China Power International Holdings Limited
AES China Holding Company (L) Ltd.
Anhui Liyuan Electric Power Development Company
Wuhu Energy Development Company
Equity Joint Venture Contract
February 12, 1996
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Table of Contents
Article 1. Definitions................................................. 3
Article 2. Parties to the Joint Venture................................ 7
Article 3. Establishment of the Joint Venture.......................... 8
Article 4. Purpose, Scope and Scale of Business........................ 9
Article 5. Total Amount of Investment and Registered Capital........... 9
Article 6. USD and RMB Financing....................................... 10
Article 7. Responsibilities of Parties to the Joint Venture............ 11
Article 8. Site........................................................ 13
Article 9. Construction and Operation of the Power Plant............... 13
Article 10. Electricity Sale and Tariffs................................ 14
Article 11. Purchase of Equipment & Materials and Services.............. 14
Article 12. Electricity Fees, Profit Distributions and Sharing of
Risks and Losses........................................... 14
Article 13. The Board of Directors...................................... 15
Article 14. Operation and Management Organization....................... 18
Article 15. Labor Management............................................ 19
Article 16. Annual Operating Plans and Budgets.......................... 19
Article 17. Taxes, Accounting and Audit................................. 20
Article 18. Bank Account and Foreign Exchange........................... 22
Article 19. Term of the Joint Venture................................... 22
Article 20. Transfer of Interests....................................... 22
Article 21. Termination Prior to the Expiration and Dissolution......... 23
Article 22. Disposal of Assets upon the Expiration of the JV............ 24
Article 23. Liabilities for Breach of Contract.......................... 24
Article 24. Power Plant Insurance....................................... 25
Article 25. Confidentiality............................................. 25
Article 26. Force Majeure............................................... 26
Article 27. Applicable Laws............................................. 26
Article 28. Settlement of Disputes...................................... 27
Article 29. Miscellaneous............................................... 27
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PREAMBLE
IN ACCORDANCE WITH THE LAW OF THE PEOPLE'S REPUBLIC OF CHINA ON SINO-FOREIGN
EQUITY JOINT VENTURES (HEREINAFTER REFERRED TO AS 'THE EQUITY JOINT VENTURE
LAW') AND OTHER PROMULGATED RELEVANT CHINESE LAWS AND REGULATIONS, CHINA POWER
INTERNATIONAL HOLDING LIMITED ('PARTY A'), AES CHINA HOLDING COMPANY (L) LTD.
('PARTY B'), ANHUI LIYUAN ELECTRIC POWER DEVELOPMENT COMPANY ('PARTY C') AND
WUHU ENERGY DEVELOPMENT COMPANY ('PARTY D') (EACH, A 'PARTY' AND COLLECTIVELY,
THE 'PARTIES'), ADHERING TO THE PRINCIPAL OF EQUALITY AND MUTUAL BENEFIT, AGREE
TO SET UP A SINO-FOREIGN JOINT VENTURE ENTERPRISE IN WUHU CITY, ANHUI PROVINCE,
THE PEOPLE'S REPUBLIC OF CHINA. THE PARTIES HAVE HERETO REACHED THE FOLLOWING
AGREEMENT:
Article 1. Definitions
Unless otherwise stated in the provisions of this Contract, the following terms
shall have meanings set forth below:
1.1 'Power Plant' shall mean the power plant which will be built,
designed, constructed, commissioned and
completed in Wuhu City, Anhui Province,
the People's Republic of China
consisting of 2 x 125MW coal-fired
generating units and all buildings,
equipment and machines, including but
not limited to coal and ash handling
facilities, civil works and marine
works, the transmission facilities
linking the plant with the grid,
auxiliary buildings and offices in
accordance with the terms and conditions
of this Contract and the EPC Contract.
1.2 'Anhui Power' shall mean Anhui Provincial Electric Power
Corporation.
1.3 'EPC Contract' shall mean the construction contract entered into
by and between the Joint Venture and
Anhui Power for the purpose of the
overall design and construction of the
Power Plant.
1.4 'Operation and Offtake
Contract' shall mean the contract entered into by and between
the Joint Venture and Anhui Power
regarding the operation of, and sale of
the electricity from the Power Plant.
1.5 'Site' shall mean the site on which the Power Plant is
located in Wuhu Power Plant of Anhui
Province, China.
1.6 'Project Budget' shall mean the project budget as included in the
EPC Contract.
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1.7 'Tariff' shall mean the on-grid tariff per KWH of
electricity generated by the Power Plant
which is approved by relevant Chinese
authorities and paid by Anhui Power and
which can be adjusted in accordance with
Article 7 of the Operation and Offtake
Contract.
1.8 'Plant Insurance' shall mean in accordance with Article 24 hereof,
insurance obtained and maintained by
Anhui Power on behalf of the Joint
Venture for the construction and
operation of the Power Plant.
1.9 'Actual Completion Date'
shall mean in accordance with EPC Contract, the
date on which any one of the units
successfully completes the 72 hour and
24 hour trial operation, and such
completion is certified by the
Engineering Consultant (as defined in
the EPC Contract) approved by the
Creditors.
1.10 'Contract Completion Date'
shall mean as defined in Article 5 of the EPC
Contract.
1.11 'Joint Venture' or 'JV'
shall mean the joint venture company set up by the
Parties pursuant to the Equity Joint
Venture Law, other promulgated relevant
Chinese laws and regulations and this
Contract. The name of the Joint Venture
in Chinese is: (omitted) and the name
of the JV in English is: Wuhu Shaoda
Electric Power Development Company
Limited.
1.12 'Articles of Association'
shall mean the Articles of Association of the Joint
Venture.
1.13 'Business License' shall mean the Business license to be issued to the
Joint Venture by the State
Administration for Industry and Commerce
of China or its other related local
branches.
1.14 'Board of Directors' or 'Board'
shall mean the Board of Directors of the Joint
Venture.
1.15 'Directors' shall mean members of the Board of Directors of the
Joint Venture.
1.16 'Establishment Date of the
Joint Venture' shall mean the date when the Business License of
the Joint Venture is issued.
1.17 'Examination and Approval
Authority' shall mean the Ministry of Foreign Trade and
Economic Cooperation of China and its
authorized examination and approval
authorities.
1.18 'Term of the Joint Venture'
shall mean the duration of the Joint Venture set
forth in Article 19 of this Contract,
including any extended term.
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1.19 'Affiliate of a Party' shall
mean a company directly or indirectly
controlled by a party by means of its
voting right or other means, or a Party
directly or indirectly controlled by a
company by means of its voting right or
other means. 'Control' means the right
to elect the member of the Board of
Directors or the direction of operation
and management.
1.20 'Confidential Information'
shall mean technology and know-how as well as
analytical data, processes, programs,
manuals, designs, sketches, photographs,
plans, drawings, specifications,
reports, studies, findings, non -
patented inventions and ideas and other
information relating to the
construction, installation and financing
of the Power Plant as well as the use or
sale of electricity, whether of a
technical engineering, operational,
business or economic nature, whenever
designated as 'Confidential' by any
Party or any of its relevant Affiliates
and provided by any Party or any of its
relevant Affiliates in connection with
the negotiation of the project
contemplated hereunder, the
implementation of this Contract or the
conduct of the business contemplated by
this Contract. Confidential Information,
however, shall not include such
information which is now or hereafter
becomes part of the public domain
through authorized publication,
information which the receiving Party
can demonstrate was already in its
possession at the time of receipt, and
information which hereafter comes into
the possession of the receiving Party
and was or is not acquired by the
receiving Party directly or indirectly
from the providing Party or sources
under an obligation of secrecy to such
providing Party.
1.21 'Force Majeure' shall mean any of the following events
(1) wars, hostilities or insurrections;
(2) pestilence or other epidemics;
(3) fires that are not caused by
carelessness or deliberateness
(4) lightning;
(5) earthquakes;
(6) other natural forces including
natural disasters.
The events listed above must have all of
the following five characteristics at
the same time:
(1) taking place after the signing of
this Contract;
(2) enforeseable or unavoidable;
(3) beyond the control of any of the
Parties;
(4) directly preventing the performance
of the obligations under this Contract
by any Party.
(5) unpreventable by the best efforts of
the Party affected.
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1.22 'Renminbi' or 'RMB' shall mean the lawful currency of China.
1.23 'RMB Financing' shall mean the RMB loans to the Joint Venture
provided from sources within China.
1.24 'Foreign Exchange' shall mean any currency other than RMB.
1.25 'U.S. Dollars', 'USD' or 'US$'
shall mean the lawful currency of the United States
of America.
1.26 'US$ Senior Loan' shall mean the USD loans provided by the First
Creditor to the Joint Venture on the
terms and conditions set forth in the
USD Senior Loan Contract.
1.27 'USD Senior Loan Contract'
shall mean the Contract signed between the Joint
Venture and the First Creditor for the
purpose of providing the USD Senior Loan
needed by the Power Plant.
1.28 'USD Subordinated Loan' shall
mean the USD loans provided by the Second
Creditor to the Joint Venture on the
terms and conditions set forth in the
USD Subordinated Loan Contract.
1.29 'USD Subordinated Loan
Contract' shall mean the Contract signed between the Joint
Venture and the Second Creditor for the
purpose of providing the USD
Subordinated Loan needed by the Power
Plant.
1.30 'Creditor' shall mean an agency or legal person who provides
funds under the Financing Contract.
1.31 'Financing Contract' shall
mean any Contract entered into by and between
the JV and a Creditor by which to obtain
construction funds for the Power Plant,
including USD Senior Loan Contract, USD
Subordinated Loan Contract and RMB Loan
Contract.
1.32 'China' shall mean the People's Republic of China.
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Article 2. Parties to the Joint Venture
2.1 Each of the Parties hereby represents and warrants to other Parties
that it is duly established and registered as set forth below, that it
has full legal power and right to enter into this Contract that its
legal representative named below is duly authorized to sign this
Contract and other contracts contemplated hereunder on its behalf, that
it has taken all necessary actions and will seek approval from the
Examination and Approval Authority to approve this Contract and the
other contracts contemplated hereunder; that upon the approval of the
Examination and Approval Authority, this Contract shall constitute the
legal, valid and binding obligations of such Party, and the terms of
this Contract shall be enforceable against such Party; its execution,
delivery and performance of this Contract and other contracts will not
violate any of its constituent documents, other agreements,
obligations, or any currently effective law, regulation or decree of
its home country that may be applicable to any aspect of the
transactions contemplated hereunder.
2.2 The parties to this Contract are:
Party A: China Power International Holdings Limited
Legal address: Suite 5306, 531 F, Central Plaza
18 Harbour Road, Wanchai,
Hong Kong
Legal Representative: Zang Mingchang
Position: General Manager
Nationality: People's Republic of China
Party B: AES China Holding Company (L) Ltd.
Legal Address: Lot A, Level 3, Wisma Oceanic
Jalan Okk Awang Besar, 87007
Federal Territory of Labuan
Legal Representative: Paul Hanrahan
Position: President
Nationality: USA
Party C: Anhui Liyuan Electric Power Develpment Company
Legal Address: No. 415 Wuhu Road
Hefei, Anhui Province
China, 230061
Legal Representative: Cheng Guangjie
Position: Chairman of the Board of Directors
Nationality: People's Republic of China
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Party D: Wuhu Energy Development Company
Legal Address: Commercial Office Building
Huangshan West Road
Wuhu, Anhui Province
China, 241000
Legal Representative: Wang Wudao
Position: General Manager
Nationality: People's Republic of China
Article 3. Establishment of the Joint Venture
3.1 The Parties of the Joint Venture agree to set up the Joint Venture in
accordance with the Equity Joint Venture Law and other relevant laws
and regulations of China. The JV is a legal entity in China, and under
the protection and governance of Chinese laws. All activities of the JV
shall abide by promulgated relevant laws, and rules and regulations of
China.
3.2 The name of the JV in Chinese is: (omitted) and in English is Wuhu
Shaoda Electric Power Development Company Limited.
The legal address of the JV is Commercial Office Building, Huangshan
West Road, Wuhu City, Anhui Province.
3.3 The form of organization of the JV shall be a limited liability
company. All parties shall share the losses, risks, legal liabilities
and other liabilities of the JV in proportion to their respective
contributions to the registered capital of the JV. Such liabilities are
limited to the registered capital contributed by each Party. Unless
otherwise agreed upon in written agreement among the Parties to the JV,
other than to provide registered capital, each Party shall not be
collectively or individually held responsible to the JV or to a third
party in connection with the JV's activities. If any action of a Party,
which causes losses, increased risks and liabilities, is not in the
scope of this Contract and violates the Article of Association or is
not included in the scope of business of the Joint Venture, no other
Party shall be held responsible for such losses, risks, legal or other
liabilities.
3.4 After the JV has obtained the approval certificate, the JV Parties
shall proceed to register with and obtain a Business License from the
Administration for Industry and Commerce in accordance with relevant
laws and regulations of the People's Republic of China.
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Article 4. Purpose, Scope, and Scale of Business
4.1 The purposes of the JV shall be to:
(a) build and develop the Power Plant, and generate and sell
electricity generated by the Power Plant in order to support and
encourage Wuhu's opening to the outside world and bring into play its
own advantages, strengthen economic cooperation and technical
exchanges,
(b) obtain advanced and appropriate equipment for the Power Plant and
use modern managerial methods in order to increase the electricity
supply in Anhui Province;
(c) achieve expected economic benefits for each Party.
4.2 The JV's scope of business is to build, own and operate the Power
Plant, and generate and sell electricity.
4.3 The scale of the JV's business includes the generation and sale of the
electricity generated by 2x125 MW coal-fired generators.
Article 5. Total Amount of Investment
and Registered Capital
5.1 The total amount of investment of the JV shall be US$118.37 million, of
which the transmission project accounts for US$ 18.07 million.
5.2 The registered capital of the JV shall be US$30 million, and shall be
contributed by the Parties according to the following ratios:
Party A 45% US$13.50 million
Party B 25% US$7.50 million
Party C 20% US$6.00 million
Party D 10% US$3.00 million
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5.3 The registered capital of the JV shall be paid in cash by the Parties.
Party C and D shall contribute their portions in RMB cash. The amount
of RMB cash shall be calculated on the basis of the actual amount of
RMB deposited into the designated bank accounts of the JV using the
reference USD/RMB exchange rate on the date of the deposit as announced
by the People's Bank of China. Party A and B shall contribute their
portions in USD cash.
5.4 All cash payments made by the Parties to the Joint Venture as their
respective registered capital contributions shall be remitted to the
Joint Venture's bank accounts.
5.5 The Parties shall make their respective registered capital
contributions in accordance with Articles 5.2, 5.3 and 5.4 hereof
within 30 days after the establishment of the JV and the obtaining of
the Business License.
5.6 After the Parties have made their respective registered capital
contributions to the JV, the JV shall, at its own expense, engage an
accountant registered in China, and accepted by all the Parties, to
verify the registered capital contributions and issue a verification
report, at which time investment certificates shall be issued to the
contributing Parties by the JV.
5.7 Any proposed increase of registered capital of the JV shall be approved
by the Board of Directors and then be submitted to the Examination and
Approval Authority for approval. After being approved by the
Examination and Approval Authority, the JV shall register such increase
with the relevant Administration for Industry and Commerce. The
contribution ratio among the Parties for any additional registered
capital shall be the same as the original registered capital
construction ratio unless otherwise agreed upon by the Parties. Upon
the agreement of the Parties and approval by the Examination and
Approval Authority, the Parties may agree to adjust the current ratio
of the registered capital contribution of the Parties.
5.8 All costs related to the project development shall be included in the
total amount of investment of the JV and be paid by the JV.
Article 6. USD Financing and RMB Financing
6.1 The Parties shall arrange financings for the Joint Venture in an amount
equivalent to the difference between the amount of the total investment
and the amount of the registered capital of the Joint Venture in
accordance with Article 6.2 of this Contract.
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6.2 Party A shall procure the provision to the Joint Venture of the USD
Senior Loan amounting to US$65 million on behalf of the Joint Venture
and shall provide guarantee for the USD Senior Loan; Party B shall
procure the provision to the Joint Venture of the USD Subordinated Loan
amounting to US$18 million on behalf of the Joint Venture, and shall
provide guarantee for the USD Subordinated Loan.
Party C and Party D shall provide or procure the provision to the Joint
Venture of financing up to US$3.75 million (equivalent to RMB 31.10
million approximately at the exchange rate of US$1:RMB 8.3), and shall
provide guarantee for such financing.
Should there be any cost overrun in the course of construction, the
Parties shall each raise funds in proportions to their contributions to
registered capital.
Article 7. Responsibilities of Parties to the Joint Venture
7.1 Responsibilities of Party C and D include the following:
(a) contributing their respective portions of the registered capital in
accordance with this Contract and other relevant laws and regulations;
(b) arranging financing in accordance with this Contract;
(c) assisting the Joint Venture in applying to relevant authorities of
China for approval, registration, permission, business license and
other matters concerning the establishment and operation of the JV,
including relevant plans for the construction and the annual generation
plans of the Power Plant;
(d) assisting the JV in purchasing and receiving equipment that shall
be purchased in China;
(e) assisting the JV in obtaining required coal, steel, cement and
other materials in accordance with the JV's required quantities,
specifications and delivery time and assisting the JV in obtaining any
necessary quota;
(f) assisting the JV in negotiating with the relevant land
administration department and other government agencies for the use of
the Site for the Power Plant, and assisting in handling all other
necessary formalities so as to ensure that during the term, the JV is
authorized to use the land at the Site in accordance with its scope of
business;
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(g) assisting the JV and its foreign employees in obtaining entry
visas, residence and work permits, and in arranging for board and
lodging, medical care, other related matters and in processing their
traveling procedures in China;
(h) assisting the JV in applying for applicable taxes and other
applicable preferential treatments in accordance with relevant laws and
regulations of China;
(i) assisting the JV in obtaining, within one month of the
establishment of the Joint Venture official approval for opening USD
and RMB accounts as provided in this Contract;
(j) assisting the JV in applying for relevant approvals and permission
so that the JV can (1) convert RMB into USD and balance the foreign
exchange account; (2) remit Party A and Party B's shares of profits and
other distributions and (3) adjust Tariffs in accordance with Article
10 of this Contract;
(k) handling other reasonable matters entrusted by the Joint Venture
from time to time.
7.2 Additional responsibilities of Party C shall be to:
(a) cause Anhui Power to sign the EPC Contract and abide by the
responsibilities set forth in the EPC Contract;
(b) cause Anhui Poser to sign the Operation and Offtake Contract and
abide by the responsibilities set forth in the Operation and Offtake
Contract;
(c) assist the JV in steadily generating electricity and in selling
such electricity to the Anhui provincial power grid in accordance with
the design capacity of the Power Plant during the term of the JV;
(d) assist the JV in recruiting local Chinese management personnel,
technical personnel, workers and other necessary personnel;
(e) cause Anhui Power to perform or do all other acts or matters
envisaged in the other provisions of this Contract to be performed or
done by Anhui Power;
(f) assist Party A and Party B in negotiating and obtaining foreign
fund financing for any in the name of the Joint Venture by providing
necessary documents;
7.3 Responsibilities of Parties A and B shall include the following:
(a) contributing their respective portions of the registered capital of
the JV in accordance with this Contract and relevant laws;
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(b) arranging financing outside of China in accordance with Article 6.2
of this Contract;
(c) assisting the Joint Venture to purchase equipment, supplies and
materials within China and overseas;
(d) assisting the Joint Venture in introducing advanced management
technique and financial management experiences;
(e) assisting the Joint Venture in recruiting qualified personnel and
consultants when necessary;
(f) assisting the staff of the Joint Venture in handing formalities for
overseas visa for training in the operation and management of the Power
Plant;
(g) handling other reasonable matters entrusted by the Joint Venture
from time to time.
Article 8. Site
The Joint Venture shall obtain the lawful right to use the site in
accordance with the provisions of Chinese laws in order to ensure its
excessive use of the Site during the term of this Contract.
Article 9. Construction and Operation of the Power Plant
9.1 The Joint Venture will entrust Anhui Power as the general contractor
for construction in change of the construction of the Power Plant.
9.2 The Joint Venture will entrust Anhui Power as the constractor for
operation in charge of the operation and management of the Power Plant,
including the supply of coal for the Power Plant.
9.3 The Parties agree that Anhui Power shall be responsible for the design,
construction, completion, commissioning, delivery, operation and
management of the Power Plant in accordance with this Contract, EPC
Contract and Operation and Offtake Contract. Management as referred to
in the previous paragraph shall mean the management of the Power Plant
and not the management of the Joint Venture.
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9.4 Party C shall cause Anhui Power to prepare in time on behalf of the JV
an annual generation plans, an annual income and expenditures plan, and
an annual renovations and improvements plan, and submit these plans to
the Board of Directors for approval and be responsible to implement
them upon approval.
Article 10. Electricity Sale and Tariffs
All electricity generated by the Power Plant shall be dispatched to the
Anhui provincial power grid for sale. The details concerning the
dispatch of electricity, Tariffs and payment shall be as presented in
the Operation and Offtake Contract.
Article 11. Purchase of Equipment
& Materials and Services
11.1 Provided that all conditions being equal, the JV shall purchase
required machinery and equipment, raw materials, fuels, accessories and
office supplies first in China.
11.2 For all imported machinery, transportation tools, raw materials and
accessories, the JV shall, in accordance with 'Laws of Inspection of
Import and Export Goods of the People's Republic of China', tender all
imports to Import and Export Commodities Inspection Authority of the
PRC for inspection.
Article 12. Electricity Fees, Profit Distributions and Sharing
of Risks and Losses
12.1 Whereas, Anhui Power shall provide services in accordance with the EPC
Contract and the Operation and Offtake Contract, the JV shall pay to
Anhui Power a management fee pursuant to these contracts.
12.2 The revenues due to the JV, including the monthly payments made by
Anhui Power for electricity under the Operation and Offtake Contract,
insurance proceeds and all other amounts, shall be distributed in the
following order of priority after having paid the projected operation
and fuel costs of the Power Plant, financial charges (loan interest,
exchange loss and financing cost), the cost of the Joint
Venture and all kinds of taxes:
(i) principal repayable in respect of the USD Senior Loan;
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(ii) principal repayable in respect of the USD Subordinated Loan;
(iii) principal payable in respect of the RMB Loan;
(iv) the JV's losses from the previous fiscal year as approved by
the Board;
(v) contributions to the three funds as required by the Chinese
law and in accordance with Article 17.3 of this Contract;
(vi) distribution of profits to Parties A, B, C and D in accordance
with Articles 12.3 hereof.
12.3 Each of the Parties shall be distributed its profits in accordance with
its respective ratio of contributions of the registered capital of the
Joint Venture. Each Party's profit shall be calculated in US dollars.
The distribution of profits to Parties A and B shall be in USD and if
the JV possesses insufficient foreign exchange, they can be paid in RMB
on the prerequisite of ensuring the foreign exchange required for
repaying USD financing, and the distribution of profits to Party C and
D shall be in RMB.
Article 13. The Board of Directors
13.1 The Board of Directors shall consist of nine directors, three of which
will be appointed by Party A, two by Party B, two by Party C and two by
Party D. The Board shall have one Chairman, and two Vice Chairmen. The
Chairman shall be appointed by Party A; Parties B and C shall appoint
one Vice Chairman each. The Chairman and Vice Chairmen shall serve for
a term of four years and the term may be renewable by the appointing
Parties. If there is a vacancy on the Board, it shall be filled by the
Party who appointed the initial Director. Any Party may remove at any
time for any reason any or all of the Directors appointed by such Party
and appoint in lieu thereof any other person to serve the remainder of
the relevant term.
13.2 The Chairman of the Board shall be the legal representative of the JV
and shall at all times carry out decisions, resolutions and orders made
by the Board. If the Chairman is unable or fails to exercise his
responsibilities for any reason, he shall authorize a Vice Chairman to
act on his behalf. The duties of the Directors shall not include daily
administrative duties.
13.3 The Board shall be the highest authority of the JV and shall decide all
major issues of the JV. For details regarding its authority and
responsibilities, see this Contract and the Articles of Association.
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13.4 The following issues must be approved by all the directors voting in
person or by proxy at an officially-convened Board meeting in order to
be validated:
(a) amendment(s) of the Articles of Association and this Contract;
(b) increase or transfer of the registered capital pledge of interests
under this Contract, and adjustment to the percentage of the JV
Parties' registered capital contributions;
(c) JV's merger with any other economic organizations;
(d) transfer, sale, lease or other means of disposal of the JV's
business or its assets in part or in total; purchase of control or
acquisition in part or in total of business or assets of other
companies or units;
(e) extension and termination of the term, dissolution or liquidation
of the JV;
(f) any expenditures related to compensation for losses caused by any
Force Majeure as defined in the EPC Contract or the Operation and
Offtake Contract;
(g) change of the Contract Completion Date specified in the EPC
Contract;
(h) change in the Project Budgets;
(i) decision over the annual operating budget (including change of
Tariffs), annual financial budget and financial reports (including the
balance sheet and the profit-loss statement);
(j) increase in the JV's production capacity;
(k) signing or amending any loan contracts, guarantees or other
important contracts (including but not limited to the EPC Contract and
the Operation and Offtake Contract) signed on behalf of or by the JV or
using any of the JV's interests, buildings, real estate, and fixed
assets or capital goods hereby as collateral, pledges, or guarantees;
(l) the appointment and dismissal of an independent auditor and
approval of the audited annual financial report of the JV;
(m) decisions regarding the annual generation plan, operating plan and
strategies;
(n) decisions with respect to funding for the general reserve fund, the
enterprise development fund and employee bonus and welfare fund; and
decisions on how to use the general reserve fund and the enterprise
development fund;
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(o) decisions on using foreign exchange in ways unspecified in Article
18.3 of this Contract;
(p) decisions regarding the use or expenditure of the employee bonus
and welfare fund; and
(q) the appointment and dismissal of the General Manager and Deputy
General Managers, and decision regarding salaries of the General
manager, Deputy General Managers and other senior management personnel.
(r) other issues specified in this Contract or the Articles of
Association.
13.5 The Board shall convene at least one meeting every year. The meetings
shall be held at the legal address of the JV or the registered
addresses of Party A, B or C, or at such other place discussed by the
Board. The quorum shall be at least six directors with at least one
from each party. The Board's resolutions can also be voted on via fax
or written forms.
13.6 Within three days after receiving a proposal for an interim meeting by
two directors, the Chairman, or any one of the Vice Chairmen, shall
decide whether to convene such meeting and promptly notify all other
directors of his or her decision.
13.7 The Chairman or any of the Vice Chairmen shall send notices regarding
any annual or interim meeting to each Director at least 14 days prior
to the date of such meeting, including the agenda, time and place of
such meeting. Such notices may be waived by the unanimous consent of
all Directors attending the meeting in person or by proxy. The Board
meeting shall not be held less than 14 days or more than 28 days from
the date of the issuance of the notification.
13.8 If any Directors can not attend any meeting for any reason, such
Directors may authorize a person in writing (via mail, fax or
hand-delivery) to represent them in attending the meeting and voting at
the meeting. A proxy can represent one or more than one Director.
13.9 The Directors shall serve without compensation from the JV. If a
Director is an employee of the JV at the same time, the JV shall
compensate the person according to his or her position in the JV. The
JV shall reimburse Directors for all reasonable expenses incurred
related to the Board meetings.
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13.10 Minutes of every Board meeting shall be recorded and signed by all
attending Directors. If a proxy attends the meeting on behalf of a
Director, the proxy shall sign the minutes of that meeting on behalf of
the Director. In order to facilitate each meeting, the Chairman shall
designate the secretary of the meeting (if the Chairman is absent, then
the Vice Chairman shall do so). The responsibilities of the secretary
are to keep minutes of each meeting and to translate or arrange
translation of all documents related to the meeting. The secretary
shall also distribute the above documents to each Director. Minutes
shall be kept in Chinese, kept on file by the JV, and copies of minutes
shall be distributed to each Party at the addresses specified in
Article 29.6.
Article 14. Operation and Management Organization
14.1 The Board of Directors shall establish an operation and management
organization which shall be responsible for the daily operation and
management of the JV. The organization shall consist of a General
Manager and several Deputy General Managers appointed by the Board of
Directors. (one Deputy General Manager shall be appointed by Party B to
be responsible for supervising the operation and maintenance of the
Power Plant).
14.2 The responsibility of the General Manager shall be to carry out the
resolutions of the Board of Directors and organize and conduct the
daily operation and management of the JV. The Deputy General Managers
shall assist the General Manager and be concurrently the manager of the
various business departments. The specifics relating to the authority
of the General Manager and Deputy General Managers are detailed in the
Articles of Association.
14.3 The General Manger shall propose and suggest the formation of the
business and management departments and candidates for senior staff,
and submit the proposals to the Board of Directors for approval.
14.4 Managers may be dismissed for abuse of power, seeking personal
interests, graft or serious dereliction of duty, or if they are
completely incapable of accomplishing their work assignment. Unless
otherwise approved by the Board of Directors, managers and other
employees of the JV shall not take any positions or work in other
companies, units, entities or organizations. Unless otherwise approved
by the Board of Directors, persons who violate this rule shall be
dismissed immediately.
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Article 15. Labor Management
15.1 The JV shall enjoy the full independence of an equity joint venture
enterprise with respect to hiring and dismissing its employees. The
recruitment, employment, dismissal, resignation, wages, salaries, labor
insurance, welfare, bonuses and labor discipline, etc. of the employees
of the JV shall be handled in accordance with relevant laws and
regulations of China.
15.2 The employees of the JV shall abide by the regulations and rules set by
the JV and fulfill their duties. Upon authorization by the Board of
Directors, the General Manager shall formulate and promulgate
regulations and measures regarding labor management. The recruitment,
employment, dismissal, resignation, wages, salaries, labor insurance,
welfare, bonuses and penalties, property rights to any invention or
publication made by the employees of the JV during their employment and
procedure for application for protecting the relevant copyrights shall
be specified in written labor contracts with each employee and in
recruitment regulations and rules of the JV.
15.3 Anhui Power's employees selected to work in the Power Plant shall be
managed by Anhui Power, but shall be considered as employees of the JV
when calculating these employee's wages, bonuses, and welfare.
15.4 Depending on the merits of the case, the General Manager is fully
authorized to warn, record a demerit of, deduct wage of, or dismiss any
employee who violates the provisions of the labor contract or the
rules, regulations or labor discipline of the JV.
Article 16. Annual Operating Plans and Budgets
16.1 The General Manager and his staff shall be responsible for the
preparation of the annual operating plans and budgets of the JV based
on the annual operating plans and budgets submitted by Anhui Power. The
operating plans and budgets (including balance sheet, profit and loss
statement and cash flow projection) for each fiscal year shall be
submitted to the Board of Directors for examination and approval prior
to December of the preceding year and shall include, but not be limited
to, comprehensive and detailed information regarding:
(a) Procurement of coal and other materials, equipment, machinery and
other assets of the JV;
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(b) Raising and use of funds (including foreign exchange and RMB);
(c) Plans with respect to the generation and sale of electricity;
(d) Projected revenues, expenditures and profits of the JV;
(e) Tariff policies; and
(f) Plans for staff and workers' training.
16.2 The Board of Directors shall complete its examination and approval of
the annual operating plan and budget for each at a meeting in the
preceding year. The General Manager shall be responsible for the
implementation of the annual operating plan and budget as approved by
the Board of Directors.
Article 17. Taxes, Accounting and Audit
17.1 The JV shall pay taxes in accordance with relevant Chinese laws and
regulations. The JV shall apply for enjoying all preferential taxes
available under the law applicable to the JV in China.
17.2 The individual employees of the JV shall be responsible for paying
their own individual income taxes in accordance with relevant
officially promulgated laws and regulations of China.
17.3 After payment of income taxes by the JV, the JV shall in accordance
with relevant officially promulgated regulations of China set aside a
certain amount for the reserve fund, the bonus and welfare fund for
workers and staff members and the enterprise development fund. The
actual amounts to be allocated each year for such funds shall be
determined by the Board of Directors on the basis of the JV's actual
economic circumstances, but the amount allocated to the bonus and
welfare fund in any year shall not exceed five (5%) percent and the
aggregate amount allocated to all three funds in any year shall not
exceed fifteen (15%) percent of the JV's net after-tax profits for such
year. If a change in the law of China renders either of these limits
ineffective, it shall be adjusted accordingly.
17.4 The fiscal year of the JV shall start on January 1 of the year and end
on December 31 of the same year. The first fiscal year of the JV shall
commence on the Establishment Date and end on December 31 of the same
year. The last fiscal year of the JV shall start on January 1 of the
year of termination and end on the date of termination of the JV.
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17.5 The JV shall adopt internationally recognized accrual basis and debit
and credit accounting systems. Accounting records, vouchers, books and
statements of the JV shall be prepared and kept in Chinese. The JV
shall use RMB as the base bookkeeping currency for its financial
records. The annual quarterly and monthly reports shall be approved and
jointly signed by the General Manager and the chief accountant (who
shall be employed by the JV) and shall be prepared and kept in Chinese.
17.6 In accordance with the relevant laws and regulations of China,
including the Foreign Investment Enterprise Accounting System of the
People's Republic of China, the JV shall formulate accounting and
administrative measures regarding its financial affairs.
17.7 An accountant registered in China and acceptable to all the Parties
shall be engaged by the JV as its auditor to examine and verify the
accounts and books of the JV and shall submit the audit report to the
Board and the General Manager. Any Party shall also have the right, but
not the obligation, not more than once in each fiscal year to appoint
an accountant registered in China or abroad to audit the accounts of
the JV at the expense of such Party; provided, however, that such
auditor shall undertake to keep confidential all documents used in the
audit. The JV shall make available its accounting books and records to
such auditor on reasonable terms.
17.8 The JV shall prepare and provide to the Parties the following reports
in the format of generally accepted accounting principles as applicable
in the electric power industry of China;
(a) Within 90 days after the last day of each fiscal year, the JV shall
provide the Parties with complete and audited financial statements
(including the profit and loss statement and balance sheet) as of the
last day of such fiscal year;
(b) Within 30 days after the last day of each financial quarter, the JV
shall provide the Parties with the unaudited financial statements for
such quarter, including a profit and loss statement (for such quarter
and for the year-to-date) and a balance sheet (as of the last day of
such quarter);
(c) Within 21 days after the last day of each month, the JV shall
provide the Parties with (i) a profit and loss statement for such
month, and (ii) a forecast for the remainder of the current financial
quarter, which shall include, without limitation, the number of
personnel, revenue, cash balance and expenses.
17.9 The JV's accounting systems shall be filed with the Wuhu Finance Bureau
and the Wuhu Taxation Bureau. The Board of Directors shall have the
right to perform the duty of financial supervision. The Parties shall
have the right to appoint accountants at their own expenses to examine
and audit the books of the JV.
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Article 18. Bank Account and Foreign Exchange
18.1 The JV shall open its RMB and foreign exchange accounts in banks
approved and acknowledged by the Chinese Government. Such foreign
exchange account shall hold all monthly payments made by Anhui Power to
the JV in respect of the USD Financing as well as the monthly
distribution of profit. The procedures for signing and issuing JV
checks shall be decided by the Board of Directors and specified in the
financial rules of the JV.
18.2 The balance of foreign exchange of the JV shall be resolved through
regulation after the procedures as stipulated by Chinese laws are
approved by relevant department.
18.3 The JV foreign exchanges shall be allocated and utilized in accordance
with the following order of priorities or an order of priority
otherwise unanimously approved by the Board:
(a) payments for USD Financing costs;
(b) payments of principal and interest in accordance with USD Senior
Loans and USD Subordinated Loans;
(c) payments for other foreign exchange expenses;
(d) profit distributions to Party A and Party B in profit
distributions.
Article 19. Term of the Joint Venture
19.1 The term of the JV shall be 20 years starting from the Establishment
Date of the JV, unless the JV is terminated prior to the expiration of
the term as specified in Article 21 or extends its term as specified in
Article 19.2.
19.2 If proposed by one Party and unanimously approved by the Board, an
application for an extension of the term of the JV shall be submitted
to the original Examination and Approval Authority six months prior to
the expiration date of the JV.
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Article 20. Transfer of Interests
20.1 No Party shall transfer any of its interests in the registered capital
of the JV before the Actual Completion Date for both units of the Power
Plant.
20.2 No Party shall sell, assign or otherwise dispose of all or part of its
interest to the registered capital of the JV to any other Party or to a
third party without first obtaining the unanimous approval from the
Board of Directors. Any person to which one of the Party's registered
capital contribution is assigned shall agree in writing to be bound by
the relevant rights and responsibilities under this Contract. Such
assignment shall not adversely affect any other Party's rights and
responsibilities under this Contract.
20.3 Subject to Article 21.1 and 21.2 above, any Party (seller) wishing to
sell, assign or otherwise dispose of the whole or any part of interest
in the registered capital of the JV shall do so in accordance with
procedures of relevant laws and regulations. The other JV Parties have
the preemptive right of purchase. Any Party's conditions for assignment
of contributions to a third party shall not be more favorable than
those to the other JV Parties, if within 45 days' issuance of a written
notice by the assigning party, the other JV Parties have not accepted
these conditions or have not indicated their intuitions to purchase,
they shall be deemed to agree to this assignment. When a Party assigns
its contributions to its associated organization, the above preemptive
right of purchase shall not apply.
20.4 Neither the business of the JV nor the performance of this Contract or
other contracts or agreements shall be interrupted by any such sale or
other transfer of such interest.
20.5 All transfers shall be submitted to the Examination and Approval
Authority for approval. Upon receipt of the approval, the JV shall
register the change with the relevant Administration for Industry and
Commerce.
Article 21. Termination Prior to the Expiration
and Dissolution
21.1 Should there be any event of force majeure during the repayment period
of the USD Senior Loans, the JV may be terminated in advance by
unanimous agreement among all the Parties upon condition that all
amounts outstanding or owing by the Joint Venture under or in
connection with the USD Senior Loan have been fully discharged and have
been approved by the Examination and Approval Authority.
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21.2 Shall there be any of the following occurrences after all the accounts
in connection with the USD Senior Loan have been discharged:
(i) Owing to causes of a force majeure event, the Power Plant is
damaged, outage continues for a year without any hope of
recovery;
(ii) The Operation and offtabe Contract is terminated and the Power
Purchase will not perform its duty to purchase power;
(iii) The Joint Venture fails to achieve its business purpose and
holds no prospect for development;
the Joint Venture may terminate prior to expiration upon unanimous
agreement by the Board of Directors and having been approved by the
original Examination and Approval Authority.
21.3 Upon earlier termination, the Joint Venture shall undergo liquidation
according to law and having repaid all its debts, the remaining assets
shall be distributed in accordance with the proportion of the
registered capital contributed by each Party.
Article 22. Disposal of Assets upon the Expiration
of the JV
Upon the expiration of the term of the JV (including any extended
term), the JV shall carry out liquidation according to relevant laws.
The assets after liquidation shall be distributed in accordance with
the proportion of registered capital contributed by each Party.
Article 23. Liabilities for Breach of Contract
23.1 If any party fails to perform its obligations hereunder and fails to
cure them within the restricted period, it will constitute breach of
contract. Subject to the conditions permitted by the Chinese law, the
breaching party shall indemnify any direct or indirect losses of the
other JV Parties and the JV for its breach of Contract; such losses
include but are not limited to legal and other expenses arising from
such dispute.
Page: 24 of 30
23.2 If any Party faults made its registered capital contributions in the
amounts and at the time as set forth in the provisions of Article 5 of
this Contract, commencing from the first month of arrears, the
breaching Party shall make a monthly payment of a breach of contract
penalty to the non-breaching Parties which is equal to one point five
percent (1.5%) of the contribution in arrears. If a contribution is in
arrears for 3 months, the non-breaching Parties shall have the right to
supersede the status of the breaching Party and according to the law to
claim the compensation from the breaching Party for the losses
resulting from its failure to make its capital contribution.
23.3 If this Contract cannot be performed or cannot be performed completely
because of the default of one of the Parties, the Company and the
non-breaching Party shall send a notice to the breaching Party
requiring it to rectify its default within 30 days from receipt of such
notice. If within such period rectification has not been made by the
breaching Party, it shall be considered to constitute a breach of this
Contract and Party the non-breaching Party shall be liable for
compensating the Company and the non-breaching Party for the losses
suffered.
23.4 If more than one Party is at default, each breaching Party shall
respectively bear its share of the liability for breaching the
Contract.
Article 24. Power Plant Insurance
Appropriate arrangements will be made for the insurance of the Power
Plant during the construction period and during the operating period.
The types of insurance coverage, term and amounts of insurance shall be
discussed and decided by the Board of Directors and purchased from
insurance companies within China.
Article 25. Confidentiality
25.1 Each of the parties acknowledges and agrees that the performance of its
obligations under this contract may involved the disclosure of
Confidential Information.
25.2 Each of the Parties, their relevant Affiliates, and the JV and their
respective employees and personnel shall use the Confidential
Information only for the purposes specified in this Contract, and shall
not disclose any of the Confidential Information to third parties,
except to its attorneys, accountants and advisers retained in
connection with the subject matter hereof, without the prior written
consent of the Party providing such Confidential Information. All
Parties, their Affiliates and the JV shall make such confidential
information available only to those JV personnel whose duties require
them to be familiar with such Confidential Information.
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Article 26. Force Majeure
26.1 If any Party is prevented by any Force Majeure event from performing
its obligations specified in this Contract, the time to perform such
obligations by the Party affected shall be extended, on a day-for-day
basis, by the number of days during which the Party is excused from
performing its obligations under this Contract as a result of an event
of Force Majeure. All the other obligations and time to perform those
obligations shall not be affected.
26.2 Upon occurrence of any Force Majeure event, the Party affected shall
promptly notify the other Parties by cable, telex or fax and, within 15
days, provide details of the event, together with a valid certifying
documents evidencing the reasons for which the Contract cannot be
performed or cannot be performed in part or for which performance needs
to be delayed. Such certifying document shall be provided by the local
notorial office where the force majeure event occurred. In accordance
with the degree of impact of the event on the performance of the
Contract, the Parties shall discuss and decide whether there is to be
full or partial exemption from responsibility for performing the
Contract, or whether the performe of the Contract is to be delayed.
However, the party's obligations to make capital contributions shall
not be affected by the force majeure event, and before the decision is
made in connection with exemption from or delayed performance of
obligations of the Contract, the Party that encounters and event of
force majeure must use its best efforts to performance its obligations
under the Contract and to reduce to the minimum the losses to the
Company and the Other Parties.
26.3 If a force majeure event has resulted in the destruction of the Power
Plant during the Joint Venture term, the Board of Directors at the
request of at least two Directors, shall meet to determine whether to
terminate this Contract in accordance with the provisions of Article
21.
Article 27. Applicable Laws
This Contract shall be governed by the laws of China.
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Article 28. Settlement of Disputes
28.1 Should there be any dispute in connection with this Contract, one Party
shall notify the others in writing of the dispute. Should the Party
intend to resolve the dispute through friendly consultations, the Party
shall notify the other of their intention in writing. Under such
circumstances, the Parties shall make their best efforts to settle the
dispute through friendly consultations within 60 days after the date of
issuing the notification.
28.2 In case no settlement can be reached within 60 days after the date of
issuing the notification, the dispute shall be submitted to arbitration
for final arbitration.
28.3 The dispute shall be submitted to the China International Economic and
Trade Arbitration Commission in Beijing for arbitration. The
arbitration award is final and binding upon all Parties.
Article 29. Miscellaneous
29.1 This Contract is executed in Chinese and English. Should there be any
inconsistency in the interpretation of the two languages, the Chinese
version shall prevail.
29.2 This Contract may be amended only by a document in writing executed by
the duly authorized representatives of all Parties hereto, Such
amendments may become effective only upon approval by the relevant
Chinese government authorities.
29.3 The rights and obligations of the Parties under this Contract shall
continue to exist throughout the term of JV (and any extension thereof)
and shall not be prejudiced by the establishment of the JV, the
adoption of the Articles of Association or the execution of any of the
related Contracts hereto. In the event of any conflict or inconsistency
between the provisions of this Contract and the provisions of the
Articles of Association or any of the related Contracts hereto
(including specifically and without limitation the EPC Contract) on the
other, the provisions of this Contract shall prevail.
29.4 This Contract shall become effective after being approved by the
Ministry of Foreign Trade and Economic Cooperation of the People's
Republic of China or its authorized examination and approval authority.
It is also applicable to amendments to this Contract.
Page: 27 of 30
29.5 All notices given by one Party to the other Parties shall be made in
Chinese by personal delivery, fax or registered air mail promptly
transmitted or addressed as indicated below or to such other address
notified in lieu thereof. Unless otherwise specifically provided, the
date of receipt of a notice or communication hereunder shall be deemed
to be the date of receipt if delivered personally, 10 days after its
postmark in the case of a registered air mail and 1 working day after
dispatch in the case of a fax, (or whichever shall first occur if
different delivery means are used). Any Party may change its address
for the purpose hereunder by written notice to the other Parties.
Party A: China Power International Holding Limited
Address: 5/f, Office Building, Capital Hotel
No. 3 Qianmen East Avenue
Beijing, China
Telephone: 010-5129988-3510
Facsimile: 010-5227647
Post Code: 100008
Party B: AES China Holding Company (L) Ltd.
Address: 3/F (W), Golden Bridge Building
No.1 (A) Jianguomenwai Avenue
Beijing, China
Telephone: 010-5089619
Facsimile: 010-5089828
Post Code: 100020
Party C: Anhui Liyuan Electric Power Development Company Ltd.
Address: No. 415 Wuhu Road
Hefei City, Anhui Province, China
Telephone: 0551-3632007
Facsimile: 0551-3633393
Post Code: 230061
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Party D: Wuhu Energy Development Company
Address: Commercial Office Building
Huangshan West Road
Wuhu City, Anhui Province, China
Telephone: 0553-3823224
Facsimile: 0553-3823224
Post Code: 241000
29.6 Failure or delay on the part of any Party to exercise any right or
privilege under this Contract shall not be regarded as a waiver of such
rights or privileges nor shall any partial exercise of any right or
privilege preclude any further exercise thereof. Any waiver by a Party
at a certain time of a breach by another Party shall not be construed
as a waiver by such Party of its rights to such provision, or any of
its other rights hereunder.
29.7 If any one or more of the provisions contained in this Contract or any
document executed in connection herewith shall be invalid, illegal or
unenforceable in any respect under any applicable law, (i) the
validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or
impaired and shall remain in full force and effect; and (ii) the
invalid, illegal or unenforceable provision shall be replaced by a new
provision that is valid, legal and enforceable and that comes closest
in expressing the intention of such invalid, illegal or unenforceable
provision.
29.8 The headings contained in this Contract are for reference only and
shall not be deemed to be a part of this Contract or to affect the
remaining or interpretation hereof.
Each of the Parties hereto have caused this Contract to be executed by
their duly authorized representatives on , 1996.
China Power International Holdings Limited
Signatory: /s/ [SIGNATURE ILLEGIBLE]
Name:
Title:
AES China Holding Company (L) Ltd.
Signatory: /s/ [SIGNATURE ILLEGIBLE]
Name:
Title:
Party C: Anhui Liyuan Electric Power Development Company
Signatory: /s/ [SIGNATURE ILLEGIBLE]
Name:
Title:
Wuhu Energy Development Company
Signatory: /s/ [SIGNATURE ILLEGIBLE]
Name:
Title:
Equity Joint Venture Contract - China Power International Holdings Ltd., AES China Holding Co. Ltd., Anhui Liyuan Electric Power Development Co. and Wuhu Energy Development Co.
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