UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No
Indicate the number of shares outstanding of each of the registrant's
classes of Common Stock, as of July 12, 1996.
8,134,100 shares of Class A Common Stock, $.01 par value.
7,500,000 shares of Class B Common Stock, $.01 par value.
- --------------------------------------------------------------------------------
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AES CHINA GENERATING CO. LTD.
INDEX
PART I. FINANCIAL INFORMATION Page No
-------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Statements of Operations......................3
Consolidated Balance Sheets................................5
Consolidated Statements of Cash Flows......................7
Notes to Consolidated Financial Statements.................8
ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................9
PART II. OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS................................. Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ......13
ITEM 5. OTHER INFORMATION ................................. Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................15
SIGNATURES................................................16
2
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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
AES CHINA GENERATING CO. LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS
ENDED
MAY 31, 1996 MAY 31, 1995
-----------------------------
(unaudited)
REVENUES:
Electricity sales US$ 2,383 US$ 202
Construction delay fee 43 --
------ ------
2,426 202
OPERATING COSTS AND EXPENSES:
Costs of sales 1,766 87
Development, selling, general and
administrative expenses 1,413 2,215
------ ------
TOTAL OPERATING COSTS AND EXPENSES 3,179 2,302
------ ------
OPERATING LOSS (753) (2,100)
OTHER INCOME:
Interest income 1,737 2,891
Interest expense (322) --
Equity in earnings of affiliate 126 41
------ ------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 788 832
Income taxes 202 --
Minority interest (8) 46
------ ------
NET INCOME US$ 594 US$ 786
------ ------
NET INCOME PER SHARE US$ 0.04 US 0.05
====== ======
See Notes to Consolidated Financial Statements
3
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AES CHINA GENERATING CO. LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS
ENDED
MAY 31, 1996 MAY 31, 1995
--------------------------------------------
(unaudited)
REVENUES:
Electricity sales US$ 2,447 US$ 373
Construction delay fee 403 -
------------------- ------------------
2,850 373
OPERATING COSTS AND EXPENSES:
Costs of sales 1,997 309
Development, selling, general and
administrative expenses 3,405 4,664
------------------- ------------------
TOTAL OPERATING COSTS AND EXPENSES 5,402 4,973
------------------- ------------------
OPERATING LOSS (2,552) (4,600)
OTHER INCOME:
Interest income 3,715 5,607
Interest expense (322) -
Equity in earnings of affiliate 252 41
------------------- ------------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 1,093 1,048
Income taxes 202 -
Minority interest (19) 55
------------------- ------------------
NET INCOME US$ 910 US$ 993
------------------- ------------------
NET INCOME PER SHARE US$ 0.06 US$ 0.06
=================== ==================
See Notes to Consolidated Financial Statements
4
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AES CHINA GENERATING CO. LTD.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUES AND SHARE AMOUNTS)
AS OF AS OF
MAY 31, 1996 NOVEMBER 30, 1995
------------------ ---------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents US$ 105,997 US$ 125,684
Investments - held-to-maturity 15,041 41,609
Investments - available-for-sale 14,889 2,995
Accounts receivable from related 2,438 463
parties
Interest receivable 90 293
Inventory 787 31
Prepaid expenses and other current 1,712 422
assets
------------------ ---------------------
TOTAL CURRENT ASSETS 140,954 171,497
PROPERTY, PLANT AND EQUIPMENT:
Electric generating facilities 52,736 6,468
Equipment, furniture and leasehold 2,018 1,233
improvements
Accumulated depreciation and (1,403) (665)
amortization
Construction in progress 64,305 39,555
------------------ ---------------------
TOTAL PROPERTY, PLANT AND 117,656 46,591
EQUIPMENT, NET
OTHER ASSETS:
Project development costs 725 1,083
Investment in and advances to 2,401 2,566
affiliate
Notes receivable 9,901 7,500
Deposits and other assets 682 634
------------------ ---------------------
TOTAL OTHER ASSETS 13,709 11,783
------------------ ---------------------
TOTAL US$ 272,319 US$ 229,871
================== =====================
See Notes to Consolidated Financial Statements
5
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AES CHINA GENERATING CO. LTD.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUES AND SHARE AMOUNTS)
AS OF AS OF
MAY 31, 1996 NOVEMBER 30, 1995
------------------ --------------------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - The AES US$ 1,265 US$ 214
Corporation
Accounts payable and accrued 10,907 1,967
expenses
Payable for repurchase of shares - 10,011
Payable for investment purchase - 2,995
Loans from minority shareholders - 1,181 351
current portion
Notes payable 1,180 1,000
------------------ --------------------
TOTAL CURRENT LIABILITIES 14,533 16,538
LONG-TERM LIABILITIES:
Deferred income taxes 202 -
Loans from minority shareholders 33,646 6,666
------------------ --------------------
TOTAL LONG-TERM LIABILITIES 33,848 6,666
MINORITY INTEREST 37,020 19,082
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY:
Class A Common Stock - par value
$0.01 per share (50,000,000 shares
authorized; 10,216,000 shares issued) 102 102
Class B Common Stock - par value
$0.01 per share (50,000,000 shares
authorized; 7,500,000 shares issued
and outstanding) 75 75
Additional paid-in capital 201,762 201,762
Retained earnings 2,677 1,767
Cumulative translation adjustment 105 250
Treasury stock, at cost
(2,081,900 shares at May 31, 1996
and 1,912,600 shares at
November 30, 1995, of
Class A Common Stock) (17,803) (16,371)
------------------ --------------------
TOTAL SHAREHOLDERS' EQUITY 186,918 187,585
------------------ --------------------
TOTAL US$ 272,319 US$ 229,871
================== ====================
See Notes to Consolidated Financial Statements
6
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AES CHINA GENERATING CO. LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS
ENDED
MAY 31, 1996 MAY 31, 1995
------------------------------------------------
(UNAUDITED)
NET CASH PROVIDED BY /
USED IN) OPERATING ACTIVITIES US$ (953) US$ 1,105
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions and loans from
minority shareholders 5,155 4,000
Proceeds from note payable 180 -
Repurchase of Class A Common Stock (11,443) (3,305)
--------------------- -------------------
NET CASH PROVIDED BY /
(USED IN) FINANCING ACTIVITIES (6,108) 695
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (34,082) (124,649)
Proceeds from the sale/maturity of
investments 45,761 168,565
Purchase of building, equipment,
leaseholds and
construction in progress (20,782) (1,525)
Investment and advances to affiliate - (1,291)
Recoupment of investment from affiliate 447 -
Investment in note receivable (2,401) -
Project development costs and other
assets (1,569) (686)
--------------------- -------------------
NET CASH PROVIDED BY /
(USED IN) INVESTING ACTIVITIES (12,626) 40,414
--------------------- -------------------
INCREASE / (DECREASE) IN CASH AND
CASH EQUIVALENTS (19,687) 42,214
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 125,684 95,486
--------------------- -------------------
END OF PERIOD US$ 105,997 US$ 137,700
===================== ===================
See Notes to Consolidated Financial Statements
SUPPLEMENTARY DISCLOSURE:
- ------------------------
In April 1996, the Company's joint venture partner in Jiaozuo Wan Fang
contributed capital and shareholder loans of $38.5 million in the form of land
use rights, construction-in-progress, equipment and receivables, net off
accounts payable.
7
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AES CHINA GENERATING CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. GENERAL AND BASIS OF PRESENTATION
AES China Generating Co. Ltd. ("AES Chigen" or the "Company"), a Bermuda
company, was incorporated on December 7, 1993, to develop, acquire, finance,
construct, own and manage electric power generation facilities in the People's
Republic of China (the "PRC"). The Company is a controlled affiliate of The AES
Corporation ("AES"). As of May 31, 1996, AES owned approximately 48% of the
outstanding common stock of the Company.
The consolidated financial statements include the accounts of AES Chigen and its
subsidiaries. Investments in 50% or less owned affiliates over which the Company
has the ability to exercise significant influence, but not control, are
accounted for using the equity method. Intercompany transactions and balances
have been eliminated. During the second quarter of 1996, the Company acquired
controlling interest in Jiaozuo Wan Fang Power Company Limited ("Jiaozuo Wan
Fang") for cash which approximated the fair value of net tangible assets
acquired. The acquisition was accounted for as a purchase.
In the Company's opinion, all adjustments necessary for a fair presentation of
the unaudited results of operations for the three months and six months ended
May 31, 1996 and 1995 are included. All such adjustments are accruals of a
normal and recurring nature. The results of operations for the periods are not
necessarily indicative of the results of operations to be expected for the full
year. The financial statements are unaudited.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at May 31, 1996 and November 30, 1995 and the
reported amounts of revenues and expenses during the three months and six months
ended May 31, 1996 and 1995. Actual results could differ from those estimates.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Company's
financial statements filed as part of the Company's Annual Report on Form 10-K
for the fiscal year ended November 30, 1995 (the "Annual Report"). This
Quarterly Report on Form 10-Q should be read in conjunction with such Annual
Report.
2. NOTE RECEIVABLE
In May 1996, Jiaozuo Wan Fang, one of subsidiaries of the Company provided a
loan in the amount of approximately $2.4 million to Henan Electric Power
Corporation for the construction of the associated interconnection facility of
the Jiaozuo Wan Fang project. The loan bears interest at 15.3% per annum. The
principal and interest are repayable in 15 installments, commencing on December
1, 1997.
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3. INCOME TAXES
Deferred income taxes relate principally to accelerated depreciation methods
used and certain other expenses which are deducted for income tax purposes in
the PRC, but not for financial reporting purposes. Deferred income taxes reflect
the net tax effect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.
4. COMMITMENTS AND CONTINGENCIES
On April 29, 1996, the Company committed to invest in Jiaozuo Wan Fang $37.8
million in the form of equity investment and $68.6 million in the form of a
shareholder loan. To date, the Company has invested all the committed equity
requirement to the joint venture.
ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
In December 1993, AES purchased 7.5 million shares of the Company's Class B
common stock and in March and April 1994, the Company completed an initial
public offering of 10.2 million shares of its Class A common stock. The net
proceeds of the sale of the Class A and Class B common stock, after underwriting
commissions and discounts and the expenses of the offering, were approximately
$202 million.
In October 1994, the Company funded Hunan Xiangci-AES Hydro Power Company Ltd.
(Xiangci-AES). Xiangci-AES was established to build, own and operate a 26.2 MW
hydroelectric facility. Since the acquisition date, 5.2 MW has been in
operation. Unit 1 (10.5 MW) of the expansion facility commenced operation on May
29, 1996. Unit 2 (10.5 MW) of the expansion facility is currently expected to be
completed towards the end of the Company's third fiscal quarter of 1996. The
completion of the expansion facility has been delayed for several months due to
technical problems with equipment and installation. Pursuant to an agreement
with the contractor, AES Chigen is now actively participating in the
construction management and the Hunan Provincial Hydro Bureau is assisting in
the completion of the outstanding construction work. The Company was entitled to
construction delay payments from the contractor through March 11, 1996 to
compensate for the loss of generation.
In March 1995, the Company funded Yangchun Fuyang Diesel Engine Power Co. Ltd.
("Yangchun Fuyang"). Yangchun Fuyang was established to build, own and operate
two phases of a 15.1 megawatt diesel engine facility. The first phase of the
facility, consisting of 8.6 MW, has been in operation since the acquisition
date, and the second phase, consisting of 6.5 MW, commenced operations on April
9, 1996 after completing its 72-hour reliability test.
In May 1995, Wuxi-AES-CAREC Gas Turbine Power Company Ltd. ("Wuxi-AES-CAREC")
was established to build, own and operate two 24 MW gas turbines and
Wuxi-AES-Zhonghang Power Company Ltd. ("Wuxi-AES-Zhonghang") was established to
build, own and operate a heat recovery steam generator with a 15 MW steam
turbine. The gas turbine facility commenced commercial operations after having
successfully completed its 14-day reliability test and consecutive 96-hour run
on March 10, 1996. The additional 15 MW steam turbine facility is
9
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currently under commissioning and is expected to commence operations towards the
end of the Company's third fiscal quarter of 1996.
In December 1995, the Company announced the funding of Sichuan Fuling Aixi Power
Company Limited ("Fuling Aixi"). Fuling Aixi was organized to construct, own and
operate a mine-mouth, coal fired facility with a net 45 megawatt generating
capacity in Fuling Prefecture, Sichuan Province. Construction of the facility
commenced in February 1996 and is currently expected to be completed in mid
1998.
In April 1996, the Company announced to fund a total of $106 million in the form
of equity contribution and shareholder loan in Jiaozuo Wan Fang Power Company
Limited ("Jiaozuo Wan Fang"). Jiaozuo Wan Fang, a cooperative joint venture, was
organized to build, own and operate a 250 MW pulverized coal-fired power plant
located in Jiaozuo City, Henan Province. The Company owns a 70% share interest
in the joint venture. The remaining 30% is held by Jiaozuo Aluminum Mill
("JAM"). A portion of the electricity generated by the joint venture will be
sold to JAM and the remainder will be sold to the Henan Electric Power
Corporation. Construction is underway with completion of Unit 1 targeted for the
second half of 1997 and completion of Unit 2 scheduled for mid 1998.
In July 1996, a non-interest bearing loan in the amount of $7.5 million provided
to China Power International Holding Limited ("CPIL") which was made in
connection with Wuhu Shaoda Electric Power Development Company ("Wuhu Shaoda"),
a joint venture to develop, construct and own a 250 MW coal-fired facility in
Anhui Province, was converted to an equity contribution by the Company to the
Wuhu Shaoda project. Prior to the conversion, Wuhu Shaoda closed syndication of
a $65 million term loan facility. The term loan facility, which was provided by
nine banks led by CCIC Finance Limited, will be eligible for drawdown upon
satisfaction of certain conditions precedent which include the final
documentation of an $18 million subordinated loan AES Chigen has committed to
provide to the project. The Company expects that the conditions precedent to
drawdown will be met within the Company's third fiscal quarter of 1996. The
facility is currently under construction; the first 125 MW unit is expected to
be operational in the last fiscal quarter of 1996 with the second 125 MW unit
commencing operations in mid-1997.
The Company has also initialed or signed several joint venture contracts which
become effective under Chinese law following receipt of certain required
governmental approvals. These joint venture contracts are also subject to the
satisfaction or waiver of certain significant conditions precedent specified in
the joint venture contracts (including negotiation and execution of several
major project contracts) and, in some instances, require that the parties
re-execute the joint venture contracts to demonstrate their determinations that
the conditions precedent have been satisfied.
The required governmental approvals have not been obtained for any of the
Company's joint venture contracts, except the Company's six projects which are
currently in operation or under construction, and receipt of such approvals is
uncertain. There can be no assurance that the governmental approvals will be
received, that the conditions precedent will be satisfied or that the projects
will be completed. Certain of the conditions involve subjective determinations
by one or more parties that, by their terms, permit the parties to exercise
considerable discretion in making such determinations. It is therefore possible
that the Company may not proceed with one or more, or any, of the projects for
- -which joint venture contracts have been initialed or signed but which the
Company has not yet funded. Until the required governmental approvals
10
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have been obtained and all conditions precedent satisfied or waived, the Company
regards the initialing or signing of a joint venture contract as being a
preliminary step in the development of an electric power generation project.
RESULTS OF OPERATIONS
REVENUES AND COSTS OF SALES
Total revenues increased from approximately $0.2 million to $2.4 million from
the second quarter of 1995 to the second quarter of 1996. Costs of sales
increased from approximately $0.1 million to $1.8 million from the second
quarter of 1995 to the second quarter of 1996. The increases in revenues and
costs of sales were primarily due to the commencement of operations of the
Wuxi-AES-CAREC facility.
Total revenues increased from approximately $0.4 million to $2.9 million from
the six months ended May 31, 1995 to the six months ended May 31, 1996. Costs of
sales increased from $0.3 million to $2.0 million from the first six months of
1995 to the same period of 1996. The increases in revenues and costs of sales
were due to the commencement of operations of Wuxi-AES-CAREC facility. In
addition, an increase in revenues was generated in the first six months ended
May 31, 1996 due to the payment of a construction delay fee of $0.4 million paid
by the contractor of the Xiangci-AES expansion facility directly to AES Chigen.
Since the operation of the Xiangci-AES facility largely depends upon the flow of
river water, variations in seasonal conditions could have a significant impact
on the financial results of the plant.
DEVELOPMENT, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Development, selling, general and administrative expenses decreased 36% or
approximately $0.8 million to $1.4 million from the second quarter of 1995. For
the six months ended May 31, 1996, development, selling and administrative
expenses decreased 27%, or approximately $1.3 million to $3.4 million, compared
to the same period of 1995.
The decreases in development, selling, general and administrative expenses for
the three months and six months ended May 31, 1996 were primarily due to the
capitalization of a higher proportion of development costs associated with
projects which achieved financial closing during the first six months ended May
31, 1996 and the capitalization of development costs of the Wuhu Shaoda project.
INTEREST INCOME
Interest income for the first quarter of 1996 and 1995 and the six months ended
May 31, 1996 and 1995 was primarily generated by income from marketable
securities purchased with the proceeds received from the Company's initial
public offering. Interest income decreased 40%, or approximately $1.1 million to
$1.7 million from the second quarter of 1995 to the second quarter of 1996.
Interest income for the six months ended May 31, 1996 decreased 34%, or
approximately $1.9 million to $3.7 million compared to the corresponding period
of 1995. The decreases in interest income for the three months and six months
ended May 31, 1996 were primarily due to lower interest rates combined with a
lower average amount of funds available for investment due to power project
investments made in Wuxi-AES-CAREC, Wuxi-AES-
11
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Zhonghang, Fuling Aixi and Jiaozuo Wan Fang as well as the repurchase of a
portion of the outstanding shares of Class A common stock.
INTEREST EXPENSE
During the second quarter of 1996 and the six months ended May 31, 1996 the
interest expense of approximately $0.3 million related solely to the interest on
shareholder loan incurred by Wuxi-AES-CAREC. For the corresponding periods of
1995, the Company had no interest expenses.
INFLATION
Over the last few years, the PRC economy has registered high growth rates and
high rates of inflation. In response, the PRC government has taken measures to
curb inflation. There can be no assurance that these austerity measures alone
will succeed in controlling inflation, nor that they will not result in severe
dislocations in the PRC economy in general.
The Company will attempt, whenever possible, to hedge certain aspects of its
projects against the effects of inflation. Generally, this will be done by
structuring the energy and operations and maintenance payments in its power
sales contract for a project to increase at essentially the same rates as the
costs of fuel and other services and supplies in corresponding project
contracts.
FOREIGN CURRENCY EXCHANGE
The Company anticipates that a portion of its costs and expenses will be
incurred and that a portion of its potential equity contributions and/or loan
advances may be made in Renminbi, the official currency of the PRC. The Company
also anticipates that until project investments are made and such projects reach
commercial operations, the majority of its revenues will be generated through
interest in earnings on U.S. dollar denominated investments. Over the past ten
years, the Renminbi has experienced a net devaluation against the U.S. dollar.
As a result, the Company does not currently anticipate the need to hedge its
projected Renminbi expenditures. Additionally, the Company believes that there
is a lack of an economically efficient foreign currency hedging market based on
Renminbi dollar futures, swaps and/or options. As a result, if the long-term
Renminbi devaluation trend were to reverse, the Company may not be able to
mitigate its exposure to potentially fluctuating exchange rates. However, the
Company will monitor the availability of any financial instruments that may
develop and that would permit, in the Company's opinion, economically attractive
hedging strategies. In addition, the Company will attempt, whenever possible, to
hedge against exchange rate fluctuations by structuring its joint venture and
power purchase contracts to provide for adjustments in profit distributions and
in electricity payments for changes in the Renminbi and the U.S. dollar exchange
rate.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1996, cash and cash equivalents totaled approximately $106 million,
as compared to $125.7 million at the beginning of the fiscal year. The $19.7
million decrease in cash resulted from $1 million net cash used in operating
activities, $6.1 million used in financing activities and $12.6 million used in
investing activities. Net cash used in financing activities reflected
settlements of purchases of Class A common stock made by the Company just prior
to year end 1995 and additional purchases during the first six months of 1996,
partially offset by equity
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contributions and loans from minority shareholders to the Company's consolidated
subsidiaries. Net cash used in investing activities, due primarily to both the
purchase of short-term investments of $34.1 million, funding project development
costs and other assets of $1.6 million, providing a loan of $2.4 million and
investments in projects represented primarily by $20.8 million in property
additions, offset in part by the proceeds from maturity of investments of $45.8
million. The investments in projects include the construction funding of the
Wuxi-AES-CAREC, Wuxi-AES-Zhonghang, Fuling Aixi and Jiaozuo Wan Fang.
The Company has committed to invest approximately $197 million in the six
projects which are currently in operation or under construction. As of May 31,
1996, the Company has injected approximately $82 million of the $197 million
committed in the form of equity contributions and loans to Wuxi-AES-CAREC,
Wuxi-AES-Zhonghang, Fuling Aixi, Jiaozuo Wan Fang and Wuhu Shaoda projects. The
Company intends to pursue the development, acquisition, ownership and operation
of additional electric power generation and related facilities in China and to
repurchase additional Class A common stock on a limited basis depending upon
market prices thereof and expectations on timing and need for future equity
contributions and loans to projects. The Company expects to have sufficient
liquidity to fund through 1997 its project equity and shareholder loan
commitments entered into to date, to pursue the development of additional
projects, to repurchase additional Class A common stock and for general
corporate purposes from available cash and cash equivalents and investments
currently on hand, from investment earnings on the balance of invested cash and
from project dividends and loan repayments.
If the Company is successful in developing or acquiring an interest or interests
in additional electric power generation projects (and there can be no assurance
that it will be successful), the Company will be required to make equity
contributions or advance loans to such projects in order to fund all or a
portion of related construction or acquisition costs. The Company believes that
its available capital will not be sufficient to make equity contributions or
advance loans to one or more of the projects for which it has signed or
initialed joint venture contracts, or to one or more other projects which the
Company is actively pursuing, if they are successfully developed (or in one or
more projects with similar capital requirements). If one or more of the proposed
projects is successfully developed, and in any event after 1997 in connection
with its existing commitments, the Company will be required to raise debt or
additional equity to meet funding requirements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Annual General Meeting of Shareholders was held on Wednesday, April 3,
1996.
c.(i) The Company's Bye-laws provide that the Board of Directors consists of two
classes, the Class A Directors and the Class B Directors. At the Annual General
Meeting, the holders of Class A common stock elected the Class A Directors and
the holders of Class B common stock elected the Class B Directors, each for a
term of one year and until their successors have been elected and shall have
qualified.
Nine directors were elected at the 1996 Annual General Meeting, four Class A
Directors and five Class B Directors, each by a majority of the votes cast for
such director, as follows:
Class A Directors:
- -----------------
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(1) William Dykes: 6,747,031 votes for, 9,700 votes abstaining;
(2) Xiliang Feng: 6,747,331 votes for, 9,400 votes abstaining;
(3) Dr. Victor Hao Li: 6,747,731 votes for, 9,000 votes abstaining; and
(4) William H. Taft, IV: 6,747,431 votes for, 9,300 votes abstaining.
Class B Directors:
- -----------------
(1) Roger W. Sant: 7,500,000 votes for;
(2) Dennis W. Bakke: 7,500,000 votes for;
(3) Robert F. Hemphill, Jr.: 7,500,000 votes for;
(4) Thomas Tribone: 7,500,000 votes for; and
(5) Thomas I. Unterberg: 7,500,000 votes for.
c.(ii) A proposal (designated Item 2 and set forth in the Company's Proxy
Statement), adopted by the Board of Directors, to approve the Company's Profit
Sharing and Stock Ownership Plan was approved by a majority of the votes cast by
the holders of the Company's Common Stock: 6,713,556 votes for; 33,843 votes
against; and 20,200 votes abstained.
c.(iii) A proposal (designated Item 3 and set forth in the Company's Proxy
Statement), recommended by the Board of Directors, to appoint Deloitte Touche
Tohmatsu to serve as independent auditors of the Company for the fiscal year
ending November 30, 1996 and to authorize the Board of Directors to fix their
fee was approved by a majority of the votes cast by the holders of the Company's
Common Stock: 6,838,683 votes for; 4,750 votes against; and 2,030 votes
abstained.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS
EXHIBIT
NUMBER DOCUMENT
------- --------
10.26* Cooperative Joint Venture Contract to Establish
Jiaozuo Wan Fang Power Company Limited dated March
27, 1996 between Jiaozuo Power Partners, L.P. and
Jiaozuo Aluminum Mill
10.27* Shareholder Loan Contract dated April 26, 1996
between Jiaozuo Wan Fang Power Company Limited and
Jiaozuo Aluminum Mill
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
10.31 Assignment and Assumption Contract dated April 26,
1996 between Jiaozuo Wan Fang Power Company
Limited and Jiaozuo Aluminum Mill
11 Consolidated Statements Regarding Computation of
Earnings Per Share
b. Reports on Form 8-K
None.
- ----------
* Confidential treatment has been requested for certain information identified
in this document.
15
<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)
July 15, 1996 /s/ Jeffery A. Safford
- ------------- -----------------------------
Date Jeffery A. Safford
Vice President
Chief Financial Officer and Secretary
16
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
------- --------
10.26* Cooperative Joint Venture Contract to Establish
Jiaozuo Wan Fang Power Company Limited dated March
27, 1996 between Jiaozuo Power Partners, L.P. and
Jiaozuo Aluminum Mill
10.27* Shareholder Loan Contract dated April 26, 1996
between Jiaozuo Wan Fang Power Company Limited and
Jiaozuo Aluminum Mill
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
10.31 Assignment and Assumption Contract dated April 26,
1996 between Jiaozuo Wan Fang Power Company
Limited and Jiaozuo Aluminum Mill
11 Consolidated Statements Regarding Computation of
Earnings Per Share
b. Reports on Form 8-K
None.
- ----------
* Confidential treatment has been requested for certain information identified
in this document.
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
Exhibit 10.26
SINO-FOREIGN COOPERATIVE JOINT VENTURE
JIAOZUO WAN FANG POWER COMPANY LIMITED
CONTRACT
March 27, 1996
250 MW Power Plant
Jiaozuo City, Henan Province
People's Republic of China
<PAGE>
T A B L E O F C O N T E N T S
Chapters Pages
Chapter 1. Definitions 1
Chapter 2. Parties to this Contract; Representations and Warranties 4
Chapter 3. Establishment of the Joint Venture 5
Chapter 4. Purpose and Scope of Business 6
Chapter 5. Total Amount of Investment and Capital 6
Chapter 6. Responsibilities of Each Party 8
Chapter 7. Construction of the Power Plant 10
Chapter 8. Operation of the Power Plant 10
Chapter 9. Board of Directors 11
Chapter 10 Management 12
Chapter 11. Personnel and Labor Management 13
Chapter 12. Trade Union 14
Chapter 13. Purchase of Equipment 14
Chapter 14. Taxes and Licenses 14
Chapter 15. Accounting; Distribution of Profits; Priority of Payments 15
Chapter 16. Sale of Electricity 17
Chapter 17. Independent Auditing 17
Chapter 18. Foreign Exchange Management 17
<PAGE>
Chapter 18. Foreign Exchange Management 17
Chapter 19. Term 18
Chapter 20. Insurance 18
Chapter 21. Land Use 19
Chapter 22. Applicable Law 19
(i)
<PAGE>
Chapter 23. Effects of Changes in Chinese Law 19
Chapter 24. Breach of Contract 19
Chapter 25. Termination 20
Chapter 26. Liquidation 21
Chapter 27. Force Majeure 22
Chapter 28. Settlement of Disputes 23
Chapter 29. Non-Disclosure of Business Information 24
Chapter 30 Miscellaneous 25
(ii)
<PAGE>
SINO-FOREIGN COOPERATIVE JOINT VENTURE
JIAOZUO WAN FANG POWER COMPANY LIMITED
CONTRACT
PREAMBLE
This Cooperative Joint Venture Contract is made this 27th day of March,
1996 by and between JIAOZUO ALUMINUM MILL, a Chinese enterprise (the "Chinese
Party"), and JIAOZUO POWER PARTNERS, L.P., a Cayman Islands exempted limited
partnership (the "Foreign Party").
WHEREAS, in accordance with the Law of the People's Republic of China on
Sino-foreign Cooperative Enterprises, the implementing rules thereunder and
other relevant Chinese laws and regulations, the Chinese Party and the Foreign
Party, adhering to the principle of equality and mutual benefit and through
friendly consultations, agree to organize a cooperative joint venture
enterprise in Jiaozuo City, Henan Province, the People's Republic of China and
to invest jointly for the purposes described herein, all upon and subject to
the terms and conditions set forth herein;
NOW, THEREFORE, the Parties, intending to be legally bound under Chinese
law, enter into this Contract under the following terms and conditions:
CHAPTER 1
DEFINITIONS
When used in this Contract the following capitalized (or, in the Chinese
version hereof, underlined) terms shall have the meanings set forth below:
"Aluminum Mill Power Supply Contract" means the Power Purchase and Sale
Contract between the Joint Venture and the Chinese Party, as it may be amended
or otherwise modified from time to time.
"Articles of Association" means the Articles of Association of the Joint
Venture signed by the Parties.
"Board" means the Board of Directors of the Joint Venture established
pursuant to Chapter 9.1.
"Business License" means the business license of the Joint Venture to be
issued by the Jiaozuo Municipal Administration for Industry and Commerce.
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<PAGE>
"Coal Purchase and Transportation Contract" means the Coal Purchase and
Transportation Contract entered into by the Joint Venture for the supply and
transportation of coal, as it may be amended or otherwise modified from time to
time.
"Contract" means this Cooperative Joint Venture Contract, as it may be
amended or otherwise modified from time to time.
"Deputy General Manager" means the Deputy General Manager of the Joint
Venture appointed pursuant to Chapter 10.2.
"Dispatch Contract" means the Dispatch and Interconnection Contract between
the Joint Venture and the Henan Electric Power Corporation.
"Expatriates" has the meaning set forth in Chapter 11.4.
"Financing Documents" means, collectively, all documents executed and
delivered between the Joint Venture and any Party in connection with the
financings contemplated in Chapter 5.5.
"Foreign Exchange Rate" means the exchange rate of U.S. Dollars for
Renminbi actually used by the Joint Venture as permitted by SAEC.
"Foreign Exchange Risk Fund" means the foreign exchange risk fund required
to be funded by the Joint Venture from the Joint Venture's after-tax profits,
as the approved power price has taken into consideration the exchange rate risk
factor. Such fund shall be used to balance the rates of return to both Parties.
"Foreign Exchange Regulations" means the regulations and rules on foreign
exchange published by the relevant authorities of China as they may be amended,
modified, replaced or superseded.
"General Manager" means the General Manager of the Joint Venture appointed
pursuant to Chapter 10.2.
"Interconnection Construction Contract" means the Engineering, Procurement
and Construction Contract between the Joint Venture and the Henan Electric
Power Corporation, for the construction of the transmission facilities, as it
may be amended or otherwise modified form time to time.
"Interconnection Financing Contract" means the financing contract between
the Joint Venture and the Henan Electric Power Corporation, to provide
financing from the Joint Venture to the Henan Electric Power Corporation for
the construction of the transmission facilities, as it may be amended or
otherwise modified from time to time.
"Joint Venture" means the cooperative joint venture company established by
the Chinese Party and the Foreign Party pursuant to the terms of this Contract.
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<PAGE>
"Land Use Rights" means the right to the use of the Site issued by the
relevant Chinese government authority in charge of land management as provided
in Chapter 21 and any other land use rights necessary or desirable for the
construction and operation of the Power Plant for the Term.
"Liquidation Committee" means the Liquidation Committee described in
Chapter 26.2.
"MOFTEC" means the Ministry of Foreign Trade and Economic Cooperation of
China or any successor approval authority.
"Parties" means the Chinese Party and the Foreign Party, collectively.
"Party" shall mean either of the Parties, individually.
"Power Company Power Purchase Contract" means the Power Purchase and Sale
Contract between the Joint Venture and the Henan Electric Power Corporation, as
it may be amended or otherwise modified from time to time.
"Power Plant" means the coal-fired electric generating facility to be
located at the Site consisting of 2 x 125 megawatt generating units with a
combined capacity of approximately 250 megawatts, as well as generation and
fuel handling facilities and all other related equipment and facilities.
"Power Plant Power Purchase Contract" means the Power Plant Power Purchase
Contract between the Joint Venture and the Henan Electric Power Corporation for
the purchase by the Joint Venture of electricity for construction, start-up and
other uses at the Power Plant, as it may be amended from time to time.
"Project Contracts" means, collectively, (i) the Power Company Power
Purchase Contract, (ii) the Aluminum Mill Power Supply Contract, (iii) the
construction contracts, (iv) the Site Use Contract, (v) the Coal Purchase and
Transportation Contract, (vi) the Dispatch Contract, (vii) the Financing
Documents, (viii) the Power Plant Power Purchase Contract, (ix) the
Interconnection Financing Contract and (x) the Interconnection Construction
Contract.
"Renminbi" or "RMB" means the lawful currency of China.
"SAEC" means the State Administration for Exchange Control of China.
"SAIC" means the State Administration for Industry and Commerce of China.
"Site" means the land located at Jiaozuo City, Henan Province, China upon
which the Power Plant is to be constructed and located, as more fully described
on the Site Map.
"Site Map" means the map on which the boundaries of the Site are marked in
red.
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<PAGE>
"Site Use Contract" means the Site Use Contract executed by the Joint
Venture relating to the use by the Joint Venture of the Site, as it may be
amended or otherwise modified from time to time.
"State Planning Commission" means the State Planning Commission of China.
"U.S. Dollars" or "US$" means the lawful currency of the United States of
America.
CHAPTER 2
PARTIES TO THIS CONTRACT; REPRESENTATIONS AND WARRANTIES
2.1 The Parties to this Contract are:
(a) Jiaozuo Aluminum Mill, a Chinese enterprise organized in
accordance with the laws of China and registered with the
Jiaozuo Municipal Administration of Industry and Commerce
(Business License number is 410800-17347144-14931).
Legal Address: 160 Tanan Road
Jiaozuo City
Henan Province
China
Telefax: (86-391) 393-3739
Legal representative: Name: Jin Bao Qing
Position: General Manager
Nationality: Chinese
(b) Jiaozuo Power Partners, L.P., a Cayman Islands exempted
limited partnership.
Legal Address: P.O. Box 309
George Town, Grand Cayman
Cayman Islands, British West Indies
Telefax: (852) 2530-1673
Legal representative: Name: Paul Hanrahan
Position: President of Jiaozuo (GP)
Corporation, its
General Partner
Nationality: U.S.A.
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<PAGE>
2.2 Each Party hereby represents and warrants to the other Party that:
(a) (i) in the case of the Chinese Party, it is a state-owned enterprise
duly organized and validly existing as a legal person under the laws
of China; and (ii) in the case of the Foreign Party, it is a Cayman
Islands exempted limited partnership duly organized and validly
existing under the laws of the Cayman Islands;
(b) it has full legal right and power to execute and deliver this Contract
and all of the contracts and documents referred to in this Contract to
which it is a Party and to perform its obligations hereunder and
thereunder; and
(c) it has taken all appropriate and necessary action to authorize the
execution and delivery by it of this Contract and all of the contracts
and documents referred to in this Contract to which it is a Party and
to authorize the performance by it of the terms and conditions hereof
and thereof.
CHAPTER 3
ESTABLISHMENT OF THE JOINT VENTURE
3.1 The Parties will establish the Joint Venture as a Sino-foreign cooperative
joint venture company in accordance with the Law of the People's Republic
of China on Sino-foreign Cooperative Enterprises, the implementing rules
thereunder, other relevant Chinese laws and regulations and the terms of
this Contract.
3.2 The Joint Venture will be a limited liability company with legal person
status. The liability of each Party to the Joint Venture is limited to its
capital contribution. After the Joint Venture has commenced normal
operation, however, the Foreign Party shall bear unlimited liability for
the Joint Venture's indebtedness.
3.3 The name of the Joint Venture in Chinese is "Jiaozuo Wan Fang Dianli
Youxian Zeren Gongsi." The name of the Joint Venture in English is "Jiaozuo
Wan Fang Power Company Limited." The legal address of the Joint Venture is
Daiwangzhen, Jiaozuo City, Henan Province, China.
3.4 All activities of the Joint Venture will be governed by and will be under
the protection of the promulgated laws, decrees, rules and regulations of
China.
-5-
<PAGE>
CHAPTER 4
PURPOSE AND SCOPE OF BUSINESS
4.1 The purpose of the Joint Venture shall be to strengthen economic
cooperation and technical exchanges, to satisfy the electricity
requirements of the Chinese Party, to improve power supply and promote the
development of the economy in Henan Province by adopting advanced and
appropriate technology and scientific management methods, and to
continuously raise the economic efficiency of the Joint Venture and ensure
satisfactory economic benefits for each Party.
4.2 The business scope of the Joint Venture shall be to build, own, operate and
maintain a 2 x 125 MW coal-fired self-supply power plant near the site of
the Jiaozuo Aluminum Mill of Henan Province to generate and sell
electricity according to the relevant contracts and develop and operate
power related business in utilizing coal ash.
4.3 The business activities of the Joint Venture will be carried out in
accordance with the provisions of this Contract, the Articles of
Association and the decisions of the Board.
CHAPTER 5
TOTAL AMOUNT OF INVESTMENT AND CAPITAL
5.1 The total amount of investment in the Joint Venture will be One Billion Two
Hundred Sixty Million Seven Hundred Ninety Thousand Renminbi (RMB
1,260,790,000).
5.2 The total registered capital of the Joint Venture will be Four Hundred
Forty Seven Million Five Hundred Eighty Thousand Renminbi (RMB
447,580,000).
5.3 (a) The Chinese Party will contribute to the registered capital of the
Joint Venture One Hundred Thirty Four Million Two Hundred Seventy Four
Thousand Renminbi (RMB 134,274,000), which is equal to 30% of the
total registered capital of the Joint Venture. The Chinese Party will
make its contribution to the registered capital of the Joint Venture
in the form of Power Plant equipment and Land Use Rights (which Power
Plant equipment and Land Use Rights contributions and corresponding
values shall be confirmed by the Henan Provincial Administration on
State Assets and agreed to by the Parties).
(b) The Foreign Party will contribute to the registered capital of the
Joint Venture Three Hundred Thirteen Million Three Hundred and Six
Thousand Renminbi (RMB 313,306,000), which is equal to 70% of the
total registered capital of the Joint Venture. The Foreign Party will
make its contribution to the registered capital of the Joint Venture
in cash in
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<PAGE>
U.S. Dollars at the prevailing Foreign Exchange Rate at the time of
contribution.
5.4 The Parties will fund the entire amount of their respective portions of the
registered capital of the Joint Venture 30 days after the issuance of the
Business License to the Joint Venture. Late payment (unless caused by the
fact that the Joint Venture bank account has not been timely opened or
caused by delays in receipt of wire transfer after being sent) will be
subject to an interest charge of 2% per month (or portion thereof) from the
date due until the date paid. In the event either Party fails to make its
capital contribution within two days of the date due, the other Party may
(but shall not be obligated to) make such contribution, in which case the
percentage of the registered capital of the Parties shall be adjusted
accordingly, subject to the approval by the original examining and
approving authority. The Party failing to make such installment will
nevertheless remain liable for accrued interest from the date due until the
date the other Party makes such contribution.
5.5 (a) The Chinese Party will provide a loan in RMB to the Joint Venture in
an amount equivalent to 30% of the difference between the amount of
the total investment set forth in Chapter 5.1 and the amount of the
registered capital of the Joint Venture set forth in Chapter 5.2 upon
terms acceptable to the Joint Venture.
(b) The Foreign Party will provide a loan in U.S. Dollars to the Joint
Venture in an amount equivalent to 70% of the difference between the
amount of the total investment set forth in Chapter 5.1 and the amount
of the registered capital of the Joint Venture set forth in Chapter
5.2 upon terms acceptable to the Joint Venture.
(c) The Joint Venture shall have no liability or obligation to any person
or entity with respect to the shareholder loans provided pursuant to
this Chapter 5.5 other than to the providers of such shareholder
loans.
5.6 The registered capital of the Joint Venture may be increased with the
written consent of the Parties, the consent of the Board and the approval
of MOFTEC.
5.7 After the Parties have made their entire respective capital contributions
to the Joint Venture, the Joint Venture will engage an accountant
registered in China to verify such capital contributions. Upon the issuance
of a verification report by such accountant, the Joint Venture will issue
an investment certificate to each Party.
5.8 (a) Neither Party may assign, sell, encumber or otherwise transfer all or
any part of its interest in the Joint Venture without first obtaining
(i) the consent of the other Party, which consent may be withheld in
the other Party's sole and absolute discretion; (ii) the unanimous
approval by the Board of Directors; (iii) the approval by the original
examining and approving authority; and (iv) the agreement by the
transferee to assume the transferor's obligation hereunder, provided
that with respect to assignments
-7-
<PAGE>
by either Party to one or more of its 100% owned companies, the
Parties will cause their directors to vote for such assignment. Any
instrument purporting to transfer any interest in the Joint Venture in
violation of these restrictions shall be null and void and therefore
shall not be effective to confer any right upon the purported
transferee.
(b) In addition, any such proposed assignment, sale or transfer will be
subject to the right of the other Party as hereinafter described to
acquire the interest proposed to be assigned, sold or transferred. In
the event a Party proposes to assign, sell or transfer all or any part
of its interest in the Joint Venture, the transferring Party will give
a written notice (the "Assignment/Transfer Notice") to the
non-transferring Party setting forth the terms and conditions upon
which the assignment, sale or transfer is proposed to be made. The
non-transferring Party will have the right, which shall be exercised,
if at all, by notice to the transferring Party within 60 days after
the non-transferring Party receives the Assignment/Transfer Notice, to
acquire such interest upon the same terms and conditions upon which
the assignment, sale or transfer is proposed to be made. If the
transferring Party does not receive such notice within such 60-day
period and if the transferring Party complies with the restrictions in
Chapter 5.8(a), the transferring Party will have the right to assign,
sell or otherwise transfer such interest to the proposed transferee on
the terms and conditions set forth in the Assignment/Transfer Notice.
CHAPTER 6
RESPONSIBILITIES OF EACH PARTY
6.1 The Chinese Party will perform, in addition to its other obligations set
forth in this Contract, each of the following duties:
(a) contributing its capital at the times and in the amounts required
pursuant to Chapter 5;
(b) providing financing as described in Chapter 5.5;
(c) obtaining and delivering to the Joint Venture no later than 15 days
after the approval by MOFTEC of this Contract an original or a
notarized photocopy of a document issued by the relevant Chinese
government authority in charge of land management evidencing that all
governmental consents, approvals and similar items have been obtained
in connection with the grant to the Joint Venture of the Land Use
Rights that are necessary or desirable for the construction and
operation of the Power Plant;
(d) assisting the Joint Venture in obtaining no later than 15 days after
the approval by MOFTEC of this Contract an original or a notarized
photocopy of all relevant approvals (including approvals of the Power
Bureau Power Purchase Contract and the Aluminum Mill Power Supply
Contract and the
-8-
<PAGE>
specific pricing provisions contained therein for the entire term of
each such contract) that are necessary or desirable for the
construction and operation of the Power Plant;
(e) arranging for the transfer of the relevant construction related
contracts to the degree that the Joint Venture requests that they be
transferred;
(f) assisting the Joint Venture in purchasing or leasing in China at
reasonable rates in Renminbi such equipment, materials, office
supplies, transportation services, communication facilities and other
goods and services as may be necessary or desirable for the
construction and operation of the Power Plant;
(g) assisting the Joint Venture in recruiting qualified Chinese management
personnel, technical personnel, and workers as contemplated in
Chapters 10 and 11 and assisting the Joint Venture in obtaining
passports and all necessary travel documents required for such persons
to travel overseas for training or other purposes related to the
construction and operation of the Power Plant;
(h) assisting foreign personnel of the Joint Venture in applying for entry
visas, travel documents and work licenses and in arranging for
suitable board, lodging, office space, transportation, medical
facilities and security for such personnel;
(i) assisting the Joint Venture in applying for tax reductions and
exemptions and any other investment incentives and benefits available
to the Joint Venture and the Foreign Party in China and in Henan
Province;
(j) assisting the Joint Venture in applying to the Bank of China as well
as to other authorized banks for the opening of foreign currency and
Renminbi accounts for the Joint Venture; and
(k) performing such other responsibilities as shall be entrusted to it by
the Joint Venture.
6.2 The Foreign Party will perform, in addition to its other obligations set
forth in this Contract, each of the following duties:
(a) contributing its capital at the times and in the amounts required
pursuant to Chapter 5;
(b) providing financing as described in Chapter 5.5;
(c) assisting the Joint Venture in obtaining such equipment, materials,
supplies, goods and services not available in China as may be
necessary or desirable for the construction and operation of the Power
Plant;
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<PAGE>
(d) assisting the Joint Venture in recruiting necessary foreign personnel;
and
(e) performing such other responsibilities as shall be entrusted to it by
the Joint Venture.
CHAPTER 7
CONSTRUCTION OF THE POWER PLANT
7.1 The Joint Venture will be responsible for the construction of the Power
Plant. The Joint Venture will work with one or more contractors to assist
it in constructing the Power Plant.
7.2 The Chinese Party and the Foreign Party will work together with
construction contractors to transfer any ongoing design, engineering,
equipment procurement and construction work with respect to the Power Plant
from the Chinese Party to the Joint Venture in accordance with the
construction contracts.
7.3 Since the Power Plant is under construction, at the time the Parties make
contributions to the registered capital of the Joint Venture, the Chinese
Party shall, pursuant to an agreement to be entered into between the
Parties, transfer to the Joint Venture the equipment, materials, Land Use
Rights, completed and ongoing construction work of the Power Plant,
relevant construction contracts and other assets contributed by the Chinese
Party prior to the establishment of the Joint Venture. Detailed
arrangements for such transfer shall be specified in the relevant agreement
to be entered into between the Parties. Both Parties agree to consider the
time factor regarding assets that have been valued and confirmed by the
Henan Provincial Administration on State Assets.
7.4 During the construction period the Joint Venture may enter into contracts
with one or more consulting companies or engineering companies to provide
consulting services.
CHAPTER 8
OPERATION OF THE POWER PLANT
8.1 The Joint Venture will be responsible for the operation and maintenance of
the Power Plant.
8.2 Upon the agreement of both Parties, the Joint Venture may enter into
contracts with one or more companies to provide consulting services with
respect to the operations of the Power Plant.
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<PAGE>
CHAPTER 9
BOARD OF DIRECTORS
9.1 The Joint Venture will establish a Board of Directors which will be the
highest authority of the Joint Venture. The Board will decide all major
issues concerning the Joint Venture.
9.2 The Board will be composed of six directors, of whom two will be appointed
by the Chinese Party and four will be appointed by the Foreign Party. The
Board of Directors shall be established on the day the Business License is
issued to the Joint Venture. Each of the directors will serve for a term of
three years and may serve for consecutive terms upon appointment by the
original Party. The Chairman of the Board will be appointed by the Foreign
Party and the Vice-Chairman of the Board will be appointed by the Chinese
Party. If a seat on the Board is vacated by a director prior to the
completion of such director's term, the Party which originally appointed
such director will, as soon as possible, appoint a successor director to
serve out such vacating director's term. The quorum for a Board meeting is
five directors, and the detailed procedures for holding a Board meeting are
specified in the relevant provisions of the Articles of Association.
9.3 Except for the matters listed from (a) to (i) below, all matters considered
by the Board will be subject to the approval of a majority of the entire
Board; however, prior to taking an action which any Party reasonably thinks
might substantially affect such Party's reasonable interests, the Board
shall fully explore other options and attempt to implement the option that
will have the least adverse impact on the reasonable interests of such
Party; provided, however, that such option will not materially affect the
profitability or safe and reliable operation of the Power Plant. The
unanimous approval of the Board will be required to authorize any of the
following actions:
(a) amendment to the Articles of Association of the Joint Venture;
(b) termination and dissolution of the Joint Venture;
(c) increase or decrease or assignment of the registered capital of the
Joint Venture;
(d) merger, split or change of the organizational form of the Joint
Venture;
(e) mortgaging or granting a security interest on the assets of the Joint
Venture;
(f) approval of the year end financial statements of the Joint Venture;
(g) approval of all contracts between the Joint Venture and a Party or an
affiliate company of a Party;
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<PAGE>
(h) profit distribution plan of the Joint Venture; and
(i) appointment of the General Manager of the Joint Venture.
9.4 The Chairman of the Board will be the legal representative of the Joint
Venture. The Chairman will have the power to preside over the meetings of
the Board and exercise the other functions of the Chairman set forth in the
Articles of Association. Whenever the Chairman cannot exercise his or her
functions for any reason, the Vice Chairman shall exercise such functions
as the representative of the Chairman until the Chairman resumes his or her
functions or a successor is appointed. Neither the Chairman of the Board
nor the Vice Chairman of the Board shall have the power to take any action
binding the Board or the Joint Venture without the express authorization of
the Board.
9.5 The functions, powers and working procedures of the Board shall be set
forth in the Articles of Association.
9.6 Directors shall serve without compensation except when a director is also a
member of management or an employee of the Joint Venture. All reasonable
traveling and hotel costs for each director incurred in direct connection
with board meetings or Joint Venture business approved by the Board shall
be borne by the Joint Venture in the currency incurred.
CHAPTER 10
MANAGEMENT
10.1 The Joint Venture will be managed using modern and scientific management
techniques.
10.2 The Joint Venture will have a General Manager and a Deputy General Manager.
The General Manager will be recommended by the Foreign Party and will be
appointed by unanimous decision of the Board. The Deputy General Manager
will be recommended by the Chinese Party and will be appointed by majority
decision of the Board. The term of office of the General Manager and the
Deputy General Manager will be three years from the date of appointment.
10.3 The General Manager will be responsible for implementing the decisions of
the Board and organizing and conducting the daily management of the Joint
Venture, and will have the authority to accomplish the foregoing. The
Deputy General Manager will assist the General Manager.
10.4 The details of the appointment of the other senior employees shall be
specified in the Articles of Association.
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<PAGE>
CHAPTER 11
PERSONNEL AND LABOR MANAGEMENT
11.1 The initial labor plan, consisting of the number of employees of the Joint
Venture, including levels and job descriptions, will be prepared by the
General Manager and then submitted to the Board for approval. The labor
plan will be revised at least annually by the General Manager and then
submitted to the Board for approval. The Joint Venture will employ only
such number of employees as is necessary for its operations. Increases or
decreases in the total number of employees of the Joint Venture due to
expansion or increased efficiency, respectively, will require the approval
of the Board.
11.2 Labor and personnel policies of the Joint Venture will be determined by the
General Manager, subject to approval by the Board. These policies will be
consistent with the promulgated laws, rules and regulations of China
available to the public and will be based on the following principles:
(a) The General Manager will implement hiring policies whereby all
employees of the Joint Venture will be selected on the basis of
examination and will have the best possible qualifications. In this
regard, the Joint Venture will be free to hire qualified personnel
from any location in China and, if necessary, from foreign countries.
All employees will first be employed on a probationary basis. In
accordance with the labor policies of the Joint Venture, the General
Manager shall (within the authority granted by the Board and the
Articles of Association) have the authority to select and hire
employees for any position and to dismiss such employees. The General
Manager may delegate such authority as he or she deems appropriate.
(b) The salaries and all welfare benefits and subsidies for Chinese
employees of the Joint Venture will be set forth in the labor plan.
Annual wage levels of all Chinese employees (including, if applicable,
the General Manager) will be set annually by the Board and adjusted as
the Board deems necessary (taking into consideration the economic
conditions of the Joint Venture) in accordance with Chinese labor
regulations concerning wages. Welfare benefits and subsidies to
Chinese workers and staff will be given as provided by law and
reviewed and approved annually by the Board. Further benefits and
subsidies may be determined by the Board, but will not exceed the
standards set by the relevant governmental authority. The General
Manager may, in accordance with the policies established by the Board
and the budget of the Joint Venture then in effect, award bonuses to
employees and managers. All bonuses of whatever type for employees and
managers will be established as an incentive, and will be awarded on
the basis of performance.
(c) The General Manager will recommend to the Board annual merit salary
increases for specific employees. Such increases will be based upon
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the individual employee's performance and will be in accordance with
Chinese labor regulations concerning wages.
(d) The wages and welfare benefits for the Joint Venture's employees shall
be higher than the average level of the wages and welfare benefits for
the employees in the same industry in Henan Province.
11.3 The Joint Venture may enter into individual employment contracts with any
Chinese staff and workers directly if it deems such contracts appropriate.
If required by law, the Joint Venture will enter into an employment
contract with the trade union on behalf of Chinese staff and workers.
11.4 Foreign high-ranking managers and other staff ("Expatriates") will serve as
executives and in other positions of the Joint Venture and will enter into
an employment contract with the Joint Venture.
CHAPTER 12
TRADE UNION
The employees of the Joint Venture may establish a trade union pursuant to
relevant Chinese laws and regulations. The Joint Venture shall pay two percent
(2%) of the actual wages received by employees of the Joint Venture into the
Joint Venture's trade union fund for such trade union's use in accordance with
the applicable laws of China on the management of trade union funds.
CHAPTER 13
PURCHASES OF EQUIPMENT
Except as otherwise provided in the Project Contracts, the Joint Venture
will endeavor to source equipment, materials, fuel, parts, services and other
required items in China.
CHAPTER 14
TAXES AND LICENSES
14.1 The Joint Venture will pay taxes in accordance with the tax laws of China
and the relevant provisions of the taxation department of Henan Province.
14.2 Management, staff members and workers of the Joint Venture will pay
individual income tax according to the Individual Income Tax Law of China.
The Joint Venture will not be responsible for paying any such taxes.
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CHAPTER 15
ACCOUNTING; DISTRIBUTION OF PROFITS; PRIORITY OF PAYMENTS
15.1 Pursuant to the provisions of relevant laws and regulations, the General
Manager of the Joint Venture will present the Board with balance sheets,
profit and loss statements and other supplementary information requested by
the Board prepared in Chinese and English on a monthly and quarterly basis
and audited financial statements (including balance sheets and profit and
loss statements) on a yearly basis. Such audited financial statements shall
be prepared by accountant(s) registered in China with international
experience. The finance and accounting of the Joint Venture shall be
conducted in accordance with the applicable accounting laws and principles
of China. To the extent required by relevant law, the Joint Venture shall
submit on a monthly and annual basis financial statements to the local tax
authority, the relevant authorities in the electric industry and the
relevant finance department. In the event of any material difference
between the then-applicable Chinese accounting laws and principles and
internationally generally accepted accounting principles ("International
GAAP"), the Chinese accounting laws and principles shall be followed;
however, in order to meet the business and operation needs of the Joint
Venture or if required by any Party, the General Manager shall cause
additional financial statements of the Joint Venture to be prepared in
accordance with International GAAP.
15.2 The Joint Venture will adopt financial accounting systems that will ensure
that the Joint Venture will:
(a) make and keep financial records which, in reasonable detail,
accurately and fairly reflect all transactions and affairs of the
Joint Venture; and
(b) maintain a system of internal accounting controls sufficient to
provide reasonable assurances that:
(i) transactions are authorized, executed and recorded so as to
provide for proper financial statements and maintain
accountability for assets; and
(ii) safeguards (including the performance of periodic physical
inventories) are established to prevent unapproved persons from
having access to the Joint Venture's assets.
15.3 All vouchers, books, statements, reports and other operating, accounting
and financial records of the Joint Venture and descriptions thereof will be
prepared in Chinese and English.
15.4 The fiscal year of the Joint Venture will begin on January 1 and end on
December 31 of each Gregorian calendar year. The first fiscal year of the
Joint Venture will begin on the date of issuance of the Business License
and end on December 31 of that year.
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- ----------
[*** Filed separately with the Commission pursuant to a request for
confidential treatment.]
15.5 The Joint Venture will maintain its books of account in Renminbi. The Joint
Venture may also maintain duplicate books of account in U.S. Dollars if
requested by the Board. The Joint Venture will also prepare separate
records and statements for transactions in other foreign currencies in
which it has such transactions so that the Joint Venture and each Party can
inspect the expenditure and income of foreign exchange.
15.6 The Joint Venture will apply its revenues according to the following
priorities: first, to pay amounts then due under the Project Contracts and
any other contracts to which the Joint Venture may be a Party; second, to
pay other administrative and operation expenses then due; third, to pay
taxes of the Joint Venture then due; fourth, to pay principal, interest and
fees then due in respect of foreign exchange loans and to pay principal,
interest and fees then due in respect of Renminbi loans; fifth, to make
contributions to the Joint Venture's three funds as provided in Chapter
15.10; sixth, to fund the Foreign Exchange Risk Fund based on the Board's
decision pursuant to the provisions hereof; and seventh, to make profit
distribution based on the Board's unanimous decision pursuant to the ratio
of [***]% to the Chinese Party and [***]% to the Foreign Party.
15.7 During the term of the Joint Venture and after examination and approval by
the financial and tax authorities , the Joint Venture may effect an early
recovery of investment to the Foreign Party pursuant to Article 44 of the
implementing rules of the Law on Sino-foreign Cooperative Enterprises.
15.8 The Joint Venture will use Renminbi to effect payment of locally sourced
equipment, materials, fuel, parts and other items and all costs and
expenses denominated in Renminbi. Subject to the Foreign Exchange
Regulations and so as to minimize the risk of incurring foreign exchange
losses, the Joint Venture will convert Renminbi revenues to foreign
exchange to effect payment of costs and expenses denominated in foreign
exchange required to be paid in foreign exchange.
15.9 Unless the Foreign Party otherwise requires, all distributions to the
Foreign Party (including any distribution to be made upon a liquidation of
the Joint Venture) will be remitted in U.S. Dollars out of China to an
account or accounts designated by the Foreign Party. Any distribution to
the Chinese Party (including any distribution to be made upon a liquidation
of the Joint Venture) will be in Renminbi and will be remitted to an
account or accounts designated by the Chinese Party.
15.10In accordance with Chinese laws and regulations and the Articles of
Association, the Joint Venture will make contributions each year to the
Joint Venture's Expansion Fund, Reserve Fund and Bonus and Welfare Fund for
Staff and Workers in an amount to be determined by the Board from the
after-tax profits of the Joint Venture. The aggregate proportion of the
after-tax profits of the Joint Venture contributed in any year by the Joint
Venture to such funds and any other funds will not exceed 15 percent of
such after-tax profits for the
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relevant year. All amounts on deposit in such funds shall be utilized
only as directed by the Board.
CHAPTER 16
SALE OF ELECTRICITY
16.1 The Joint Venture will supply to the Chinese Party the electricity it
requires to operate its Aluminum Plant located in Jiaozuo City, Henan
Province, China pursuant to an Aluminum Mill Power Supply Contract. The
Chinese Party will pay for the electricity in cash in RMB.
16.2 Any electricity generated by the Joint Venture not sold to the Chinese
Party shall be sold to the Henan Electric Power Corporation pursuant to the
Power Company Power Purchase and Sale Contract.
CHAPTER 17
INDEPENDENT AUDITING
17.1 In the event either Party believes that a mistake has been made in the
preparation of any of the financial reports enumerated in Chapter 15.1,
such Party will have the right to appoint an independent auditor to examine
and verify such report and the costs of the independent auditor shall be
borne by the Party making the request. Any such auditor will be an
accountant with international experience registered in China.
17.2 All necessary documents and accounts of the Joint Venture will, for the
performance of auditing under this Chapter, be provided to the auditor(s)
according to the reasonable requirements of such auditor(s).
17.3 In the event such auditor(s) discover any material mistakes in any such
report, the Joint Venture will cause its accountant(s) to restate such
report to correct such material mistakes in accordance with the
then-applicable accounting laws and principles of China.
CHAPTER 18
FOREIGN EXCHANGE MANAGEMENT
18.1 All foreign exchange matters of the Joint Venture will be handled in
accordance with the Foreign Exchange Regulations and the provisions
contained in this Chapter are specifically subject to the Foreign Exchange
Regulations.
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18.2 The Joint Venture will open and maintain in its own name a Renminbi
account(s) at the Bank of China or another bank located in China which is
approved by the People's Bank of China.
18.3 The Joint Venture will also open a U.S. Dollar account(s) (and such other
foreign currency accounts as the Board may decide) at the Bank of China or
another bank located in China. All foreign exchange income and expenditures
of the Joint Venture will be paid into and out of such account or accounts.
The foreign exchange funds maintained in such account(s) and the income
thereon shall only be used as permitted under Chinese law.
18.4 The foreign staff and staff from Hong Kong and Macau of the Joint Venture
may remit their salaries and other income derived from the Joint Venture
out of China after payment of any required tax.
18.5 During the Term, all foreign exchange necessary for the payment of interest
on and repayment of principal of the Foreign Party's U.S. Dollar loans,
distribution of profits to the Foreign Party and return of its capital
shall be handled in accordance with the relevant state regulations of
foreign exchange control.
CHAPTER 19
TERM
The term of the Joint Venture will commence on the date of the issuance of
the Business License and continue for 23 years thereafter (including three
years of construction) unless terminated prior thereto in accordance with the
provisions of this Contract or as extended by written agreement of the Parties
(the "Term").
CHAPTER 20
INSURANCE
The Joint Venture will maintain such insurance policies as are required to
be maintained by the Joint Venture as determined by the Board of Directors.
Such policies will be obtained from appropriate companies licensed to do
business in China and will be denominated in Renminbi and/or in foreign
currencies as determined by the Board, and will comply with applicable Chinese
laws and regulations.
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CHAPTER 21
LAND USE
After establishment of the Joint Venture, the Joint Venture will enter into
the Site Use Contract. Upon execution of the Site Use Contract, a land use
certificate will be issued to the Joint Venture allowing it full land use
rights necessary for the construction and operation of the Power Plant for the
Term.
CHAPTER 22
APPLICABLE LAW
The formation, validity, interpretation and implementation of this Contract
shall be governed by and construed under the publicly promulgated laws of
China.
CHAPTER 23
EFFECTS OF CHANGES IN CHINESE LAW
In the event the Joint Venture is unable to realize the operating objective
expected by the Parties or any Party's interest is materially adversely
affected due to a major change in operating environment (including legal
environment, changes, amendments or supplements to any existing, or the passage
of any new, national, provincial, municipal, local or other law, statute,
ordinance, rule or regulation, or interpretation thereof by any court,
administrative agency or other government authority after the approval of this
Contract), upon the receipt of a written request of any Party, the Parties
shall promptly make amendments to this Contract so as to protect the interests
of the Parties under this Contract. In the event that any new laws or
regulations are promulgated by the Chinese government which are more favorable
to the Joint Venture, the Joint Venture shall apply for the enjoyment of such
preferential treatment.
CHAPTER 24
BREACH OF CONTRACT
A Party will be in breach of this Contract if:
(a) it fails fully to perform, or suspends its performance of, any of its
obligations under this Contract and if it does not correct such
failure or suspension after notice thereof from the non-breaching
Party within 30 days or, if such failure or suspension cannot
reasonably be corrected within 30 days, within such longer period (not
to exceed 180 days) as may reasonably be required to correct such
failure or suspension;
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(b) any representation made by it in Chapter 2.2 or 2.3 shall prove to be
untrue in any material respect as of the date on which it was made: or
(c) it fails to fund any installment of its portion of the registered
capital of the Joint Venture within two days of the date such
installment was due pursuant to Chapter 5.4.
The breaching Party shall indemnify the Joint Venture and the non-breaching
Party in respect of any loss incurred (excluding consequential damages or
special damages) as a result of such breach, together with interest thereon
from the date any such loss shall have occurred through the date of
payment, calculated at the rate of 15% per annum.
CHAPTER 25
TERMINATION
25.1 The Joint Venture will terminate on the expiration of the Term.
25.2 Prior to the expiration of the Term, this Contract may be terminated
pursuant to any of the following provisions:
(a) Upon the occurrence and during the continuance of a breach of this
Contract under Chapter 24, the non-breaching Party may terminate this
Contract by giving written notice to the breaching Party;
(b) In the event the Power Company Power Purchase Contract or the Aluminum
Mill Power Supply Contract shall at any time be terminated as a result
of the occurrence of an event of force majeure, the Parties will
consider the viability of continuing the business of the Joint Venture
and the feasibility of obtaining substitute electricity purchaser(s),
and, if such substitute electricity purchaser(s) is not obtained
within six months after such termination of the Power Company Power
Purchase Contract or the Aluminum Mill Power Supply Contract, the
Board may vote to terminate this Contract;
(c) If the Joint Venture is unable to lawfully continue its operation,
either Party may terminate this Contract by giving written notice to
the other Party;
(d) If all or a material portion of the assets or properties of the Joint
Venture or a Party shall have been expropriated or requisitioned, such
Party may terminate this Contract by giving written notice to the
other Party; or
(e) If the Joint Venture fails to make a payment when due on any
shareholder loan provided by a Party, such Party may terminate this
Contract by giving written notice to the other party.
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- ----------
[*** Filed separately with the Commission pursuant to a request for
confidential treatment.]
CHAPTER 26
LIQUIDATION
26.1 The Joint Venture shall be liquidated and dissolved upon the termination of
this Contract pursuant to Chapter 25, provided that an application for
approval shall be submitted to the relevant examining and approving
authority in order to terminate this Contract and dissolve the Joint
Venture prior to the end of the Term as provided in Chapter 25.2. In the
event that the Joint Venture is dissolved pursuant to Chapter 25.1 and if
at the time of such dissolution the Foreign Party has recovered its entire
contribution to the registered capital of the Joint Venture, the fixed
assets, including working capital, comprising the Power Plant will belong
to the Chinese Party for free and all other assets of the Joint Venture
will be distributed to the Chinese Party and the Foreign Party according to
a unanimous decision of the Board based on the ratio of [***]% to the
Chinese Party and [***]% to the Foreign Party.
26.2 If by application of the provisions contained in Chapter 26.1 the assets of
the Joint Venture are to be liquidated, a Liquidation Committee (composed
of Board members or other qualified persons, including, without limitation,
certified accountants or attorneys) will be established, composed of two
members appointed by the Chinese Party and four members appointed by the
Foreign Party. The Liquidation Committee will have the power to represent
the Joint Venture in all legal matters concerning the liquidation. In
accordance with applicable Chinese laws and regulations, the Liquidation
Committee will value and liquidate the Joint Venture's assets based on the
Joint Venture's going concern value, taking into account the actual
circumstances of the Joint Venture, the market value of companies in
similar industries and internationally accepted principles of valuation.
26.3 The Liquidation Committee will conduct a thorough examination of the Joint
Venture's assets and liabilities. On the basis of such examination, the
Liquidation Committee will develop a liquidation plan, under the
supervision of the department-in-charge, for the liquidation of the Joint
Venture. The liquidation plan will be subject to approval by the Board. All
actions of the Liquidation Committee will be subject to approval of all
members of the Liquidation Committee. No member of the Liquidation
Committee shall have the power to take any action binding the Liquidation
Committee or the Joint Venture without the express authorization of the
majority members of the Liquidation Committee.
26.4 Upon completion of all liquidation procedures, the Liquidation Committee
shall submit its final report, after approval by the Board, to the approval
and examination authority, and shall nullify the registration of the Joint
Venture. The Parties will have the right to obtain copies of the Joint
Venture's accounting books and other documents, but the originals thereof
shall be left in the care of the Chinese Party.
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[*** Filed separately with the Commission pursuant to a request for
confidential treatment.]
26.5 Upon liquidation resulting from an early termination of this Contract, the
Joint Venture's assets will be applied according to the following
principles and order:
(a) to payments of all liquidation expenses;
(b) to payments of salary, insurance and benefits of the employees of the
Joint Venture;
(c) to payments then due under any contracts or in respect of any
indebtedness of the Joint Venture;
(d) to payments of interest and fees then due with respect to foreign
currency loans;
(e) to payments of interest and fees then due with respect to Renminbi
loans;
(f) to payments of taxes of the Joint Venture then due;
(g) to payments of principal of foreign loans;
(h) to payments of principal of Renminbi loans;
(i) to repayments of registered capital to the Parties in accordance with
the decision of the Board; and
(j) to distributions to the Chinese Party and the Foreign Party according
to the ratio of [***]% to the Chinese Party and [***]% to the Foreign
Party based on a unanimous decision of the Board.
CHAPTER 27
FORCE MAJEURE
In the event that earthquake, typhoon, flooding, fire or war directly
affects the performance of this Contract or makes it impossible to perform this
Contract in accordance with the terms hereof, the Party affected by such force
majeure shall immediately notify the other Party of such event and shall
provide details of such event and effective documentary evidence in a timely
manner. On the basis of the degree to which the performance of this Contract is
affected, the Parties shall discuss whether to terminate this Contract,
partially excuse the obligation to perform this Contract or delay performance
of this Contract.
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CHAPTER 28
SETTLEMENT OF DISPUTES
28.1 Any dispute arising out of or in connection with this Contract will be
attempted to be settled through friendly consultation between the Parties.
Such consultation will begin immediately after either Party has delivered
to the other Party a written request for such consultation. If the Parties
do not reach an amicable solution within 30 days from the notice of such
dispute, either Party may, with notice to the other Party, submit the
dispute for binding arbitration in Stockholm, Sweden under the auspices of
and in accordance with the Arbitration Rules of the Arbitration Institute
of the Stockholm Chamber of Commerce (except to the extent this Chapter 28
specifies different procedures in which event such procedures will govern
the arbitration to the extent so specified). The Parties agree that any
dispute arising out of or in connection with this Contract will be
submitted exclusively to and be finally settled by arbitration irrespective
of the magnitude of such dispute or whether such dispute would otherwise be
considered justiciable or ripe for resolution by a court or arbitral
tribunal. Any settlement and award rendered through such an arbitration
proceeding will 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. This Contract and the rights and
obligations of the Parties will remain in full force and effect pending the
award in such arbitration proceeding.
28.2 The arbitration will be conducted in English and Chinese.
28.3 There will be three arbitrators. Each Party will select one arbitrator
within 30 days after giving or receiving the demand for arbitration. Such
arbitrators will be freely selected, and the Parties 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 as
determined by the arbitration tribunal taking into account the relative
merits of the positions of the Parties.
28.4 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.
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28.5 Each of the Parties is subject to civil and commercial law with respect to
its obligations under this Contract, and the execution and performance of
this Contract by it constitutes private and commercial acts rather than
governmental and public acts. Each of the Parties irrevocably agrees that
this Contract is a commercial rather than a public or governmental activity
and that 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 either of the Parties or any
of their assets has or hereafter may acquire any right to immunity from
set-off, legal proceedings, attachment prior to judgment, other attachment
or execution of judgment on the grounds of sovereignty or otherwise, such
Party hereby irrevocably waives such rights to immunity in respect of its
obligations arising under or relating to this Contract.
CHAPTER 29
NON-DISCLOSURE OF BUSINESS INFORMATION
29.1 During the term of this Contract, the Parties may, upon reasonable request,
furnish each other and the Joint Venture with proprietary business
documents and information needed for the implementation of this Contract.
29.2 The Parties agree that all proprietary business documents and information
which are disclosed by either Party to the Joint Venture or to the other
Party, either directly or indirectly, in writing, orally or by drawings or
inspection will be used only for the Joint Venture's legitimate commercial
purposes as specified in this Contract.
29.3 Each Party agrees that it will furnish, and cause the Joint Venture to
furnish, such documents and information the same degree of proprietary
treatment as the Party gives to its own similar proprietary documents or
information.
29.4 Each Party agrees not to disclose, and cause the Joint Venture not to
disclose, any such proprietary documents or information to any third Party
or to any of its employees, except to its advisors, attorneys, engineering
consultants and lenders under confidentiality arrangements substantially
similar to those set forth in this Chapter and to those employees who are
required to have such proprietary documents and information to carry out
the commercial purposes of the Joint Venture.
29.5 Notwithstanding the foregoing, the following will not be subject to the
undertakings set forth in this Chapter:
(a) documents already in the possession of, or information already known
to, the Joint Venture or the Party receiving the documents or
information before its initial disclosure by the other Party through
no breach of any confidentiality obligation to or for the benefit of
the disclosing Party;
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(b) documents or information in the public domain at the time of
disclosure, or which after such disclosure enters into the public
domain through no fault of Joint Venture or the Party to whom the
information was disclosed; and
(c) documents or information lawfully furnished or disclosed by a third
Party to the Joint Venture or the Party receiving the information or
documents.
CHAPTER 30
MISCELLANEOUS
30.1 This Contract has been written in Chinese and English and each such version
will be of equal force and effect. All documents, notices, waivers and all
other communications written or otherwise between the Parties in connection
with this Contract will be in the Chinese and English languages. All
numbers in contracts of the Joint Venture, books of account and records
will be Arabic.
30.2 Any modifications to this Contract will be subject to written agreement
signed by the authorized representatives of both Parties and will become
effective upon the approval of the original approval and examination
authority of this Contract.
30.3 Subject to the provisions of Chapter 23, in the event any provision of this
Contract is determined to be invalid or unenforceable under applicable
Chinese laws, all other provisions of this Contract will continue in full
force and effect. The Parties will, in such event, replace the invalid
provision with a valid provision which as closely as possible corresponds
to the spirit and purpose of such invalid provision and this Contract.
30.4 After termination of this Contract, the relevant provisions of this
Contract which form the basis for a valid claim by either Party arising
from or in connection with this Contract will remain in effect as related
to the settlement of such claim until such claim is settled. The dispute
resolution provisions of Chapter 28 and the confidentiality provisions of
Chapter 29 will also remain in effect after termination of this Contract.
30.5 A failure or delay by either Party to require the enforcement of any of the
provisions of this Contract will not be construed as a waiver by such Party
of any of its rights nor will it affect in any way the validity of this
Contract or any of its provisions at any time thereafter.
30.6 Neither of the Parties will act on behalf of the other Party, which can
only become bound by the signature of its own authorized representative. In
all circumstances, the Joint Venture will act only in its own name and will
not be considered to be the agent of either of the Parties. Similarly,
unless expressly provided otherwise in a signed writing, neither of the
Parties is the agent of the
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Joint Venture and, therefore, neither of the Parties is entitled to assume
any obligation on behalf of the Joint Venture nor to bind the Joint Venture
in any way whatsoever.
30.7 This Contract constitutes the entire agreement and understanding of the
Parties with respect to the subject matter hereof and supersedes all
documents and correspondence entered into prior to this Contract with
respect to the subject matter hereof.
30.8 Any notice or other communication to be given hereunder shall be in writing
and shall be sufficiently given if, in the case of the Chinese Party,
addressed as set forth in Chapter 2.1 and in the case of the Foreign Party,
addressed to: AES China Generating Co. Ltd., 7/F, Allied Capital Resources
Building, 32-38 Ice House Street, Central, Hong Kong, Telefax:
852-2530-1673, Attention: President, and sent by registered mail or an
internationally recognized overnight courier service, hand-delivered or
transmitted and clearly received by facsimile transmission. Any such notice
shall be effective only upon actual receipt thereof. All notices given by
facsimile shall be confirmed in writing, sent as aforesaid, but the failure
to so confirm shall not vitiate the original notice. Either Party may
change its address for purposes of receiving notices hereunder by notice to
the other Party given in accordance with this Chapter 29.8.
30.9 The titles and headings herein are used for convenience of reference only
and shall not be deemed part of this Contract for purposes of
interpretation. Unless otherwise stated, all references made in this
Contract to "Chapters," shall refer to Chapters of this Contract.
30.10In the event that there is any conflict or contradiction between
provisions of this Contract and provisions of the Articles of Association,
provisions of this Contract shall prevail.
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30.11This Contract is executed on March 27, 1996 in Jiaozuo, People's Republic
of China, in four sets of English and Chinese originals by the duly
authorized representatives of the Parties. This Contract shall become
effective on the date the certificate of approval relating to this Contract
is issued by MOFTEC.
JIAOZUO ALUMINUM MILL
By: /s/ [SIGNATURE ILLEGIBLE]
- ----------------------------
Name: Jin Bao Qing
Title: General Manager
Nationality: Chinese
JIAOZUO POWER PARTNERS, L.P.
by Jiaozuo (GP) Corporation,
its General Partner
By: /S/ Edward C. Hall III
- -------------------------
Name: Edward C. Hall III
Title: Vice President
Nationality: U.S.A.
-27-
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
Exhibit 10.27
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 00037-1) with its registered office in Jiaozuo City, Henan Province,
China (telephone no: 391-329-3144) and JIAOZUO ALUMINUM MILL ("Lender")
(facsimile no: 391-393-3739).
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 RMB 243,963,000
(including interest during construction as provided in Section 3 hereof), 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 RMB 121,981,500 (the "Tranche A
Loans") and the Tranche B Loans to be used mostly for the second unit in an
aggregate amount not to exceed RMB 121,981,500 (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, 1988 (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 Bank of China
is open for business in Jiaozuo, Henan Province, the People's Republic of China
(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, 2004. 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 RMB (Y) 25 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.
------------------
-1-
<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 [***]% per annum, which 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 service 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 service 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 service 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
service 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 Renminbi not later than 10:00 a.m. Beijing time on each
Payment Date to the account of Lender (no. [ ]) at [ ] Bank, [ ], or such other
account within China as Lender notifies to Borrower.
5. Representations and Warranties.
-------------------------------
-2-
<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's other indebtedness does not exceed RMB five million except the loans
provided by other shareholders of Borrower not exceeding US$ 68,584,000, 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:
-3-
<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 dated as
of March 27, 1996 between Jiaozuo Power Partners, L.P. and Jiaozuo Aluminum Mill
(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;
-4-
<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 Power Partners, L.P. evidence
in form and substance satisfactory to Lender that Jiaozuo Power Partners, L.P.
has committed to provide US Dollar loans needed for the Project; and
(l) 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 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.
(e) 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.
-5-
<PAGE>
(f) 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.
(g) 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.
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
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;
-6-
<PAGE>
[*** Filed separately with the Commission pursuant to a request for confidential
treatment.]
(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.
9. Intercreditor Arrangements.
---------------------------
Borrower and Lender each acknowledge that Borrower has also entered into a
loan contract with AES China Power Holding Co. (L), Ltd. for a loan amount up to
US$ 68,584,000 (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 annum, and that the
term of the Other Loan Contract shall be no shorter than ten 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
Renminbi cash basis and loans due to lender under the Other Loan Contract shall
be calculated on US Dollar 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
-7-
<PAGE>
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.
(b) 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.
13. Governing Law.
--------------
This Contract shall be governed by and interpreted in accordance with the
laws of the People's Republic of China.
14. Conciliation and Arbitration.
-----------------------------
(a) 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 14 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 14. 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
-8-
<PAGE>
action and irrevocably submits generally and unconditionally to the jurisdiction
of any such court in any such action.
(b) Language. The arbitration shall be conducted in English and Chinese and
the arbitration shall refer to the English and Chinese texts of this Contract.
(c) 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.
(d) 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.
(e) 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.
15. 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).
16. 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.
17. 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
-9-
<PAGE>
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.
18. 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.
19. 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.
20. Severability.
-------------
If any one 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.
21. 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.
22. Language.
---------
This Contract shall be written and executed in both Chinese and English
versions, each of which shall have equal force and effect.
23. 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.
-10-
<PAGE>
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
- --------
By: /s/ Edward C. Hall, III
--------------------------------
Name:
Title:
LENDER JIAOZUO ALUMINUM MILL
- ------ By: /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Name:
Title:
-11-
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
RMB (Yen) [ ] Date:
FOR VALUE RECEIVED, Jiaozuo Wan Fang Power Company Limited
("Borrower") hereby unconditionally promises to pay to the order of Jiaozuo
Aluminum Mill ("Lender") at the account of Lender (no. ) at , the principal sum
of [amount of Loans in words] (RMB (Y) [ ]) 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 the People's Republic of China.
JIAOZUO WAN FANG POWER COMPANY LIMITED
By:-----------------------------------
Name:
Title:
-1-
<PAGE>
EXHIBIT B
[TO BE DECIDED BY BORROWER'S BOARD OF DIRECTORS]
DRAWDOWN SCHEDULE
Date Amount Construction Milestone
- ---- ------ ----------------------
-1-
<PAGE>
EXHIBIT C
AMORTIZATION SCHEDULE
TRANCHE A TRANCHE B
- ----------------------------------------- ---------------------------------
Number Date Payment Amount
1 1-Jan-98 30% of Depreciation from 1997
Payment Amount Payment Amount
(Percent of Principal (Percent of Principal
Outstanding as of 2-Jan-98) Outstanding as of
Number Date Unit 2 COD
2 1-Apr-98 2.94 Number Date
3 1-Jul-98 2.94% 1 1-Jul-98 3.03%
4 1-Oct-98 2.94% 2 1-Oct-98 3.03%
5 1-Jan-99 2.94% 3 1-Jan-99 3.03%
6 1-Apr-99 2.94% 4 1-Apr-99 3.03%
7 1-Jul-99 2.94% 5 1-Jul-99 3.03%
8 1-Oct-99 2.94% 6 1-Oct-99 3.03%
9 1-Jan-00 2.94% 7 1-Jan-00 3.03%
10 1-Apr-00 2.94% 8 1-Apr-00 3.03%
11 1-Jul-00 2.94% 9 1-Jul-00 3.03%
12 1-Oct-00 2.94% 10 1-Oct-00 3.03%
13 1-Jan-01 2.94% 11 1-Jan-01 3.03%
14 1-Apr-01 2.94% 12 1-Apr-01 3.03%
15 1-Jul-01 2.94% 13 1-Jul-01 3.03%
16 1-Oct-01 2.94% 14 1-Oct-01 3.03%
17 1-Jan-02 2.94% 15 1-Jan-02 3.03%
18 1-Apr-02 2.94% 16 1-Apr-02 3.03%
19 1-Jul-02 2.94% 17 1-Jul-02 3.03%
20 1-Oct-02 2.94% 18 1-Oct-02 3.03%
21 1-Jan-03 2.94% 19 1-Jan-03 3.03%
22 1-Apr-03 2.94% 20 1-Apr-03 3.03%
23 1-Jul-03 2.94% 21 1-Ju1-03 3.03%
24 1-Oct-03 2.94% 22 1-Oct-03 3.03%
25 1-Jan-04 2.94% 23 1-Jan-04 3.03%
26 1-Apr-04 2.94% 24 1-Apr-04 3.03%
27 1-Jul-04 2.94% 25 1-Jul-04 3.03%
28 1-Oct-04 2.94% 26 1-Oct-04 3.03%
29 1-Jan-05 2.94% 27 1-Jan-05 3.03%
30 1-Apr-05 2.94% 28 1-Apr-05 3.03%
31 1-Jul-05 2.94% 29 1-Jul-05 3.03%
32 1-Oct-05 2.94% 30 1-Oct-05 3.03%
33 1-Jan-06 2.94% 31 1-Jan-06 3.03%
34 1-Apr-06 2.94% 32 1-Apr-06 3.03%
35 1-Jul-06 2.94% 33 1-Jul-06 3.03%
---- ----
Total 100.00% Total 100.00%
<PAGE>
EXHIBIT D
LIST OF BORROWER'S DEBTS OF OVER RMB ONE MILLION EACH
-1-
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
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.
------------------
-1-
<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 [***]% per annum, which 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 (no. [ ]) at [ ] Bank,
or such other account within China as Lender notifies to Borrower.
5. Representations and Warranties.
-------------------------------
-2-
<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:
-3-
<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;
-4-
<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.
-5-
<PAGE>
(e) Borrower shall promptly register the Loans (no later than 15 days after
the date hereof) with the State Administration of Exchange Control 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
-6-
<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 years.
-7-
<PAGE>
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.
-8-
<PAGE>
13. Governing Law.
-------------
This Contract shall be governed by and interpreted in accordance with the
laws of England without regard to the conflict of laws rules thereof.
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
-9-
<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.
-10-
<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.
--------
-11-
<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
- --------
By: /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Name:
Title:
LENDER AES CHINA POWER HOLDING CO. (L), LTD.
- ------
By: /S/ Edward C. Hall, III
-------------------------------
Name: Edward C. Hall, III
Title:
-12-
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
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 the conflict of laws rules thereof.
JIAOZUO WAN FANG POWER
COMPANY LIMITED
By:-------------------------
Name:
Title:
-1-
<PAGE>
EXHIBIT B
DRAWDOWN SCHEDULE
[TO BE DETERMINED BY BORROWER'S BOARD OF DIRECTORS]
Date Amount Construction Milestone
- ---- ------ ----------------------
-1-
<PAGE>
EXHIBIT C
AMORTIZATION SCHEDULE
TRANCHE A TRANCHE B
- ---------------------------------------- ----------------------------------
NUMBER DATE PAYMENT AMOUNT
1 1-Jan-98 70% of 1997 Deprecuaiton
PAYMENT AMOUNT PAYMENT AMOUNT
(PERCENT OF PRINCIPAL (PERCENT OF PRINCIPAL
OUTSTANDING AS OF 2-JAN-98) OUTSTANDING AS OF
NUMBER DATE UNIT 2 COD
2 1-Apr-98 0.21% NUMBER DATE
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%
---- ----
Total 100.00% Total 100.00%
<PAGE>
EXHIBIT D
LIST OF BORROWER'S DEBTS OF OVER RMB ONE MILLION EACH
- 1 -
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
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
<PAGE>
TABLE OF CONTENTS
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)
<PAGE>
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
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
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
2
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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.
3
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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 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
4
<PAGE>
[*** Filed separately with the Commission pursuant to a request for
confidential treatment.]
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 [***] years after the Business License (as
defined in the Joint Venture Contract) is issued to Seller (including [***]
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.
6
<PAGE>
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 unexpected
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 accordance
with Prudent Electrical Practices and this Contract.
7
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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.
<PAGE>
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
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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
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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
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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
In the case of Seller, to:
(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 caluclated 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.]
(Average Conversion Rate(t) -
Average Conversion Rate(m - 1)
Average Conversion Rate(m) x [1 + (-------------------------------------------]
Average Conversion Rate(m - 1)
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 Chinese Party's
x Conversion Factor) Annual Profit
------------------------------- + ----------------------- +
Base Output 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 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
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 be 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:
IRR FACTOR = 20 1
E --------------
n=1 1/(1+ [***])^n
- --------------------------------------------------------------------------------
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.
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
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.
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"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
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[***] Filed separately with the Commission pursuant to a request for
confidential information 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.
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"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 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
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[***] Filed separately with the Commission pursuant to a request for
confidential information Power Corporation.
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 [***] 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
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[***] Filed separately with the Commission pursuant to a request for
confidential information Power Corporation.
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
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[***] Filed separately with the Commission pursuant to a request for
confidential information Power Corporation.
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
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<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
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<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
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<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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(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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(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
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
13
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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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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;
15
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(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
<PAGE>
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.
18
<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:
19
<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 caluclated 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.
1
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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
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[*** Filed separately with the Commission pursuant to a request for confidential
treatment.]
(Average Conversion Rate(t) -
Average Conversion Rate(m - 1)
Average Conversion Rate(m) x [1 + (-------------------------------------------]
Average Conversion Rate(m - 1)
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 Chinese Party's
x Conversion Factor) Annual Profit
------------------------------- + ----------------------- +
Base Output 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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"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
<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 be 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 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:
IRR FACTOR = 20 1
E --------------
n=1 1/(1 - [***])n
- --------------------------------------------------------------------------------
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 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 acheiving an installed capacity of 115 MW net per
Unit. (Parasitic load has beed 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
cannot 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, 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 mobilization and purging, for which
fifteen (15) minutes minimum is required. Start-up times are minimum.
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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 Loadong and Deloading Rates.
Mode Load Ramp Rate
(MW) (MW/min.)
---- ---- ---------
Cold 0 - 20 0.17
Cold 20 - 125 0.39
2
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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 fom 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, witha 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 no earlier than two days and no later
than seven days after the Purchaser's receipt of such notice. If Seller
electes to perform such second capacity test, Seller shall, within five
days after the conclusion of such capacity test submit to Purchaser
("Sellers Notice") with a copy to the engineer, the results of either the
initial capacity test or the second capacity test, as Seller may elect.
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 acceptable 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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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 occured 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
Exhibit 10.31
ASSIGNMENT AND ASSUMPTION CONTRACT
This ASSIGNMENT AND ASSUMPTION CONTRACT (this "Contract"), dated as of
this 26th day of April, 1996, is between JIAOZUO ALUMINUM MILL ("Assignor") and
JIAOZUO WAN FANG POWER COMPANY LIMITED ("Assignee").
RECITALS
WHEREAS, Assignor owns all right, title and interest in and to the
equipment, machinery, properties, contracts, permits, licenses and other assets
listed on Schedule A attached hereto (the "Project Assets");
WHEREAS, pursuant to the Joint Venture Contract dated as of March 27,
1996 between Assignor and Jiaozuo Power Partners, L.P. (the "Joint Venture
Contract"), Assignor is required to transfer the Project Assets to Assignee at
the time contributions to the registered capital of Assignee are made;
WHEREAS, Assignor desires to assign to Assignee, and Assignee desires
to accept, all of Assignor's right, title, interest and benefits under, in and
to, the Project Assets and Assignee desires to assume certain liabilities in
connection therewith as listed on Schedule B attached hereto (the
"Liabilities"), all on the terms and conditions set forth herein; and
WHEREAS, the transfer of the Project Assets under this Contract is made
in consideration of Jiaozuo Power Partners, L.P. entering into the Joint Venture
Contract and in consideration of Assignee's assumption of the Liabilities listed
on Schedule B hereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Assignor hereby irrevocably conveys, transfers, sets over and
assigns to Assignee (the "Assignment"), and its successors and assignees, all of
Assignor's right, title and interest in and to all of the Project Assets and all
benefits arising thereunder or therefrom, such Assignment to take effect on the
Assignment Date (as herein defined).
2. (a) Subject to the terms and conditions herein, Assignee hereby
assumes the Liabilities specifically listed on Schedule B hereto, provided that
Assignee shall not assume any liability in connection with the Project (as
defined in the Power Purchase and Sale Contract dated as of April 26, 1996
between Assignor and Assignee), the Project Assets or this Contract, whether or
not listed on Schedule B, until the Assignment Date or such later date as the
Assignment becomes effective under Section 4. Assignor specifically acknowledges
and agrees that Assignee does not assume any liability not listed on Schedule B
and that Assignee shall have no responsibility for any liability in connection
with the
-1-
<PAGE>
Project, the Project Assets or this Contract prior to the Assignment Date or
such later date as the Assignment becomes effective under Section 4.
(b) All debts and liabilities of Assignor in connection with the
Project (other than those listed on Schedule B), whether now existing or
hereafter arising, shall be the sole obligation of Assignor and shall not give
rise to any actual or contingent Lien (as herein defined) on any portion of the
Project, the Project Assets, Assignee, any assets of Assignee or any interest in
Assignee. Assignee shall not be liable for any such debts or liabilities.
Assignor shall be obligated to repay such debts and liabilities in full and upon
such repayment shall provide evidence satisfactory to Assignee that such debts
and liabilities have been paid in full and that all claims and liens in
connection therewith have been released.
3. Each party hereto agrees that it shall execute or cause to be
executed promptly after request by the other such documents or instruments as
may be reasonably required for the purpose of or in connection with the
assignment by Assignor of the Project Assets or the assumption by Assignee of
the Liabilities pursuant to this Contract.
4. Notwithstanding anything contained herein, to the extent the consent
of any third party is required as a condition to the assignment of any Project
Asset, the Assignment, insofar as it encompasses such Project Asset, shall not
be effective unless and until such consent shall have been obtained and Assignor
shall: (a) until such time as such consent shall have been obtained, to the
extent possible obtain for Assignee the benefits of such Project Asset as though
the Assignment had been effective with respect to such Project Asset; and (b) be
obligated to obtain the consent of such third party. At such time as Assignor
shall obtain the required consent to the assignment of any Project Asset
retained by Assignor pursuant to this Section 4, the Assignment shall
immediately become effective in accordance with the terms of this Contract
without the need for further action or further documentation by either party
hereto. This Section 4 shall not apply to any transfer that does not require any
third party's consent.
5. The "Assignment Date" shall be the date on which this Contract is
formally signed by Assignor and Assignee, which date shall be after the business
license is issued to Assignee.
6. Assignor represents and warrants to and covenants with Assignee as
follows:
(a) Assignor has all necessary corporate power and authority to execute
and perform its obligations under this Contract; the signing and performance by
Assignor of this Contract have been duly authorized by all necessary corporate
action on its part; and this Contract has been duly and validly signed by
Assignor and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms.
-2-
<PAGE>
(b) No authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency are
necessary for the signing or performance by Assignor of this Contract or for the
validity or enforceability thereof.
(c) So long as provisions of this Contract are in effect, Assignor
shall (i) preserve and maintain its corporate existence; (ii) preserve and
maintain all of its material rights, privileges and franchises; and (iii) comply
with the requirements of all applicable laws, rules, regulations and orders of
governmental or regulatory authorities.
(d) Assignor is the sole legal and beneficial owner of the Project
Assets free and clear of any Lien other than the Liabilities listed on Schedule
B. "Lien" means, with respect to any property, any mortgage, lien, pledge,
charge, security interest, encumbrance, option, contract right or other third
party right of any kind in respect of such property.
(e) The Project Assets are in a good state of repair and working
condition and comprise of all of the assets, rights and privileges which are
currently or have been used or required by Assignor to carry on the Project.
(f) There are no options or other agreements or contracts outstanding
which provide for the sale or transfer or the right to require the creation of
any Lien over the Project Assets or any part thereof.
(g) Assignee shall upon taking over the Project Assets have full and
complete right, title and interest in and to the Project Assets free and clear
of all Liens.
(h) Neither Assignor nor any of its employees is engaged in or is the
subject of any litigation or arbitration, administrative or criminal proceedings
which may affect the Project Assets or the Project.
(i) All the books and records and other materials relevant to the
Project have been fully, properly and accurately maintained on a consistent
basis and have been turned over to Assignee.
(j) Except as expressly listed on Schedule C hereto, Assignor has
conducted work in connection with the Project in all respects in accordance with
all applicable laws, permits and regulations of the People's Republic of China
and is not currently in violation of such applicable laws, permits and
regulations including without limitation those of the environmental protection
agency. The Project and its business as contemplated will not violate such
applicable laws and regulations referred to above. Assignor acknowledges that
the approvals listed on Schedule C have not been obtained and believes that the
lack of such approvals will not have a serious impact on the Project. Assignor
agrees to provide relevant government support document(s) and try its best to
hold the Assignee harmless against losses in connection therewith.
-3-
<PAGE>
(k) Assignor has disclosed to Assignee in writing full and complete
copies of all contracts and arrangements entered into prior to the date hereof
in respect of the Project Assets and the Projects; and Assignor is not at the
date hereof a party to or subject to any agreement which is outside the ordinary
course of the business of the Project.
(l) There are no claims of third parties or liabilities or obligations
of any kind relating directly or indirectly to the Project or the Project Assets
except the Liabilities set forth on Schedule B hereto.
(m) There are no contracts, obligations, agreements or arrangements to
which Assignor is a party or by which Assignor is bound which are void, illegal
or unenforceable under or contravening any laws, regulations or permits.
(n) Assignor is not in default under any provision of any of the
contracts relating to the Project to be assigned to Assignee and no event has
occurred which constitutes a default, or with the giving of default notice or
the passage of the default cure period, would constitute a default under the
foregoing contracts.
(o) The approvals, contracts and insurance policies to be assigned to
Assignee are and will be on the date of such assignment in full force and effect
in accordance with their terms.
(p) All representations and warranties made by Assignor will be true
throughout the term of Assignee as a joint venture.
(q) Assignor believes that the construction of the power plant complies
with all applicable laws, permits and regulations.
(r) No tax liability shall be incurred by Assignee as a result of
Assignor's transfer of the Project Assets to Assignee as Assignor contribution
to the registered capital of Assignee.
(s) Work relating to the Project that has been completed prior to the
Assignment Date or such later date as the Assignment becomes effective under
Section 4 is free from defects in title, conforms to standards of design,
materials and workmanship prevailing in the industry and conforms in all
respects to the construction contract(s).
(t) Warranties provided by manufacturers or otherwise on equipment
transferred and other Project Assets are valid as of the Assignment Date or such
later date as the Assignment becomes effective under Section 4.
(u) Assignor shall notify Assignee immediately in writing if Assignor
becomes aware of any circumstances that might make any of the representations
and warranties hereunder untrue or misleading.
-4-
<PAGE>
7. Assignor shall, and does hereby agree to, indemnify Assignee for,
and hold it harmless from, (a) any and all liability, loss or damage (other than
to the extent resulting from the Liabilities listed on Schedule B hereto) which
may be incurred under or by reason of this Contract or any breach by Assignor of
any of the representations, warranties, covenants or the terms of this Contract,
(b) any and all claims and demands whatsoever which may be asserted against
Assignee by reason of this Contract (other than to the extent resulting from the
Liabilities listed on Schedule B hereto), (c) any and all claim, liability, loss
or damage relating to the Project or Project Assets arising prior to the
Assignment Date or such later date as the Assignment is effective under Section
4 and (d) any and all claim, liability, loss or damage relating to the Project
or Project Assets arising after Assignment Date or such later date as the
Assignment is effective under Section 4 (other than to the extent resulting from
the Liabilities listed on Schedule B hereto), including in the case of any of
the foregoing items (a) through (d) all costs, expenses and reasonable
attorneys' fees, but excluding any such loss, liability, damage, claims or
demands to the extent resulting directly from Assignee's misconduct or
negligence.
8. (a) Both parties agree that the total value of the Project Assets as
of March 31, 1996 is an amount not less than RMB 301,648,069 and not exceeding
RMB312,808,069 (the "Price Range"). Both parties shall endeavor to agree on the
precise value of the Project Assets (the "Final Price") within the Price Range
prior to May 17, 1996. Upon reaching agreement on the Final Price, (i) the Final
Price shall be stated in Schedule A and Schedule B; (ii) both parties shall sign
Schedule A and Schedule B, which signatures shall be evidence that the parties
have reached agreement on the Final Price; and (iii) the transfer of the Project
Assets from Assignor to Assignee in an amount equal to the Final Price shall be
deemed to have been made on the Assignment Date.
(b) Notwithstanding Section 8(a), the effective date of the Assignment
is the Assignment Date.
(c) On the date the parties reach agreement on the Final Price, a
portion of the Final Price equal to RMB 134,274,000 shall be converted into
Assignor's contribution to the registered capital of Assignee and the remaining
amount of the Final Price shall be deemed to be the first drawdown on the
shareholder loan required to be provided by Assignor to Assignee pursuant to the
Joint Venture Contract.
(d) Both parties recognize that certain of the contracts listed on
Schedule B are not based on fixed prices and that certain contract prices
specified in Schedule B are subject to change. Assignee shall be responsible for
any such price changes except those price changes that have been already
accounted for in the Valuation Report of the Assets of Jiaozuo Aluminum Mill's
Self-Supply Power Plant by Henan Provincial Ownership Rights and Assets
Valuation Company, Ltd. dated June 28, 1995, which price changes shall be
Assignor's responsibility.
-5-
<PAGE>
9. 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.
10. (a) 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 consultation. 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 10 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 10. 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.
(b) The arbitration shall be conducted in English and Chinese and the
arbitration shall refer to the English and Chinese texts of this Contract.
(c) 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.
(d) 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
-6-
<PAGE>
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.
(e) 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.
11. This Contract may be amended or modified only by an instrument in
writing signed by both parties.
12. This Contract will be executed in four counterparts in both Chinese
and English versions. Each version shall be of equal force and effect.
13. This Contract shall be governed by and construed in accordance with
the laws of the People's Republic of China.
14. The invalidity of any provision or portion of this Contract will
not affect the validity of the remainder of this Contract.
15. 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.
16. This Contract and the Assignment shall become effective upon the
formal signing by both parties of this Contract after the business license is
issued to Assignee.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Assignment and Assumption Contract to be signed by its duly authorized
representative on the date first set forth above.
JIAOZUO ALUMINUM MILL
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------
Name:
Title:
JIAOZUO WAN FANG POWER COMPANY LIMITED
By: /s/ Edward C. Hall, III
---------------------------
Name:
Title:
-7-
<PAGE>
Schedule A
List of Project Assets
This Schedule A includes the list of Project Assets in the following
pages and any and all other property and assets, whether tangible or intangible
and wherever located, relating to the Project or any aspect of its development,
construction, ownership, financing or operation, whether in the name of
Assignor, any of its affiliates or any other party (including the contracts
listed on Schedule B and the rights and interests thereunder).
SCHEDULE A
JIAOZUO POWER STATION PROJECT
Total Assets and Liabilities to be Transferred to the Joint Venture Company
(in RMB)
<TABLE>
1-June-95 to
31-May-95 Adjustment to 31-Mar-96
31-May-95 Appraised Value Appraised Value Change in Book Value
Asset Type Book Value
<S> <C> <C> <C> <C>
Land Use Right 8,601,274 81,940,628 (1,830,000) 7,598,845
Civil Construction & Installation 11,175,884 26,670,090 - 20,370,490
Prepaid Construction 17,361,078 17,361,078 - 16,145,721
Prepaid Equipment 30,853,102 48,039,898 (2,973,902) 8,310,400
Equipment in Warehouse 22,470,903 38,770,903 - 2,800,563
Fixed Assets - - - 617,220
Inventory - Raw Materials 10,521,054 10,657,218 - (1,840,111)
Other Investment 53,206 - - 500,232
Deferred Expenses 21,237,317 29,788,617 - 20,067,261
Other Receivables 2,224,327 2,224,327 - 578,697
Cash & Cash Equivalents 4,229,322 4,229,322 - 4,541,607
===================== =================== ===================== =========================
Total Assets 128,727,467 259,682,081 (4,803,902) 79,690,925
===================== =================== ===================== =========================
Liabilities
Other Payables
--------------------- ------------------- --------------------- -------------------------
Total Liabilities
Capital
Contributed by PRC Partners
===================== =================== ===================== =========================
Total Liab. & Capital
===================== =================== ===================== =========================
</TABLE>
<TABLE>
31-Mar-96
Reappraised Value Reference Pages
Asset Type (JV Opening Bal.)
<S> <C> <C>
Land Use Right 80,110,628 Sche. # 1
Civil Construction & Installation 47,040,580 Sche. # 2
Prepaid Construction 33,506,799 Sche. # 3
Prepaid Equipment 53,376,396 Sche. # 4
Equipment in Warehouse 41,571,466 Sche. # 5
Fixed Assets 617,220 Sche. # 6
Inventory - Raw Materials 8,817,107 Sche. # 7
Other Investment 500,232 Sche. # 8
Deferred Expenses 49,855,878 Sche. # 9
Other Receivables 2,803,024 Sche. # 10
Cash & Cash Equivalents 8,770,929
=====================
Total Assets 326,970,259
=====================
Liabilities
Other Payables 25,322,190 Sche. # 11
---------------------
Total Liabilities 25,322,190
Capital
Contributed by PRC Partners 301,648,069
=====================
Total Liab. & Capital 326,970,259
=====================
</TABLE>
Mam
<PAGE>
<TABLE>
Land Use Right
(in RMB) 1-June-95 to
31-May-95 31-May-95 31-Mar-96 31-Mar-96 31-Mar-96
Account Items Book Value Appraised Value Change in BV Book Value Reappraised Value
<S> <C> <C> <C> <C> <C>
Land Acquiring Fee
(area of 481,492.1 m2) 7,755,754 81,940,628 7,413,189 15,168,943 80,110,628
Land Investigation Fee 461,000 - 461,000 -
Temporary Facility 332,220 185,656 517,876 -
Electricity Transformer 52,300 - 52,300 -
----------------- ----------------- ----------------- --------------- ---------------------
TOTAL 8,601,274 81,940,628 7,598,845 16,200,119 80,110,628
</TABLE>
Sch. 1 - Land Use Right
<PAGE>
Civil Construction
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Reappraised Value
Projects Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C>
Well #1 315,171 490,601 - 315,171 490,601
Well #2 339,440 483,230 - 339,440 483,230
Well #3 343,855 491,980 - 343,855 491,980
Well #4 316,897 483,293 - 316,897 483,293
Well #5 341,097 484,294 - 341,097 484,294
Well #6 337,545 484,508 - 337,545 484,508
Well #7 337,513 484,098 - 337,513 484,098
Well #8 347,742 491,868 - 347,742 491,868
Well #9 139,020 496,880 - 139,020 496,880
Well #10 355,068 497,433 - 355,068 497,433
Wall Surrounding the Well 184,030 184,031 19,235 203,265 203,266
Land Work on Water Source 60,000 - - 60,000 -
Main Plant Land Civil Work 5,946,279 10,558,400 246,060 6,192,339 10,804,460
Cooling Tower Civil Work 40,766 1,440,000 341,878 382,644 1,781,878
Plant Entrance Road Work 161,355 1,766,400 132,610 293,965 1,899,010
Plant Area Wall Construction 316,460 336,000 8,416 324,876 344,416
Main Bridge 499,988 3,724,600 302,507 802,495 4,027,107
Chemney 347,149 1,376,956 1,004,596 1,351,745 2,381,552
Dormitory 383,695 1,632,000 81,132 464,827 1,713,132
Raw Material Storage 62,814 763,518 284,954 347,768 1,048,472
Fine Stone - - 5,000 5,000 5,000
Road for Coal Transport - - 5,250 5,250 5,250
Road Correction - - 1,111,440 1,111,440 1,111,440
Thermal Power Company - - 3,107,372 3,107,372 3,107,372
Main Plant Construction - - 11,510,549 11,510,549 11,510,549
Canteen Outside the Plant - - 254,888 254,888 254,888
Boiler Room - - 140,278 140,278 140,278
Building - - 466,551 466,551 466,551
Staff Canteen - - 684,656 684,656 684,656
Water Treatment - - 649,411 649,411 649,411
Warehouse - - 13,708 13,708 13,708
----------------- ---------------- --------------------- -------------------- --------------------
TOTAL 11,175,884 26,670,090 20,370,490 31,546,373 47,040,580
</TABLE>
Sch. 2 - Civil Construction
<PAGE>
Prepaid Construction
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Reappraised Value
Vendors Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C>
Jiaozuo Geology Investigation 190,000 190,000 - 190,000 190,000
Xian City Construction 3,450,000 3,450,000 (3,450,000) - -
City Labor Services 1,809,324 1,809,324 1,500,010 3,309,334 3,309,334
Provincial Construction 5,500,000 5,500,000 6,476,395 11,976,395 11,976,395
Wushi 2nd Construction 766,790 766,790 (74,923) 691,867 691,867
Zheng Iron 40,000 40,000 2,700,000 2,740,000 2,740,000
Provincial Thermal 3,030,963 3,030,963 3,808,241 6,839,204 6,839,204
Provincial Zhongyuen 600,000 600,000 1,080,000 1,680,000 1,680,000
Xinxian Geology Investigation 900,000 900,000 1,200,000 2,100,000 2,100,000
City Electricity 400,000 400,000 (400,000) - -
Jiaozuo Electricity 400,000 400,000 (400,000) - -
Xinguang Installation 240,000 240,000 300,000 540,000 540,000
Xinxian Construction 34,000 34,000 (34,000) - -
Linzhou - - 500,000 500,000 500,000
Jiazuo United - - 1,980,000 1,980,000 1,980,000
Zhengzhou City Electric - - 400,000 400,000 400,000
Chang Fire-proof Materials - - 560,000 560,000 560,000
----------------- ---------------- --------------- ------------ --------------
TOTAL 17,361,077 17,361,077 16,145,722 33,506,799 33,506,799
</TABLE>
Sch. 3 - Prepaid Construction
<PAGE>
Prepaid Equipment
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Reappraised Value
Equipment Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C>
#1 Turbine Machine 7,380,000 15,600,000 1,000,000 8,380,000 16,600,000
#1 Turbine Generator 6,011,000 12,003,894 - 6,011,000 12,003,894
Others 17,462,102 17,462,102 7,310,400 24,772,502 24,772,502
----------------- ---------------- --------------------- ------------------ -------------------
TOTAL 30,853,102 45,065,996 8,310,400 39,163,502 53,376,396
</TABLE>
Sch. 4 - Prepaid Equipment
<PAGE>
Equipment in Warehouse
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
# of 31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Reappraised Value
Items Unit Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C> <C>
#1 Boiler 1 20,700,000 37,000,000 - 20,700,000 37,000,000
#1 Boiler Transportation 996,417 996,417 - 996,417 996,417
Prepaid Boiler Service Fees 100,000 100,000 - 100,000 100,000
Water Pump for Boiler 1 2,406 2,406 - 2,406 2,406
Switch 1 565 565 - 565 565
Fan Machine 1 1,260 1,260 - 1,260 1,260
Exchange Set 2 214,500 214,500 - 214,500 214,500
Water Flow Reader 5 1,533 1,533 - 1,533 1,533
Motor 3 1,115 1,115 - 1,115 1,115
Pump 8 453,107 453,107 - 453,107 453,107
Ignition Set 8 230,000 230,000 230,000
High Pressure Static Remover 103,477 103,477 103,477
Turbine 780 780 780
Mixer 5 815,840 815,840 815,840
Breakers 2 476,100 476,100 476,100
Generator 3,000 3,000 3,000
SW2-110IW/160A 6 604,018 604,018 604,018
Isolated Switch 1 120,670 120,670 120,670
Electric Current Sensor 2,140 2,140 2,140
Electric Current Sensor 250 250 250
Electric Current Sensor 535 535 535
Electric Current Sensor 535 535 535
Voltage Sensor 3 152,705 152,705 152,705
Voltage Sensor 7 262,975 262,975 262,975
Electric Current Sensor 504 504 504
Switch 1 7,281 7,281 7,281
Switch 3 15,842 15,842 15,842
Isolated Switch 570 570 570
Isolated Switch 1,449 1,449 1,449
Isolated Switch 1,072 1,072 1,072
Electric Current Sensor 547 547 547
Electric Current Sensor 273 273 273
--------------- ---------------- ------------------- ----------------- ---------------
22,470,903 38,770,903 2,800,563 25,271,466 41,571,466
</TABLE>
Sch. 5 - Equipment in Warehouse
<PAGE>
Fixed Assets
<TABLE>
31-Mar-96 31-Mar-96
(in RMB) Book Value Reappraised Value
<S> <C> <C> <C>
Yangcheng 1021 135,000
Depreciation (36,043)
----------------- -----------------
Net 98,957 98,957
Audi 100 398,500
Depreciation -
----------------- -----------------
Net 398,500 398,500
Van 38,250
Depreciation (10,605)
----------------- -----------------
Net 27,645 27,645
Small Van 108,000
Depreciation (15,882)
----------------- -----------------
Net 92,118 92,118
total: 617,220 617,220
</TABLE>
Sch. 6 - Fixed Assets
<PAGE>
Inventory Raw Materials
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Reappraised Value
Items Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C>
Black Metal 8,835,452 8,935,973 (1,329,764) 7,505,688 7,505,688
Color Metal 24,208 24,208 10,185 34,393 34,393
Materials for Electricity Work 288,221 288,221 140 288,361 288,361
Hardware Materials 67 67 383 450 450
Screws - - 395 395 395
Auto Parts 397 397 5,940 6,337 6,337
Construction Materials 1,358,337 1,388,204 (392,315) 966,022 966,022
Water Heater 6,883 12,659 (3,070) 3,813 3,813
Low Value, Short Life Materials 5,119 5,119 96 5,215 5,215
Fuel - - 715 715 715
Labor Tools 2,370 2,370 3,348 5,718 5,718
----------------- ---------------- --------------------- --------------- -------------------
TOTAL 10,521,054 10,657,218 (1,703,947) 8,817,107 8,817,107
</TABLE>
Sch. 7 - Inventory Raw Material
<PAGE>
Other Investments
<TABLE>
(in RMB) 31-May-95 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 Reappraised Value
Book Value Book Value
<S> <C> <C> <C> <C>
Training 451,674 451,674
Furniture and Appliances 53,206 101,763 48,558
--------------- ---------------- ------------------ -------------------
TOTAL 53,206 553,438 500,232
</TABLE>
Sch. 8 Other Investment
<PAGE>
Deferred Expense
<TABLE>
(in RMB) 31-May-95 1-June-95 to 31-Mar-96
31-May-95 Appraised Value 31-Mar-96 31-Mar-96 Appraised Value
Items to be Amortized Book Value Change in BV Book Value
<S> <C> <C> <C> <C> <C>
Design Fee 3,053,983 3,053,983 1,020,000 4,073,983 4,073,983
Research & Experimental Fee 2,030 2,030 - 2,030 2,030
Feasibility Study 223,000 223,000 30,000 253,000 253,000
Environmental Evaluation 117,500 117,500 - 117,500 117,500
Temporary Pipeline 26,382 26,382 25,775 52,157 52,157
Loan Interest 13,911,399 21,465,647 13,809,260 27,720,659 35,274,907
Electricity 395,493 395,493 982,395 1,377,888 1,377,888
Office Expense 109,095 109,095 234,419 343,514 343,514
Travel 447,903 447,903 556,408 1,004,311 1,004,311
Entertainment 870,071 870,071 749,540 1,619,611 1,619,611
Salaries and Benefits 437,515 437,515 1,138,000 1,575,515 1,575,515
Other Compensation 211,040 211,040 122,654 333,694 333,694
Tax 11,621 11,621 14,687 26,308 26,308
Repair Fee 51,082 51,082 57,539 108,621 108,621
Insurance Fee 15,070 15,070 34,173 49,243 49,243
Printing Fee 8,392 8,392 7,082 15,474 15,474
Penalty Fee 1,877 1,877 1,125 3,002 3,002
Transportation Fee 43,032 43,032 114,696 157,728 157,728
Technical Information Fee 25,772 25,772 54,730 80,502 80,502
Material Consumption 198,629 198,629 193,567 392,196 392,196
Low value, short-live items 11,547 11,547 15,678 27,225 27,225
Other 142,194 142,194 657,538 799,732 799,732
----------------- ---------------- --------------------- ------------------ --------------
Subtotal 20,314,627 27,868,875 19,819,266 40,133,893 47,688,141
Office Equipment
(provided by the mill)
Passenger Vehicle 141,571 141,571
Coupe 450,000 450,000
Mini-van 42,000 42,000
Motor Cycle 1 13,500 13,500
Motor Cycle 2 6,200 6,200
Air-Conditioner 1 21,200 21,200
Air-Conditioner 2 8,500 8,500
Photocopy Machine 34,790 34,790
Typewriter 14,628 14,628
Color TV 1 5,738 5,738
Color TV 2 7,200 7,200
Picture Developing Machine 13,200 13,200
Security System 4,800 4,800
TV 9,600 9,600
Bicycles 1,604 1,604
Phone 14,280 14,280
Mobile Phone 56,400 56,400
Pagers 58,300 58,300
Furniture 93,542 93,542
----------------- ---------------- --------------------- ------------------ --------------
Subtotal 997,053 997,053
Jiangau Isuzu Van 127,100 127,100 - 127,100 127,100
Coupe 211,304 211,304 - 211,304 211,304
Gold Cup Sealion Van 358,900 358,900 - 358,900 358,900
Tianjin Honda Motor Cycle 11,050 11,050 - 11,050 11,050
Golden City Suzuki Motor Cycle 8,800 8,800 - 8,800 8,800
Telecommunication Network 186,214 186,214 19,638 205,852 205,852
Measurement Equipment 11,926 11,926 - 11,926 11,926
Water Level Measuring Equipment 1,634 1,634 - 1,634 1,634
TV 2,902 2,902 - 2,902 2,902
Camera 1,580 1,580 - 1,580 1,580
Other 1,280 1,280 2,967 4,247 4,247
Air Conditioner - - 185,920 185,920 185,920
Mobil Phone - - 39,470 39,470 39,470
----------------- ---------------- --------------------- ------------------ --------------
Subtotal 922,690 922,690 247,995 1,170,685 1,170,685
TOTAL 21,237,317 29,788,618 20,067,261 41,304,578 49,855,879
</TABLE>
Sch. 9 - Deferred Expense
<PAGE>
Other Receivables
<TABLE>
(in RMB) 31-May-95 31-Mar-96
31-May-95 Appraised 31-Mar-96 Reappraised Value
Receivable Item Book Value Value Book Value
<S> <C> <C> <C> <C> <C>
Advances to Employees 974,166 974,166
Machuan Finance Ministry 1,000,000 1,000,000
Daiwang Finance Ministry 50,000 50,000
Provincial No. 2 Construction 31,300 31,300
Provincial Construction Service 80,000 80,000
Jiaozuo Cable 700 700
Provincial Design Institute 5,000 5,000
Jiaozuo Minery Department 50,000 50,000
Zhengzhou Cable 600 600
Jiaozuo City Geology Investigation 470,000 470,000
City Electricity Department 130,000 130,000
Canteen 10,010 10,010
City North Transportation Station 1,248 1,248
----------------- ----------------- ---------------- ------------------
TOTAL 2,803,024 2,803,024
</TABLE>
Sch 10 -Other Receivables
<PAGE>
Other Payables
<TABLE>
31-Mar-96
31-Mar-96 Reappraised Value
Content Book Value
<S> <C> <C> <C>
Jiaozuo University (Xian Electricity University) Training 7,300 7,300
Provincial Construction Investment Purchase of Material 108,672 108,672
Shanghai Electric Construction Purchase of Material 188,000 188,000
City No. 2 Cement Factory Purchase of Material 9,500 9,500
Shishan Resource Trading Purchase of Material - -
City Resource Recycle Trading Co. Purchase of Material 84,292 84,292
Provincial Foreign Investment Resource Purchase of Material 1,939,351 1,939,351
Provincial Metallic Material Co. Purchase of Material 2,431,854 2,431,854
City Material Co. Purchase of Material 268,842 268,842
Provincial Metallic Material Development Co. Purchase of Material 81,043 81,043
Chungyuen Trading Co. Purchase of Material 2,774,514 2,774,514
Xian Electric Purchase of Equipmer 310,002 310,002
Zhengyeung Switch Purchase of Equipmer 616,290 616,290
Nantung Purchase of Equipmer 500,000 500,000
City Resources Limited Purchase of Material 23,205 23,205
Shanghai Boiler Purchase of Boiler 2,300,000 2,300,000
(Various Raw Material Suppliers) Purchase of Material 433,597 433,597
------------ -----------
12,076,462 12,076,462
Loan payable 12,500,000 13,000,000
Tax Payable (Construction Tax) 245,728 245,728
- ------------------------------ ------------ -----------
TOTAL 24,822,190 25,322,190
</TABLE>
Sch. 11 Other Payables
<PAGE>
Schedule B
List of Liabilities Assumed by Assignee
Equipment Contract
Jiaozuo Project
SCHEDULE B
List of Liabilities Assumed by Assignee
Equipment Contract
<TABLE>
Contract Amount Paid as Amount O/S
Reference Equipment Name & Model Number Manufacturer Quantity Amount at Mar 31, 96 at Mar 31, 96
--------- ----------------------------- ------------ -------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1.a Turbine (RMB'000) (RMB'000) (RMB'000)
1 Turbine Machine #1, Shanghai Turbine 1 12,300 8,380 3,920
N125-13.24/535/535
2 Turbine Machine #2, Shanghai Turbine 1 13,000 3,900 9,100
N125-13.24/535/535
3 Turbine Generator #1, Shanghai Electric 1 8,103 6,011 2,092
QFS-125-2 13.8kv
4 Turbine Generator #2, Shanghai Electric 1 8,012 801 7,211
QFS-125-2 13.8kv
5 Air Condenser, N-71100-III, Shanghai Station 1 4,480 1,948 2,532
61401-0-0, JD-330-1
6 Low Pressure Heater, JD-220-4, Shanghai Station 1 930 93 837
JD-260-3, JD-260-2
7 High Pressure Heater, Shanghai Station 1 2,290 229 2,061
JG-490-3-1, JG-450-3-2
8 Pressure Reducing Set, C3D65-0 Shanghai Station 1 470 47 423
(WW202-0, Y3D23-0, TP4-D601-0,
TP4-D602-0, TP4-D201-0)
9 Blowdown, 71102-0-0 Shanghai Station 1 35 4 32
10 Blowdown, 71202-0-0A Shanghai Station 1 45 5 41
11 Condensing Pump, 12NL-160 Shanghai Pump Factory 2 600 180 420
Motor, JSL 12-4 Shanghai Pump Factory 2 118 35 83
12 Water Supply Set, DGT 480-180 Shanghai Electric Construct 2 1,960 596 1,364
Water supply set motor, (Ordered by Shanghai 2 470 282 188
ykds-3200-2,6kv Electric)
13 Water Pump Set, 150NW-T8x2 Shanghai Pump Factory 2 81 24 57
Motor, y55kw, 2p, 380v Shanghai Pump Factory 2 21 6 15
14 Injection Pump, 250s-39A Shanghai Pump Factory 2 22 7 15
15 Motor, y250m-4,380v, 55kw Shanghai Pump Factory 2 19 6 13
16 Oil Pump 150y-150 Shanghai Pump Factory 1 15 5 11
Motor, YB 315 L1-160KW Shanghai Pump Factory 1 62 19 44
17 High Pressure Set, GS100, GL 440 Qingdao Boiler 2 1,600 1,100 500
18 Bridge Crane, 75/20t Dailian 1 1,460 1,022 438
19 Flushing Set Qingdao Electric Equipment 1 188 - 188
20 Extraction Set Shanghai Turbine 2 -
Steam Seal Heater Shanghai Turbine 1 200 - 200
21 Water Filter Qingdao Electric Equipment 2 17 - 17
22 Extraction Set B151.81.21, Shanghai 3 210 210
HB151.82.10
23 Heater for Starting Gas PxP-160T Changzhou Northern Power 4 152 - 152
----------- ------------- -----------------
56,861 24,699 32,162
</TABLE>
1
<PAGE>
Equipment Contract
Jiaozuo Project
SCHEDULE B
List of Liabilities Assumed by Assignee
Equipment Contract
<TABLE>
Contract Amount Paid as Amount O/S
Reference Equipment Name & Model Number Manufacturer Quantity Amount at Mar 31, 96 at Mar 31, 96
--------- ----------------------------- ------------ -------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1.b Boiler
1 Boiler, SG 420/13.7-M419 Shanghai Boiler 1 23,000 20,700 2,300
2 Boiler, SG 420/13.7-M419 Shanghai Boiler 1 23,000 4,600 18,400
3 Ignition Set, KLD-2 Shanghai Boiler 8 230 230 -
4 Ignition Set, KLD-3 Shanghai Boiler 8 230 - 230
5 Wind Box #1, 651419-4 Shanghai Boiler 1 80 - 80
6 Wind Box #2, 651419-4 Shanghai Boiler 1 80 - 80
7 Neunatic Actuator, ZGSA-160x300, Shanghai Boiler 40 150 - 150
ZSZ-63x125
8 Neunatic Actuator, ZGSA-160x300, Shanghai Boiler 40 150 150
ZSZ-63x125
9 Ash Blower, 1K-525B (long) Hebei Machinery 4 534 160 374
Ash Blower, IR-3 (short) Hebei Machinery 24
10 Copper Coal Grinder, MG350, 600 Jiaozuo Minery Factory 2 3,600 1,080 2,520
11 Motor, YTM 630-6 Xiangtan Minery Factory 2 690 240 450
12 ESP, RWD-KFH/JZL-1-108x3-2 Chengzhou Electric Construct 2 5,700 1,995 3,705
13 Start-up Boiler, SZS10-1.25/ Tianjin Boiler 1 466 310 156
300-y
14 Coal Foeder, RMD063 Hebei Machinery Factory 2 140 - 140
15 Scroper Coal Fine Conveyer, Hebei Machinery Factory 1 217 - 217
RMSSF40
16 Coarse Separator, HW-CB-I Qingdao Boiler 2 191 - 191
17 Fine Separator, HW-XB-I Qingdao Boiler 2 132 - 132
18 Fan (Separator), M5-29-11 Chengdu Machinery 2 284 120 164
19 Draft Fan, G4-73-11 Chengdu Machinery 2 156 120 36
20 Inducing Fan, Y4-2X60-01 Chengdu Machinery 2 1,260 760 500
21 Motor, YFKK450-4, YFKK6301-8, Zangyeung Electric 6 1,252 - 1,252
YFKK5001-4
22 Coal Greeze Feeder, GF-9 Zangyeung Electric 12 144 - 144
23 Fan Muffler, ZK-LT-20x3.2-A Chengdu Electric 2 140 - 140
24 Elevator, TLJ1000/1.0-JX.PC Changzhou Elavator 1 250 50 200
25 Lubricant Dilution, GDZ-63 Shenyang Minery 2 100 - 100
26 Injection Lubrication Set, Shenyang Lubrication Factory 2 78 - 78
SZP-2A ---------- -------- -------------
62,254 30,365 31,889
</TABLE>
2
<PAGE>
Equipment Contract
Jiaozuo Project
SCHEDULE B
List of Liabilities Assumed by Assignee
Equipment Contract
<TABLE>
Contract Amount Paid as Amount O/S
Reference Equipment Name & Model Number Manufacturer Quantity Amount at Mar 31, 96 at Mar 31, 96
--------- ----------------------------- ------------ -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
2. Coal Handle
1 Truck Unloader, QX280-12 Hunan Electric Equipment 2 620 186 434
2 Bucket Wheel Reclaimer, Daichung Co. 1 3,700 500 3,200
DQL500/500-25
3 Screen, GGS-600 Shenyang Electric 2 200 - 200
4 Hopper Crusher, PCH-1016 Hebei Minery Equipment 2 456 - 456
5 Iron Picker, RCDD-12 Jenjiang Magnetic Equipment 2 178 - 178
6 Iron Picker, RCDD-10 Jenjiang Magnetic Equipment 2 108 - 108
7 Blade Wheel Feeder, QYG-600A Shenyang Electric Machinery 2 590 - 590
8 Belt Conveyer, B 1000mm Jiaozuo Forklift 11 3,875 - 3,875
9 Plow Unloader, B 1000mm Zhengzou Electric Equipment 6 108 - 108
10 Electric Circuit, 800x800 Zhengzou Electric Equipment 4 36 - 36
11 Water Scrapper Zhengzou Electric Equipment 1 10 - 10
12 Seal of Coal Silo Shenyang Electric Machinery 269 121 - 121
13 Damper Air Lock, 4A Wuxi Electric Supply 4 60 - 60
14 Bulk Material Handle Wuxi Electric Supply 4 60 - 60
15 Crane, LD Luoyang Forklift 1 42 - 42
16 Crane, LD Luoyang Forklift 1 40 - 40
17 Electric Belt, TCS-Y901 Jiangsu Electronic Scale 4 497 - 497
18 Truck Scale Balance Xishan Equipment 32 302 - 302
19 Electric motor vehicle Changzhou Limited Company 1 111 - 111
--------------- ----------- -------------
11,114 686 10,428
3. Ash and Slag
1 Boam Crane, LD Luo Yang Fortlift 1 35 - 35
2 Ash Discharge Valve, XZ320 Zhengzou Electric Equipment 12 31 - 31
3 Air Lock, DDBS-20/40 Zhengzou Electric Equipment 8 80 - 80
4 Air Lock, DDS-20 Zhengzou Electric Equipment 4 36 - 36
5 Three-Way Buffle Plate, 320x320 Zhengzou Electric Equipment 12 36 - 36
6 Truck Loading Equipment Zhengzou Electric Construct 1 58 - 58
7 Neumatic Transportation Pump, Zhejiang Electric Construct 8 640 - 640
CD4.0-1800
8 Neumatic Transportation Pump, Zhejiang Electric Construct 4 272 - 272
CD2.5-1600
Solinoid Valve, DFX-IID Zhejiang Electric Construct 6 96 - 96
9 Mixer/Feeder/Discharge Valve Nantong Construction Equip. 5 816 500 316
10 Oil Cooled Screw Air Compressor Shanghai Installation 4 940 - 940
Heater, DYK-30, DKY-45 Jiangsu Generation Equipment 6 150 - 150
--------------- ------------ --------------
3,190 500 2,690
</TABLE>
3
<PAGE>
Equipment Contract
Jiaozuo Project
SCHEDULE B
List of Liabilities Assumed by Assignee
Equipment Contract
<TABLE>
Contract Amount Paid as at Amount O/S
Reference Equipment Name & Model Number Manufacturer Quantity Amount Mar 31, 96 at Mar 31, 96
--------- ----------------------------- ------------ -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
4.Demineralization
1 H+Ion Exchanhger, 1800R+-1250 Xian Xibei Electric Construct 5 169 169
2 Cathode Ion Exchanger, 1800R- Xian Xibei Electric Construct 5 169 169
-1250
3 Mixed Ion Exchanger, 1250R+-5, Xian Xibei Electric Construct 2 52 38 14
R- -1000
4 CO2 Remover Xian Xibei Electric Construct 2 63 63
5 Resin Catcher Xian Xibei Electric Construct 4 12 12
6 Acid Absorber Xian Xibei Electric Construct 1 5 5
7 Acid Tank Central Electric 2 124 112 12
8 Alkaline Tank Central Electric 2 124 112 12
9 Acid Scaling Tank - Anode Bed City Demin. Group 1 9 9
10 Acid Scaling Tank - Mixed Bed City Demin. Group 1 7 7
11 Alkaline Scaling Tank - City Demin. Group 1 9 9
Cathode Bed
12 Alkaline Scaling Tank - City Demin. Group 1 7 7
Mixed Bed
13 Steel Filter Tank Anyeung Water Treatment 2 272 272
14 Installation Yixing Water Treatment 8 912
------------ ---------------- -------------
1,934 600 422
5.a.Electric System
1 Transformer, SFPZ7-90000/220 Xian Transformer 1 4,700 1,000 3,700
2 Transformer, SFP7-150000/110 Xian Transformer 1 4,300 1,000 3,300
3 Standby Transformer, Xian Transformer 1 1,240 1,240
SF27-20000/110
4 Transformer for the Plant, Xian Transformer 1 830 830
SF7-20000/13.8
5 Circuit Breaker, Zhenyeung Switch 2 456 300 156
SW2-220IIIW/1600A
6 Circuit Breaker, Zhenyeung Switch 6 588 300 288
SW2-110IW/1600A
7 Switch, GW8-110W/400A Zhenyeung Switch 1 7 7
8 Switch, GW8-60W/400A Zhenyeung Switch 3 15 15
9 Isolation Switch, GN23-20Z/8000A Zhenyeung Switch 1 118 118
10 Lightening Arrestor, Nanyeung Lightening Arrestor 6 180 180
Y10W-200/520(W)
11 Lightening Arrestor, Nanyeung Lightening Arrestor 15 233 20 213
Y10W-108/268(W)
12 Lightening, Y1W-146W Nanyeung Lightening Arrestor 1 17 17
13 Lightening, Y1W-60W Nanyeung Lightening Arrestor 3 22 22
14 Lightening, Y25W-16.7 Nanyeung Lightening Arrestor 3 3 3
15 Discharge Record, JSY-10 Nanyeung Lightening Arrestor 25 8 8
16 H.V.Panel Xinyeung Switch 7 510 102 408
</TABLE>
4
<PAGE>
Equipment Contract
Jiaozuo Project
SCHEDULE B
List of Liabilities Assumed by Assignee
Equipment Contract
<TABLE>
Contract Amount Paid as Amount O/S
Reference Equipment Name & Model Number Manufacturer Quantity Amount at Mar 31, 96 at Mar 31, 96
--------- ----------------------------- ------------ -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
17 PT TYD220 Xian Electric 3 151 106 45
18 PT TYD110 Xian Electric 7 259 100 159
19 CT Zhenyeung Equipment 43 960 300 660
20 Isolation Switch, GW4 Wushun Electric 41 870 100 770
----------- ------------- -------------
15,466 3,508 11,958
6.b. Plant Power
1 Dry Transformer, SCL2-1250/6, Beijing Transformer 4 614 614
SCL2-100
2 BGZN-27x2x300/220 Xinxian 755 2 1,354 1,354
BGZN-27-2x100/220 Xinxian 755 1 387 387
3 NIFE901-220-40 Shanghai 2 1,340 1,340
4 6KV high voltage box, JYN3-10 Xinhong Industrial Automatic 71 2,980 2,980
5 GSF-1 ACF Xinhong Industrial Automatic 8 281 281
6 GKG-1, GFKG-6 Xinhong Industrial Automatic 21 263 263
------------- ------------ --------------
7,219 7,219
Instrumentation
1 General DCS System Shenzhen 2 6,998 6,998
2 Boiler/Turbine Protection System Jiaozuo 1 1,370 1,370
3 Secondary Air Gate/Swing Cylinder Suian City 10 145 145
Central Panel, FDK-1
4 Thermal Set Control System Shenzhen Electric Power 2 1,979
5 Monitor System Shenzhen Wanyue 1 227 227
------------- ------------ --------------
10,719 8,740
8. Water System
1 Recirculation Pump, 1200HLCB3-19, Shanghai (KSB) 4 1,941 1,081 860
YL800KW10P6kv
2 Booster, 500S-22B Shanghai (KSB) 2 106 32 74
3 Crane, 16/3.2t Xin Xian 1 240 - 240
-------------- ------------ --------------
2,287 1,113 1,174
171,043 61,471 106,682
</TABLE>
5
<PAGE>
Construction Contract
SCHEDULE B
List of Liabilities Assumed by Assignee
Construction Contract
<TABLE>
Amount
Total Prepaid Civil O/S
Ref# Project Contractor Amount Construction Construction March 31, 96
- ---- ------- ---------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
(RMB'000) (RMB'000) (RMB'000) (RMB'000)
1 Thermal System Henan Construction 28,440 28,440
Fuel System Henan Construction 12,040 12,040
Water Supply System Henan Construction 18,540 18,540
Turbine System Henan Construction 2,710 2,710
Water Treatment System Henan Construction 1,850 1,850
Generation Support System Henan Construction 2,130 2,130
Supplementary System Henan Construction 6,970 6,970
Other Henan Construction 4,370 4,370
-------- ---------------- -------------- --------------
77,050 12,940 14,820 49,290
2 Staff Dormitory Zhongyeun Construct 2,000 1,680 460 -
3 Dormitory Water & Electricity Xinguang Installation 800 540 260
Supply
Conference Room Xinguang Installation 70 70
--------- ---------------- -------------- --------------
870 540 - 330
4 No.I 110kv Cable Modification Jiaozuo Electric 570 570
No.II 110kv Cable Modification Jiaozuo Electric 560 560
---------- ---------------- -------------- --------------
1,130 -- 1,110 20
5 Road Work Outside the Plant Jiaozuo City Construct 1,600 1,600
Tower Construction Jiaozuo City Construct 300 300
---------- ---------------- -------------- --------------
1,900 3,310 290 -
6 Cooling Tower Civil Work Hungda 1,620 -- -- 1,620
7 Canteen Outside the Plant Linzhou 1,120 500 250 370
8 Cooling Tower Fine Stone Xinxian 1,300 1,300
350 350
----------- --------------- -------------- --------------
1,650 2,100 390 -
9 Pole Zheng Iron 6,000 2,740 800 2,460
10 Water Well Jiaozuo Mineral Water 3,770 190 3,440 140
11 Warehouse Wushi 800 690 360 -
12 Underground Water Pipe City Water 1,980 -
13 Installation Provincial Thermal 150,000 6,840 3,110 140,050
14 Main Plant Construction Xian 6,190 - 6,190 -
15 Plant Wall Chang 320 320 -
--------- ---------------- -------------- --------------
TOTAL 254,420 33,510 31,540 194,280
</TABLE>
6
<PAGE>
Schedule C
List of Approvals Not Obtained
Assignor acknowledges that as of the date hereof, it has not received
the following approvals:
1. Construction Engineering Permit
2. Construction Start Permit
D-1
Exhibit 11a
AES CHINA GENERATING CO. LTD.
STATEMENTS REGARDING COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
Three Months Ended Three Months Ended
May 31, 1996 May 31, 1995
------------------ -------------------
PRIMARY
Weighted Average Number of Shares of
Common Stock Outstanding 15,634 17,446
Net Effect of Dilutive Stock Options
Based on the Treasury Stock Method Using
Average Market Price 11 --
------ ---------
Weighted Average Shares Outstanding 15,645 17,446
====== =========
Net Income US$ 594 786
====== =========
Per Share Amount US$ 0.04 0.05
====== =========
FULLY DILUTED
Weighted Average Number of Shares of
Common Stock Outstanding 15,634 17,446
Net Effect of Dilutive Stock Options Based
on the Treasury Stock Method Using Ending
Market Price 44 --
------ ---------
Weighted Average Shares Outstanding 15,678 17,446
====== =========
Net Income US$ 594 786
====== =========
Per Share Amount US$ 0.04 0.05
====== =========
<PAGE>
Exhibit 11b
AES CHINA GENERATING CO. LTD.
STATEMENTS REGARDING COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
Six Months Ended Six Months Ended
May 31, 1996 May 31, 1995
----------------- ----------------
PRIMARY
Weighted Average Number of Shares of Common
Stock Outstanding 15,640 17,580
Net Effect of Dilutive Stock Options
Based on the Treasury Stock Method Using 4 --
Average Market Price
------ ---------
Weighted Average Shares Outstanding 15,644 17,580
====== =========
Net Income US$ 910 993
====== =========
Per Share Amount US$ 0.06 0.06
====== =========
FULLY DILUTED
Weighted Average Number of Shares of 15,640 17,580
Common Stock Outstanding
Net Effect of Dilutive Stock Options Based on
the Treasury Stock Method Using Ending Market
Price 37 --
------ ---------
Weighted Average Shares Outstanding 15,677 17,580
====== =========
Net Income US$ 910 993
====== =========
Per Share Amount US$ 0.06 0.06
====== =========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31,
1996 AND THE CONSOLIDATED BALANCE SHEET AS OF MAY 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> MAY-31-1996
<CASH> 105,977
<SECURITIES> 29,930
<RECEIVABLES> 90
<ALLOWANCES> 0
<INVENTORY> 787
<CURRENT-ASSETS> 140,954
<PP&E> 119,059
<DEPRECIATION> 1,403
<TOTAL-ASSETS> 272,319
<CURRENT-LIABILITIES> 14,533
<BONDS> 33,646
0
0
<COMMON> 177
<OTHER-SE> 186,741
<TOTAL-LIABILITY-AND-EQUITY> 272,319
<SALES> 2,447
<TOTAL-REVENUES> 2,850
<CGS> 1,997
<TOTAL-COSTS> 1,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 322
<INCOME-PRETAX> 1,093
<INCOME-TAX> 202
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 910
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0
</TABLE>
