES
SECTION 22. APPLICABLE LAW
SECTION 23. SEVERABILITY
(i)
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SECTION 24. ENTIRE AGREEMENT
SECTION 25. NO THIRD PARTY BENEFICIARIES
SECTION 26. CONSTRUCTION
APPENDIX A PRICING
APPENDIX B POINTS OF INTERCONNECTION
APPENDIX C TECHNICAL LIMITS
APPENDIX D CAPACITY TEST PROCEDURES
(ii)
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This Power Purchase and Sale Contract (this "Contract") is entered into as
of April 26, 1996, by and between JIAOZUO ALUMINUM MILL ("Purchaser") and
JIAOZUO WAN FANG POWER COMPANY LIMITED ("Seller").
RECITALS
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A. Seller intends to construct, finance, own, manage, operate and maintain
a coal-fired electric generating facility to be located in Jiaozuo City, Henan
Province, China, consisting of two 125 megawatt coal-fired electric generating
units.
B. Seller wishes to make available and sell and Purchaser desires to
receive and purchase electricity from the Facility.
C. In consideration of the premises and of the mutual covenants and
agreements set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
AGREEMENT
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SECTION 1
DEFINITIONS AND EXPLANATION OF TERMS
As used in this Contract (including the Appendices hereto), the following
capitalized terms (in the English version hereof) and underlined terms (in the
Chinese version hereof) shall have the meanings set forth below.
"BANKRUPTCY" means, with respect to a party, (i) a party makes a general
assignment for the benefit of its creditors; (ii) a party takes any action for
its winding-up or liquidation or for the appointment of a receiver, trustee or
similar officer of it or of any of its revenues and assets; or (iii) a party
consents to any of the actions described in clause (ii) being taken against it.
"BUSINESS DAY" means any day on which Bank of China are open for business
in Jiaozuo City, Henan Province, China.
"CHANGE IN LAW" has the meaning given such term in Section 10.
"COMMERCIAL OPERATION DATE" or "COD" means either or both of the Unit One
COD and the Unit Two COD.
"CONSTRUCTION CONTRACT" means the Contract for Engineering,
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Procurement and Construction Services to be entered into for the design,
engineering and construction of the Facility.
"COORDINATION COMMITTEE" has the meaning given that term in Section 5.8.
"DISPATCH CONTRACT" has the meaning given that term in Section 3.
"DOLLAR" or "$" means the lawful currency of the United States of America.
"ENERGY PAYMENT" means the Energy Payment described in Appendix A.
"FACILITY" means the coal-fired electric generating facility to be
constructed, financed, owned and operated by Seller and located in Jiaozuo City,
Henan Province, China consisting of two coal boilers and two steam turbine
generating units each with an expected capacity of approximately 125 megawatts
and an aggregate expected capacity of approximately 250 megawatts as well as all
associated fuel handling and transport and generation equipment and components.
"FACILITY SITE" means that real property located in Jiaozuo City, Henan
Province, China on which the Facility is to be located.
"FORCE MAJEURE" means any of the following events, which cause either or
both of the parties to be unable to perform its or their obligations under this
Contract: war, hostility, public disturbance, strikes, other labor disputes and
work stoppages, failure or interruption of transportation or other utilities,
epidemic, fire, flood, earthquake, storm, tidal wave or other acts of nature,
and all other similar events beyond the control of the parties affected thereby.
"GOVERNMENTAL INSTRUMENTALITY" means the government of the People's
Republic of China or any province, municipality or other political subdivision,
instrumentality, ministry, department, agency, court, authority, corporation
which has authority to exercise governmental functions or commission under the
direct or indirect control of any such body.
"GRID" means the power grid under the control of the Henan Electric Power
Corporation.
"HEPC" means the Henan Electric Power Corporation.
"JOINT VENTURE CONTRACT" means the Cooperative Joint Venture Contract for
the Jiaozuo Wan Fang Power Company Limited between Purchaser and Jiaozuo Power
Partners, L.P.
"MINIMUM TAKE" means (i) for the period beginning on the Unit One Testing
Date and ending on the date immediately preceding the Unit Two
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[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
Testing Date, the kilowatt-hour amount equal to the product of (x) [***]
kilowatts multiplied by (y) [***]% multiplied by (z) the number of hours in this
period; (ii) for the period beginning on the Unit Two Testing Date (if such date
is not the first day of a calendar year) and ending on the last day of the
calendar year in which the Unit Two Testing Date occurs, the kilowatt-hour
amount equal to the product of (x) [***] kilowatts multiplied by (y) [***]%
multiplied by (z) the number of hours in this period; and (iii) for each
calendar year thereafter, the kilowatt-hour amount equal to the product of (x)
[***] hours multiplied by (y) [***] kilowatts, except that for the calendar year
during which the expiration date of this Contract occurs (if such expiration
date is not the last day of such calendar year), the Minimum Take means the
kilowatt-hour amount equal to the product of (x) [***] kilowatts multiplied by
(y) [***]% multiplied by (z) the number of hours in such calendar year prior to
the expiration date; provided that Seller may adjust the Minimum Take for any
year by adjusting the kilowatt numbers in clauses (i), (ii) and (iii) above so
long as Seller notifies Purchaser in writing of such adjustment at least
thirteen months before such adjustment takes effect. Purchaser may also request
Seller to adjust the Minimum Take for any calendar year, provided that Purchaser
makes such request at least thirteen months prior to the beginning of such
calendar year.
"NEW MILL" means Purchaser's aluminum production facility located at
Daiwang Zhen, Jiaozuo City, including the existing production lines with an
annual capacity of 40,000 tons of aluminum and any new aluminum production lines
to be added by Purchaser to such facility or any other facility.
"OLD MILL" means Purchaser's aluminum production facility located in the
city of Jiaozuo with an annual capacity of 13, 000 tons of aluminum.
"PERMIT" means any permit, license, approval, consent, waiver,
authorization or other requirement required in connection with the Project from
any Governmental Instrumentality under applicable laws or regulations.
"PERMIT EVENT" means (i) any Permit not being granted upon application
having been duly made; (ii) any Permit ceasing to remain in full force and
effect, or not being renewed upon application having been duly made or being
renewed upon terms and conditions which are less favorable to Seller than those
originally imposed; (iii) the attachment to any Permit subsequent to its grant
of any terms or conditions which adversely affect any of Seller's rights or the
performance by Seller of any of its obligations; or (iv) the requirement of any
Permit not required as of the date of this Contract.
"POINTS OF INTERCONNECTION" means the physical points on the Facility Site
as described in Appendix B at which interconnection is made between the Facility
and Purchaser, such points being subject to the requirements set out in Appendix
C.
"POWER PURCHASE AND SALE CONTRACT" means the Power Purchase and Sale
Contract between Seller and HEPC.
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"PROJECT" means the Facility, the Facility Site, and all other equipment
and property that may become part of either of the foregoing.
"PRUDENT ELECTRICAL PRACTICES" means those codes, rules and regulations
stipulated by the Ministry of Electric Power of the People's Republic of China
or other relevant Governmental Instrumentality in respect of power plant
operation and maintenance, control or other related matters. Where there are no
such codes, rules and regulations, "Prudent Electrical Practices" means those
practices that are generally accepted for use in the international electric
utility industry and commonly used in safe and prudent electric utility
engineering and operations to design, engineer, construct, test, operate and
maintain equipment.
"PURCHASER ENERGY PAYMENT" means the Energy Payment per kilowatt hour
described in Appendix A times the number of kilowatt hours delivered for the
relevant period as measured pursuant to Section 9.
"RATED CAPACITY" means the capacity (expressed in kilowatts (kW)) of the
two 125 megawatt units of the Facility to generate energy, as determined in a
completed performance test conducted for each such unit prior to its COD in
accordance with the test procedures contained in Appendix D.
"RMB" or "RENMINBI" means the lawful currency of the People's Republic of
China.
"SCHEDULED OUTAGE" means a planned interruption of the Facility's
generating capability that has been scheduled in advance and is for inspection,
testing, preventive maintenance, repairs or replacement.
"SHORTAGE PERIOD" has the meaning given such term in Section 7.2.
"TECHNICAL LIMITS" means the limits and constraints relating to the
operation and maintenance of the Facility, as described in Appendix C.
"TESTING DATE" means either or both of the Unit One Testing Date and the
Unit Two Testing Date.
"TESTING PERIOD" means, for each unit of the Facility, the period
commencing on the date on which, in the opinion of Seller and as set forth in a
certificate to be delivered by Seller to Purchaser, such unit is capable of
producing energy for sale to Purchaser (whether or not Purchaser has completed
construction of the interconnection described in Section 8.2) and ending on the
Commercial Operation Date for such unit.
"UNIT ONE COMMERCIAL OPERATION DATE" or "UNIT ONE COD" means the first date
following the Testing Period for the first unit of the Facility to be completed
on which such unit, in the opinion of Seller and as evidenced by the completion
of a performance test during the Testing Period, is capable of producing and
delivering, and does produce, energy for sale to Purchaser pursuant to the terms
and conditions of this Contract, as set forth in a certificate
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to be delivered by Seller to Purchaser.
"UNIT ONE TESTING DATE" means the date on which the Testing Period for the
first unit of the Facility to be completed commences.
"UNIT TWO COMMERCIAL OPERATION DATE" or "UNIT TWO COD" means the first date
following the Testing Period for the second unit of the Facility to be completed
on which such unit, in the opinion of Seller and as evidenced by the completion
of a performance test during the Testing Period, is capable of producing and
delivering, and does produce, energy for sale to Purchaser pursuant to the terms
and conditions of this Contract, as set forth in a certificate to be delivered
by Seller to Purchaser.
"UNIT TWO TESTING DATE" means the date on which the Testing Period for the
second unit of the Facility to be completed commences.
"UNSCHEDULED OUTAGE" means any interruption of the Seller's generating
capability that is not a Scheduled Outage except any interruption caused by
Seller in bad faith which results in damages to Purchaser.
SECTION 2
TERM OF CONTRACT
This Contract shall become effective upon signing by the parties. Unless
terminated pursuant to Section 13, this Contract shall continue in effect until
the date that is twenty three years after the Business License (as defined in
the Joint Venture Contract) is issued to Seller (including three years of
construction).
SECTION 3
CONDITIONS TO OBLIGATIONS
The obligations of Purchaser and Seller under this Contract are conditioned
upon (i) execution by Seller and the HEPC of the Power Purchase and Sale
Contract and of a mutually satisfactory dispatch and interconnection contract in
respect of the Facility (the "Dispatch Contract") and (ii) receipt of all
applicable approvals from all relevant Governmental Instrumentalities of the
electricity pricing formula set forth in Appendix A and, if required, of this
Contract, the Power Purchase and Sale Contract and the Dispatch Contract.
SECTION 4
SALE AND PURCHASE
4.1 (A) In accordance with the terms and conditions of this Contract, from
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and after the Unit One Testing Date, Seller agrees to sell, and Purchaser agrees
to purchase, all of the New Mill's and, after the completion of the connecting
lines between the Facility and the Old Mill, the Old Mill's electricity
requirements from the Facility (whether such lines will be built shall be
decided by Purchaser), provided, however, that (i) Seller shall not be obligated
to provide at any time more than the capacity number (in kilowatts) used to
calculate the Minimum Take; and (ii) Seller's obligations to sell energy to
Purchaser are subject to Seller's obligations under the Power Purchase and Sale
Contract. Purchaser may not purchase any electricity from any third party unless
and only to the extent the Facility is unable to provide all of the New Mill's
and, after the completion of the connecting lines between the Facility and the
Old Mill, the Old Mill's electricity requirements. If Purchaser anticipates any
material change in its demand for power, it shall notify Seller immediately.
Upon written request by Purchaser, Seller may (but shall not be obligated to)
adjust the capacity number (in kilowatts) used to calculate the Minimum Take.
From and after the Unit One Testing Date, Purchaser shall pay Seller for energy
by making Purchaser Energy Payments in accordance with (i) the Approval Reply
Concerning the Method for Calculating the Price for the Electricity Sold to the
Grid from Jiaozuo Wan Fang Power Company Limited (2x125MW Units) by the Henan
Provincial Pricing Bureau (Yu Jia Gong Zi No. 088 (1998)) including its
Appendix, Method for Calculating the Price for the Electricity Sold to the Grid
from Jiaozuo Wan Fang Power Company Limited (attached hereto as Appendix A) and
(ii) Section 11, provided that the price for energy sold hereunder shall be the
same as the price for energy sold to HEPC pursuant to the Power Purchase and
Sale Contract.
(B) The parties acknowledge that the minimum output of energy to be
purchased by Purchaser during any period shall not be less than the Minimum Take
applicable to that period. If for any reason (except a Force Majeure event
affecting Purchaser) Purchaser does not purchase the Minimum Take in any period,
Purchaser shall nevertheless be obligated to make Purchaser Energy Payments to
Seller in the amounts which would have been due had Purchaser purchased the
Minimum Take in such period, i.e., Purchaser shall still pay the Purchaser
Energy Payment in respect of the amount of such shortfall (assuming the Facility
would have operated at full Rated Capacity), provided that such Purchaser Energy
Payment shall not include any amounts in respect of the Fuel Charge (as defined
in Appendix A). The amount of such payment shall be calculated and made within
30 days after the end of the relevant period. If during the course of any period
it could be reasonably expected that Seller may have difficulty delivering the
Minimum Take as a result of Force Majeure or Change in Law, Seller shall have
the right to revise the power supply schedule already agreed to by Seller and
Buyer so as to permit Seller to deliver as much energy as possible in order to
achieve the Minimum Take.
(C) After the Unit Two Commercial Operation Date, Seller shall endeavor to
provide power to Purchaser constantly throughout the year, subject to the
Technical Limits, Prudent Electrical Practices and Seller's obligations under
the Power Purchase and Sale Contract and the Dispatch Contract.
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SECTION 5
OPERATION AND MAINTENANCE
5.1 Subject to the requirements in Section 4.1(A) and the Minimum Take
requirements in Section 4.1(B), (i) on or prior to July 31 of each year,
Purchaser shall provide Seller in writing with Purchaser's annual plan of power
demand (in both kilowatts and kilowatt hours) for the following year, and Seller
may, in consultation with Purchaser, modify such plan in writing on or prior to
November 30 of each year; (ii) on or prior to the first day of March, June,
September and December, Purchaser shall provide Seller in writing with
Purchaser's quarterly plan of power demand (in both kilowatts and kilowatt
hours) for the following quarter, and Seller may, in consultation with
Purchaser, modify such plan in writing on or prior to the last day of March,
June, September and December; and (iii) on or prior to the first day of each
month, Purchaser shall provide Seller in writing with Purchaser's monthly plan
of power demand (in both kilowatts and kilowatt hours) for the following month,
and Seller may, in consultation with Purchaser, modify such plan in writing on
or prior to the last day of each month.
5.2 Purchaser shall follow the plans (as modified by Seller) referred to in
clause 5.1. If Purchaser plans or anticipates any change exceeding + or - 3% of
such plans, Purchaser shall immediately submit a written application to Seller
for such planned or anticipated change. Seller shall make reasonable efforts to
satisfy Purchaser's application, having regard to, among other things,
Purchaser's needs, the Technical Limits, Prudent Electrical Practices and
Seller's obligations under the Power Purchase and Sale Contract and the Dispatch
Contract.
5.3 If there is any change in Purchaser's operation which has an unexpect-
ed material impact on Purchaser's power consumption, Purchaser shall immediately
notify Seller of such change and shall coordinate with Seller with a view to
minimizing any adverse effect of such change, provided, however, no such change
shall in any way affect Purchaser's obligation to purchase the Minimum Take or
its obligation to purchase all the New Mill's and, after the completion of the
connecting lines between the Facility and the Old Mill, the Old Mill's
electrical requirements from Seller as provided in Section 4.1(A).
5.4 Upon Seller's request, Purchaser shall provide daily, monthly and annual
summary reports to Seller concerning Purchaser's operating condition and its
power consumption.
5.5 If, due to any reason including any reason involving the Grid, Seller is
unable to provide power in accordance with plans agreed upon by Seller and
Purchaser, Seller shall immediately notify Purchaser in writing.
5.6 Seller shall cause the Facility to be operated and maintained in accord-
ance with Prudent Electrical Practices and this Contract.
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5.7 Seller shall establish and provide to Purchaser a copy of the initial
technical limits 30 days prior to the expected Unit One Testing Date and shall
notify Purchaser immediately in writing of any change to the technical limits.
5.8 The parties shall establish a coordination committee (the "Coordination
Committee"), consisting of two representatives from each party. Responsibilities
of the Coordination Committee shall include coordination between the parties on
such issues as the construction of the Facility, the connection of the Facility
with Purchaser, Purchaser's power consumption plan and Seller's Scheduled
Outages and Unscheduled Outages. The Coordination Committee shall meet on a
regular basis. If either party notifies the other party that it wishes to hold a
meeting of the Coordination Committee in addition to the regular meetings, the
parties shall hold such a meeting as soon as practical.
SECTION 6
OUTAGES
6.1 Seller may schedule a Scheduled Outage at any time so long as
Seller provides Purchaser with a 30 days prior written notice. In the event that
a Scheduled Outage is caused by any action or omission of the Grid and it is not
feasible to provide such 30 days prior written notice, Seller shall provide to
Purchaser a written notice with respect to the Scheduled Outage as soon as
practicable.
6.2 Seller shall provide Purchaser with an estimate of the nature, duration
and scope of any Scheduled Outage.
6.3 As the need for any Unscheduled Outage is determined, Seller shall
promptly provide Purchaser with an estimate of the nature, duration and scope of
such outage. Seller will not be considered in default under this Contract as a
result of any Unscheduled Outage.
6.4 After the Unit Two Testing Date, if an outage occurs with respect of
both units of the Facility, Seller shall immediately notify Purchaser. Upon
Purchaser's request, Seller shall apply to HEPC to provide power to Purchaser
pursuant to agreement already reached between Purchaser and HEPC. In the event
that HEPC agrees to provide power to Purchaser, Seller shall, pursuant to
arrangements to be made between the parties hereto, transmit to Purchaser power
purchased by Purchaser from HEPC by using Seller's connecting lines with the
Grid. In the event that HEPC refuses to provide power to Purchaser, Seller shall
not have any liability.
SECTION 7
EMERGENCIES
7.1 Seller shall provide Purchaser with a copy of the emergency procedure
agreed to by Seller and HEPC for the Facility at least 30 days before
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the Unit One Testing Date.
7.2 Seller shall, during any period of shortage of energy that
Purchaser sustains (a "Shortage Period"), at the request of Purchaser, use all
reasonable efforts to supply such energy as the Facility is able to generate
during such period within the Technical Limits and in accordance with Prudent
Electrical Practices. If a Scheduled Outage would occur at the same time as a
Shortage Period, Seller shall, upon the request of Purchaser, use all reasonable
efforts to reschedule the Scheduled Outage or, if the Scheduled Outage has
begun, restore energy production as soon as possible.
SECTION 8
INTERCONNECTION
8.1 Energy produced by Seller and sold to Purchaser pursuant to this
Contract shall be made available and delivered by Seller to Purchaser at the
Point of Interconnection.
8.2 Purchaser shall at its own expense design, construct, control,
operate and own all interconnection equipment located beyond the Point of
Interconnection. Such interconnection will be completed and capable of
transmitting electricity at least 150 days prior to the Unit One Testing Date.
The cost of additions or changes to any of Purchaser's substations,
transformers, transmission lines, or any other portions of Purchaser as a result
of Purchaser's purchase of electricity under this Contract or other changes
required by Purchaser shall be borne entirely by Purchaser. Purchaser shall not
be liable for obtaining power to commission and energize the Facility.
8.3 Seller shall be responsible at its own expense for the engineering,
design and construction of the interconnection from the Facility to the Point of
Interconnection. Seller shall provide two Points of Interconnection 150 days
prior to the Unit One Testing Date and a third Point of Interconnection 150 days
prior to the Unit Two Testing Date. All these three points shall be hot
stand-bys to one another.
8.4 Purchaser shall provide to Seller within 90 days after the execution of
this Contract a report with respect to the level of harmonics produced by its
rectifying equipment. If the level of harmonics exceeds that specified by the
power industry, Purchaser shall purchase and install at its own cost needed
harmonic filtering equipment. The harmonics content should comply with the
Electrical Energy Quality and Public Grid's Harmonics promulgated by the State
Technology Monitoring Bureau in 1993 or the latest applicable regulations on
harmonics content.
8.5 As soon as the initial testing of the first unit of the Facility
is completed, Purchaser shall, at its cost, change the 110 kV lines which supply
power to Purchaser from the Grid at the time of the execution of this Contract
over to the Point of Interconnection so that the Facility can supply power to
Purchaser directly starting from the Unit One Testing Date. Such lines are
further described in Appendix B.
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SECTION 9
MEASUREMENT OF ELECTRIC ENERGY
9.1 All measurements of energy delivered by Seller to Purchaser shall be
made at various outlet lines at the high-voltage side of the Point of
Interconnection by suitable kilowatt and dual-direction active and reactive
power kilowatt-hour meters. Seller shall install, own and operate two sets of
meters in conformity with Purchaser's metering standards and operating
procedures and Prudent Electrical Practices (except that Purchaser shall be
responsible for reading the meters at midnight 12 o'clock on the last day of
each month with representatives of Seller being present). Purchaser's
representative shall sign a written statement of each meter reading at the time
of reading the meters. One set of such meters will be the primary meters and the
other set will be the back-up meters. Readings on the primary meters will be the
measurement of energy delivered. Testing, calibrating and recalibrating of
metering equipment will be in accordance with Prudent Electrical Practices and
performed jointly by representatives of Purchaser and Seller under the
supervision and direction of the electric energy measurement authority of Henan
Province, China. Neither Seller nor Purchaser may change the metering facilities
for the Facility without the consent of the other party.
9.2 If either party disputes a meter's accuracy or condition, it shall so
advise the other party in writing. The other party shall, within 15 days after
receiving such notice, advise the disputing party in writing as to its position
concerning the meter's accuracy. If the parties are unable to resolve their
disagreement, then they shall engage either the electric energy measurement
authority of Henan Province, China or an unaffiliated, qualified third party to
test the meter. Should the meter be found in good order and registering
accurately (within the standard set forth in Section 9.4), the disputing party
shall bear the cost of inspection; otherwise the cost shall be borne by the
owner of the meter.
9.3 Seller agrees to repair and recalibrate any malfunctioning meter at its
own expense as soon as reasonably possible.
9.4 If the primary meter used to measure energy fails to register, the
back-up meter will be used to measure energy. If the difference in measurements
made by the primary meter and the back-up meter exceeds 0.5 percent of the
energy measured by the primary meter in any month, the meters shall be repaired
and recalibrated and an adjustment shall be made correcting all measurements
made by the inaccurate or defective meter for the amount of the inaccuracy in
that month, in the following manner:
(A) As may be agreed upon by the parties, or
(B) In the event that the parties cannot agree on the amount of the
adjustment necessary to correct the measurements made by any inaccurate or
defective meter, the parties shall use the back-up meter, if installed and
10
<PAGE>
registering accurately, to determine the amount of such inaccuracy, provided,
however, that such meter is tested in the same manner as the primary meter. In
the event that the back-up meter is also found to be inaccurate by more than 0.5
percent, then the parties shall use the Purchaser's meter on the far end of the
interconnection line, if such meter is believed by the parties to be operating
properly, adjusted for reasonable line losses. In the event there is not
agreement as to the accuracy of this set of meters, the parties shall estimate
the amount of the necessary adjustment referring to operating data maintained in
the Facility's control system.
(C) In the event the parties cannot agree on the actual period during
which the inaccurate measurements were made, the period for which the
measurements are to be adjusted shall be the last one-half of the period from
the last previous test of the meter.
(D) To the extent the adjustment period covers a period of deliveries
for which payment has already been made by Purchaser, Seller shall use the
corrected measurements to recompute the amount due and Seller or Purchaser, as
applicable, shall make up the difference between the paid and recomputed
amounts. Payment of such difference by the owing party shall be made not later
than 30 days after such party receives notice of the amount due. If such payment
is not made in full prior to the end of this 30-day period, a late fee will be
payable by the owing party equal to 0.04% of such unpaid amount for each day in
the first 60 days such amount remains unpaid and equal to 0.08% for each day
thereafter. Any payment of such unpaid amounts shall be applied first to payment
of the late payment interest charge and then to the principal amount
outstanding.
SECTION 10
CHANGE IN LAW
If a Change in Law occurs which requires new capital expenditures for the
Project, increases Seller's operating costs of the Project, imposes restrictions
upon Seller's operation of the Project which deny Seller the full economic
benefit of this Contract or interferes with Seller's performance of its
obligations hereunder, the price of energy shall be adjusted and submitted for
approval pursuant to the formula set forth in Appendix A so as to place Seller
in the same economic position as if such Change in Law had not occurred. A
certificate of Seller setting forth the basis for determination of such payment
adjustment shall be delivered to Purchaser. As used herein, "Change in Law"
shall mean any Permit Event, any change in any law, statute, ordinance, rule,
regulation or Prudent Electrical Practices (including the adoption of any new
law, statute, ordinance, rule, regulation or Prudent Electric Practices) or
interpretation thereof by any Governmental Instrumentality from those in effect
on the date of execution of this Contract, or any prohibition or acts by
government or public
11
<PAGE>
agency which causes either or both of the parties to be unable to perform its or
their obligations hereunder.
SECTION 11
METHOD OF PAYMENT
11.1 On or before the fifth Business Day of each calendar month beginning
with the first full calendar month after the Unit One Testing Date, Seller shall
submit to Purchaser a billing statement showing the amount payable by Purchaser
hereunder as Purchaser Energy Payments, and the calculation thereof, with
respect to the immediately preceding month. Purchaser shall pay such amounts
within 20 calendar days after Purchaser's receipt of the billing statement.
Payment shall be made by transfer to Seller's account in a bank to be designated
by Seller.
11.2 Notwithstanding the foregoing, if a Purchaser Energy Payment is not
paid in full to Seller on or before the close of business on the date due, a
late fee will be payable by Purchaser equal to 0.04% of such unpaid amount for
each day in the first sixty days such amount remains unpaid or equal to 0.08%
for each day thereafter. Any payments of such unpaid amount shall be applied
first to payment of any late payment interest charge and then to the principal
amount outstanding.
11.3 In the event Purchaser disputes all or any portion of any
billing statement, Purchaser shall nevertheless pay the full amount when due and
shall give written notice of the dispute to Seller. Such notice shall identify
the disputed bill and contain a detailed statement of the amount and nature of
the dispute. No adjustment shall be made for disputed amounts unless notice is
given together with a detailed statement of the claim. A billing statement shall
be deemed final and not subject to dispute by Purchaser if Purchaser has not
delivered a notice disputing such billing statement within three months after
Purchaser's receipt of such billing statement. Seller shall give prompt
consideration to any dispute and shall notify Purchaser of its position within
30 days following receipt of Purchaser's written notice. If Seller shall not
have responded to Purchaser within such 30 day period, Seller shall be deemed to
have accepted Purchaser's position. Upon final determination of the correct
amount and all necessary adjustments, any overpayment by Purchaser (together
with interest thereon at a rate of 0.04% per day), shall be credited to
Purchaser in the monthly billing statement next submitted to Purchaser.
11.4 All payments under this Contract shall be made in Renminbi.
SECTION 12
FORCE MAJEURE
12
<PAGE>
12.1 If a party is wholly or partially unable to perform its obligations
arising under this Contract due to Force Majeure, the party claiming Force
Majeure shall give the other party written notice describing the Force Majeure
event together with a certificate stating that such party is wholly or partially
unable to perform its obligations under this Contract as a result of such Force
Majeure event.
12.2 If, as a result of Force Majeure, a party is rendered wholly or
partially unable to perform its obligations under this Contract, that party
shall be excused to the extent so affected; provided that:
(A) the suspension of performance shall be of no greater scope and of
no longer duration than is required by the Force Majeure event;
(B) no obligations under this Contract which shall have arisen before
the Force Majeure event shall be excused as a result of the Force Majeure event;
(C) no obligations to make payment shall be excused as a result of the
Force Majeure event; and
(D) the party claiming Force Majeure shall use its reasonable efforts
to remedy its inability to perform.
SECTION 13
EVENTS OF DEFAULT
13.1 Purchaser may give a notice of termination of this Contract upon the
occurrence and continuance of any of the following events of default:
(A) Bankruptcy of Seller;
(B) Seller abandons the Project for a period of 12 consecutive months;
or
(C) Seller fails to perform any of its material obligations under this
Contract which continues unremedied for 30 days after notice from Purchaser (or
if such failure cannot be remedied within 30 days, such longer period not to
exceed six months as may be reasonably necessary to remedy such failure);
provided, however, that Purchaser may not terminate this Contract as a result of
any event listed above which is caused directly or indirectly by any action or
omission by Purchaser, HEPC, any Governmental Instrumentality or any entity
party to a Project Contract (as defined in the Joint Venture Contract)
(including breach by Purchaser of its obligations under this Contract, breach by
HEPC of its obligations under the Power Purchase and Sale Contract and breach by
the coal supplier of the coal supply contract for the Project).
13
<PAGE>
13.2 Seller may give a notice of termination of this Contract upon
the occurrence and continuance of any of the following events of default:
(A) Bankruptcy of Purchaser;
(B) a Permit Event;
(C) any Governmental Instrumentality fails to perform or repudiates
any of its obligations under any of the documents set forth in Section 3 or any
Permit;
(D) any Governmental Instrumentality expropriates or threatens to
expropriate Seller or any assets or rights of Seller or takes other action that
adversely affects the enjoyment by Seller of its rights, or the performance by
Seller of any of its obligations under this Contract;
(E) Purchaser fails to pay when due any amount payable by Purchaser
under this Contract;
(F) Purchaser fails to perform any of its material obligations (other
than payment obligations referred to in clause (E) above) under this Contract
which continues unremedied for 30 days after notice from Seller; or
(G) any Governmental Instrumentality imposes restrictions prohibiting
or materially limiting Seller's or its principals' ability to repatriate profits
or revenues from the Project outside China.
13.3 Any termination notice shall specify the event of default giving rise to
the termination notice. Following the termination notice, the parties shall
consult for a period of up to 90 days as to what steps shall be taken. At the
expiration of the 90 day period and unless the parties shall have otherwise
agreed or the event of default giving rise to the termination notice shall have
been remedied, the party having given the termination notice may terminate this
Contract by giving written notice to the other party, whereupon this Contract
shall terminate on the date specified for termination in such notice.
13.4 In the event of any breach or default under this Contract other than a
default referred to in Section 13.1, Purchaser shall not be relieved of any of
its liabilities or obligations hereunder, including its obligation to make
Purchaser Energy Payments whether becoming due before or after such breach or
default and to pay any past due amounts.
13.5 Nothing in this Section 13 shall preclude Seller from exercising its
rights under Section 10, if applicable, or any other rights or remedies
hereunder. The rights upon default provided herein are cumulative and not
exclusive of any other rights upon default available under Chinese law; provided
that neither party shall have any right to terminate this Contract except as
expressly provided in this Section 13.
14
<PAGE>
SECTION 14
WAIVER
Failure by either party to exercise any of its rights under this Contract
shall not constitute a waiver of such rights. Neither party shall be deemed to
have waived any right resulting from any failure to perform by the other party
unless it has made such waiver specifically in writing.
SECTION 15
CONCILIATION AND ARBITRATION
15.1 Dispute Settlement. Except as otherwise provided in this Contract,
the parties shall attempt to settle any dispute arising out of or in connection
with this Contract through friendly consultation between themselves. Such
consultation shall begin promptly after one party has delivered to the other
party a written request for such consultations. If the parties do not reach an
amicable solution within 30 days of receipt of such notice, either party may,
with notice to the other party, submit the dispute for binding arbitration in
Beijing, China, under the auspices of the China international Economic and Trade
Arbitration Commission ("CIETAC") in accordance with the CIETAC Arbitration
Rules as in effect on the date of this Contract (except to the extent this
Section 15 specifies different procedures, in which event such procedures shall
govern the arbitration, including the selection of the arbitration panel). The
parties agree that any dispute arising out of or in connection with this
Contract shall be submitted exclusively to arbitration as provided in this
Section 15. Any settlement and award rendered through such an arbitration
proceeding shall be final and binding upon the parties if the decision is in
writing and contains a reasoned analysis explaining the arbitrators' reasons for
rendering the award. The parties agree that the arbitral award may be enforced
against the parties or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof. Accordingly, the parties irrevocably agree that any action to enforce
such judgment may be instituted wherever appropriate and each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have now or hereafter to the laying of the venue or the jurisdiction or
the convenience of the forum of any such action and irrevocably submits
generally and unconditionally to the jurisdiction of any such court in any such
action.
15.2 Language. The arbitration shall be conducted in English and Chinese and
the arbitration shall refer to the English and Chinese texts of this Contract.
15.3 Arbitrators. There shall be three arbitrators. The parties shall
each select one arbitrator within 30 days after giving or receiving the demand
for arbitration. The two arbitrators selected by the parties shall select the
third arbitrator. If a party does not appoint an arbitrator who has consented to
15
<PAGE>
participate within 30 days after the selection of the first arbitrator, the
relevant appointment shall be made by the arbitrating body. The costs of the
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.
15.4 Submission to Jurisdiction; Defenses. Each party is subject to civil
and commercial law and irrevocably agrees that this Contract is a commercial
rather than a public or governmental activity and neither party is entitled to
claim immunity from legal proceedings with respect to itself or any of its
assets on the grounds of sovereignty or 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. To the extent that a
party or any of its assets has or hereafter may acquire any right to immunity
from any set-off, legal proceedings, attachment or execution of judgment on the
grounds of sovereignty or otherwise, each party hereby irrevocably waives such
right to immunity in respect of its obligations arising under or relating to
this Contract.
15.5 Continued Performance. The parties hereby agree to carry out their
respective obligations under this Contract, including without limitation all
payment obligations, notwithstanding any pending dispute or controversy.
SECTION 16
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
16.1 Seller represents and warrants as follows:
(A) it is a Sino-foreign cooperative joint venture duly organized and
existing under the laws of the People's Republic of China;
(B) it has full legal right, power and authority to execute, deliver
and perform this Contract and the contracts and documents referred to in this
Contract to which it is a party;
(C) it has taken all appropriate and necessary action to authorize the
execution, delivery and performance of this Contract and the contracts and
documents referred to in this Contract to which it is a party; and
(D) it has obtained all consents, approvals and authorizations
necessary for the valid execution, delivery and performance of this Contract and
the contracts and documents referred to in this Contract to which it is a party,
provided, however, that Appendix A to this Contract is subject to the approval
of the relevant price authorities before this Contract shall become effective.
16.2 Purchaser represents and warrants as follows:
(A) it is a Chinese enterprise duly organized and existing under the
laws of the People's Republic of China;
16
<PAGE>
(B) it has full legal right, power and authority to execute, deliver
and perform this Contract and the contracts and documents referred to in this
Contract to which it is a party;
(C) it has taken all appropriate and necessary action to authorize the
execution, delivery and performance of this Contract and the contracts and
documents referred to in this Contract to which it is a party; and
(D) it has obtained all consents, approvals and authorizations
necessary for the valid execution, delivery and performance of this Contract and
the contracts and documents referred to in this Contract to which it is a party,
provided, however, that Appendix A to this Contract is subject to the approval
of the relevant price authorities before this Contract shall become effective.
16.3 If from time to time a financial institution which is proposing to
extend loan facilities or credit support to Seller reasonably requests any
financial or other information, Purchaser will promptly provide such
information.
SECTION 17
LIABILITY OF PARTIES
17.1 Seller shall indemnify Purchaser and its officers, principals,
directors, agents and employees from and against all direct damages to the
extent arising from third party claims and losses for damage to property or
injury to or death of persons arising from the negligence, bad faith or willful
misconduct of Seller or its officers, principals, directors, agents or employees
in connection with the performance of Seller's duties under this Contract or
Seller's breach of this Contract. Such indemnity shall not apply to the extent
that any claims or losses are caused by or arise out of any intentional or
negligent act or omission, bad faith or willful misconduct by Purchaser or its
officers, principals, directors, employees or agents.
17.2 Purchaser shall indemnify Seller and its principals, officers,
directors, employees and agents from and against all direct damages to the
extent arising from third party claims and losses for damage to property or
injury to or death of persons arising from the negligence, bad faith or willful
misconduct of Purchaser or its officers, principals, directors, employees or
agents in connection with the performance of Purchaser's duties under this
Contract or Purchaser's breach of this Contract. Such indemnity shall not apply
to the extent that any claims or losses are caused by or arise out of any
intentional or negligent act or omission, bad faith or willful misconduct by
Seller or its principals, officers, directors, employees or agents.
17.3 Neither party nor its officers, principals, directors, employees or
agents shall be liable to the other party or its officers, principals,
directors, employees or agents for claims for incidental, consequential or
indirect
17
<PAGE>
damages to persons or property, whether arising in tort, contract or otherwise,
connected with or resulting from performance or non-performance under this
Contract.
SECTION 18
ASSIGNMENT
Assignments by either party of this Contract shall require the consent of
the other party, provided, however, such consent shall not be unreasonably
withheld.
SECTION 19
AMENDMENT OF CONTRACT
This Contract may be amended or modified only by an instrument in writing
signed by both parties.
SECTION 20
LANGUAGE
This Contract will be executed in four counterparts in both Chinese and
English versions. Each version shall be of equal force and effect.
SECTION 21
NOTICES
Any notice required or permitted to be given hereunder shall be in writing
and shall be (i) personally delivered, (ii) transmitted by postage prepaid
registered mail (airmail if international), (iii) transmitted by internationally
recognized courier service, or (iv) transmitted by facsimile to the parties as
follows, as elected by the party giving such notice:
(A) In the case of Purchaser, to:
Jiaozuo Aluminum Mill
160 Tanan Road
Jiaozuo
Henan
China
18
<PAGE>
Attention: Mr. Jin Bao Qing
Facsimile No.: (86-391) 393-3739
Telephone No.: (86-391) 393-3993
(B) In the case of Seller, to:
Jiaozuo Wan Fang Power Company Limited
Daiwang Zhen, Jiaozuo
Henan, China
Attention:
Facsimile No.:
Telephone No.: 391-329-3144
and
AES China Generating Co., Ltd.
9/F, Allied Capital Resources Building
32-38 Ice House Street
Central, Hong Kong
Attention: Paul Hanrahan
Facsimile No.: 852-2530-1673
Telephone No.: 852-2842-5111
Except as otherwise specified herein, all notices and other communications shall
be deemed to have been duly given on (i) the date of receipt if delivered
personally, (ii) 7 days after the date of posting if transmitted by mail, (iii)
3 days after delivery to the courier if transmitted by courier, or (iv) the date
of transmission with confirmed answer back if transmitted by facsimile,
whichever shall first occur. Any party may change its address for purposes
hereof by notice to the other party. All notices hereunder shall be in English
and Chinese.
SECTION 22
APPLICABLE LAW
This Contract shall be governed by and construed in accordance with the
laws of the People's Republic of China.
SECTION 23
SEVERABILITY
The invalidity of any provision or portion of this Contract will not affect
the validity of the remainder of this Contract.
19
<PAGE>
SECTION 24
ENTIRE AGREEMENT
This Contract contains the complete agreement between the parties with
respect to the matters contained herein and supersedes all other agreements,
whether written or oral, with respect to the matters contained herein.
SECTION 25
NO THIRD PARTY BENEFICIARIES
Except as otherwise expressly stated herein, this Contract is intended to
be solely for the benefit of Purchaser and Seller and their respective
successors and permitted assigns and is not intended to and shall not confer any
rights or benefits on any third party not a signatory hereto.
SECTION 26
CONSTRUCTION
Unless otherwise stated, all references made in this Contract to "Sections"
and "Appendices" shall refer, respectively, to Sections of, and Appendices to,
this Contract. References herein to this Contract include the Appendices hereto.
References herein to "month" and "year" shall mean calendar month and calendar
year, respectively, unless otherwise specified.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused
this Contract to be executed by their duly authorized representatives as of the
day and year written above.
JIAOZUO WAN FANG POWER COMPANY LIMITED
By: /s/ Edward C. Hall, III
----------------------------------
Name:
Title:
JIAOZUO ALUMINUM MILL
By: /s/ [SIGNATURE ILLEGIBLE]
----------------------------------
Name:
Title:
20
<PAGE>
APPENDIX A
Unless otherwise defined herein, capitalized terms (in the English version
hereof) and underlined terms (in the Chinese version hereof) used but not
defined in this Appendix A shall have the same meanings set forth in the Power
Purchase and Sale Contract to which this Appendix A is attached.
ENERGY PAYMENT ("SP") shall be expressed in RMB per kilowatt hour. For each Base
Output Period, as herein defined, the Energy Payment shall be calculated
annually on the date which is 60 days prior to the end of each Calendar Year and
shall be in accordance with the following formula:
SP = (PC + FC + EC + QC + TC) X [1 + VAT RATE X (1 + OT RATE)]
(1) "PC" IS THE UNIT PRODUCTION CHARGE WHICH SHALL BE EXPRESSED IN RMB PER
KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
PC = RMB Operation and Maintenance Costs + ($ Operation and Maintenance Costs
x Conversion Factor)
-------------------------------------------------------------------------
Base Output
+ Annual Depreciation Amount + Fuel Expenses
------------------------------------------
Base Output
Where:
The Unit Production Charge does not include VAT credit.
"OPERATION AND MAINTENANCE COSTS" shall be, for each period referred to in the
definition of Base Output below (each such period, a "Base Output Period"), all
RMB and Dollar operation and maintenance costs of the Project for such period
and shall include, without limitation, all costs of salaries, wages and benefits
for the Chinese and foreign employees (including trade union contributions and
relevant allocations not covered in After Tax Enterprise Profit Retention),
management (including the management of Seller), maintenance, water, ash
disposal, materials, dispatch service fee, environmental compliance, insurance
premiums, land use, administration, ratable funding for major maintenance
overhauls, interest on working capital, costs associated with the exchange of
RMB for Dollars, and amortization of deferred expenses*. All costs will include
estimates of price escalation for the applicable period.
Operation and Maintenance Costs will be separated into costs budgeted to be
actually incurred and payable in RMB (RMB Operation and Maintenance Costs) and
in Dollars ($ Operation and Maintenance Costs) to be used in the formula for the
Unit Production Charge.
A-1
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
* Deferred expenses will include costs to establish Seller, etc.
"FUEL EXPENSES" shall be, for each Base Output Period, budgeted amounts for all
fuel costs, including all costs of fuel supply, transportation, exchange and
storage, necessary for the Facility to produce the Base Output. All costs will
include estimates of price escalation for the applicable period. The budgets for
Fuel Expenses will include assumptions of the coal price per ton, the plant
average consumption rate (in grams/kWh), coal quality and heat content and
assumptions of the oil price per ton, oil quality and heat content and the
annual oil consumption determined by the number of annual unit starts and other
operations requiring oil.
"Annual Depreciation Amount" =
---------------------------
(Fixed Asset Total Book Value) x Classified Depreciation Rate;
Where:
"FIXED ASSET TOTAL BOOK VALUE" equals the total project cost to complete the
Project including all compensation made in accordance with the construction
contracts, construction management costs, any taxes or fees imposed on the
Project, working capital, debt service reserves and all development fees
unanimously agreed to by the investors in Seller. Also included in the total
Project cost which is required for the completion of Project construction will
be the interest accrued on all debt during construction and other relevant
expenses.
"CLASSIFIED DEPRECIATION RATE" shall mean the depreciation rate determined
according to the classified service life provided in the relevant document.
"BASE OUTPUT" shall mean (i) for the period beginning on the Unit One Testing
Date and ending on the date immediately preceding the Unit Two Testing Date, the
kilowatt-hour amount equal to the product of the Rated Capacity of the first
unit of the Facility multiplied by [***]% multiplied by the number of hours in
this period; (ii) for the period beginning on the Unit Two Testing Date (if such
date is not the first day of a calendar year) and ending on the last day of the
calendar year in which the Unit Two Testing Date occurs, the kilowatt-hour
amount equal to the product of the Rated Capacity of the two units of the
Facility multiplied by [***]% multiplied by the number of hours in this period;
and (iii) for each calendar year thereafter, the kilowatt-hour amount equal to
the product of the Rated Capacity of the two units of the Facility multiplied by
[***] hours, except that for the calendar year during which the expiration date
of the Power Purchase and Sale Contract occurs (if such expiration date is not
the last day of such calendar year), the Base Output shall be the kilowatt-hour
amount equal to the product of the Rated Capacity of the two units of the
Facility multiplied by [***]% multiplied by the number of hours in such calendar
year prior to the expiration date.
"CONVERSION FACTOR" shall equal
A-2
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
<TABLE>
Average Conversion Rate t - Average Conversion Rate m - 1)
<S> <C>
Average Conversion Rate m x [1 + (---------------------------------------------------------]
Average Conversion Rate m - 1
</TABLE>
where:
m shall mean the 30 day period immediately preceding the date
of calculation
t shall mean the 12 month period immediately prior to the date
of calculation
m - 1 shall mean the 30 day period immediately preceding the 12
month period prior to the date of calculation
"AVERAGE CONVERSION RATE" shall equal the average of the Conversion Rate for
each day over the applicable period.
"CONVERSION RATE" shall mean the closing selling exchange rate of Renminbi for
Dollars published by the People's Bank of China (or any successor entity
publishing such rate).
At such time as the Renminbi is freely convertible and an international market
based forward rate is available, the Conversion Factor shall be set equal to
such quoted forward exchange rate of Renminbi for Dollars which is six months
from the beginning of each Base Output Period.
(2) "FC" IS THE UNIT PROFIT CHARGE BEFORE TAX WHICH SHALL BE EXPRESSED IN
RMB PER KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
FC = Unit Profit
-----------
1 - Income Tax Rate
Unit Profit = (Foreign Party's Annual Profit x Conversion Factor)
--------------------------------------------------- +
Base Output
Chinese Party's Annual Profit
----------------------------- +
Base Output
(Annual $ Debt Service Payment x Conversion Factor) + Annual RMB Debt Service
Payment
-----------------------------------------------------------------------------
Base Output -
Annual Depreciation Loan Repayment After Tax Enterprise Profit Retention
- ---------------------------------- + -------------------------------------
Base Output Base Output
Where:
"ANNUAL PROFIT" shall be the annual amounts listed on Exhibit A-1 which have
been calculated to yield a projected [***]% financial internal rate of return on
registered capital over the joint venture term of Seller.
"REGISTERED CAPITAL CONTRIBUTION" shall be equal to the total registered
capital, denominated in RMB, provided by Seller's joint venture partners through
the Unit Two Commercial Operation Date.
A-3
<PAGE>
"ANNUAL $ DEBT SERVICE PAYMENT" shall be an annual Dollar payment in an amount
equal to the annual amount required to pay all principal on the Dollar
denominated debt financing for the Project.
"ANNUAL RMB DEBT SERVICE PAYMENT" shall be an annual RMB payment in an amount
equal to the annual amount required to pay all principal on the RMB denominated
debt financing for the Project.
"AFTER TAX ENTERPRISE PROFIT RETENTION" shall be all amounts required pursuant
to law to be set aside by Seller from the after-tax profits of the Project
deposited in the Reserve Fund, Enterprise Development Fund and the Bonus and
Welfare Fund for Staff and Workers, and any other similar funds required to be
set up and funded by any other government entity in the future. After Tax
Enterprise Profit Retention for each annual period shall be determined for each
Base Output Period based on the amount of after-tax profits estimated by Seller
for each such year.
"INCOME TAX RATE" shall be the actual percentage tax rate that will be applied
to Seller in the Base Output Period.
"ANNUAL DEPRECIATION LOAN REPAYMENT" shall equal that portion of the annual
depreciation fund which is used to pay the principal of the debt.
(3) "OT RATE" IS THE OTHER TAX RATE WHICH SHALL BE THE RATE PAYABLE IN
RESPECT OF ANY TAXES THAT SELLER IS OBLIGATED TO PAY OTHER THAN VAT ON
PRODUCTION SALES. DETAILS OF THIS COMPONENT WOULD BE ESTABLISHED UPON THE
INTRODUCTION OF THOSE NEW TAXES. **
** Purchaser recognizes that the intent of this provision is to cause the Energy
Payment to Seller to be adjusted so that the net amount received after payment
of all taxes and fees other than VAT equals the net amount that would have been
received had the taxes and fees not been imposed.
(4) "VAT RATE" SHALL BE THE ACTUAL VAT RATE APPLICABLE TO SELLER'S SALES
REVENUES AT BASE OUTPUT.
(5) "EC" IS THE UNIT FINANCIAL CHARGE WHICH SHALL BE EXPRESSED IN RMB PER
KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
EC = Financial Espenses
------------------
Base Output
"FINANCIAL EXPENSES" shall mean, during the operation period of the Project, the
interest of the loan for the construction of, and expenses incurred in financing
the operations of the Project, projected on an annual basis. Financial Expenses
related to the Dollar debt shall include interest, related fees and withholding
taxes
A-4
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
(grossed up for taxes payable by Seller) imposed pursuant to relevant Chinese
regulations on the Dollar denominated debt financing for the Project multiplied
by Conversion Factor, that is:
Financial Expenses related to the $ Debt Financing x Conversion Factor
RMB Financial Expenses shall include interest and related fees on RMB
denominated debt financing for the Project.
(6) "QC" IS THE UNIT NET NON-BUSINESS EXPENDITURES WHICH SHALL BE EXPRESSED
IN RMB PER KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING
FORMULA:
QC = Non-Business Expenditures - Non-Business Income
-----------------------------------------------
Base Output
"NON-BUSINESS EXPENDITURES" and "NON-BUSINESS INCOME" mean the amount of
expenditures and income, respectively, of Seller which have no direct relation
to the operation of the Project.
(7) THE UNIT TRUE-UP CHARGE ("TC") SHALL BE EXPRESSED IN RMB PER KILOWATT
HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
TC = Cost Recovery Balance at the Time of Price Calculation x (1 + True-up
Charge Interest Rate/2)
---------------------------------------------------------------------
Base Output
Where:
"COST RECOVERY BALANCE" for any given month, shall equal to Cost Recovery
Balance for the previous month x (1 + True-up Charge Interest Rate/12)
+ Cost Recovery for the month
- - Cost Recovery Balance that has been absorbed in the Energy Payment, pursuant
to a power price adjustment provided in this section.
"TRUE-UP CHARGE INTEREST RATE" shall equal [***]% per annum.
"COST RECOVERY" shall equal the difference between the total sum of the actual
costs and the total sum of the budgeted costs of all of the components contained
in this price formula, which reflects economic changes in the underlying
assumptions contained in the price formula. Factors which affect components in
this price formula include, but are not limited to: (i) fuel price changes
affecting Fuel Expenses; (ii) raw material price changes affecting Operation and
Maintenance Costs; (iii) changes in the Conversion Rate affecting the Conversion
Factor; (iv) changes to the type or rate of taxes affecting the Other Tax Rate,
Income Tax Rate or VAT Rate, (v) changes in various funds which Seller is
A-5
<PAGE>
required to maintain affecting After Tax Enterprise Profit Retention; (vi)
policy-related changes in expenditures (including a Change in Law) affecting any
of the price formula components; and (vii) any other costs not within the
control of Seller (except for increased costs due solely to operations in excess
of the Base Output).
References in this Appendix A to annual periods shall be deemed to refer to the
actual length of the relevant Base Output Period.
A-6
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
APPENDIX A1
PROFIT
Chinese Party Registered Capital 132,911 (000 RMB)
Foreign Party Registered Capital 37,364 (000 USD)
Registered Capital Contribution Date 1-Jun-96
Commercial Operation Date 1-Jan-98
Return on Investment During Construction = Registered Capital Contributed X
([***]^L)
Where: L equals the number of years of construction
Annual Profit = (Registered Capital contributed + Return on Investment
During Construction) x IRR Factor
Where:
1
IRR Factor = 20 -------------
E 1/(1 + [***])^n
n=1
- -------------------------------------------------------------------------------
Foreign Party Annual Profit Chinese Party Annual Profit
Year Amount (000 USD) Year Amount (000 RMB)
[***] [***] [***] [***]
The above numbers shall be adjusted to reflect the actual amount of Registered
Capital Contributed, the actual date of Registered Capital Contribution and the
actual Commercial Operation Date.
<PAGE>
APPENDIX B
POINT OF INTERCONNECTION
The Point of Interconnection shall be at the 110 KV transmission frame
towers located inside the south fence of the Seller's 110 KV switchyard.
<PAGE>
APPENDIX C
TECHNICAL LIMITS
1. ELECTRICAL SYSTEM CHARACTERISTICS
(a) Voltage: 110 kV (equipment should be suitable for grid
voltage variations from 107 kV - 126 kV). During
plant operation, Seller's main transformer output
voltage shall coordinate with Purchaser's receiving
voltage.
(b) Power Factor: Power factor operating range at the 110 kV
Point of Interconnection is 0.85 (lag) to 1.0
power factor.
(c) Grid Frequency: 50 Hertz - 2.0 Hertz to + 1.0 Hertz
2. INDIVIDUAL GENERATING UNIT CHARACTERISTICS. The values contained in
this Appendix C are based on achieving an installed capacity of 115
MW net per Unit. (Parasitic load has been deducted)
(a) Capacity of Generating Equipment.
(i) 147 MVA generating capacity
(ii) 125 MW continuous capacity
(iii) Generator main transformers are rated 150 MVA.
(b) START-UP TIMES. Start-up times are from boiler light-off to full
load, and do not include time for mobiliation and purging, for which
fifteen (15) minutes minimum is required. Start-up times are minimum.
Normal Operation
----------------
Coal Start from ambient 10 hours
Warm Start after 40 hours 7 hours
shutdown
Hot Start after 10 hours 4 hours
shutdown
(c) Maximum Loading and Deloading Rates.
------------------------------------
Mode Load Ramp Rate
(MW) (MW/min.)
---- ---- ---------
Cold 0-20 0.17
Cold 20-125 0.39
<PAGE>
APPENDIX D
CAPACITY TEST PROCEDURES
Capacity Test to establish the Rated Capacity of a Unit will be the same
test as described in Appendix D (Capacity Test Prodecures) of the Power Purchase
and Sale Contract between Seller and Henan Electric Power Corporation. Purchaser
agrees to accept the result of such capacity test.
Exhibit 10.30
POWER PURCHASE AND SALE CONTRACT
BETWEEN
JIAOZUO WAN FANG POWER COMPANY LIMITED
AND
HENAN ELECTRIC POWER CORPORATION
Dated as of April 25, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Section 1. Definitions And Explanation Of Terms..........................1
Section 2. Term Of Contract..............................................5
Section 3. Conditions To Obligations.....................................5
Section 4. Sale And Purchase.............................................5
Section 5. Operation And Maintenance.....................................7
Section 6. Outages.......................................................7
Section 7. Emergencies...................................................7
Section 8 Interconnection...............................................8
Section 9. Measurement Of Electric Energy................................8
Section 10. Change Of Law.................................................10
Section 11. Method Of Payment.............................................10
Section 12. Force Majeure.................................................11
Section 13. Events Of Default.............................................12
Section 14. Waiver........................................................13
Section 15. Conciliation And Arbitration..................................14
Section 16. Representations, Warranties And Undertakings..................15
Section 17. Liability Of Parties..........................................16
Section 18. Assignment....................................................17
Section 19. Amendment Of Contract.........................................17
Section 20. Language......................................................17
Section 21. Notices.......................................................17
Section 22. Applicable Law................................................18
Section 23. Severability..................................................18
Section 24. Entire Agreement..............................................19
Section 25. No Third Party Beneficiaries..................................19
Appendix A Pricing
Appendix B Point Of Interconnection
Appendix C Technical Limits
Appendix D Capacity Test Procedures
(i)
<PAGE>
POWER PURCHASE AND SALE CONTRACT
This Power Purchase and Sale Contract (this "Contract") is entered into as
of April 25, 1996, by and between HENAN ELECTRIC POWER CORPORATION ("Purchaser")
and JIAOZUO WAN FANG POWER COMPANY LIMITED ("Seller").
RECITALS
--------
A. Seller intends to construct, finance, own, manage, operate and maintain
a coal-fired electric generating facility to be located in Jiaozuo City, Henan
Province, China, consisting of two 125 megawatt coal-fired electric generating
units.
B. Seller wishes to make available and sell and Purchaser desires to
receive and purchase a portion of the energy produced by the Facility.
SECTION 1
DEFINITIONS AND EXPLANATION OF TERMS
As used in this Contract, the following capitalized terms (in the English
version hereof) and underlined terms (in the Chinese version hereof) shall have
the meanings set forth below.
"ALUMINUM COMPANY" means Jiaozuo Aluminum Mill, a Chinese enterprise
registered with the Jiaozuo Municipal Administration of Industry and Commerce
with its principal office located at 31 Tanan Road, Jiaozuo City, Henan
Province, China.
"ALUMINUM MILL POWER SUPPLY CONTRACT" means the contract between Seller and
the Aluminum Company pursuant to which Seller agrees to sell, and the Aluminum
Company agrees to purchase, a portion of the energy produced by the Facility.
"BANKRUPTCY" means, with respect to a party, (i) a party makes a general
assignment for the benefit of its creditors; (ii) a party takes any action for
its winding-up or liquidation or for the appointment of a receiver, trustee or
similar officer of it or of any of its revenues and assets; or (iii) a party
consents to any of the actions described in clause (ii) being taken against it.
"BUSINESS DAY" means any day on which the Industrial and Commercial Bank of
China is open for business in Jiaozuo City, Henan Province, China.
1
<PAGE>
"CHANGE IN LAW" has the meaning given such term in Section 10.
"COMMERCIAL OPERATION DATE" or "COD" means either or both of the Unit One
COD and the Unit Two COD.
"CONSTRUCTION CONTRACT" means the Contract for Engineering, Procurement and
Construction Services to be entered into for the design, engineering and
construction of the Facility.
"DISPATCH CONTRACT" has the meaning given that term in Section 3.
"DOLLAR" or "$" means the lawful currency of the United States of America.
"EMERGENCY" means a condition on Purchaser's electrical system under which
continued deliveries of energy from the Facility will materially harm the safe
and reliable operation of such system or result in disruption of its electric
service or create a danger to persons or property.
"ENERGY PAYMENT" means the Energy Payment described in Appendix A.
"FACILITY" means the coal-fired electric generating facility to be
constructed, financed, owned and operated by Seller and located in Jiaozuo City,
Henan Province, China consisting of two coal boilers and two steam turbine
generating units each with an expected capacity of approximately 125 megawatts
and an aggregate expected capacity of approximately 250 megawatts as well as all
associated fuel handling and transport and generation equipment and components.
"FACILITY SITE" means the land located in Jiaozuo City, Henan Province,
China on which the Facility is to be located.
"FORCE MAJEURE" means any of the following events, which causes either or
both of the parties to be unable to perform its or their obligations under this
Contract: war, hostility, public disturbance, strikes, other labor disputes and
work stoppages, failure or interruption of transportation or other utilities,
epidemic, fire, flood, earthquake, storm, tidal wave or other acts of nature,
and all other similar events beyond the control of the parties affected thereby.
"GOVERNMENTAL INSTRUMENTALITY" means the government of the People's
Republic of China or any province, municipality or other political subdivision,
instrumentality, ministry, department, agency, court, authority, corporation
which has authority to exercise governmental functions or commission under the
direct or indirect control of any such body.
"GRID" means the power grid under the control of the Henan Electric
2
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
Power Corporation.
"JOINT VENTURE CONTRACT" means the Cooperative Joint Venture Contract for
the Jiaozuo Wan Fang Power Company Limited between the Aluminum Company and
Jiaozuo Power Partners, L.P. ("Jiaozuo Power").
"MINIMUM TAKE" means (i) for the period beginning on the Unit One Testing
Date and ending on the date immediately preceding the Unit Two Testing Date, the
kilowatt-hour amount equal to the sum of all energy produced by the second 125
megawatt unit of the Facility to be completed and delivered to Purchaser plus
the product of (x) [***] megawatts multiplied by (y) [***]% multiplied by (z)
the number of hours in this period; (ii) for the period beginning on the Unit
Two Testing Date (if such date is not the first day of a calendar year) and
ending on the last day of the calendar year in which the Unit Two Testing Date
occurs, the kilowatt-hour amount equal to the product of (x) [***] megawatts
multiplied by (y) [***]% multiplied by (z) the number of hours in this period;
and (iii) for each calendar year thereafter, the kilowatt-hour amount equal to
the product of (x) [***] megawatts multiplied by (y) [***] hours, except that
for the calendar year during which the expiration date of this Contract occurs
(if such expiration date is not the last day of such calendar year), the Minimum
Take means the kilowatt-hour amount equal to the product of (x) [***] megawatts
multiplied by (y) [***]% multiplied by (z) the number of hours in such calendar
year prior to the expiration date; provided that Seller may adjust the Minimum
Take for any year by adjusting the megawatt numbers in clauses (i), (ii) and
(iii) above so long as Seller notifies Purchaser in writing of such adjustment
at least twelve months before such adjustment takes effect. In addition, the
Minimum Take shall be adjusted pursuant to Section 4.1 (C) hereof or Section 4.2
of the Dispatch Contract.
"PERMIT" means any permit, license, approval, consent, waiver,
authorization or other requirement required in connection with the Project from
any Governmental Instrumentality under applicable laws or regulations.
"PERMIT EVENT" means (i) any Permit not being granted upon application
having been duly made; (ii) any Permit ceasing to remain in full force and
effect, or not being renewed upon application having been duly made or being
renewed upon terms and conditions which are less favorable to Seller than those
originally imposed; (iii) the attachment to any Permit subsequent to its grant
of any terms or conditions which adversely affect any of Seller's rights or the
performance by Seller of any of its obligations; or (iv) the requirement of any
Permit not required as of the date of this Contract.
"POINT OF INTERCONNECTION" means the physical point as described in
Appendix B at which interconnection is made between the Facility and Purchaser's
transmission facilities.
"PROJECT" means the Facility, the Facility Site, and all other equipment
and property that may become part of either of the foregoing.
3
<PAGE>
"PRUDENT ELECTRICAL PRACTICES" means those codes, rules and regulations
stipulated by the Ministry of Electric Power of the People's Republic of China,
other relevant Governmental Instrumentality or other relevant bodies duly
authorized by the government in respect of power plant operation and
maintenance, control or other related matters. Where there are no such codes,
rules and regulations, "Prudent Electrical Practices" means those practices that
are generally accepted for use in the international electric utility industry
and commonly used in safe and prudent electric utility engineering and
operations to design, engineer, construct, test, operate and maintain equipment.
"PURCHASER ENERGY PAYMENT" means the Energy Payment per kilowatt hour
described in Appendix A times the number of kilowatt hours delivered for the
relevant period as measured pursuant to Section 9.
"RATED CAPACITY" means the capacity (expressed in kilowatts (kW)) of the
two 125 megawatt units of the Facility to generate energy, as determined in a
completed performance test conducted for each such unit prior to its COD in
accordance with the test procedures contained in Appendix D.
"RMB OR RENMINBI" means the lawful currency of the People's Republic of
China.
"SCHEDULED OUTAGE" means a planned interruption of the Facility's
generating capability that has been scheduled in advance in the manner provided
in the Dispatch Contract and is for inspection, testing, preventive maintenance,
repairs or replacement.
"TECHNICAL LIMITS" means the limits and constraints relating to the
operation and maintenance of the Facility, as described in Appendix C.
"TESTING DATE" means either or both of the Unit One Testing Date and the
Unit Two Testing Date.
"TESTING PERIOD" means, for each unit of the Facility, the period
commencing on the date on which, in the opinion of Seller and as set forth in a
certificate to be delivered by Seller to Purchaser, such unit is capable of
producing energy for sale to Purchaser and ending on the Commercial Operation
Date for such unit.
"UNIT ONE COMMERCIAL OPERATION DATE" or "UNIT ONE COD" means the first date
following the Testing Period for the first unit of the Facility to be completed
on which such unit, in the opinion of Seller and as evidenced by the completion
of a performance test during the Testing Period, is capable of producing and
delivering, and does produce, energy for sale to Purchaser pursuant to the terms
and conditions of this Contract, as set forth in a certificate to be delivered
by Seller to Purchaser.
"UNIT ONE TESTING DATE" means the date on which the Testing
4
<PAGE>
Period for the first unit of the Facility to be completed commences.
"UNIT TWO COMMERCIAL OPERATION DATE" or "UNIT TWO COD" means the first date
following the Testing Period for the second unit of the Facility to be completed
on which such unit, in the opinion of Seller and as evidenced by the completion
of a performance test during the Testing Period, is capable of producing and
delivering, and does produce, energy for sale to Purchaser pursuant to the terms
and conditions of this Contract, as set forth in the certificate to be delivered
by Seller to Purchaser.
"UNIT TWO TESTING DATE" means the date on which the Testing Period for the
second unit of the Facility to be completed commences.
SECTION 2
TERM OF CONTRACT
This Contract shall become effective upon signing by the parties. Unless
terminated pursuant to Section 13, this Contract shall continue in effect until
the date that is twenty three years after the Business License (as defined in
the Joint Venture Contract) is issued to Seller.
SECTION 3
CONDITIONS TO OBLIGATIONS
The obligations of Purchaser and Seller under this Contract are conditioned
upon (i) execution of a mutually satisfactory Dispatch and Interconnection
Contract in respect of the Facility (the "Dispatch Contract") between Seller and
Dispatcher (as defined therein) and (ii) receipt of all applicable approvals
from all relevant Governmental Instrumentalities of the electricity pricing
formula set forth in Appendix A and, if required, of this Contract and the
Dispatch Contract.
SECTION 4
SALE AND PURCHASE
4.1 (A) In accordance with the terms and conditions of this Contract,
Seller agrees to sell, and Purchaser agrees to purchase, energy produced and
delivered to the Point of Interconnection by the Facility. From and after the
Unit One Testing Date, Purchaser shall pay Seller for energy by making Purchaser
Energy Payments in accordance with Section 11 and Appendix A.
(B) The parties acknowledge that the minimum output of energy to be
5
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
purchased by Purchaser will not be less than the Minimum Take. If for any reason
(except a Force Majeure event affecting Purchaser) Purchaser does not purchase
the Minimum Take in any period, Purchaser shall nevertheless be obligated to
make Purchaser Energy Payments to Seller in the amounts which would have been
due had Purchaser purchased the Minimum Take in such period, i.e., Purchaser
shall still pay the Purchaser Energy Payment in respect of the amount of such
shortfall, provided that when calculating such shortfall Purchaser Energy
Payment, the Energy Payment shall not include any amounts in respect of the Fuel
Charge (as defined in Appendix A). The amount of such shortfall payment shall be
calculated and made within 30 days after the end of a relevant Minimum Take
period. If during the course of any period it could be reasonably expected that
Seller may have difficulty delivering the Minimum Take as a result of Force
Majeure, Change in Law or an Emergency, Purchaser shall, in cooperation with
Dispatcher, revise the dispatch schedule so as to permit Seller to deliver as
much energy as possible in order to achieve the Minimum Take.
(C) If Seller is unable to deliver capacity to Purchaser pursuant to the
dispatch curves specified in the dispatch schedule because the Aluminum Company
is taking capacity (in kilowatts) in excess of its entitlement specified in the
Aluminum Mill Power Supply Contract, such excess amount of energy (i.e., the
amount of energy in kilowatt hours equal to the product of the excess capacity
multiplied by the number of hours the Aluminum Company is taking such excess
capacity) taken by the Aluminum Company shall be deducted in computing the
Minimum Take. Seller shall provide one month prior written notice to Purchaser
of any planned increase or decrease in the Aluminum Company's use of electricity
exceeding 10 megawatts.
(D) Seller may sell and Purchaser may purchase energy in addition to the
Minimum Take at the price set forth in Appendix A. Starting from the Unit One
Testing Date, for each kilowatt-hour of such additional energy purchased by
Purchaser above the Minimum Take, Seller shall pay an Excess Generation Fee to
Purchaser equal to [***]% of the profits, as specified in the pricing formula,
prior to paying income taxes from sales of energy to Purchaser above and beyond
the Minimum Take. If the Seller is required by relevant government authorities
to pay any taxes, including income taxes, or any amount put into the reserve
funds, including income taxes on the amounts put into the reserve funds, on
account of the amount paid to Purchaser as an Excess Generation Fee, then the
total of such taxes and reserve fund payments shall be subtracted in calculating
the Excess Generation Fee. The amount of such payment by Seller to Purchaser
shall be calculated and such payment shall be made within 60 days after the end
of each Minimum Take period. If such payment is not made in full to Purchaser
prior to the end of this 60-day period, a late fee will be payable by Seller
equal to 0.04% of such unpaid amount for each day in the first 60 days such
amount remains unpaid and equal to 0.08% for each day thereafter. Any payment of
such unpaid amounts shall be applied first to payment of the late payment
interest charge and then to the principal amount outstanding.
6
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
4.2 To the extent energy is generated prior to the Unit One Testing Date, Seller
agrees to sell and Purchaser agrees to purchase all such energy. Purchaser shall
pay the Purchaser Energy Payment for such energy. Seller shall pay to Purchaser
a per kWh fee for coordinating receipt of such energy equal to RMB [***] yuan
within 20 days after the end of any month in which such energy is purchased. If
such payment is not made in full to Purchaser prior to the end of this 20-day
period, a late fee will be payable by Seller equal to 0.04% of such unpaid
amount for each day in the first 60 days such amount remains unpaid and equal to
0.08% for each day thereafter. Any payment of such unpaid amounts shall be
applied first to payment of the late payment interest charge and then to the
principal amount outstanding.
4.3 Purchaser may reject and choose not to make any payment for energy that is
produced by Seller in willful violation of the Dispatch Contract.
SECTION 5
OPERATION AND MAINTENANCE
5.1 Seller shall be subject to dispatch by Dispatcher pursuant to the Dispatch
Contract.
5.2 Seller shall cause the Facility to be operated and maintained in accordance
with Prudent Electrical Practices and this Contract.
5.3 Seller shall establish and provide to Purchaser a copy of the initial
Technical Limits 30 days prior to the expected Unit One Testing Date and shall
notify Purchaser as soon as practicable of any change to the Technical Limits.
SECTION 6
OUTAGES
Provisions regarding outages of the Facility and power supply for starting,
testing and restarting the Facility shall be specified in the Dispatch Contract.
To the extent Seller needs power from Purchaser, Purchaser shall provide such
power to Seller pursuant to a power sale agreement to be entered into between
Seller and Purchaser.
SECTION 7
EMERGENCIES
Emergencies shall be handled pursuant to provisions of the Dispatch
Contract.
7
<PAGE>
SECTION 8
INTERCONNECTION
8.1 Energy produced by Seller and sold to Purchaser pursuant to this Contract
shall be made available and delivered by Seller to Purchaser at the Point of
Interconnection.
8.2 Purchaser shall design, control, operate and own all interconnection
equipment (necessary for its system to accept capacity and energy from Seller)
located at the Point of Interconnection. Such equipment shall be designed and
constructed pursuant to an interconnection construction contract. Seller shall
provide Purchaser a loan in the amount of [RMB 82 million] yuan for such work.
The term and interest rate for such loan, together with other relevant
provisions, shall be specified in a separate agreement to be entered into
between Seller and Purchaser. Such interconnection will be completed and capable
of transmitting electricity at least 150 days prior to the Unit One Testing
Date. The cost of additions or changes to any of Purchaser's substations,
transformers, transmission lines, or any other portions of Purchaser's electric
system as a result of Purchaser's load additions or other changes required by
Purchaser shall be borne entirely by Purchaser. Purchaser shall also cooperate
with Seller and the Aluminum Company in order to switch the lines which
currently provide power to the Aluminum Company to Seller's lines so that the
Aluminum Company can accept power directly from Seller starting from the Unit
One Testing Date.
8.3 Subject to the provisions of the Construction Contract, Seller shall be
responsible at its own expense for the engineering, design and construction of
the interconnection from the Facility to the Point of Interconnection.
8.4 Purchaser shall be responsible at its own expense for making all changes to
its system necessary to accept capacity and energy from Seller. Purchaser shall
at its own expense design, construct, maintain and repair all interconnection
facilities from its system to the Point of Interconnection.
SECTION 9
MEASUREMENT OF ELECTRIC ENERGY
9.1 All measurements of energy delivered by Seller to Purchaser shall be made at
various outlet lines at the high-voltage side of the Point of Interconnection by
suitable kilowatt and dual-direction active and reactive power kilowatt-hour
meters. Seller shall install, own and operate two sets of meters in conformity
with Purchaser's metering standards and operating procedures and Prudent
Electrical Practices (except that Purchaser shall be responsible for reading the
meters at midnight 12 o'clock on the last day of each month with
8
<PAGE>
representatives of Seller being present). Purchaser's representative shall sign
a written statement of each meter reading at the time of reading the meters. One
set of such meters will be the primary meters and the other set will be the
back-up meters. Readings on the primary meters will be the measurement of energy
delivered. Testing, calibrating and recalibrating of metering equipment will be
in accordance with Prudent Electrical Practices and performed jointly by
representatives of Purchaser and Seller under the supervision and direction of
the electric energy measurement authority of Henan Province, China. Neither
Seller nor Purchaser may change the metering facilities for the Facility without
the consent of the other party.
9.2 If either party disputes a meter's accuracy or condition, it shall so advise
the other party in writing. The other party shall, within 15 days after
receiving such notice, advise the disputing party in writing as to its position
concerning the meter's accuracy. If the parties are unable to resolve their
disagreement, then they shall engage either the electric energy measurement
authority of Henan Province, China or an unaffiliated, qualified third party to
test the meter. Should the meter be found in good order and registering
accurately (within the standard set forth in Section 9.4), the disputing party
shall bear the cost of inspection; otherwise the cost shall be borne by the
owner of the meter.
9.3 Seller agrees to repair and recalibrate any malfunctioning meter at its own
expense as soon as reasonably possible.
9.4 If the primary meter used to measure energy fails to register, the back-up
meter will be used to measure energy. If the difference in measurements made by
the primary meter and the back-up meter exceeds 0.5 percent of the energy
measured by the primary meter in any month, the meters shall be repaired and
recalibrated and an adjustment shall be made correcting all measurements made by
the inaccurate or defective meter for the amount of the inaccuracy in that
month, in the following manner:
(A) As may be agreed upon by the parties, or
(B) In the event that the parties cannot agree on the amount of the
adjustment necessary to correct the measurements made by any inaccurate or
defective meter, the parties shall use the back-up meter, if installed and
registering accurately, to determine the amount of such inaccuracy, provided,
however, that such meter is tested in the same manner as the primary meter. In
the event that the back-up meter is also found to be inaccurate by more than 0.5
percent, then the parties shall use the Purchaser's meter on the far end of the
interconnection line, if such meter is believed by the parties to be operating
properly, adjusted for reasonable line losses. In the event there is not
agreement as to the accuracy of this set of meters, the parties shall estimate
the amount of the necessary adjustment referring to operating data maintained in
the Facility's control system.
(C) In the event the parties cannot agree on the actual period during
9
<PAGE>
which the inaccurate measurements were made, the period for which the
measurements are to be adjusted shall be the last one-half of the period from
the last previous test of the meter.
(D) To the extent the adjustment period covers a period of deliveries
for which payment has already been made by Purchaser, Seller shall use the
corrected measurements to recompute the amount due and Seller or Purchaser, as
applicable, shall make up the difference between the paid and recomputed
amounts. Payment of such difference by the owing party shall be made not later
than 30 days after such party receives notice of the amount due. If such payment
is not made in full prior to the end of this 30-day period, a late fee will be
payable by the owing party equal to 0.04% of such unpaid amount for each day in
the first 60 days such amount remains unpaid and equal to 0.08% for each day
thereafter. Any payment of such unpaid amounts shall be applied first to payment
of the late payment interest charge and then to the principal amount
outstanding.
SECTION 10
CHANGE OF LAW
If a Change in Law occurs which requires new capital expenditures for the
Project, increases Seller's operating costs of the Project, imposes restrictions
upon Seller's operation of the Project which deny Seller the full economic
benefit of this Contract or interferes with Seller's performance of its
obligations hereunder, the price of energy shall be adjusted pursuant to the
formula set forth in Appendix A so as to place Seller in the same economic
position as if such Change in Law had not occurred. A certificate of Seller
setting forth the basis for determination of such payment adjustment shall be
delivered to Purchaser. As used herein, "Change in Law" shall mean any Permit
Event, any change in any law, statute, ordinance, rule, regulation or Prudent
Electrical Practices (including the adoption of any new law, statute, ordinance,
rule, regulation or Prudent Electric Practices) or interpretation thereof by any
Governmental Instrumentality from those in effect on the date of execution of
this Contract, or any prohibition or acts by government or public agency which
causes either or both of the parties to be unable to perform its or their
obligations hereunder.
SECTION 11
METHOD OF PAYMENT
11.1 On or before the fifth Business Day of each calendar month beginning with
the first full calendar month after the Unit One Testing Date, Seller shall
submit to Purchaser a billing statement showing the amount payable by Purchaser
hereunder as Purchaser Energy Payments, and the calculation thereof, with
respect to the immediately preceding month. Purchaser shall pay
10
<PAGE>
such amounts within 20 calendar days after Purchaser's receipt of the billing
statement. Payment shall be made by transfer to Seller's account in a bank to be
designated by Seller.
11.2 Notwithstanding the foregoing, if a Purchaser Energy Payment is not paid in
full to Seller on or before the close of business on the date due, a late fee
will be payable by Purchaser equal to 0.04% of such unpaid amount for each day
in the first sixty days such amount remains unpaid or equal to 0.08% for each
day thereafter. Any payments of such unpaid amount shall be applied first to
payment of any late payment interest charge and then to the principal amount
outstanding.
11.3 In the event Purchaser disputes all or any portion of any billing
statement, Purchaser shall nevertheless pay the full amount when due and shall
give written notice of the dispute to Seller. Such notice shall identify the
disputed bill and contain a detailed statement of the amount and nature of the
dispute. No adjustment shall be made for disputed amounts unless notice is given
together with a detailed statement of the claim. A billing statement shall be
deemed final and not subject to dispute by Purchaser if Purchaser has not
delivered a notice disputing such billing statement within three months after
Purchaser's receipt of such billing statement. Seller shall give prompt
consideration to any dispute and shall notify Purchaser of its position within
30 days following receipt of Purchaser's written notice. If Seller shall not
have responded to Purchaser within such 30 day period, Seller shall be deemed to
have accepted Purchaser's position. Upon final determination of the correct
amount and all necessary adjustments, any overpayment by Purchaser (together
with interest thereon at a rate of 0.04% per day), shall be credited to
Purchaser in the monthly billing statement next submitted to Purchaser.
11.4 All payments under this Contract shall be made in Renminbi.
SECTION 12
FORCE MAJEURE
12.1 If a party is wholly or partially unable to perform its obligations arising
under this Contract due to Force Majeure, the party claiming Force Majeure shall
give the other party written notice describing the Force Majeure event together
with a certificate stating that such party is wholly or partially unable to
perform its obligations under this Contract as a result of such Force Majeure
event.
12.2 If, as a result of Force Majeure, a party is rendered wholly or partially
unable to perform its obligations under this Contract, that party shall be
excused to the extent so affected; provided that:
(A) the suspension of performance shall be of no greater scope and of
no longer duration than is required by the Force Majeure event;
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<PAGE>
(B) no obligations under this Contract which shall have arisen before
the Force Majeure event shall be excused as a result of the Force Majeure event;
(C) no payment obligations shall be excused as a result of the Force
Majeure event; and
(D) the party claiming Force Majeure shall use its reasonable efforts
to remedy its inability to perform.
SECTION 13
EVENTS OF DEFAULT
13.1 Purchaser may give a notice of termination of this Contract upon the
occurrence and continuance of any of the following events of default:
(A) Bankruptcy of Seller;
(B) Seller abandons the Project for a period of 12 consecutive months;
or
(C) Seller fails to perform any of its material obligations under this
Contract which continues unremedied for 30 days after notice from Purchaser (or
if such failure cannot be remedied within 30 days, such longer period not to
exceed six months as may be reasonably necessary to remedy such failure);
provided, however, that Purchaser may not terminate this Contract as a result of
any event listed above which is caused directly or indirectly by any action or
omission by Purchaser or any Governmental Instrumentality (including breach by
Purchaser of its obligations under this Contract or breach by Dispatcher of its
obligations under the Dispatch Contract).
13.2 Seller may give a notice of termination of this Contract upon the
occurrence and continuance of any of the following events of default:
(A) Bankruptcy of Purchaser;
(B) a Permit Event;
(C) any Governmental Instrumentality fails to perform or repudiates
any of its obligations under any of the documents set forth in Section 3 or any
Permit;
(D) any Governmental Instrumentality expropriates or threatens to
expropriate Seller or any assets or rights of Seller or takes other action that
adversely affects the enjoyment by Seller of its rights, or the performance by
Seller of any of its obligations under this Contract;
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<PAGE>
(E) Purchaser fails to pay when due any amount payable by Purchaser
under this Contract;
(F) Purchaser fails to perform any of its material obligations (other
than payment obligations referred to in clause (E) above) under this Contract
which continues unremedied for 30 days after notice from Seller; or
(G) any Governmental Instrumentality imposes restrictions prohibiting
or materially limiting Seller's or its principals' ability to repatriate profits
or revenues from the Project outside China.
Nothing in this Section 13 shall preclude Seller from exercising its rights
under Section 10, if applicable, or any other rights or remedies hereunder.
13.3 Any termination notice shall specify the event of default giving rise to
the termination notice. Following the termination notice, the parties shall
consult for a period of up to 90 days as to what steps shall be taken. At the
expiration of the 90 day period and unless the parties shall have otherwise
agreed or the event of default giving rise to the termination notice shall have
been remedied, the party having given the termination notice may terminate this
Contract by giving written notice to the other party, whereupon this Contract
shall terminate on the date specified for termination in such notice.
13.4 Following termination of this Contract by Seller due to Purchaser's default
hereunder, Purchaser shall, to the extent permitted by law, transmit any energy
produced by Seller to any entity designated by Seller which is interconnected
with Purchaser. Purchaser shall be paid its reasonable costs for transmitting
such energy.
13.5 In the event of any breach or default under this Contract other than a
default referred to in Section 13.1, Purchaser shall not be relieved of any of
its liabilities or obligations hereunder, including its obligation to make
Purchaser Energy Payments whether becoming due before or after such breach or
default and to pay any past due amounts.
13.6 The rights upon default provided herein are cumulative and not exclusive of
any other rights upon default available under Chinese law; provided that neither
party shall have any right to terminate this Contract except as expressly
provided in this Section 13.
SECTION 14
WAIVER
Failure by either party to exercise any of its rights under this Contract
shall not constitute a waiver of such rights. Neither party shall be deemed to
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<PAGE>
have waived any right resulting from any failure to perform by the other party
unless it has made such waiver specifically in writing.
SECTION 15
CONCILIATION AND ARBITRATION
15.1 Dispute Settlement. Except as otherwise provided in this Contract, the
parties shall attempt to settle any dispute arising out of or in connection with
this Contract through friendly consultation between themselves. Such
consultation shall begin promptly after one party has delivered to the other
party a written request for such consultations. If the parties do not reach an
amicable solution within 30 days of receipt of such notice, either party may,
with notice to the other party, submit the dispute for binding arbitration in
Beijing, China, under the auspices of the China international Economic and Trade
Arbitration Commission ("CIETAC") in accordance with the CIETAC Arbitration
Rules as in effect on the date of this Contract (except to the extent this
Section 15 specifies different procedures, in which event such procedures shall
govern the arbitration, including the selection of the arbitration panel). The
parties agree that any dispute arising out of or in connection with this
Contract shall be submitted exclusively to arbitration as provided in this
Section 15. Any settlement and award rendered through such an arbitration
proceeding shall be final and binding upon the parties if the decision is in
writing and contains a reasoned analysis explaining the arbitrators' reasons for
rendering the award. The parties agree that the arbitral award may be enforced
against the parties or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof. Accordingly, the parties irrevocably agree that any action to enforce
such judgment may be instituted wherever appropriate and each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have now or hereafter to the laying of the venue or the jurisdiction or
the convenience of the forum of any such action and irrevocably submits
generally and unconditionally to the jurisdiction of any such court in any such
action.
15.2 Language. The arbitration shall be conducted in English and Chinese and the
arbitration shall refer to the English and Chinese texts of this Contract.
15.3 Arbitrators. There shall be three arbitrators. The parties shall each
select one arbitrator within 30 days after giving or receiving the demand for
arbitration. The two arbitrators selected by the parties 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 arbitrating body. The costs of the
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.
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<PAGE>
15.4 Submission to Jurisdiction; Defenses. Each party is subject to civil and
commercial law and irrevocably agrees that this Contract is a commercial rather
than a public or governmental activity and neither party is entitled to claim
immunity from legal proceedings with respect to itself or any of its assets on
the grounds of sovereignty or 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. To the extent that a party or any of
its assets has or hereafter may acquire any right to immunity from any set-off,
legal proceedings, attachment or execution of judgment on the grounds of
sovereignty or otherwise, each party hereby irrevocably waives such right to
immunity in respect of its obligations arising under or relating to this
Contract.
15.5 Continued Performance. The parties hereby agree to carry out their
respective obligations under this Contract, including without limitation all
payment obligations, notwithstanding any pending dispute or controversy.
SECTION 16
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
16.1 Seller represents and warrants as follows:
(A) it is a Sino-foreign cooperative joint venture duly organized and
existing under the laws of the People's Republic of China;
(B) it has full legal right, power and authority to execute, deliver
and perform this Contract and the contracts and documents referred to in this
Contract to which it is a party;
(C) it has taken all appropriate and necessary action to authorize the
execution, delivery and performance of this Contract and the contracts and
documents referred to in this Contract to which it is a party; and
(D) it has obtained all consents, approvals and authorizations
necessary for the valid execution, delivery and performance of this Contract and
the contracts and documents referred to in this Contract to which it is a party,
provided, however, that Appendix A to this Contract is subject to the approval
of the relevant price approval authorities before this Contract shall become
effective.
16.2 Purchaser represents and warrants as follows:
(A) it is a Chinese enterprise duly organized and existing under the
laws of the People's Republic of China;
(B) it has full legal right, power and authority to execute, deliver
and perform this Contract and the contracts and documents referred to in this
Contract to which it is a party;
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<PAGE>
(C) it has taken all appropriate and necessary action to authorize the
execution, delivery and performance of this Contract and the contracts and
documents referred to in this Contract to which it is a party; and
(D) it has obtained all consents, approvals and authorizations
necessary for the valid execution, delivery and performance of this Contract and
the contracts and documents referred to in this Contract to which it is a party,
provided, however, that Appendix A to this Contract is subject to the approval
of the relevant price approval authorities before this Contract shall become
effective.
16.3 If from time to time a financial institution which is proposing to extend
loan facilities or credit support to Seller reasonably requests any financial or
other information, Purchaser will promptly provide such information.
SECTION 17
LIABILITY OF PARTIES
17.1 Seller shall indemnify Purchaser and its officers, principals, directors,
agents and employees from and against all direct damages to the extent arising
from third party claims and losses for damage to property or injury to or death
of persons arising from the negligence, bad faith or willful misconduct of
Seller or its officers, principals, directors, agents or employees in connection
with the performance of Seller's duties under this Contract or Seller's breach
of this Contract. Such indemnity shall not apply to the extent that any claims
or losses are caused by or arise out of any intentional or negligent act or
omission, bad faith or willful misconduct by Purchaser or its officers,
principals, directors, employees or agents.
17.2 Purchaser shall indemnify Seller and its principals, officers, directors,
employees and agents from and against all direct damages to the extent arising
from third party claims and losses for damage to property or injury to or death
of persons arising from the negligence, bad faith or willful misconduct of
Purchaser or its officers, principals, directors, employees or agents in
connection with the performance of Purchaser's duties under this Contract or
Purchaser's breach of this Contract. Such indemnity shall not apply to the
extent that any claims or losses are caused by or arise out of any intentional
or negligent act or omission, bad faith or willful misconduct by Seller or its
principals, officers, directors, employees or agents.
17.3 Neither party nor its officers, principals, directors, employees or agents
shall be liable to the other party or its officers, principals, directors,
employees or agents for claims for incidental, consequential or indirect damages
to persons or property, whether arising in tort, contract or otherwise,
connected with or resulting from performance or non-performance under this
Contract.
16
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SECTION 18
ASSIGNMENT
Assignments by either party of this Contract shall require the consent of
the other party, provided, however, such consent shall not be unreasonably
withheld.
SECTION 19
AMENDMENT OF CONTRACT
This Contract may be amended or modified only by an instrument in writing
signed by both parties.
SECTION 20
LANGUAGE
This Contract will be executed in four counterparts in both Chinese and
English versions. Each version shall be of equal force and effect.
SECTION 21
NOTICES
Any notice required or permitted to be given hereunder shall be in writing
and shall be (i) personally delivered, (ii) transmitted by postage prepaid
registered mail (airmail if international), (iii) transmitted by internationally
recognized courier service, or (iv) transmitted by facsimile to the parties as
follows, as elected by the party giving such notice:
(A) In the case of Purchaser, to:
Henan Electric Power Corporation
No. 11 South Songshan Road
Zhengzhou, Henan, China 450052
Attention: Xu Xing Long
Facsimile No.: 86-371-790-5034
Telephone No.: 86-371-790-5015
17
<PAGE>
(B) In the case of Seller, to:
Jiaozuo Wan Fang Power Company Limited
Dai Wang Zheng
Jiaozuo City, Henan, China
Attention: Edward C. Hall III
Facsimile No.: N/A
Telephone No.: N/A
and
AES China Generating Co., Ltd.
9/F, Allied Capital Resources Building
32-38 Ice House Street
Central, Hong Kong
Attention: Paul Hanrahan
Facsimile No.: 852-2530-1673
Telephone No.: 852-2842-5111
Except as otherwise specified herein, all notices and other communications
shall be deemed to have been duly given on (i) the date of receipt if delivered
personally, (ii) 7 days after the date of posting if transmitted by mail, (iii)
3 days after delivery to the courier if transmitted by courier, or (iv) the date
of transmission with confirmed answer back if transmitted by facsimile,
whichever shall first occur. Any party may change its address for purposes
hereof by notice to the other party. All notices hereunder shall be in English
and Chinese.
SECTION 22
APPLICABLE LAW
This Contract shall be governed by and construed in accordance with the
laws of the People's Republic of China.
SECTION 23
SEVERABILITY
The invalidity of any provision or portion of this Contract will not affect
the validity of the remainder of this Contract.
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<PAGE>
SECTION 24
ENTIRE AGREEMENT
This Contract contains the complete agreement between the parties with
respect to the matters contained herein and supersedes all other agreements,
whether written or oral, with respect to the matters contained herein.
SECTION 25
NO THIRD PARTY BENEFICIARIES
Except as otherwise expressly stated herein, this Contract is intended to
be solely for the benefit of Purchaser and Seller and their respective
successors and permitted assigns and is not intended to and shall not confer any
rights or benefits on any third party not a signatory hereto.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused
this Contract to be executed by their duly authorized representatives as of the
day and year written above.
HENAN ELECTRIC POWER CORPORATION
By: /s/ [SIGNATURE ILLEGIBLE]
-----------------------------
Name:
Title:
JIAOZUO WAN FANG POWER COMPANY LIMITED
By: /s/ Edward C. Hall, III
----------------------------
Name:
Title:
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<PAGE>
APPENDIX A
----------
Unless otherwise defined herein, capitalized terms (in the English version
hereof) and underlined terms (in the Chinese version hereof) used but not
defined in this Appendix A shall have the same meanings set forth in the Power
Purchase and Sale Contract to which this Appendix A is attached.
Energy Payment ("SP") shall be expressed in RMB per kilowatt hour. For each Base
Output Period, as herein defined, the Energy Payment shall be calculated
annually on the date which is 60 days prior to the end of each Calendar Year and
shall be in accordance with the following formula:
SP = (PC + FC + EC + QC + TC) X [1 + VAT RATE X (1 + OT RATE)]
(1) "PC" IS THE UNIT PRODUCTION CHARGE WHICH SHALL BE EXPRESSED IN RMB PER
KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
PC = RMB Operation and Maintenance Costs + ($ Operation and Maintenance Costs
Costs x Conversion Factor)
---------------------------------------------------------------------------
Base Output
+ Annual Depreciation Amount + Fuel Expenses
------------------------------------------
Base Output
Where:
The Unit Production Charge does not include VAT credit.
"Operation and Maintenance Costs" shall be, for each period referred to in the
definition of Base Output below (each such period, a "Base Output Period"), all
RMB and Dollar operation and maintenance costs of the Project for such period
and shall include, without limitation, all costs of salaries, wages and benefits
for the Chinese and foreign employees (including trade union contributions and
relevant allocations not covered in After Tax Enterprise Profit Retention),
management (including the management of Seller), maintenance, water, ash
disposal, materials, dispatch service fee, environmental compliance, insurance
premiums, land use, administration, ratable funding for major maintenance
overhauls, interest on working capital, costs associated with the exchange of
RMB for Dollars, and amortization of deferred expenses*. All costs will include
estimates of price escalation for the applicable period.
Operation and Maintenance Costs will be separated into costs budgeted to be
actually incurred and payable in RMB (RMB Operation and Maintenance Costs) and
in Dollars ($ Operation and Maintenance Costs) to be used in the formula for the
Unit Production Charge.
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[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
* Deferred expenses will include costs to establish Seller, etc.
"Fuel Expenses" shall be, for each Base Output Period, budgeted amounts for all
fuel costs, including all costs of fuel supply, transportation, exchange and
storage, necessary for the Facility to produce the Base Output. All costs will
include estimates of price escalation for the applicable period. The budgets for
Fuel Expenses will include assumptions of the coal price per ton, the plant
average consumption rate (in grams/kWh), coal quality and heat content and
assumptions of the oil price per ton, oil quality and heat content and the
annual oil consumption determined by the number of annual unit starts and other
operations requiring oil.
"Annual Depreciation Amount" =
--------------------------
(Fixed Asset Total Book Value) x Classified Depreciation Rate;
Where:
"Fixed Asset Total Book Value" equals the total project cost to complete the
Project including all compensation made in accordance with the construction
contracts, construction management costs, any taxes or fees imposed on the
Project, working capital, debt service reserves and all development fees
unanimously agreed to by the investors in Seller. Also included in the total
Project cost which is required for the completion of Project construction will
be the interest accrued on all debt during construction and other relevant
expenses.
"Classified Depreciation Rate" shall mean the depreciation rate determined
according to the classified service life provided in the relevant document.
"Base Output" shall mean (i) for the period beginning on the Unit One Testing
Date and ending on the date immediately preceding the Unit Two Testing Date, the
kilowatt-hour amount equal to the product of the Rated Capacity of the first
unit of the Facility multiplied by[***]% multiplied by the number of hours in
this period; (ii) for the period beginning on the Unit Two Testing Date (if such
date is not the first day of a calendar year) and ending on the last day of the
calendar year in which the Unit Two Testing Date occurs, the kilowatt-hour
amount equal to the product of the Rated Capacity of the two units of the
Facility multiplied by [***]% multiplied by the number of hours in this period;
and (iii) for each calendar year thereafter, the kilowatt-hour amount equal to
the product of the Rated Capacity of the two units of the Facility multiplied by
[***] hours, except that for the calendar year during which the expiration date
of the Power Purchase and Sale Contract occurs (if such expiration date is not
the last day of such calendar year), the Base Output shall be the kilowatt-hour
amount equal to the product of the Rated Capacity of the two units of the
Facility multiplied by [***]% multiplied by the number of hours in such calendar
year prior to the expiration date.
"Conversion Factor" shall equal
2
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
<TABLE>
<CAPTION>
Average Conversion Rate t - Average Conversion Rate m-1)
<S> <C>
Average Conversion Rate m x [1 + (---------------------------------------------------------]
Average Conversion Rate m - 1
</TABLE>
where:
m shall mean the 30 day period immediately preceding the
date of calculation
t shall mean the 12 month period immediately prior to the date
of calculation
m - 1 shall mean the 30 day period immediately preceding the 12
month period prior to the date of calculation
"Average Conversion Rate" shall equal the average of the Conversion Rate for
each day over the applicable period.
"Conversion Rate" shall mean the closing selling exchange rate of Renminbi for
Dollars published by the People's Bank of China (or any successor entity
publishing such rate).
At such time as the Renminbi is freely convertible and an international market
based forward rate is available, the Conversion Factor shall be set equal to
such quoted forward exchange rate of Renminbi for Dollars which is six months
from the beginning of each Base Output Period.
(2) "FC" is the Unit Profit Charge Before Tax which shall be expressed in
RMB per kilowatt hour and shall be calculated pursuant to the following formula:
FC = Unit Profit
-----------
1 - Income Tax Rate
Unit Profit = (Foreign Party's Annual Profit x Conversion Factor) +
---------------------------------------------------
Base Output
Chinese Party's Annual Profit +
-----------------------------
Base Output
(Annual $ Debt Service Payment x Conversion Factor) + Annual RMB Debt Service
Payment -
- -----------------------------------------------------------------------------
Base Output
Annual Depreciation Loan Repayment + After Tax Enterprise Profit Retention
- ---------------------------------- -------------------------------------
Base Output Base Output
Where:
"Annual Profit" shall be the annual amounts listed on Exhibit A-1 which have
been calculated to yield a projected [***]% financial internal rate of return on
registered capital over the joint venture term of Seller.
"Registered Capital Contribution" shall be equal to the total registered
capital, denominated in RMB, provided by Seller's joint venture partners through
the Unit Two Commercial Operation Date.
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<PAGE>
"Annual $ Debt Service Payment" shall be an annual Dollar payment in an amount
equal to the annual amount required to pay all principal on the Dollar
denominated debt financing for the Project.
"Annual RMB Debt Service Payment" shall be an annual RMB payment in an amount
equal to the annual amount required to pay all principal on the RMB denominated
debt financing for the Project.
"After Tax Enterprise Profit Retention" shall be all amounts required pursuant
to law to be set aside by Seller from the after-tax profits of the Project
deposited in the Reserve Fund, Enterprise Development Fund and the Bonus and
Welfare Fund for Staff and Workers, and any other similar funds required to be
set up and funded by any other government entity in the future. After Tax
Enterprise Profit Retention for each annual period shall be determined for each
Base Output Period based on the amount of after-tax profits estimated by Seller
for each such year.
"Income Tax Rate" shall be the actual percentage tax rate that will be applied
to Seller in the Base Output Period.
"Annual Depreciation Loan Repayment" shall equal that portion of the annual
depreciation fund which is used to pay the principal of the debt.
(3) "OT RATE" IS THE OTHER TAX RATE WHICH SHALL BE THE RATE PAYABLE IN
RESPECT OF ANY TAXES THAT SELLER IS OBLIGATED TO PAY OTHER THAN VAT ON
PRODUCTION SALES. DETAILS OF THIS COMPONENT WOULD BE ESTABLISHED UPON THE
INTRODUCTION OF THOSE NEW TAXES. *
* Purchaser recognizes that the intent of this provision is to cause the Energy
Payment to Seller to be adjusted so that the net amount received after payment
of all taxes and fees other than VAT equals the net amount that would have been
received had the taxes and fees not been imposed.
(4) "VAT RATE" SHALL BE THE ACTUAL VAT RATE APPLICABLE TO SELLER'S SALES
REVENUES AT BASE OUTPUT.
(5) "EC" IS THE UNIT FINANCIAL CHARGE WHICH SHALL BE EXPRESSED IN RMB PER
KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
EC = Financial Expenses
------------------
Base Output
"Financial Expenses" shall mean, during the operation period of the Project, the
interest of the loan for the construction of, and expenses incurred in financing
the operations of the Project, projected on an annual basis. Financial Expenses
related to the Dollar debt shall include interest, related fees and withholding
taxes
4
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[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
(grossed up for taxes payable by Seller) imposed pursuant to relevant
Chinese regulations on the Dollar denominated debt financing for the Project
multiplied by Conversion Factor, that is:
Financial Expenses related to the $ Debt Financing x Conversion Factor
RMB Financial Expenses shall include interest and related fees on RMB
denominated debt financing for the Project.
(6) "QC" IS THE UNIT NET NON-BUSINESS EXPENDITURES WHICH SHALL BE EXPRESSED
IN RMB PER KILOWATT HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING
FORMULA:
QC = Non-Business Expenditures - Non-Business Income
-----------------------------------------------
Base Output
"Non-Business Expenditures" and "Non-Business Income" mean the amount of
expenditures and income, respectively, of Seller which have no direct relation
to the operation of the Project.
(7) THE UNIT TRUE-UP CHARGE ("TC") SHALL BE EXPRESSED IN RMB PER KILOWATT
HOUR AND SHALL BE CALCULATED PURSUANT TO THE FOLLOWING FORMULA:
TC = Cost Recovery Balance at the Time of Price Calculation x (1 + True-up
Charge Interest Rate/2)
---------------------------------------------------------------------
Base Output
Where:
"Cost Recovery Balance" for any given month, shall equal to Cost Recovery
Balance for the previous month x (1 + True-up Charge Interest Rate/12)
+ Cost Recovery for the month
- - Cost Recovery Balance that has been absorbed in the Energy Payment, pursuant
to a power price adjustment provided in this section.
"True-Up Charge Interest Rate" shall equal [***]% per annum.
"Cost Recovery" shall equal the difference between the total sum of the actual
costs and the total sum of the budgeted costs of all of the components contained
in this price formula, which reflects economic changes in the underlying
assumptions contained in the price formula. Factors which affect components in
this price formula include, but are not limited to: (i) fuel price changes
affecting Fuel Expenses; (ii) raw material price changes affecting Operation and
Maintenance Costs; (iii) changes in the Conversion Rate affecting the Conversion
Factor; (iv) changes to the type or rate of taxes affecting the Other Tax Rate,
Income Tax Rate or VAT Rate, (v) changes in various funds which Seller is
5
<PAGE>
required to maintain affecting After Tax Enterprise Profit Retention; (vi)
policy-related changes in expenditures (including a Change in Law) affecting any
of the price formula components; and (vii) any other costs not within the
control of Seller (except for increased costs due solely to operations in excess
of the Base Output).
References in this Appendix A to annual periods shall be deemed to refer to the
actual length of the relevant Base Output Period.
6
<PAGE>
[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]
APPENDIX A1
PROFIT
Chinese Party Registered Capital 132,911 (000 RMB)
Foreign Party Registered Capital 37,364 (000 USD)
Registered Capital Contribution Date 1-Jun-96
Commercial Operation Date 1-Jun-96
Return on Investment During Construct = Registered Capital Contributed X ([***]
L)
Where L equals the number of years of construction
Annual Profit = (Registered Capital contributed + Return on Investment During
Construction) x IRR Factor
Where
1
IRR Factor = 20 -------------
E 1/(1 - [***])n
n=1
- ------------------------------------------------------------------------------
Foreign Party Annual Profit Chinese Party Annual Profit
Year Amount (000USD) Year Amount (000RMB)
[***] [***] [***] [***]
The above numbers shall be adjusted to reflect the actual amount of Registered
Capital Contributed the actual date of Registered Capital Contribution.
<PAGE>
Appendix B
POINT OF INTERCONNECTION
The Point of Interconnection shall be at the last transmission line
tower located outside the fence of the Seller's 220 kV switchyard.
<PAGE>
APPENDIX C
TECHNICAL LIMITS
1. Electrical System Characteristics
(a) Voltage: 220 kV (equipment should be suitable for grid
voltage variations from 213 kV - 252 kV).
(b) Power Factor: Power factor operating range at the 220 kV
Point of Interconnection is 0.85 (lag) to 1.0
power factor.
(c) Grid Frequency: 50 Hertz + 1.0 Hertz to - 2.0 Hertz
2. Individual Generating Unit Characteristics. The values contained in
this Appendix C are based on achieving an installed capacity of 115
MW net per Unit. (Parasitic load has been deducted)
(a) Capacity of Generating Equipment.
(i) 147 MVA generating capacity
(ii) 125 MW continuous capacity
(iii) Generator step-up transformers are rated 150 MVA.
(b) Minimum Stable Load. The Parties agree not to dispatch the
Facility below 72% load. If the performance test demonstrates
that the unit can not maintain a stable operation at 72% dispatch
without the use of oil, the Parties will explore whether
technological modifications to the boiler are possible. If such
modification is technically certified that it will not cause damage
to the operation of the boiler, derate the boiler or shorten the
operational life of the boiler, Seller shall make the technological
modification to the facility, provided, however, if the costs of
such modification exceeds 0.1% of the total investment, the Parties
agree to settle the problem through mutual negotiations in the
spirit of equality and mutual respect.
(c) Start-up Times. Start-up times are from boiler light-off to full
load, and do not include time for mobiliation and purging, for which
fifteen (15) minutes minimum is required. Start-up times are minimum.
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<PAGE>
Normal Operation
Coal Start from ambient 10 hours
Warm Start after 40 hours 7 hours
shutdown
Hot Start after 10 hours 4 hours
shutdown
(d) Maximum Loading and Deloading Rates.
Mode Load Ramp Rate
(MW) (MW/min.)
---- ---- ---------
Cold 0-20 0.17
Cold 20-125 0.39
2
<PAGE>
APPENDIX D
CAPACITY TEST PROCEDURES
1. Guidelines.
----------
After a unit is sufficiently complete so that such unit and all systems
associated with it are capable of safe operation in accordance with Prudent
Electrical Practices, Seller shall conduct a capacity test as described below.
Seller shall give Purchaser and the engineer at least five days prior written
notice of the date on which a capacity test will commence. Purchaser may for
reasonable cause defer a capacity test for up to five days from the date
requested by Seller. Seller, Purchaser and the engineer shall each designate and
make available qualified and authorized representatives to observe a capacity
test as described in this Appendix D, and to monitor the taking of measurements
to determine the level of achievement. Testing and measuring procedures used in
a capacity test shall be in accordance with Chinese standards and codes. A
capacity test may, but is not required to be, run concurrently with the
performance tests under the construction contracts.
2. Capacity Test.
-------------
A capacity test shall establish the Rated Capacity for a Unit and shall consist
of continuous, full load operation for twenty-four hours. The result of any
capacity test shall be the net electrical capacity averaged over the duration of
the capacity test, expressed in MW and measured at the Point of Interconnection.
Upon the conclusion of the initial capacity test, Seller may elect to either (a)
within five days submit the results of such capacity test to Purchaser, with a
copy to the engineer, or (b) deliver a notice to Purchaser, with a copy to the
engineer stating Seller's intention to perform a second capacity test,
commencing no earlier than two days and no later than seven days after
Purchaser's receipt of such notice. If Seller elects to perform such second
capacity test, Seller shall, within five days after the conclusion of such
capacity test submit to Purchaser ("Seller's Notice") with a copy to the
engineer, the results of either the initial capacity test or the second capacity
test, as Seller may elect.
During the performance of a capacity test, a unit shall operate within the
limits of the Electrical System Characteristics as described in Appendix C.
3. Notice of Results.
-----------------
If Purchaser concurs with the information in Seller's Notice, the engineer
shall, within five days of receipt of Seller's Notice, provide written notice to
Seller and Purchaser certifying the results of the test. If Purchaser disputes
any or all of the results contained in Seller's notice, representatives of
Seller, Purchaser, and the engineer shall meet at a mutually aceptable location
to review and discuss the dispute. Within fourteen days of receipt of Seller's
Notice, the engineer shall decide what the disputed levels of capacity were.
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<PAGE>
Such decision shall be certified in a notice to Seller and Purchaser, and shall
be binding.
4. Achievement of Testing Date.
---------------------------
The Testing Date of a unit shall be deemed to have occurred as of the date such
unit has completed a capacity test, as certified by the engineer.
5. Disposition of Output.
---------------------
At all times during start-up, preliminary testing, capacity tests, or other
operations of a unit in furtherance of achieving the Testing Date of such unit,
Purchaser shall, at no expense to Seller, arrange for the disposition of each
unit's output of electricity.
2
