Sino-foreign Cooperative Joint Venture

Information contained herein, marked with [***], is being filed pursuant to a request for confidential treatment.


Exhibit 10.26


SINO-FOREIGN COOPERATIVE JOINT VENTURE


JIAOZUO WAN FANG POWER COMPANY LIMITED


CONTRACT


March 27, 1996
250 MW Power Plant


Jiaozuo City, Henan Province


People's Republic of China


T A B L E O F C O N T E N T S


Chapters Pages


Chapter 1. Definitions 1


Chapter 2. Parties to this Contract; Representations and Warranties 4


Chapter 3. Establishment of the Joint Venture 5


Chapter 4. Purpose and Scope of Business 6


Chapter 5. Total Amount of Investment and Capital 6


Chapter 6. Responsibilities of Each Party 8


Chapter 7. Construction of the Power Plant 10


Chapter 8. Operation of the Power Plant 10


Chapter 9. Board of Directors 11


Chapter 10 Management 12


Chapter 11. Personnel and Labor Management 13


Chapter 12. Trade Union 14


Chapter 13. Purchase of Equipment 14


Chapter 14. Taxes and Licenses 14


Chapter 15. Accounting; Distribution of Profits; Priority of Payments 15


Chapter 16. Sale of Electricity 17


Chapter 17. Independent Auditing 17


Chapter 18. Foreign Exchange Management 17 Chapter 18. Foreign Exchange Management 17


Chapter 19. Term 18


Chapter 20. Insurance 18


Chapter 21. Land Use 19


Chapter 22. Applicable Law 19


(i)


Chapter 23. Effects of Changes in Chinese Law 19


Chapter 24. Breach of Contract 19


Chapter 25. Termination 20


Chapter 26. Liquidation 21


Chapter 27. Force Majeure 22


Chapter 28. Settlement of Disputes 23


Chapter 29. Non-Disclosure of Business Information 24


Chapter 30 Miscellaneous 25


(ii)


SINO-FOREIGN COOPERATIVE JOINT VENTURE


JIAOZUO WAN FANG POWER COMPANY LIMITED


CONTRACT


PREAMBLE


This Cooperative Joint Venture Contract is made this 27th day of March, 1996 by and between JIAOZUO ALUMINUM MILL, a Chinese enterprise (the "Chinese Party"), and JIAOZUO POWER PARTNERS, L.P., a Cayman Islands exempted limited partnership (the "Foreign Party").


WHEREAS, in accordance with the Law of the People's Republic of China on Sino-foreign Cooperative Enterprises, the implementing rules thereunder and other relevant Chinese laws and regulations, the Chinese Party and the Foreign Party, adhering to the principle of equality and mutual benefit and through friendly consultations, agree to organize a cooperative joint venture enterprise in Jiaozuo City, Henan Province, the People's Republic of China and to invest jointly for the purposes described herein, all upon and subject to the terms and conditions set forth herein;


NOW, THEREFORE, the Parties, intending to be legally bound under Chinese law, enter into this Contract under the following terms and conditions:


CHAPTER 1


DEFINITIONS


When used in this Contract the following capitalized (or, in the Chinese version hereof, underlined) terms shall have the meanings set forth below:


"Aluminum Mill Power Supply Contract" means the Power Purchase and Sale Contract between the Joint Venture and the Chinese Party, as it may be amended or otherwise modified from time to time.


"Articles of Association" means the Articles of Association of the Joint Venture signed by the Parties.


"Board" means the Board of Directors of the Joint Venture established pursuant to Chapter 9.1.


"Business License" means the business license of the Joint Venture to be issued by the Jiaozuo Municipal Administration for Industry and Commerce.


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"Coal Purchase and Transportation Contract" means the Coal Purchase and Transportation Contract entered into by the Joint Venture for the supply and transportation of coal, as it may be amended or otherwise modified from time to time.


"Contract" means this Cooperative Joint Venture Contract, as it may be amended or otherwise modified from time to time.


"Deputy General Manager" means the Deputy General Manager of the Joint Venture appointed pursuant to Chapter 10.2.


"Dispatch Contract" means the Dispatch and Interconnection Contract between the Joint Venture and the Henan Electric Power Corporation.


"Expatriates" has the meaning set forth in Chapter 11.4.


"Financing Documents" means, collectively, all documents executed and delivered between the Joint Venture and any Party in connection with the financings contemplated in Chapter 5.5.


"Foreign Exchange Rate" means the exchange rate of U.S. Dollars for Renminbi actually used by the Joint Venture as permitted by SAEC.


"Foreign Exchange Risk Fund" means the foreign exchange risk fund required to be funded by the Joint Venture from the Joint Venture's after-tax profits, as the approved power price has taken into consideration the exchange rate risk factor. Such fund shall be used to balance the rates of return to both Parties.


"Foreign Exchange Regulations" means the regulations and rules on foreign exchange published by the relevant authorities of China as they may be amended, modified, replaced or superseded.


"General Manager" means the General Manager of the Joint Venture appointed pursuant to Chapter 10.2.


"Interconnection Construction Contract" means the Engineering, Procurement and Construction Contract between the Joint Venture and the Henan Electric Power Corporation, for the construction of the transmission facilities, as it may be amended or otherwise modified form time to time.


"Interconnection Financing Contract" means the financing contract between the Joint Venture and the Henan Electric Power Corporation, to provide financing from the Joint Venture to the Henan Electric Power Corporation for the construction of the transmission facilities, as it may be amended or otherwise modified from time to time.


"Joint Venture" means the cooperative joint venture company established by the Chinese Party and the Foreign Party pursuant to the terms of this Contract.


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"Land Use Rights" means the right to the use of the Site issued by the relevant Chinese government authority in charge of land management as provided in Chapter 21 and any other land use rights necessary or desirable for the construction and operation of the Power Plant for the Term.


"Liquidation Committee" means the Liquidation Committee described in Chapter 26.2.


"MOFTEC" means the Ministry of Foreign Trade and Economic Cooperation of China or any successor approval authority.


"Parties" means the Chinese Party and the Foreign Party, collectively. "Party" shall mean either of the Parties, individually.


"Power Company Power Purchase Contract" means the Power Purchase and Sale Contract between the Joint Venture and the Henan Electric Power Corporation, as it may be amended or otherwise modified from time to time.


"Power Plant" means the coal-fired electric generating facility to be located at the Site consisting of 2 x 125 megawatt generating units with a combined capacity of approximately 250 megawatts, as well as generation and fuel handling facilities and all other related equipment and facilities.


"Power Plant Power Purchase Contract" means the Power Plant Power Purchase Contract between the Joint Venture and the Henan Electric Power Corporation for the purchase by the Joint Venture of electricity for construction, start-up and other uses at the Power Plant, as it may be amended from time to time.


"Project Contracts" means, collectively, (i) the Power Company Power Purchase Contract, (ii) the Aluminum Mill Power Supply Contract, (iii) the construction contracts, (iv) the Site Use Contract, (v) the Coal Purchase and Transportation Contract, (vi) the Dispatch Contract, (vii) the Financing Documents, (viii) the Power Plant Power Purchase Contract, (ix) the Interconnection Financing Contract and (x) the Interconnection Construction Contract.


"Renminbi" or "RMB" means the lawful currency of China.


"SAEC" means the State Administration for Exchange Control of China.


"SAIC" means the State Administration for Industry and Commerce of China.


"Site" means the land located at Jiaozuo City, Henan Province, China upon which the Power Plant is to be constructed and located, as more fully described on the Site Map.


"Site Map" means the map on which the boundaries of the Site are marked in red.


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"Site Use Contract" means the Site Use Contract executed by the Joint Venture relating to the use by the Joint Venture of the Site, as it may be amended or otherwise modified from time to time.


"State Planning Commission" means the State Planning Commission of China.


"U.S. Dollars" or "US$" means the lawful currency of the United States of America.


CHAPTER 2


PARTIES TO THIS CONTRACT; REPRESENTATIONS AND WARRANTIES


2.1 The Parties to this Contract are:


(a) Jiaozuo Aluminum Mill, a Chinese enterprise organized in
accordance with the laws of China and registered with the
Jiaozuo Municipal Administration of Industry and Commerce
(Business License number is 410800-17347144-14931).


Legal Address: 160 Tanan Road
Jiaozuo City
Henan Province
China


Telefax: (86-391) 393-3739


Legal representative: Name: Jin Bao Qing
Position: General Manager
Nationality: Chinese


(b) Jiaozuo Power Partners, L.P., a Cayman Islands exempted
limited partnership.


Legal Address: P.O. Box 309
George Town, Grand Cayman
Cayman Islands, British West Indies


Telefax: (852) 2530-1673


Legal representative: Name: Paul Hanrahan
Position: President of Jiaozuo (GP)
Corporation, its
General Partner
Nationality: U.S.A.


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2.2 Each Party hereby represents and warrants to the other Party that:


(a) (i) in the case of the Chinese Party, it is a state-owned enterprise
duly organized and validly existing as a legal person under the laws
of China; and (ii) in the case of the Foreign Party, it is a Cayman
Islands exempted limited partnership duly organized and validly
existing under the laws of the Cayman Islands;


(b) it has full legal right and power to execute and deliver this Contract
and all of the contracts and documents referred to in this Contract to
which it is a Party and to perform its obligations hereunder and
thereunder; and


(c) it has taken all appropriate and necessary action to authorize the
execution and delivery by it of this Contract and all of the contracts
and documents referred to in this Contract to which it is a Party and
to authorize the performance by it of the terms and conditions hereof
and thereof.


CHAPTER 3


ESTABLISHMENT OF THE JOINT VENTURE


3.1 The Parties will establish the Joint Venture as a Sino-foreign cooperative
joint venture company in accordance with the Law of the People's Republic
of China on Sino-foreign Cooperative Enterprises, the implementing rules
thereunder, other relevant Chinese laws and regulations and the terms of
this Contract.


3.2 The Joint Venture will be a limited liability company with legal person
status. The liability of each Party to the Joint Venture is limited to its
capital contribution. After the Joint Venture has commenced normal
operation, however, the Foreign Party shall bear unlimited liability for
the Joint Venture's indebtedness.


3.3 The name of the Joint Venture in Chinese is "Jiaozuo Wan Fang Dianli
Youxian Zeren Gongsi." The name of the Joint Venture in English is "Jiaozuo
Wan Fang Power Company Limited." The legal address of the Joint Venture is
Daiwangzhen, Jiaozuo City, Henan Province, China.


3.4 All activities of the Joint Venture will be governed by and will be under
the protection of the promulgated laws, decrees, rules and regulations of
China.


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CHAPTER 4


PURPOSE AND SCOPE OF BUSINESS


4.1 The purpose of the Joint Venture shall be to strengthen economic
cooperation and technical exchanges, to satisfy the electricity
requirements of the Chinese Party, to improve power supply and promote the
development of the economy in Henan Province by adopting advanced and
appropriate technology and scientific management methods, and to
continuously raise the economic efficiency of the Joint Venture and ensure
satisfactory economic benefits for each Party.


4.2 The business scope of the Joint Venture shall be to build, own, operate and
maintain a 2 x 125 MW coal-fired self-supply power plant near the site of
the Jiaozuo Aluminum Mill of Henan Province to generate and sell
electricity according to the relevant contracts and develop and operate
power related business in utilizing coal ash.


4.3 The business activities of the Joint Venture will be carried out in
accordance with the provisions of this Contract, the Articles of
Association and the decisions of the Board.


CHAPTER 5


TOTAL AMOUNT OF INVESTMENT AND CAPITAL


5.1 The total amount of investment in the Joint Venture will be One Billion Two
Hundred Sixty Million Seven Hundred Ninety Thousand Renminbi (RMB
1,260,790,000).


5.2 The total registered capital of the Joint Venture will be Four Hundred
Forty Seven Million Five Hundred Eighty Thousand Renminbi (RMB
447,580,000).


5.3 (a) The Chinese Party will contribute to the registered capital of the
Joint Venture One Hundred Thirty Four Million Two Hundred Seventy Four
Thousand Renminbi (RMB 134,274,000), which is equal to 30% of the
total registered capital of the Joint Venture. The Chinese Party will
make its contribution to the registered capital of the Joint Venture
in the form of Power Plant equipment and Land Use Rights (which Power
Plant equipment and Land Use Rights contributions and corresponding
values shall be confirmed by the Henan Provincial Administration on
State Assets and agreed to by the Parties).


(b) The Foreign Party will contribute to the registered capital of the
Joint Venture Three Hundred Thirteen Million Three Hundred and Six
Thousand Renminbi (RMB 313,306,000), which is equal to 70% of the
total registered capital of the Joint Venture. The Foreign Party will
make its contribution to the registered capital of the Joint Venture
in cash in


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U.S. Dollars at the prevailing Foreign Exchange Rate at the time of
contribution.


5.4 The Parties will fund the entire amount of their respective portions of the
registered capital of the Joint Venture 30 days after the issuance of the
Business License to the Joint Venture. Late payment (unless caused by the
fact that the Joint Venture bank account has not been timely opened or
caused by delays in receipt of wire transfer after being sent) will be
subject to an interest charge of 2% per month (or portion thereof) from the
date due until the date paid. In the event either Party fails to make its
capital contribution within two days of the date due, the other Party may
(but shall not be obligated to) make such contribution, in which case the
percentage of the registered capital of the Parties shall be adjusted
accordingly, subject to the approval by the original examining and
approving authority. The Party failing to make such installment will
nevertheless remain liable for accrued interest from the date due until the
date the other Party makes such contribution.


5.5 (a) The Chinese Party will provide a loan in RMB to the Joint Venture in
an amount equivalent to 30% of the difference between the amount of
the total investment set forth in Chapter 5.1 and the amount of the
registered capital of the Joint Venture set forth in Chapter 5.2 upon
terms acceptable to the Joint Venture.


(b) The Foreign Party will provide a loan in U.S. Dollars to the Joint
Venture in an amount equivalent to 70% of the difference between the
amount of the total investment set forth in Chapter 5.1 and the amount
of the registered capital of the Joint Venture set forth in Chapter
5.2 upon terms acceptable to the Joint Venture.


(c) The Joint Venture shall have no liability or obligation to any person
or entity with respect to the shareholder loans provided pursuant to
this Chapter 5.5 other than to the providers of such shareholder
loans.


5.6 The registered capital of the Joint Venture may be increased with the
written consent of the Parties, the consent of the Board and the approval
of MOFTEC.


5.7 After the Parties have made their entire respective capital contributions
to the Joint Venture, the Joint Venture will engage an accountant
registered in China to verify such capital contributions. Upon the issuance
of a verification report by such accountant, the Joint Venture will issue
an investment certificate to each Party.


5.8 (a) Neither Party may assign, sell, encumber or otherwise transfer all or
any part of its interest in the Joint Venture without first obtaining
(i) the consent of the other Party, which consent may be withheld in
the other Party's sole and absolute discretion; (ii) the unanimous
approval by the Board of Directors; (iii) the approval by the original
examining and approving authority; and (iv) the agreement by the
transferee to assume the transferor's obligation hereunder, provided
that with respect to assignments


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by either Party to one or more of its 100% owned companies, the
Parties will cause their directors to vote for such assignment. Any
instrument purporting to transfer any interest in the Joint Venture in
violation of these restrictions shall be null and void and therefore
shall not be effective to confer any right upon the purported
transferee.


(b) In addition, any such proposed assignment, sale or transfer will be
subject to the right of the other Party as hereinafter described to
acquire the interest proposed to be assigned, sold or transferred. In
the event a Party proposes to assign, sell or transfer all or any part
of its interest in the Joint Venture, the transferring Party will give
a written notice (the "Assignment/Transfer Notice") to the
non-transferring Party setting forth the terms and conditions upon
which the assignment, sale or transfer is proposed to be made. The
non-transferring Party will have the right, which shall be exercised,
if at all, by notice to the transferring Party within 60 days after
the non-transferring Party receives the Assignment/Transfer Notice, to
acquire such interest upon the same terms and conditions upon which
the assignment, sale or transfer is proposed to be made. If the
transferring Party does not receive such notice within such 60-day
period and if the transferring Party complies with the restrictions in
Chapter 5.8(a), the transferring Party will have the right to assign,
sell or otherwise transfer such interest to the proposed transferee on
the terms and conditions set forth in the Assignment/Transfer Notice.


CHAPTER 6


RESPONSIBILITIES OF EACH PARTY


6.1 The Chinese Party will perform, in addition to its other obligations set
forth in this Contract, each of the following duties:


(a) contributing its capital at the times and in the amounts required
pursuant to Chapter 5;


(b) providing financing as described in Chapter 5.5;


(c) obtaining and delivering to the Joint Venture no later than 15 days
after the approval by MOFTEC of this Contract an original or a
notarized photocopy of a document issued by the relevant Chinese
government authority in charge of land management evidencing that all
governmental consents, approvals and similar items have been obtained
in connection with the grant to the Joint Venture of the Land Use
Rights that are necessary or desirable for the construction and
operation of the Power Plant;


(d) assisting the Joint Venture in obtaining no later than 15 days after
the approval by MOFTEC of this Contract an original or a notarized
photocopy of all relevant approvals (including approvals of the Power
Bureau Power Purchase Contract and the Aluminum Mill Power Supply
Contract and the


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specific pricing provisions contained therein for the entire term of
each such contract) that are necessary or desirable for the
construction and operation of the Power Plant;


(e) arranging for the transfer of the relevant construction related
contracts to the degree that the Joint Venture requests that they be
transferred;


(f) assisting the Joint Venture in purchasing or leasing in China at
reasonable rates in Renminbi such equipment, materials, office
supplies, transportation services, communication facilities and other
goods and services as may be necessary or desirable for the
construction and operation of the Power Plant;


(g) assisting the Joint Venture in recruiting qualified Chinese management
personnel, technical personnel, and workers as contemplated in
Chapters 10 and 11 and assisting the Joint Venture in obtaining
passports and all necessary travel documents required for such persons
to travel overseas for training or other purposes related to the
construction and operation of the Power Plant;


(h) assisting foreign personnel of the Joint Venture in applying for entry
visas, travel documents and work licenses and in arranging for
suitable board, lodging, office space, transportation, medical
facilities and security for such personnel;


(i) assisting the Joint Venture in applying for tax reductions and
exemptions and any other investment incentives and benefits available
to the Joint Venture and the Foreign Party in China and in Henan
Province;


(j) assisting the Joint Venture in applying to the Bank of China as well
as to other authorized banks for the opening of foreign currency and
Renminbi accounts for the Joint Venture; and


(k) performing such other responsibilities as shall be entrusted to it by
the Joint Venture.


6.2 The Foreign Party will perform, in addition to its other obligations set
forth in this Contract, each of ...