EXHIBIT 10.94.02
SECOND AMENDED AND RESTATED
ON-SHORE
OPERATION AND MAINTENANCE AGREEMENT
CONSTRUCTION PHASE
BY
AND
BETWEEN
TANGSHAN PANDA HEAT AND POWER CO., LTD.
TANGSHAN PAN-WESTERN HEAT AND POWER CO.. LTD.
TANGSHAN CAYMAN HEAT AND POWER CO., LTD.
TANGSHAN PAN-SINO HEAT CO., LTD.
AND
DUKE/FLUOR XXXXXX INTERNATIONAL SERVICES
SECOND AMENDED AND RESTATED
ON-SHORE
OPERATION AND MAINTENANCE AGREEMENT
CONSTRUCTION PHASE
BY
AND
BETWEEN
TANGSHAN PANDA HEAT AND POWER CO., LTD.,
TANGSHAN PAN-WESTERN HEAT AND POWER CO., LTD.
TANGSHAN CAYMAN HEAT AND POWER CO., LTD.
TANGSHAN PAN-SINO HEAT CO., LTD.
AND
DUKE/FLUOR XXXXXX INTERNATIONAL SERVICES
RECITALS:
THIS AMENDED AND RESTATED OPERATION AND MAINTENANCE AGREEMENT is made and
entered into on the 1st day of January, 1998, by and between Tangshan Panda Heat
and Power Co., Ltd., a Chinese Joint Venture company ("Tangshan Panda"),
Tangshan Pan- Western Heat and Power Co., Ltd., a Chinese Joint Venture company
("Tangshan Pan- Western"), Tangshan Cayman Heat and Power Co., Ltd., a Chinese
Joint Venture company ("Tangshan Cayman") and Tangshan Pan-Sino Heat Co., Ltd.,
a Chinese Joint Venture company ("Tangshan Pan-Sino") (collectively, hereinafter
referred to as "Owner"), and Duke/Fluor Xxxxxx International Services, a general
partnership formed in the State of Nevada by Duke Coal Project Services Pacific,
Inc., a Nevada corporation, and Fluor Xxxxxx Xxxx, Inc., a Delaware corporation,
(hereinafter referred to as "Operator"), individually referred to hereinafter as
"Party" and collectively as "Parties."
WHEREAS, Duke Coal Project Services Pacific, Inc. entered into a
Partnership Agreement dated September 1, 1994 with Fluor Xxxxxx Xxxx, Inc. to
form the partnership to be known as Duke/Fluor Xxxxxx International Services;
WHEREAS, Owner and North China Power Group Company, a Chinese company (the
"Utility") entered into an Electric Energy Purchase and Sales Agreement dated
September 22, 1995, pursuant to which Owner intends to construct and operate two
nominal 5OMW coal-fired electric and thermal energy cogeneration power
generation stations (collectively, the "Facilities") in Luannan County near the
city of Gujiaying, Hebei Province, the People's Republic of China and pursuant
to which Owner will sell and the Utility will purchase electrical energy
produced by the Facilities and Owner shall sell steam and heat to local
businesses;
WHEREAS, Owner and Harbin Power Engineering Company, Limited, a Chinese
company (the "EPC Contractor") have entered into a turnkey Engineering,
Procurement and Construction Agreement dated April 24, 1996 (the "EPC Contract")
a copy of which has previously been furnished to Operator pursuant to which the
EPC Contractor thereunder will design, construct, test and startup the
Facilities:
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WHEREAS, Owner desires to have Operator provide pre-commercial and
post-commercial operation and maintenance services at the Facilities and
Operator desires to provide such services;
WHEREAS, Owner and Duke/Fluor Xxxxxx International Services, Inc. entered
into the Operation and Maintenance Agreement dated June 26, 1996 and where
Duke/Fluor Xxxxxx International Services, Inc. was characterized incorrectly as
a Nevada corporation; and
WHEREAS, the Operation and Maintenance Agreement dated June 26, 1996 was
superseded by an Amended and Restated Operation and Maintenance Agreement dated
as of March 6, 1997;
WHEREAS, the parties have allocated the services to be provided into four
separate contracts; two of which relate to off-shore services, one during the
Construction Phase and one during the Commercial Operations, and two of which
relate to on-shore services, one during the Construction Phase and one during
the Commercial Operations; and
WHEREAS, the parties have agreed that the Amended and Restated Agreement
of March 6, 1997, is superseded by the four Agreements described above, one of
which is this Second Amended and Restated On-shore Operation and Maintenance
Agreement, Construction Phase, dated as of the date first written above.
NOW, THEREFORE, in consideration of the foregoing and of the premises
hereinafter contained, Owner and Operator agree as follows:
SECTION I
DEFINITIONS
Whenever the following terms appear in this Agreement, they shall have the
following meanings:
"Affiliate" shall mean, with respect to any corporation, a corporation
which controls, is controlled by, or is under common control with such
corporation or successor thereto.
"Agreement" shall mean this Operation and Maintenance Agreement made and
entered into on the date set forth above by and between Tangshan Panda Heat and
Power Co., Ltd., Tangshan Pan-Western Heat and Power Co., Ltd., Tangshan Cayman
Heat and Power Co., Ltd., Tangshan Pan-Sino Heat Co., Ltd., and Duke/Fluor
Xxxxxx International Services.
"Annual Budget" shall mean the budget of all costs and expenses
anticipated to be incurred by Operator to meet its obligations under this
Agreement during any calendar year, or part thereof.
"Annual Fee" shall mean the amount payable to Operator pursuant to Section
4.03.B(ii).
"Annual Outage Period" shall mean the annual period from November 1
through October 31 each year.
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"Approved Budget" shall mean the annual budget prepared and submitted by
Operator pursuant to Section 2.17 hereof, which has been approved by Owner.
"Authorization To Proceed" shall mean Owners' written notice to Operator
to commence the work required by this Agreement.
"Claims" shall have the meaning given such term in Section 8.03A. hereof.
"Commencement Date" shall mean the calendar date upon which Operator is to
commence the work required by this Agreement as specified in the Authorization
to Proceed.
"Commercial Operation Date" shall mean the date upon which Owner's
Facilities start regular delivery of their electric energy delivered to the
Utility's Grid which shall be determined by the Utility and Owner after approval
of 72 hour full-load testing operation by both the generation units of Owner's
Facilities.
"Consumables" shall have the meaning set forth in Section 2.07 hereof.
"EPC Contract" shall mean the Turnkey EPC Contract between Owner and EPC
Contractor relating to the design, procurement, construction, testing and
starting up of the Facilities as the same may be amended, supplemented or
modified from time-to-time.
"EPC Contractor" shall mean Harbin Power Engineering Company Limited, a
Chinese company.
"Facilities" shall mean two nominal 50 MW coal-fired electric and thermal
energy cogeneration power stations and steam and hot water distribution systems
to be built by Owner in Luannan County near the city of Gujiaying in Hebei
Province, The People's Republic of China to supply electrical energy to the
Utility and thermal energy to a number of Chinese companies in Luannan County
and all equipment contained therein and parts thereof. It shall include, without
limitation, the fuel receiving and storage facility, all fuel delivery equipment
from the fuel storage facility to the balance of the Facility, interconnection
facilities to interconnect disconnect switch with the Utility (that is on the
high side of Owner's step-up transformer) and other auxiliary equipment and
systems described in the EPC Contract. It shall also include the steam and hot
water distribution systems, including, without limitation, piping, heat
exchangers, valves, controls, and insulation, to be built under separate
contracts, up to the interconnect point at each individual customer.
"Facilities Funding Date" shall mean the date upon which the initial loans
are made by the Lenders to Owner.
"Heat Rate" shall mean the net electrical output divided into the thermal
input expressed in British Thermal Units Per Kilowatt Hours (BTU/kWh) at a
specific process steam flow and condition.
"Indemnitee" shall have the meaning set forth in Section 8.03A. hereof.
"Lender" and "Lenders" shall mean Pan-Western Energy Corporation LLC, a
Cayman Islands corporation.
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"Loan Documents" shall mean the relevant documentation executed between
the Lender(s) and Owner for the financing of the Facilities and any other
financing documents as may be amended from time-to-time, excerpts of which are
attached hereto as Exhibit C.
"Lost Work Day" shall mean any employee lost work day resulting from an
on-the-job injury or illness.
"Net Facilities Output" shall mean the power output of the Facilities in
Kilowatts (kW) measured at the high voltage side of the main power transformer.
"Notice to Proceed for the EPC Contract" shall mean a written notice from
Owner to the EPC Contractor directing the EPC Contractor to commence the
performance of the EPC Contract Work.
"Operator" shall mean Duke/Fluor Xxxxxx International Services.
"Owner" shall mean collectively Tangshan Panda Heat and Power Co., Ltd., a
Chinese Joint Venture company, Tangshan Pan-Western Heat and Power Co., Ltd., a
Chinese Joint Venture company, Tangshan Cayman Heat and Power Co., Ltd., a
Chinese Joint Venture company, and Tangshan Pan-Sino Heat Co., Ltd., a Chinese
Joint Venture company.
"Owner's Account" or "Account of Owner" shall have the meaning set forth
in Section 4.02 of this Agreement.
"Owner's Representative" shall have the meaning set forth in Section 3.01
of this Agreement.
"Outage" shall mean any interruption of required (dispatched) electric
energy deliveries (as set forth in Sections 2.1 and 2.2 of the Electric Energy
Purchase and Sales Agreement) to the Utility's Grid by Owner's Facilities.
"Outage Days" shall mean the cumulative elapsed outage time of any type
for each 50 MW unit of the Facilities calculated for each Annual Outage Period.
Outage Days will be calculated on an actual time elapsed basis. (For example,
twenty-four (24)one (1) hour outages shall be equal to one (1) day). Outage Days
do not include the time when the Utility dispatches the unit(s) off-line or the
Utility is unable to accept electrical energy due to Force Majeure conditions.
"Plant Manager" shall mean Operator's on-site employee responsible for the
operation and maintenance of the Facilities.
"Power Agreement" shall mean the Electric Energy Purchase and Sales
Agreement, and the General Interconnection Agreement, both dated as of September
22, 1995, the Supplemental Agreement dated February 10, 1996 and the technical
interconnect dispatch agreement (to be executed prior to the Commercial
Operation Date), relevant excepts of which are attached hereto as Exhibit A, all
between Owner and the Utility.
"Prudent Utility Practices" shall mean those practices generally followed
by the United States electric utility industry with respect to the operation and
maintenance of electric generating facilities (including, but not limited to,
the operation and safety practices generally followed by the electric utility
industry), to the extent reasonably possible, unless otherwise directed in
writing by Owner or
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otherwise required for financing of the Facilities. Operator will not be
responsible, however, for any failure to comply with those standards, or
portions thereof, where that failure is caused or necessitated by differences
between Chinese Prudent Utility Practices (or the like) and those of the United
States, or by workforce or industry customs in China that make compliance by
Operator with United States Prudent Utility Practices imprudent or impractical.
"Reimbursable Costs" or "Reimbursable Cost" shall mean all reasonable and
actual direct costs properly incurred.
"Scheduled Commercial Operation Date" shall mean the expected date which
the Facilities achieve Commercial Operation Date which is estimated to be
November 1, 1998. Owner may change the Scheduled Commercial Operation Date by
giving two hundred and forty (240) days prior written notice to Operator.
"Scheduled Annual Overhaul Outages" shall mean those planned outages of
the Facilities applied for by the Operator and approved and scheduled by the
Utility annually in advance of the November 1 to October 31 annual period.
"Scheduled Outage" shall mean those times the unit(s) are scheduled
off-line by the Utility or Operator's request in advance such that they are not
dispatched to produce electric energy by the Utility.
"Site" shall mean that real property upon which the Facilities are
located.
"Utility" shall mean North China Power Group Company, a Chinese company
organized under the laws of China.
"$" shall mean United States Dollars.
SECTION II
SERVICES TO BE PERFORMED BY OPERATOR
Operator will provide all operation and maintenance services necessary for
the efficient, sound and effective operation of the Facilities so as to enable
the Facilities to satisfy the requirements set forth in the Power Agreement,
attached as Exhibit A hereto and which may be amended from time-to-time, and to
maintain the Facilities in good mechanical and operating repair and condition
all in accordance with Prudent Utility Practices. Without limiting the
generality of the foregoing, Operator shall do the following:
2.01 Personnel. Operator shall recruit and train, in a manner consistent
with Prudent Utility Practices, competent qualified personnel to operate and
maintain the Facilities including, without limitation, the following:
A. A Plant Manager, assigned to the Facilities full time, to manage
on-site operations and maintenance, which individual shall be
approved in writing by Owner.
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B. Additional full time on-site personnel as needed.
C. Additional engineering support, operations, maintenance, and
management personnel not located full time at the Facilities, as
needed to perform the requirements of this Agreement.
Without limiting the generality of the foregoing, Operator will arrange to
(i) staff the Facilities during all hours; (ii) provide those full time on-site
personnel identified and agreed to by Operator and Owner. Operator shall submit
the qualifications of full-time, on-site management and key supervisory
personnel hired for review and approval by Owner, and such personnel shall be
acceptable to Owner at all times. Owner's approval or acceptance of any such
personnel shall not be construed as or imply Owner's acceptance of the conduct,
performance or qualifications of such personnel nor result in any waiver of
Operator's duties and responsibilities for providing personnel as required for
its performance or for responsibility for compliance with any standard or other
duty of performance hereunder and as required by the Power Agreement and the
Loan Documents. Personnel other than on-site management and key supervisory
positions shall be recruited, trained supervised, administered and directed by
Operator, but shall be directly employed under contract with Owner or one of its
affiliates or subsidiaries.
2.02 INITIAL STAFFING, STARTUP AND TESTING. After receiving Authorization
to Proceed, Operator shall prepare a hiring schedule for the personnel
identified and agreed to by Operator and Owner. After review and written
approval of the hiring schedule by Owner, Operator shall cause the commencement
of initial hiring of personnel. Operator shall adjust the hiring schedule, as
requested by Owner in writing, in accordance with changes in the construction,
startup, and Commercial Operation Date, and shall obtain Owner's review and
approval of such changes.
Operator shall provide capable operating personnel to assist in initial
training, startup and testing of the Facilities under the direction and
supervision of the EPC Contractor. It is understood that Owner is obligated to
pay for Operator's services during startup and testing as provided herein but
that total supervision and direction of all startup and testing activities
(including those of Operator) shall be furnished by the EPC Contractor who will
have care, custody and control of the Facilities prior to Commercial Operation
Date of the Facilities.
2.03 OPERATION AND MAINTENANCE. Operator shall prepare to operate and
maintain the Facilities, seven (7) days a week, twenty-four (24) hours per day,
in accordance with Prudent Utility Practices, manufacturers' recommendations as
applicable, and as required by the Power Agreement attached hereto as Exhibit A,
or Loan Documents as may be amended relating to the Facilities and this
Agreement. The Operator will operate the Facilities in a manner to maximize the
useful life of the equipment, to avoid excessive fuel consumption, to minimize
downtime for repairs, and to avoid forced outages, in a manner consistent with
that of a prudent owner maintaining its own facility for its own account.
Operator shall consult with Owner in order to clarify its obligations in the
event that any conflict exists in these obligations under this Agreement.
Operator shall be solely responsible for the operation and maintenance of the
Facilities hereunder but will follow the directions of Owner with respect to
financial or economic matters as long as compliance with such directions will
not materially and adversely affect the operation and maintenance of the
Facilities nor its performance as required hereunder after comparison of the
relative benefits and detriment of incurring any cost and the relative effect on
operations if such cost were not incurred.
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2.04 TOOLS.
A. Operator shall review the tool list developed by the EPC Contractor
pursuant to the EPC Contract, and shall identify and prepare a list
of recommended tools required to adequately perform the requirements
of this Agreement. Said list will be submitted to Owner in one or
more increments and shall be modified or supplemented throughout the
term of this Agreement by agreement of the Parties as necessary to
permit the timely acquisition thereof. The initial list of such
tools shall, in no event, be submitted to Owner later than one
hundred eighty (180) days prior to the Scheduled Commercial
Operation Date.
B. The initial supply of tools identified on the list described in
Section 2.04A. above shall be subject to the written approval of the
Owner and will be procured by Operator to Owner's account as
provided in Section IV of this Agreement or as a Reimbursable Cost.
Operator shall promptly notify Owner in writing of tools that were
not approved that could impact its obligations and duties hereunder.
C. Operator shall be responsible for annually, or as otherwise
reasonably requested by Owner in writing, preparing and presenting
to Owner an accurate reconciliation of the Facilities' tool
inventory.
D. Operator shall be responsible for the use, management, control,
care, and custody of the Facilities' tools.
E. Operator shall repair or replace tools as required, as a
Reimbursable Cost or to the Account of Owner, as provided in Section
IV.
F. Operator shall periodically, and no less frequently than annually,
review the Facilities tools, and make recommendations to Owner for
additional tools that would improve the Facilities operations.
2.05 SPARE PARTS.
A. Operator shall review the spare parts list developed by the EPC
Contractor pursuant to the EPC Contract, and shall identify and
prepare a list of recommended spare parts required to adequately
perform the requirements of this Agreement. Said list will be
submitted to Owner in one or more increments and shall be modified
or supplemented throughout the term of this Agreement by agreement
of the Parties as necessary to permit the timely acquisition
thereof. The initial list of such spare parts shall, in no event, be
submitted to Owner later than one hundred eighty (180) days prior to
the Scheduled Commercial Operation Date. Spare parts will be
determined with reference to generally accepted practices in the
industry and with reference to manufacturer's recommendations.
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B. The initial supply of spare parts identified on the list described
in Section 2.05A. above shall be subject to the written approval of
the Owner and will be procured by Operator for Owner's account as
provided in Section IV of this Agreement or as a Reimbursable Cost.
C. Operator shall, subsequent to submitting the initial list of spare
parts described in Section 2.05A. above be responsible for
procuring, for Owner's account as provided in Section IV hereof or
as a Reimbursable Cost, replacements for said listed spare parts as
necessary.
D. Operator shall be responsible for the use, care, custody, management
and control of said spare parts.
E. Operator shall be responsible for annually, or as otherwise
reasonably requested by Owner in writing, performing and presenting
to Owner an accurate reconciliation of the Facilities' spare parts
inventory.
F. Operator shall be responsible for establishing proper and effective
on-site warehousing and inventory controls for such spare parts. The
inventory control system is to be coupled to an Owner approved plant
maintenance management information system.
G. Operator shall procure additional parts subject to Owner's written
approval or replacement parts to maintain inventory at levels to
support Facilities requirements, as a Reimbursable Cost or to the
Account of Owner as provided for in Section IV.
2.06 EQUIPMENT.
A. Operator shall identify and prepare a list of recommended machinery,
equipment, office furnishings, computers, and software (the
"Equipment") required to adequately perform the requirements of this
Agreement. Said list will be submitted to Owner in one or more
increments and shall be modified or supplemented throughout the term
of this Agreement by agreement of the Parties as necessary to permit
the timely acquisition thereof. The initial list of such Equipment
shall, in no event, be submitted to Owner later than one hundred
eighty (180) days prior to the Scheduled Commercial Operation Date.
B. The Equipment identified on the list of such Equipment described in
Section 2.06A. above shall be subject to the written approval by
Owner and shall be procured by Operator for Owner's Account as
provided in Section IV or as a Reimbursable Cost. Operator shall
promptly notify Owner in writing of the Equipment that was not
approved that could impact Operator's obligations and duties
hereunder.
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C. Operator shall periodically review the Equipment required to perform
under this Agreement and make recommendations to Owner of
modifications or additions to the Facilities equipment throughout
the term of this Agreement that would improve or enhance the
Facilities operations.
D. NOT USED
E. Operator shall, when approved in advance by Owner in writing,
procure and install additional Equipment as a Reimbursable Cost or
to the Account of Owner as provided for in Section IV.
2.07 CONSUMABLES AND OTHER MATERIALS.
A. Operator shall identify those consumable, expendable, and other
materials and supplies ("Consumables") necessary to perform the
requirements of this Agreement. Said Consumables will be identified
to Owner throughout the term of this Agreement as necessary to
permit the timely acquisition thereof. The initial list of such
Consumables shall, in any event, be identified and submitted to
Owner in writing no later than one hundred eighty (180) days prior
to the Scheduled Commercial Operation Date.
B. Operator shall use, manage, care for, control and maintain
Consumables as required to support the needs of the Facilities, and
procure Consumables, as Reimbursable Costs or to Owner's Account as
provided in Section IV, throughout the term of this Agreement.
2.08 PURCHASED PARTS, LABOR AND SERVICES. Operator shall identify and
procure, as Reimbursable Costs or for the account of Owner as provided for in
Section IV, parts other than spare parts and labor and services throughout the
term of this Agreement as necessary to perform the requirements of this
Agreement. This will include procurement for the services of equipment
manufacturer's personnel, or personnel trained and qualified to provide
equivalent services, to perform manufacturer's recommended service procedures
when deemed necessary. Without limitation, Operator, in its capacity as Owner's
agent, shall procure as a Reimbursable Cost third-party contracts to clean up
and remove hazardous waste and solid waste, except to the extent such waste
arises out of the negligence or fault of Operator or pursuant to Section 2.16.
Any maintenance or repair which can reasonably be performed by regular full time
on-site personnel, provided pursuant to Section 2.01 above, shall be performed
by them.
2.09 NOT USED
2.10 OPERATING, MAINTENANCE AND SAFETY PLANS AND PROCEDURES. Using the
operations and maintenance manuals supplied to Owner by the EPC Contractor
pursuant to the EPC Contract as supplemented by Operator's standard procedures
developed for like facilities, Operator shall develop (and furnish copies to
Owner for review and approval in writing) necessary, specific and fully
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integrated operating, maintenance and safety plans and procedures including,
without limitation, the following (each of which shall satisfy the requirements
set forth in the Power Agreement):
A. Startup, operating, dispatching and shutdown procedures for the
Facilities equipment and systems including appropriate periodic
checks of and/or for water quality and treatment requirements, fluid
or gaseous leaks, improper temperatures, excessive noise and
vibrations, proper pressures and liquid levels, emission levels and
other pertinent operating information indicative of the equipment
condition.
B. Periodic maintenance plans identifying schedules and procedures for
the equipment lubrication, packing and seal checks, filter checks
and services, and electrical and control system checks.
C. Plans and procedures for long-term maintenance and overhaul of the
Facilities' equipment.
D. Plans and procedures for as-needed repairs and overhauls.
E. Plans and procedures for emergency service and repairs as needed,
twenty-four (24) hours a day, each day of the year. Such procedures
will provide for expedited service and repairs; for the availability
of Operator's management personnel, in connection with such
services, on a twenty-four (24) hours a day, each day of the year
basis; for notification of and expediting the availability of
factory or service personnel when necessary repairs are beyond the
capabilities of on-site personnel, and for the immediate
notification of Owner of any emergency event or condition, of
anticipated corrective actions to be taken and of anticipated
service and repair times and cost consequences.
F. Procedures for identifying, acquiring and maintaining required spare
parts to ensure that the Facilities has an adequate inventory of
spare parts, in accordance with Section 2.05 of this Agreement
including a critical spare parts analysis which will identify key
parts that may require over-stocking for the purpose of increased
plant availability.
G. Procedures for notice to and approval by Owner of any alterations or
capital improvements to the Facilities, so that no alterations or
capital improvements to the Facilities will be made without the
written consent of Owner.
Operator will, without limitation, provide in such plans and procedures
for visual, mechanical or instrumental inspection as necessary in order to
provide early detection of required adjustments, repairs or replacements so that
required adjustments, repairs or replacements can be scheduled with minimum
interference to the Facilities operations insofar as possible. Such procedures
will be consistent with applicable manufacturer's recommendations, will provide
for the services of factory representatives and/or outside consultants where
appropriate and will provide for orderly shutdowns and minimum interference with
operations. Such procedures will be reviewed as required and in no event less
frequently than annually with a copy of the review provided to Owner. No
alterations to the Facilities shall, in any event, be made without the prior
written approval of Owner.
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2.11 RECORDS. Operator shall keep and maintain maintenance and operation
records for the Facilities and for the equipment therein. Such records shall
satisfy the requirements set forth in the Power Agreement and Lenders'
requirements under Loan Documents and shall include, without limitation: the
logging of daily exception reports; daily Operator's logs; a record of all
maintenance and repairs performed; copies of all plans and procedures developed
pursuant to Section 2. 1 0 above or otherwise; emissions and compliance reports;
equipment and instrument calibration records; fuel consumption records; and
electricity production, consumption and delivery records. All records shall be
made available for examination by Owner, the Utility (where required by the
Power Agreement) or Lender (where required by the Loan Documents) during normal
working hours
2.12 REPORTS. Operator shall prepare and furnish a monthly operations
report within ten (10) business days following the close of each calendar month,
including the following:
A. Identification of maintenance and shutdowns planned for the
succeeding twelve (12) months.
B. Any significant personnel issues including hiring, disciplinary
action or lost time due to injuries.
C. Such other matters as may be reasonably requested by Owner in
writing.
Operator shall also provide all notices and reports required in connection
with the operation and maintenance of the Facilities by applicable permits, laws
and regulations and the Power Agreement and Loan Documents relating to the
Facilities within the times required. Owner shall be responsible, pursuant to
Section 3.10C., for providing those documents which identify all required
notices relating to the operation and maintenance of equipment contained in the
Facilities that are required by this Section 2.12 and Operator will cooperate
with Owner in the identification and obtaining of all such documents.
2.13 GOVERNMENTAL, REGULATORY, UTILITY AND SAFETY REQUIREMENTS. Operator
shall prepare to operate and maintain the Facilities in compliance with all
applicable laws, permits, approvals, ordinances, rules, regulations and orders
of central, provincial, city, county and local governmental authorities.
Operator shall also comply with all safety and other rules and regulations
reasonably established in writing by Owner with respect to the Facilities and
with all safety and other rules and regulations established by the Utility with
respect to interconnection delivery facilities and with respect to property
owned by or leased from the Utility. In the event that such requirements change
during the term of the Agreement, and such changes require additional costs of
Operator, these additional costs shall be mutually determined by Owner and
Operator and reimbursed to Operator by Owner as Reimbursable Costs. In the event
such changes require alteration to the Facilities, Owner shall be responsible
for the costs of such alterations.
2.14 LIENS AND ENCUMBRANCES. Operator shall keep all real property and all
personal property and equipment associated with or part of the Facilities free
and clear of all liens and encumbrances caused by an action or failure to act by
Operator or any of its consultants, suppliers or subcontractors in the
performance of its obligations under this Agreement, including, without
limitation, failure by Operator to pay, when due, any xxxx or charge for labor
or services performed or materials or equipment furnished for use in connection
with this Agreement. Contractor shall immediately notify Owner in writing of any
such liens or encumbrances. Nothing herein contained
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shall require Operator to pay any claims for labor, materials or services which
Operator, in good faith disputes and which Operator, at its own expense, is
currently and diligently contesting; provided, however, that Operator shall, not
later than thirty (30) days after notice of the filing of any claim of lien that
is disputed or contested by Operator, post a surety bond sufficient to release
said claim of lien in accordance with the relevant laws and approvals of the
People's Republic of China or other relevant laws.
2.15 NOT USED
2.16 NOT USED
2.17 SCOPE OF WORK. Operator shall perform, throughout the term of this
Agreement, all services described in this Agreement. Such services shall be
performed and supplied in connection with, but not limited to, the following:
A. Prior to and until such time as construction of the Facilities is
commenced pursuant to funding from non-affiliated third party
lenders to the Facilities, Operator will:
i. Develop a written plan for the conduct of its responsibilities
under this Agreement and form, or be prepared to immediately
form, a business entity appropriate for the conduct of its
responsibilities under this Agreement and in accordance with a
written business plan to be agreed to by the Owner;
ii. Provide a preliminary review and consult with Owner regarding
all plant design specifications, paying particular attention
to designs which affect the Facilities operations and
operability, and submit a written assessment thereof to Owner
for its review;
iii. Conduct a preliminary assessment of the available local
Chinese labor force which may be available to assist in the
Facilities operations and report thereon to the Owner;
iv. Develop preliminary standards, qualifications, and position
description criteria for key personnel and positions which it
believes necessary to perform its duties under this Agreement:
v. Develop and provide to Owner its plans with respect to all
training required for all Chinese labor;
vi. Prepare and deliver to Owner a draft organization chart for
the full staffing of the Facilities, thought to be required;
vii. Develop and prepare its proposed preliminary, pre-commercial
and post-commercial operating budgets for the Facilities and
discuss all matters relating thereto for conclusion and
acceptance by Owner;
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viii. Support Owner with one (1) trip to New York for a presentation
to bond rating agencies and cooperate with and assist Owner on
all matters, with information relating to Operator which may
be reasonably required, within the scope of its work to be
conducted pursuant to this Agreement, which may or does affect
Owner's ability to obtain construction and permanent financing
for the Facilities; and
ix. In the performance of the services provided pursuant to this
Section 2.17A., Operator may consult with and utilize Owner's
advisors and consultants and information, for assistance in
its preliminary legal and procedural analysis of the business
structure required for the conduct of operations. The cost of
the use of such outside consultants (whose use and scope of
services shall be pre-approved by Owner) will be borne by
Owner, except as required by Operator in the formation of
Operator's business unit. Owner makes no representation or
warranty to Operator with respect to the reliability or
accuracy of all such information, or advice, and Operator
shall make its own assessment and determination as to the
reliability and accuracy thereof.
B. PRE-COMMERCIAL OPERATIONS PERIOD. Subsequent to the Facilities
Funding Date and prior to the Commercial Operation Date (as defined
in the Power Agreement), Operator will assist Owner in specifying
and procuring tools, spare parts, chemicals, etc., and will provide
operating personnel to assist in startup and testing of the
Facilities under the direction and supervision of the EPC
Contractor. These services will be performed by Operator in
accordance with this Agreement and the schedules and budgets that
are established by Operator and approved by Owner, and will include
providing all management, administration, supervision and staffing
functions required to mobilize and provide the personnel capable of
assisting the EPC Contractor during startup and testing and also
technically capable of operating the Facilities upon commencement of
operations following the Commercial Operations Date. In addition,
Operator shall monitor any services previously required to be
provided, and amend or revise or update all information as required
in order to maintain a current and correct account thereof; and
perform the following generally described duties all in accordance
with the terms of this Agreement:
i. ADMINISTRATIVE SERVICES. Operator shall be responsible for all
normal administrative and personnel related activities with
respect to Operator's personnel, including benefits, bonuses,
scheduling and overtime. In addition, Operator's
administrative responsibilities shall include, but are not
limited to, the following:
(a) The development of the Facilities safety procedures
including, but not limited to, electrical
lock-out/tag-out procedures, closed vessel entry
procedures, hazardous materials control plan, spill
prevention plan, fire prevention plan, etc.;
14
(b) All customary purchasing activities on-site, including
the purchase of all consumables, chemicals, spare parts,
equipment, tools and miscellaneous equipment needed
prior to Commercial Operations. Purchasing activities
shall include, without limitation, obtaining competitive
quotes, examinations, purchase document control,
warranty tracking, receiving and inspection and invoice
approval. Monthly purchase summaries shall be provided
to Owner within twenty (20) days from the last day of
each month;
(c) The development of an on-site budget to provide for all
customary operation and maintenance functions in
accordance with Prudent Utility Practices including,
among other things, initial spare parts, consumables,
maintenance overhauls, tools, equipment, etc. This
budget shall be submitted to Owner for approval prior to
any commitment of funds;
(d) The review and comment by Operator's management and
supervisory personnel of the startup and testing
activities prior to and during performance testing by
the EPC Contractor, subject to Owner's ultimate
responsibility for the results of such startup and
testing activities;
(e) The review and comment by Operator's management and
supervisory personnel of all mechanical and electrical
one line drawings to assure plant operability and
maintainability concerns are addressed by the EPC
Contractor, subject to Owner's ultimate responsibility
for any errors or omissions by the EPC Contractor; The
review and comment by Operator's management and
supervisory personnel of the adequacy of vendor training
programs and how these are scheduled to fit in with the
Operator's overall training program;
(g) The development of operating procedures for all
customary aspects of the plant's operations and
maintenance, including but not limited to: day-to-day
operations and maintenance, dispatch protocol, delivery
and receipt of fuels, water treatment, consumables and
hazardous materials, etc.:
(h) Making reasonable efforts to promote the public
relations of the Facilities and to maintain good
community relations including those with the city,
county and provincial authorities, customer
representatives, lending institution personnel and
approves site visitors;
(i) The identifying and preparing of lists of recommended
office equipment and furnishings to adequately perform
administrative activities; and
15
j) Providing Owner's on-site plant manager and Owner's
engineering representatives with as needed assistance
during the startup and testing of the Facilities.
ii. TRAINING. Operator will provide training services in
conjunction with those of the EPC Contractor which will fully
familiarize its personnel and subcontractor personnel with all
the Facilities systems operation and maintenance requirements
based on Operator's assessment of available local Chinese
labor skills. Such training will consist of, among other
things, combined classroom instruction and field walk-downs
for the operations and maintenance personnel, as well as any
specialized training required for Chinese labor. These
training sessions will be conducted prior to the commencement
of startup activities on the plant so that Operator's staff
can get hands-on experience during the startup, check-out and
commissioning and testing of the Facilities' systems. Each
session should be based on the operating and maintenance data
and information contained in the Plant Manual(s) to be
prepared by the EPC Contractor's staff. The Plant Manual(s)
will be made available to Operator on a schedule that will
support the development of a training program prior to
startup. A preliminary list of systems expected to be covered
in such materials is presented below:
Ash Handling & Disposal
HVAC
Chemical Feed
Lighting
Circulating Water
Main Steam
Coal Handling
Plant Drains
Compressed Air
Plant Water
Condensate Storage & Transfer
Sample System
Cooling Water
Steam Generator
DCS/Controls
Steam Turbine & Auxiliaries
Feedwater
UPS
Fire Protection
Water Treatment
Fuel Oil
110 kV System
Fuel Unloading, Handling & Preparation
125 Vdc Heat Trace
16
iii. OPERATING SERVICES. Operator's operating responsibilities
prior to the Commercial Operation Date will include, but are
not limited to, the following:
(a) The hiring and mobilization on-site in a timely manner
of qualified and competent (expatriate or local) plant
management, supervision, operations and maintenance
personnel ready to be trained;
(b) Providing trained operations and maintenance personnel
to assist in startup and testing of the Facilities under
the direction and supervision of the EPC Contractor; and
(c) The development and preparation of lists of consumables,
expendables and other materials and supplies necessary
to operate the plant.
iv. MAINTENANCE SERVICES. Operator's maintenance responsibilities
prior to the Commercial Operation Date shall include, but are
not limited to, the following:
(a) The development and implementation of an Owner approved
maintenance management information system (MMIS) in time
to support the commencement of system hand-over (in some
cases, this may occur prior to Final Acceptance);
(b) The developing of initial short-and long-term
maintenance plans for the Facilities in accordance with
manufacturer requirements prior to the Commercial
Operation Date;
(c) The preparation of lists of recommended spare parts
required to adequately operate and maintain the
Facilities in a reliable manner to meet the requirements
of the Power Agreement after the Commercial Operation
Date;
(d) The setting up and organizing of an inventory control
system which is coupled to the MMIS prior to the
Commercial Operation Date; and (e) The organizing,
stocking and management of the plant spare parts,
consumables, and tools inventory.
C. NOT USED
D. Preparation of the Facilities for the Commercial Operation Date
including, without limitation, the following:
i. Review engineering drawings; provided however, such
review shall not give Operator any responsibility for
the design of the Facilities;
17
ii. Participate with Owner in design review meetings, in
construction reviews, in the development of training
programs and in development of the Facilities checkout
and startup procedures; and
iii. Provide and train qualified Operator personnel.
E. Testing and acceptance of the Facilities from the EPC Contractor
including: (i) review of turnover packages, (ii) system walk-downs;
and (iii) assistance in developing punchlists.
F. Testing of the Facilities required by the Power Agreement. Operator
shall provide trained and qualified operating personnel to assist in
the startup and testing of the Facilities under the direction and
supervision of the EPC Contractor prior to the Commercial Operation
Date of the Facilities.
G. Startup of the Facilities in connection with each dispatch from the
Utility.
H. Management and provision of all activities required for the
Facilities support and operation, under the direction of Owner's
Representative, including but not limited to: community interface,
fuel scheduling, and management of other contracts and services
necessary to support the Facilities.
I. NOT USED
J. Management of all operation and maintenance requirements of the
Facilities.
K. Maintenance of the Facilities.
L. Furnishing electrical energy to the Utility, together with the
maintenance schedules and other records required by the Utility
under the Power Agreement.
M. NOT USED
N. Assist Owner in obtaining and renewing the necessary permits and
licenses of Section 3.05 when requested by Owner.
O. Submit a desired schedule of Scheduled Outages as defined herein
(including the duration of each outage) to Owner at least four (4)
weeks before Owner is required to supply same to the Utility.
P. Cooperate with the Utility and Owner in scheduling and performing
all scheduled maintenance outages, routine maintenance and major
overhaul outages in accordance with Owner's obligations under the
Power Agreement or as set forth in any Loan Documents.
18
Q. Preparation and submission to Owner, for Owner's approval, of an
Annual Budget for the Facilities, at least ninety (90) days before
the beginning of each calendar year. Such budget shall be consistent
with the requirements of this Agreement and meet the requirements of
the Power Agreement or any Loan Documents.
R. Provide sufficient training to operating and maintenance personnel
to assure that their capabilities and qualifications are maintained.
S. Cooperate with the Utility in scheduling and performing all testing
required under the Power Agreement.
T. Provide all other maintenance and operations services necessary to
the safe, efficient and reliable operation of the Facilities.
SECTION III
SERVICES TO BE PERFORMED BY OWNER
From and after the Commencement Date, Owner shall be responsible for the
following:
3.01 OWNER'S REPRESENTATIVE. Owner shall provide a full-time Owner's
Representative to administer Owner's responsibilities under this Agreement, to
monitor the operation of the Facilities, and to provide direction on economic
and financial matters associated with all its responsibilities hereunder.
3.02 OFFICE SPACE, EQUIPMENT, AND ADMINISTRATIVE SERVICES. Owner shall
provide office and administrative space, administrative services and equipment
for Operator at the Facilities.
3.03 TOOLS, SPARE PARTS, EQUIPMENT AND CONSUMABLES. Owner will:
A. Provide written approval or give timely objections to the
lists of tools, spare parts, Equipment, and Consumables
identified by Operator pursuant to Section II.
B. Pay for approved supplies of tools, spare parts, equipment,
Consumables, and purchased parts, labor and services and
Reimbursable Costs required by Operator to perform its
responsibilities under this Agreement, and as provided for in
this Agreement.
3.04 UTILITIES. Owner will provide and pay for all utilities.
3.05 PERMITS AND LICENSES. Owner will obtain necessary permits and
licenses, except those which are issued in the name of Operator or that Operator
is required to obtain under Section 11 above.
3.06 STAFFING SCHEDULES. Owner will provide written approval or give
timely objections for its obligation to give staffing schedule approval required
in Section 2.02.
19
3.07 MANUALS. Consistent with the needs of Operator for such material to
perform its obligations under this Agreement, Owner shall deliver, or cause to
be delivered to Operator, copies of operating and maintenance manuals for all
equipment installed in the Facilities and any and all additional documents
received from the EPC Contractor under the EPC Contract including, but not
limited to, as-built drawings of the Facilities, record books, vendor manuals
and operations and maintenance manuals.
3.08 TRAINING. Owner shall cause the EPC Contractor to provide training to
the employees of Operator in the startup and operation of the Facilities and any
and all related machinery and equipment to the extent set forth in Section 3.02
of the EPC Contract provided Operator has made such employees available to the
EPC Contractor as provided in Section 11.
3.09 PAYMENTS. Owner shall make payments to Operator in accordance with
Sections IV and V of this Agreement.
3.10 OTHER RESPONSIBILITIES. Owner will:
A. Provide and pay for all fuel required throughout the term of this
Agreement.
B. Pay or reimburse Operator all property or other taxes (including,
but not limited to, any business tax or VAT taxes) related to the
Facilities or its activities and operations but not income taxes of
Operator (except as provided in Section 4.04).
C. Provide all necessary documents in its possession, that Operator
needs to perform its obligations relating to the operation and
maintenance of equipment contained in the Facilities under this
Agreement. Owner and Operator shall consult with each other to
determine the obligations under such documents for which Operator is
responsible.
3.11 Owner shall, at all times, conform to all laws, ordinances, rules and
regulations applicable to it.
3.12 Owner has a responsibility to identify and provide Operator with all
relevant provisions in the Power Agreement and the Loan Documents and any
amendments thereto in a timely manner. To the extent that Owner does not notify
Operator of such amendments, Operator is not liable for compliance with such
amendments. Owner agrees to consult with Operator in the event that such changes
to the Loan Documents or Power Agreements is contemplated.
SECTION IV
COMPENSATION
4.01 Owner shall pay for services provided by Operator during all periods
of service provided under this Agreement as follows:
A. OPERATIONS AND MAINTENANCE COSTS. Operator will manage and
control operations and maintenance costs according to a
predetermined budget that has been accepted by and developed
in conjunction with the Owner. All
20
operations and maintenance expenses will be administered by
Operator and paid by Owner in local currency or paid as a
Reimbursable Cost.
B. LOCAL LABOR COSTS. Operator shall engage one or more Chinese
contractors to supply suitable operations and maintenance
personnel for the Facilities under direct contract with Owner.
All labor contract expenses shall be administered by Operator
and paid by Owner in local currency. In the event the Parties
direct-hire labor personnel, the Operator will recruit such
personnel under a direct employment contract with Owner.
C. NOT USED
D. OPERATOR'S US LABOR COSTS (WORK OUTSIDE OF US). All Operator's
United States labor (those employed and paid by Operator for
work performed outside the US) will be billed in US dollars to
Owner at a fixed multiplier of 2.1 on the hourly rate, plus an
additional amount sufficient to cover any duties, taxes,
incentives and other labor-related fees assessed on the income
of foreign nationals (which will be passed along by Operator
to its employees), for pre-approved work performed hereunder
outside of the United States. Reimbursement for individual
income taxes will be in accordance with Fluor Daniel's
International Assignment Policy Supplement 9, Section 9.5,
Expatriate Taxation Policy, effective April 1, 1996. Owner
will be notified of changes to this policy. Expenses
associated with pre-approved work performed will be billed at
cost. Travel and living expenses will be billed in US dollars
at actual cost with no markup in accordance with Operator's
standard travel policies. Payments by Owner to Operator for
such labor shall be in US currency.
E. EXPATRIATE CONTRACT LABOR COSTS. Expatriate contract labor
costs will be treated as normal operations and maintenance
expenses (summarized in 4.01A. above) and will be billed
through to Owner at actual cost with no markup, but with an
increase sufficient to cover any duties, taxes, incentives and
other labor-related fees assessed on the income of such
expatriate contract laborers for payment by Operator to such
laborers. Payments by Owner to Operator for such labor shall
be in U.S. or Chinese currency as directed by Operator.
F. PLANT GENERAL AND ADMINISTRATIVE EXPENSES. Plant site General
and Administrative (G&A) costs will be managed and controlled
according to a predetermined budget that has been accepted by
Owner. All G&A costs associated with plant operations will be
administered by Operator and paid for by Owner in local
currency.
All labor costs (items A., B., D., E., and F. above) will be tracked
against a budget approved by Owner.
G. NOT USED
H. NOT USED
21
I. NOT USED
4.02 OPERATOR PROCUREMENT TO OWNER'S ACCOUNT. Operator may procure those
items and services which are considered Reimbursable Costs and are included in
the Approved Budget by issuing purchase orders to be paid directly by Owner on
Owner's purchasing and requisition forms. Operator shall supply a confirming
copy of the purchase order to Owner. For purchase orders in excess of the
equivalent of One Thousand and No/100 Dollars (US$1,000) or for any items not in
the Approved Budget, Operator is required to receive written authorization from
Owner's Representative prior to issuing purchase orders to be paid directly by
Owner on Owner's purchasing and requisition forms.
4.03 COMPENSATION STRUCTURE PRIOR TO THE FACILITIES' COMMERCIAL OPERATION
DATE.
A. Prior to the Facilities Funding Date. The special provisions
for compensation from execution of this Agreement until the
Facilities Funding Date are as follows:
i. No Operating Fee will apply;
ii. Costs of Operator setting up its corporate entity to
operate in China will be borne by Operator;
iii. Travel and labor costs associated with Operator's first
trip to China (regardless of mission or work
accomplishment) will be borne by Operator;
iv. Operator will perform the work scope shown in Section
2.17A. at no cost to Owner, other than: (i) pre-approved
fees and costs of Owner's consultants and other
resources incurred in connection with the Facilities
related services performed by Operator, as provided for
above; and (ii) in connection with services rendered
pursuant to Sections 2.17A.iv. and v (for which Operator
and Owner will agree to a reasonable compensation
structure, prior to Operator providing such work); and
v. All Operator's xxxxxxxx during this period will be held
and will be submitted for payment after the Facilities
Funding Date or six (6) months, whichever comes first.
Operator will submit to Owner monthly statements showing
current xxxxxxxx with totals accrued. No interest will
accrue on the xxxxxxxx.
B. PRE-COMMERCIAL OPERATIONS PERIOD. The special provisions for
compensation subsequent to the Facilities Funding Date and
prior to the Commercial Operation Date, are as follows:
i. All expenses specifically associated with setting up the
Operator's subsidiary in the People's Republic of China
will be to the account of Operator:
22
ii. During the Pre-Commercial Operations Period, the Annual
Fee will be One Hundred Eighty-Seven Thousand Five
Hundred and No/100 Dollars (US$187,500) per annum
payable in monthly installments of Fifteen Thousand Six
Hundred Twenty-Five and No/100 Dollars ($15,625)
starting with the Commencement Date; and
iii. Operator will also be eligible for a bonus payment of
Three Hundred Seventy-Five Thousand and No/100 Dollars
(US$375,000) at the end of the Pre-Commercial Operations
Period (the "Startup Bonus"). The Startup Bonus will be
based upon mutually agreed-upon criteria that measure
the Facilities' success during this period including,
but not limited to, achieving critical path elements
such as hiring, training, sparing, or other program
setup milestones within the direct control of Operator;
and
iv. Operator's labor (in-country, expatriate and contract),
travel and other expenses will be reimbursed by Owner in
the same manner as described in Section 4.01D.
4.04 TAXES. Owner shall pay or reimburse all taxes or duties arising from
this Agreement, other than tax on Operator's income, as provided in Section
3.10B. If the People's Republic of China "deem" a profit to Operator based upon
payments relating to this Agreement in an amount in excess of the Annual Fee, as
adjusted pursuant to Section 4.03B(iii), the deemed profit tax payable by
Operator on that excess amount shall be a Reimbursable Cost. Operator shall use
its best efforts to minimize the amount of any such "deemed" profit.
4.05 INVOICING. Operator will invoice monthly for all Reimbursable Costs
and Fees payable under this Agreement. Operator shall include in its invoice the
Annual Fee and the anticipated Reimbursable Costs payable under Section 4.01D,
for the month following the invoice submission. With respect to other
Reimbursable Costs and any Start-up Bonus pursuant to Section 4.03B(iii),
Operator's invoice shall include amounts payable from the preceding month. On a
quarterly basis, Operator and Owner will reconcile actual Reimbursable Costs
under Section 4.01D with the projected amounts which have been paid hereunder,
and Operator's next invoice following such reconciliation will be adjusted
accordingly.
SECTION V
PAYMENT
5.01 PAYMENT OF MONTHLY COMPENSATION. The payment required by Section IV,
will be made on a calendar month basis. Operator shall submit its invoices by
the fifth day of the month. Owner shall pay the amount due to Operator on or
before the thirtieth (30th) day following the date the invoice is received by
Owner, provided that invoices are submitted in a timely manner to allow payment
in the applicable month in accordance with applicable loan requirements.
Invoices not timely submitted shall be paid within sixty (60) days. Operator
shall submit its billing together with copies of supporting invoices, vouchers,
receipts, and such other evidence of payment as Owner shall require.
23
5.02 PAYMENT OF TERMINATION PAYMENTS. Owner shall pay the amount due
pursuant to Section 7.02 to Operator on or before the thirtieth (30th) day
following the date the invoice for such amount is received by Owner. Operator
shall submit its billing together with copies of supporting invoices, vouchers,
receipts, and such other evidence of payment as Owner shall require.
5.03 PAYMENT DISPUTES. In the event of a dispute or question regarding any
invoice submitted by Operator, (i) all amounts not disputed or in question shall
be promptly paid as and when required by Section 5.01 above, (ii) an explanation
of the dispute shall be promptly transmitted by Owner to Operator, (iii) Owner
and Operator shall immediately seek to resolve the dispute or question, and (iv)
payment shall be made within ten (10) days of any remaining amount due when the
dispute is resolved.
5.04 AUDIT RIGHTS. Owner shall have the right to audit Operator's books
and records to verify that all reimbursable costs are properly charged to Owner.
No audit rights extend to the makeup of lump sum amounts, unit rates, fixed
percentages or multipliers as may be agreed upon between Owner and Operator.
5.05 INTEREST. If Owner should fail to pay Operator the amounts due and
payable hereunder, except to the extent such amounts may be in dispute, such
delinquent payments shall bear interest at an annual rate equal to one and
twenty-five hundredths (1.25) times the prime interest rate then currently
charged by the Chase Manhattan Bank in New York, New York prorated for the
period of arrears, but in no event shall such rate exceed the maximum legal rate
allowed by applicable usury laws. Payment of interest shall not excuse or cure
any default or delay in payment of amounts due.
SECTION VI
TERM
6.01 TERM. This Agreement shall become effective as of the date of
execution of this Agreement, and shall continue in effect thereafter until the
date of Commercial Operations unless otherwise terminated as provided in this
Agreement.
6.02 NOT USED
SECTION VII
TERMINATION
7.01 TERMINATION BY OWNER WITHOUT CAUSE. Owner shall have the right to
terminate this Agreement upon any termination of the Power Agreement. Any Lender
to the Facilities shall have the right to terminate this Agreement for
convenience should it declare an "Event of Default" under the Loan Documents
after any cure period or other ability of Owner or any other party to cure any
such default. In addition, Owner shall have the right to terminate this
Agreement for convenience or in the event that the Facilities are sold to a
third party who intends to operate the Facilities. In the event Owner gives a
written termination notice pursuant to the provision of this Section 7.01, this
Agreement shall terminate as of the date specified in such notice which shall be
no earlier than fifteen (15) days after the date the notice is given.
24
7.02 TERMINATION PAYMENTS. Upon termination pursuant to this Section VII,
Owner shall pay Operator: (i) all outstanding costs pursuant to Section IV
hereof; (ii) reasonable costs that may be incurred by Operator in support of the
termination of this Agreement, and (iii) reasonable severance costs resulting
from the termination of employment of Operator's employees. Payment of these
amounts will be in accordance with Section V.
In the event of termination for convenience pursuant to Section 7.01 or in
the event of termination pursuant to Sections 7.04A. and 7.04B., Owner shall
pay, in addition to the amounts above, monthly termination payments from the
date of termination through the original Term of the On-Shore Agreement for the
Commercial Operations Phase. The monthly amounts for such payments shall be
determined from the following schedule and shall be in accordance with Section
V:
A. Twenty-Five Thousand and No/100 Dollars ($25,000) per month
from the Commercial Operation Date through the twenty-fourth
(24th) month following the Commercial Operation Date;
B. Twenty Thousand and No/100 Dollars ($20,000.00) per month for
the twenty-fifth (25th) month through the forty-eighth (48th)
month following the Commercial Operation Date; and
C. Fifteen Thousand and No/100 Dollars ($15,000) per month for
the forty-ninth (49th) month following the Commercial
Operation Date through the original Term of the Agreement for
the Commercial Operations Phase.
Owner may pay at its sole option Operator these monthly termination
payments in a lump sum based on the net present value of the payment stream
discounted at a rate of twelve percent (12%) per annum.
7.03 TERMINATION BY OWNER FOR CAUSE. Owner may terminate this Agreement
upon written notice to Operator as provided for in Section 7.05 upon the
occurrence of any of the following:
A. Operator's failure to provide adequate qualified personnel to
perform its obligations under the Agreement.
B. NOT USED
C. NOT USED
D. Failure of the Operator to perform in any material respect any
service or obligation to be performed by it hereunder or any
representation or warranty shall prove to be incorrect in any
material respect.
E. The appointment of a receiver, liquidator or trustee for
Operator by a court of competent jurisdiction or an
adjudication of bankruptcy or insolvency by any such court or
the filing by Operator of a petition seeking an adjudication
of bankruptcy or insolvency.
25
F. Continuance of a Force Majeure by Operator for more time than
that allowed in Section 12.01.
7.04 Termination By Operator For Cause. Operator may terminate this
Agreement upon written notice to Owner as provided for in Section 7.05 upon the
occurrence of any of the following:
A. Failure to pay undisputed amounts due to Operator under this
Agreement in accordance with Section V.
B. Failure of Owner to perform in any material respect any
service or obligation to be supplied or performed by it or any
representation of warranty shall prove to be incorrect in any
material respect.
C. Failure of Owner to obtain the Facilities Funding Date by June
30, 1997:
D. Continuance of a Force Majeure by Owner for more time than
that allowed in Section 12.01.
7.05 WRITTEN NOTIFICATION OF TERMINATION. In the event a written
termination notice is given pursuant to Sections 7.03A., 7.03D. or 7.04B., such
notice shall set forth the circumstances providing the basis for such
termination and the Party which receives such notice shall have thirty (30) days
to remedy such condition. In the event such circumstance is not corrected by the
Party receiving such notice, or the Party receiving such notice has not taken
substantive action acceptable to the other Party in its sole discretion to
correct the circumstances by the end of such thirty (30) day period, this
Agreement shall terminate.
7.06 TERMINATION PROCEDURE. Neither Party may terminate this Agreement
except as provided in this Section VI I. Operator shall, in the event of
termination, take all reasonable steps necessary to assure an orderly transfer
of operation and maintenance responsibility to Owner or to Owner's designee
including, without limitation, the delivery of all of the following to Owner or
to any such designee:
A. All operation, maintenance or other records, manuals and
procedures associated with the Facilities.
B. All tools, Consumables, spare parts and equipment associated
with the Facilities.
C. At the option of Owner or such designee, assignments to Owner
or such designee, in form reasonably satisfactory to Owner or
such designee, of any agreements between Operator and third
parties relating to the performance of the obligations of
Operator under this Agreement.
7.07 OWNER CURE OF OPERATOR'S DEFAULT. In the event of a default by
Operator in its obligations hereunder, Owner may (but shall not be required to)
cure such default and may charge Operator any additional incremental costs
incurred by Owner to cure such default. The exercise by Owner of this right
shall not waive any other rights of Owner hereunder.
26
SECTION VIII
INSURANCE AND INDEMNIFICATION
8.01 INSURANCE. Without limiting any of the obligations or liabilities of
the Operator,Operator shall at all times throughout the term of this Agreement
and any renewal thereof, carry and maintain, or cause to be maintained, at its
own expense, insurance with at least the minimum insurance coverage set forth
below and such other additional insurance as may reasonably be required from
time-to-time by the Owner. All insurance carried and maintained pursuant to this
Agreement shall be with insurers, and shall be in such form as shall be
satisfactory to the Lender.
A. Operator shall carry and maintain or cause to be maintained
worker's compensation insurance (or other similar or
equivalent social insurance) written in accordance with the
governing insurance laws of the People's Republic of China and
employers' liability coverage in an amount not less than
$1,000,000 per occurrence in the annual aggregate. The
employers' liability coverage shall not contain an
occupational disease exclusion.
B. Operator shall carry and maintain or cause to be maintained
comprehensive automobile liability insurance covering all
owned, non-owned and hired vehicles. Such coverage shall be
written in an amount not less than $1,000,000 combined single
limit per occurrence in the annual aggregate.
C. Owner shall provide a Contractor's All Risk (CAR) insurance
policy for the Facilities covering the general liability and
builder's risk exposure. The limit of liability insurance will
be $90,000,000 and Owner, Operator, Subcontractors, and
Financing Entities will be named insureds.
D. Following Final Acceptance, Owner shall procure and maintain
all risk property insurance (including boiler and machinery
and business interruption insurance) naming Operator as an
additional insured and providing a waiver of subrogation in
favor of Operator and designated Subcontractors. Subject to
Owner's approval, such insurance may also include such other
Persons as may be requested by Operator as additional
insureds.
E. Commercial General Liability Insurance. Owner shall provide
coverage for Owner and Operator against claims for third party
bodily injury (including death) and third party property
damage. Such insurance shall provide coverage for products -
completed operations, blanket contractual, explosion, collapse
and underground coverage, broad form property damage and
personal injury insurance. The policy will provide a combined
single limit of liability of $20,000,000 per occurrence and in
the aggregate for bodily injury and property damage.
F. Owner shall furnish Operator and in turn Operator shall
furnish Owner with evidence of the insurance required
hereunder, in the form of insurance certificates. All such
insurance certificates shall represent that the policies may
27
not be canceled or changed with respect to the requirements of
this Section 8.01 without thirty (30) days prior written
notice to Operator or its permitted assigns.
G. All deductibles or self-insured retentions under its
respective policies shall be the sole responsibility of the
Operator.
H. Any insurance carried and maintained in accordance with this
Agreement shall be endorsed to provide that:
i. Owner and any Lender to the Facilities, shall be named
as additional insureds with respect to insurance carried
pursuant to items A. employers liability (only if
possible) and B. Any obligation imposed upon the
Operator (including the liability to pay premiums) shall
be the sole obligation of the Operator and not that of
the Owner or Lender;
ii. The interest of the Owner and any Lender to the
Facilities shall not be invalidated by any action or
inaction of the Operator or any other person and all
policies shall insure the Owner and Lender regardless of
any breach or violation by the Operator or any other
Person of any warranties, declarations, or conditions in
such policies;
iii. The insurer thereunder waives all rights of subrogation
against the Owner, any Lender to the Facilities, and the
Utility, any right of set off and counterclaim and any
other right to deduction due to outstanding premium,
whether by attachment or otherwise;
iv. Such insurance shall be primary without right of
contribution of any other insurance carried by or on
behalf of the Owner, any Lender, and the Utility with
respect to their interests as such in the Facilities;
v. Inasmuch as such policies are written to cover more than
one insured, all terms, conditions, insuring agreements
and endorsements (other than the limits of liability)
shall operate in the same manner as if there were a
separate policy covering each insured; and
vi. If such insurance is canceled for any reason whatsoever,
including nonpayment of premium, or any substantial
change is made in the coverage that affects the
interests of the Owner, any Lender, and the Utility,
such cancellation or change shall not be effective as to
the Owner, such Lender, and the Utility, until thirty
(30) days after receipt by the Owner, Lender, and the
Utility of written notice sent by registered mail from
such insurer of such cancellation or change; provided,
however, that such thirty (30) day period shall be
reduced to ten (10) days in the case where cancellation
results from the nonpayment of premiums.
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J. On or before the execution of this Agreement and annually
thereafter, Operator shall arrange for furnishing Owner and
third party for which Owner makes written request with
approved certification of all required insurance. Such
certification shall be executed by each insurer or by an
authorized representative of each insurer. Such certification
or notice, as the case may be, shall identify insurers, the
type of insurance, the insurance limits and the policy term
and shall specifically list the special endorsements in
Section 8.01 D. above. Operator will furnish Owner and any
third party with copies of all insurance policies, binders,
and cover notes or other evidence of such insurance relating
to the Facilities in the event of a claim.
K. Concurrently with the furnishing of the certification referred
to in item J. above, Operator will furnish Owner and any third
party at the request of Owner with a report of each insurer or
insurance broker stating that all premiums then due from the
Operator have been paid and that in the opinion of such
insurer or insurance broker, the insurance then carried and
maintained with respect to the Facilities is in accordance
with the terms of this Agreement. Furthermore, Operator will
cause an insurer or insurance broker to advise Owner and any
third party promptly in writing of any default in the payment
of any premiums or any other act or omission on the part of
the Operator or any other person of which such broker has
actual knowledge which might invalidate or render
unenforceable, in whole or in part, any insurance provided
hereunder. Owner and/or such third party may, at their sole
option, obtain such insurance if not obtained by the Operator
and, in such event, Operator shall reimburse Owner and/or such
third party upon demand for the cost thereof.
8.02 RISK OF LOSS. Owner shall bear the risk of physical loss or damage to
the Facility, including all materials, equipment and supplies (including
temporary materials, equipment and supplies) purchased for permanent
installation in or use during construction of the Facility, regardless of
whether Owner has title thereto. Operator and Subcontractors shall have no
liability at any time for loss or damage to property of Owner, or in custody of
Owner, and Owner releases Operator and their Subcontractors there from. Operator
and their Subcontractors shall also have no liability for any loss of, or damage
to the Facility, as it is the intent of the Parties to rely on the proceeds of
Owner's insurance as satisfaction for any loss or damage to the Facility, and
Owner releases Operator and their Subcontractors for any such loss or damage.
8.03 INDEMNIFICATION.
A. Subject to the scope and limits of the insurance coverages
listed in Section 8.01 above; Operator agrees to defend and
indemnify Owner, any Lenders, and the Utility and their
respective directors, officers and employees (collectively
"Indemnitee") against, and hold them harmless from any and all
claims, suits, liabilities and legal expenses (collectively
"Claims") resulting from or in connection with Operator's
performance, negligent performance, or non-performance of its
obligations hereunder except where such Claims were caused by
the sole negligence or willful misconduct of an indemnitee,
provided that Operator shall be promptly notified in writing
so such claim or suit brought against such indemnitee and
shall be permitted to participate in the defense thereof.
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B. Subject to the scope and limits of the insurance coverages
listed in Section 8.01 above; Owner agrees to defend and to
indemnify Operator and its directors, officers and employees
(collectively "Operator Indemnitee") against, and to hold them
harmless from any and all Claims, resulting from or in
connection with Owner's performance, negligent performance, or
non-performance of its obligations hereunder, except where,
such claims were caused by the sole negligence or willful
misconduct of the Operator Indemnitee, provided that the same
notification to, and opportunity to participate, specified in
Section 7.05A. above is afforded to Owner.
C. Owner agrees to defend and to indemnify Operator Indemnitees
against and to hold them harmless from any and all claims,
resulting from or in connection with Operator indemnitee
acting under the EPC Contractor's supervision and direction,
the EPC's Contractor's performance, negligent performance or
non-performance of its obligations pursuant to Section 2.02,
except where such claims where caused by Operator's
Indemnitee's failure to comply with the directions given by
EPC Contractor and/or the sole negligence or willful
misconduct of Operator's indemnitee.
D. Indemnities against, releases from, assumptions of, and
limitations on liability expressed in this Agreement, as well
as waivers of subrogation rights, shall apply even in the
event of the fault, negligence or strict liability of the
Party indemnified or released or whose liability is limited or
assumed or against whom rights of subrogation are waived and
shall extend to the partners of each Party, their Affiliates,
and their respective officers, directors, employees, and
agents.
8.04 ADDITIONAL INSURED. Any Lender and the Utility shall be named as an
additional insured under the foregoing policies of insurance.
8.05 PRE-EXISTING CONTAMINATION. Anything herein to the contrary
notwithstanding, title to, ownership of, and legal responsibility and liability
for any and all pre-existing contamination shall at all times remain with Owner.
"Pre-existing contamination" is any hazardous or toxic substance present at the
site or sites concerned which was not brought onto such site or sites by
Operator. Owner agrees to release, defend, indemnify and hold Operator harmless
from and against any and all liability which may in any manner arise in any way
directly or indirectly caused by such pre-existing contamination except if such
liability arises from Operator's gross negligence or willful misconduct.
8.06 DAMAGE LIMITATION. Except as expressly provided herein, Operator nor
Owner shall have liability to the other party hereunder for indirect, incidental
or consequential damages, including, without limitation, loss of revenues,
liability for loss of use of the Facility or existing property, loss of profits,
loss of product or business interruption, howsoever caused, including breach of
contract, tort (including negligence), strict liability or otherwise.
SECTION IX
PERMITS AND LICENSES
9.01 OWNER PERMITS AND LICENSES. Owner shall be responsible for obtaining
and maintaining all permits, approvals and licenses, required to be in the name
of Owner, necessary for the operation and maintenance of the Facilities (unless
specifically determined to be within the scope
30
of work undertaken by Operator). Operator shall cooperate with Owner in
obtaining and maintaining such permits and licenses and in preparing reports
required thereunder.
Operator shall promptly advise Owner of any required permits and licenses or
renewals of which it becomes aware.
9.02 OPERATOR PERMITS AND LICENSES. Operator shall be responsible for
obtaining and maintaining all permits, approvals and licenses required to be in
the name of Operator and otherwise required to be obtained by Operator in the
performance of his duties hereunder.
SECTION X
INDEPENDENT CONTRACTOR
At all times, Operator shall perform the requirements of this Agreement as an
independent contractor to the Owner. Operator shall have full responsibility for
the control and direction of its employees, servants and agents. Operator shall
be fully and solely responsible for the payment of such employees, servants and
agents and for the payment of all obligations incurred by Operator in performing
the requirements of this Agreement. This Agreement is not intended to and shall
not create a partnership of any kind or type. Except for as provided in Section
2.08, Operator shall not be an agent for and may not bind Owner. Owner shall not
be an agent for and may not bind Operator.
SECTION XI
COORDINATION AND ACCESS
11.01 ACCESS. Owner shall provide Operator and its employees, agents, and
subcontractors with full and free access to the Facilities at all times to
perform its obligations under this Agreement. Operator shall furnish Owner with
a list of employees engaged in operation and maintenance of the Facilities and
shall inform Owner in writing of all changes thereto. Operator, its employees,
agents and subcontractors shall comply with all safety and other requirements
established by Operator and Owner in connection with such access.
11.02 COORDINATION; REQUIRED LEVEL OF PERFORMANCE. Operator's personnel
will interface with Owner's Representative and with appropriate representatives
of the Utility. Operator shall accept daily instructions from the Utility, steam
purchasers, and Owner as to projected requirements, subject to the design limits
of the Facilities. In the event of any interruption of the operation of the
Facilities or in the event Operator is unable to operate the Facilities so as to
meet the such requirements of the Utility, steam purchasers, and Owner, Operator
shall immediately notify Owner of the circumstance and shall exert its best
efforts to restore the Facilities to its required operating level.
SECTION XII
FORCE MAJEURE
12.01 FORCE MAJEURE. Neither Party shall be responsible or liable for or
subjected to a termination of this Agreement for or deemed in breach of this
Agreement as a result of any delay or deficiency in the performance of its
obligations hereunder to the extent that such delay or deficiency is
31
due to circumstances beyond its reasonable control. "Force Majeure Event" shall
mean any event that is not foreseeable and for which the damages caused by the
event are not reasonably preventable by the Party declaring Force Majeure and
cannot be overcome such that it adversely affects one Party's performance of its
obligations under this Agreement, including, without limitation, unusually
severe weather conditions (i.e., lightening, hurricane or typhoon); any natural
disasters such as fire or earthquakes, any labor difficulty not involving
employees of any parties hereto, any labor difficulty involving employees of
parties hereto to the extent such employees are members of a labor union and
such labor difficulty is in violation of a labor contract or in violation of
applicable laws; any labor difficulty involving employees of parties hereto, not
caused by the act or the failure to act on the part of the relevant party
hereto, to the extent such employees are in the process of becoming members of a
labor union; war; inability to obtain fuel for the Facilities; riots;
requirements, actions or failures to act on the part of governmental authorities
preventing performance; any modifications or changes in law, regulations or
rules made by the government of The People's Republic of China or any other
local government or their agencies which directly or indirectly affect either
Parties' performance of its obligations under this Agreement; inability despite
due diligence to obtain required licenses or approvals; accident; fire; damage
to or breakdown of necessary facilities; or transportation delays or accidents
(such causes hereinafter called "Force Majeure"); provided that:
A. The non-performing party shall give the other party written notice
within a reasonable time after the discovery of the Force Majeure
describing the particulars of the occurrence;
B. The suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure but under no
circumstances shall the Force Majeure exceed one hundred and eighty
(180) days; however, if such Force Majeure is declared by Operator
and results in the inability of the Facilities to furnish Dependable
Capacity to the Utility as required by the Power Agreement;
C. The Party with a deficiency in its performance uses its best efforts
to remedy such deficiency and to mitigate the effect of the Force
Majeure Event. If the Force Majeure Event is labor related, Operator
shall use best efforts to hire new employees or enter into new
subcontracts;
D. When the non-performing Party is able to resume performance of its
obligations under this Agreement that Party shall give the other
Party written notice to that effect;
E. If Operator declares Force Majeure, Owner shall have the immediate
right to enter the site at Owner's discretion to operate and
maintain the Facilities until such time as the Force Majeure is
resolved; and
F. The Force Majeure shall not excuse failure to apply money
obligations nor shall it excuse any deficiency in performance to the
extent caused by any negligent or intentional act, error, or
omission, or failure to comply with any law, rule, regulation, order
or ordinance.
12.02 EXTENSION OF AGREEMENT BY FORCE MAJEURE. Except as otherwise
provided, in no event will any condition of Force Majeure extend this Agreement
beyond its stated Term.
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SECTION XIII
ARBITRATION
Any unresolved dispute that may arise between the Parties regarding this
Agreement shall be settled by arbitration. The arbitration shall be conducted in
accordance with the Commercial Rules of the American Arbitration Association.
Venue for any arbitration proceedings shall be in Dallas, Texas. In such
proceedings, the arbitrator shall have the authority to include in his award
reimbursement of attorney fees and costs to the prevailing Party. Such award
shall be final and binding upon the parties and may be entered and enforced in
any court of appropriate jurisdiction.
SECTION XIV
OPERATOR AND OWNER REPRESENTATIONS AND WARRANTIES
14.01 REPRESENTATIONS AND WARRANTIES OF OPERATOR. Operator represents and
warrants, as of the date hereof, as follows:
A. It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, is duly qualified to
do business in and is in good standing in the State of Nevada and
shall be qualified to do business in the People's Republic of China
within one hundred twenty (120) days after Notice of Proceed to the
Commercial Operation Date, and in any other jurisdiction where it is
required to be so qualified;
B. It has taken all necessary action to authorize the execution,
delivery and performance of its obligations under this Agreement,
which action has not been superseded or modified, and this Agreement
constitutes the legal, valid and binding obligation of Operator,
enforceable in accordance with its terms;
C. The execution, delivery and performance of this Agreement do not
violate (i) its articles of incorporation or by-laws or any
resolution of its Board of Directors or other committees charges
with the governance of its affairs, (ii) any contract to which it
or, to the best of its knowledge, any of its Affiliates is a party
or (iii) any law, rule, regulation, order writ, judgment,
injunction, decree or determination affecting Operator or any of its
properties;
D. It has not filed any petition for relief under the bankruptcy laws
of the United States of America, or any other sovereign nation has
not made nor is making an assignment for the benefit of creditors,
initiated nor been the subject of any proceeding seeking to have a
receiver or trustee appointed to liquidate or manage its affairs,
and none of its properties is subject to the jurisdiction of any
bankruptcy court of the United States of America or any receivership
proceeding;
E. No litigation is pending or, to its knowledge, threatened which
seeks to restrain it from performing its obligations hereunder or
the adverse outcome of which would materially affect its business or
its ability to perform its obligations hereunder;
33
F. No authorization or approval or other action by, and notice to or
filing with, any government agency or regulatory body is required
for the due execution, delivery and performance by Operator of this
Agreement which have not been obtained;
G. It or one of its Affiliates is experienced in the operation,
maintenance and repair of electrical generating facilities, has
complied with the provisions of all applicable laws, including,
without limitation, environmental laws, respecting the operation of
such facilities and has not been and is not currently subject to any
judgment or settlement of any claim imposing significant liability
on it for noncompliance with law or mismanagement in its operation
of any electric power generating facility; and
H. It is familiar with the terms of the Power Agreement and steam sales
agreements if Operator is to operate the steam sales agreements
which affect or relate to the operation of the Facilities.
14.02 REPRESENTATIONS AND WARRANTIES OF OWNER. Each of Tangshan Panda,
Tangshan Pan-Western, Tangshan Cayman, and Tangshan Pan-Sino represents and
warrants, as of the date hereof, as follows:
A. It is a foreign joint venture company duly organized, validly
existing and in good standing under the laws of the People's
Republic of China;
B. It has taken all necessary action to authorize the execution,
delivery and performance of its obligations under this Agreement,
which action has not been superseded or modified, and this Agreement
represents the valid and binding obligation of Owner, enforceable in
accordance with its terms.
C. The execution, delivery and performance of this Agreement do not
violate (i) its Joint Venture Contracts, Articles of Association, or
by-laws or any resolution of its Board of Directors or other
committees charges with the governance of its affairs, (ii) any
contract to which it is a party or (iii) any law, rules, regulation,
order, write, judgment, injunction, decree or determination
affecting Owner or any of its properties;
D. It has not filed any petition for relief under the bankruptcy laws
of the United States of America or any other sovereign nation, has
not made nor is making an assignment for the benefit of creditors,
has not initiated nor been the subject of any proceeding seeking to
have a receiver or trustee appointed to liquidate or manage its
affairs, and none of its properties is subject to the jurisdiction
of any bankruptcy court of the United States of America or any
receivership proceeding
E. No litigation is pending or, to its knowledge, threatened which
seeks to restrain the performance of its obligations hereunder or
the adverse outcome of which could materially affect its business or
its ability to perform its obligations hereunder; and
F. No authorization or approval or other action by, and notice to or
filing with, any government agency or regulatory body is required
for the due execution, delivery and performance by Operator of this
Agreement which have not been obtained.
34
All notices, approvals, consents, requests and other communications
hereunder shall be in writing and shall be deemed to have been given when
delivered to the other Party by registered, certified, or express mail, return
receipt requested, postage prepaid, or by telecopy, addressed as follows:
If to Operator:
DUKE/FLUOR XXXXXX INTERNATIONAL SERVICES
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
ATTN: Vice President, Operations and Maintenance
DUKE/FLUOR XXXXXX
One Coliseum Centre
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
ATTN: Vice President, Operations and Maintenance
If to Owner:
Tangshan Panda Heat and Power Co., Ltd.
Luannan County
Hebei Province
The People's Republic of China
ATTN: General Manager
Tangshan Pan-Western Heat and Power Co., Ltd.
Luannan County
Hebei Province
The People's Republic of China
ATTN: General Manager
Tangshan Cayman Heat and Power Co., Ltd.
Luannan County
Hebei Province
The People's Republic of China
ATTN: General Manager
Tangshan Pan-Sino Heat Co., Ltd.
Luannan County
Hebei Province
The People's Republic of China
ATTN: General Manager
35
Panda Energy International, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
ATTN: Director of Operations
Either Party may change or augment their above address by written
notice given as provided herein.
SECTION XVI
APPLICABLE LAW
16.01 CHOICE OF LAW. This Agreement shall be deemed to have been made in
Dallas, Texas and to be performed in China. It shall be construed in accordance
with the laws of the State of Texas without application of its conflicts of laws
provisions.
16.02 CERTAIN LEGAL REPRESENTATIONS AND UNDERTAKINGS. Each of Operator and
Owner represent, undertake and warrant that it will not engage in and that no
funds shall be used directly or indirectly for any illegal payments or
activities under the laws of The People's Republic of China or of the United
States of America.
Payments made to any person shall not be used for any improper or unlawful
purposes, including any form of comical bribe, kickback, or influence payment.
Without limiting the generality of the foregoing, it is expressly understood
that neither Operator nor Owner shall, directly or indirectly, give, pay, offer,
promise nor authorize the giving or payment of, any money or anything of value
to any officer or employee of any government or any department, agency, or
instrumentality thereof, to any person acting in an official capacity for or on
behalf of any government or any department, agency or instrumentality, to any
political party official, or to any candidate for political office for the
purpose of influencing any act or decision in order to assist the Partnership in
obtaining, retaining or directing business to the Partnership, or any other
person or entity. No party shall establish or maintain any undisclosed or
unrecorded funds or assets nor falsify or cause the making of any artificial
entries in any books or records in connection with any services performed under
this Agreement.
In addition to the foregoing provisions, each of Operator and Owner
expressly undertake that in connection with any inspection or audit of the
records of either party, to insure compliance with the provisions hereof, the
audited party shall cooperate fully with the auditing party or its designee,
shall refrain from making any false or misleading statements, and shall not omit
to state, or cause any person to omit to state, any material facts necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
SECTION XVII
NON-WAIVER
The failure of Owner or of Operator to enforce any of the terms and
conditions or to exercise any right or privilege under this Agreement shall not
be construed as waiving any such term or
36
condition or right or privilege and the same shall continue and remain in force
and effect as if no such failure to enforce or exercise has occurred. No waiver
shall be valid unless so stated in writing.
SECTION XVIII
TITLE
Title to all tools, equipment, supplies and parts purchased by Operator
and of all reports, record logs and documentation prepared by Operator pursuant
to this Agreement shall pass directly upon payment by Owner. Said tools,
equipment, supplies and parts shall be and become the property of Owner free of
all liens and encumbrances except as provided for in Section 2.14
SECTION XIX
ASSIGNMENT
Operator may not assign either its rights or duties under this Agreement
without the prior written consent of Owner and Lender which shall not be
unreasonably withheld. Operator shall execute all consents to assignment
reasonably required by Lenders to the Facilities.
SECTION XX
MISCELLANEOUS
20.01 CONFIDENTIALITY. All Proprietary Information of a Party (the
"Transferred") which is \disclosed to or otherwise received or obtained by the
other Party (the "Transferee") incident to this Agreement is disclosed, and
shall be held, in confidence, and the Transferee shall not publish or otherwise
disclosed any Proprietary Information to any person for any reason or purpose
whatsoever or use any Proprietary Information for its own purposes or for the
benefit of any person, without the prior written approval of the Transferor for
a period of eight (8) years from the date of receipt of such Proprietary
Information; provided, however, that the Proprietary Information may be
disclosed to any prospective financier of the Facilities for purposes of
obtaining financing for the development, construction, operation or maintenance
of the Facilities;and, provided further that nothing herein shall limit the
right of the Transferee to provide any Proprietary Information to any court or
governmental authority having jurisdiction over or asserting a right to obtain
such information, provided that (i) such court or governmental authority orders
that such Proprietary Information be provided, and (ii) the Transferee promptly
advises the Transferor of any request for such information by such governmental
authority and cooperates in giving the Transferor an opportunity to present
objections, requests for limitation, and/or requests for confidentiality or
other restrictions on disclosure or access, to such court or governmental
authority.
The term "Proprietary Information" means all written information which has
been or is disclosed by the Transferor, or by an affiliate, officer, employee,
agent, representative, consultant, contractor, subcontractor or partner of the
Transferor, or which other becomes known to the Transferee or other party in a
confidential relationship with the Transferee, and which (x) relates to matters
such as patents, trade secrets, research and development activities, draft or
final contracts or other business arrangements, books and records, budgets, cost
estimates, pro forma calculations, engineering work project, environmental
compliance, pricing information, operations and maintenance procedures, private
processes and other similar information, as they may exist from time-to-time, or
(y) the
37
Transferor expressly designates in writing to be confidential. However,
Proprietary Information shall exclude:
A. Information that, at the time of disclosure hereunder is in the
public domain, other than any such information which entered the
public domain by breach of this Agreement or in violation of
applicable law;
B. Information that, after disclosure hereunder, enters the public
domain, other than information that entered the public domain by
breach of this Agreement or any other agreement, or in violation of
applicable law;
C. Information, other than that obtained from third parties, that prior
to disclosure hereunder, was already in the recipient's possession,
either without limitation on disclosure to others or subsequently
becoming free of such limitation;
D. Information obtained by the recipient from a third party having an
independent right to disclose the information; or
E. Information that is obtained through independent research without
use of or access to the Property Information.
20.02 JOINT SEVERAL LIABILITY. Tangshan Panda, Tangshan Pan-Western,
Tangshan Cayman, and Tangshan Pan-Sino, shall be jointly and severally liable
for the obligations under this Agreement.
20.03 AMENDMENTS. All amendments to this Agreement must be written and
must be signed by both parties hereto. Owner shall give Operator written notice
of any relevant amendments to the Loan Documents in a timely manner. If an
amendment or sub-agreement to the Power Agreement, or an amendment to the Loan
Documents materially adversely affects the performance of the Parties to this
Agreement, the Parties shall negotiate in good faith to amend this Agreement
accordingly, including, but not limited to, appropriate modifications to the
Contract Price Adjustments and Terminations for Default provisions, however,
such amendment(s) shall preserve the rights of the Parties hereto.
20.04 INVALIDITY. If any provision of this Agreement shall be found to be
invalid by any court of competent jurisdiction, such finding shall not
invalidate any other provision hereof.
20.05 SUCCESSORS & ASSIGNS. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and upon their respective
successors and assigns.
20.06 ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties as to the subject matter of this Agreement and
merges and supersedes all prior agreements, commitments, representations, and
discussion between the Parties pertaining to the subject matter of this
Agreement.
20.07 SURVIVAL. The provisions of this Agreement which by their nature are
intended to survive the cancellation, completion or termination of the Agreement
shall continue as valid and enforceable commitments of the Parties
notwithstanding any such cancellation, completion or termination.
38
20.08 WAIVER OF CONSUMER RIGHTS. The Parties HEREBY WAIVE THEIR RIGHTS
under the Deceptive Trade Practices Consumer Protection Act, Section 17.41 et
seq., Business and Commerce Code, a law that gives consumers special rights and
protections. After both Parties have consulted with attorneys of their own
selection, they voluntarily consent to this waiver.
20.09 LIMITATIONS APPLICATION. Neither Party makes any representations,
covenants, warranties or guarantees, express or implied, other than expressly
set forth herein. The Parties' rights, liabilities, responsibilities and
remedies with respect to the Services, whether in contract or otherwise, shall
be exclusively those expressly set forth in this Agreement.
20.10 THIRD PARTY BENEFICIARIES. Excluding rights any lenders to the
Facilities, this Agreement is not intended to create any third party beneficiary
or rights.
20.11 NOT USED
20.12 COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original but all of which
taken together shall be deemed a single instrument.
Executed on the first day above-written.
DUKE/FLUOR XXXXXX INTERNATIONAL SERVICES
By: /s/ XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
TANGSHAN PANDA HEAT AND POWER COMPANY, LTD.
By: /s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Authorized Legal Representative
TANGSHAN PAN-WESTERN HEAT AND POWER COMPANY, LTD.
By: /s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Authorized Legal Representative
TANGSHAN CAYMAN HEAT AND POWER COMPANY, LTD.
By: /s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Authorized Legal Representative
39
