EXHIBIT 10.9
AMENDMENT AGREEMENT
This Amendment Agreement (hereinafter the "Agreement") is made and
entered into as of this 20th day of November, 1999 by and between CE Casecnan
Water and Energy Company, Inc. a Philippine corporation (hereinafter "CE
Casecnan") and CP CASECNAN, a limited liability consortium with external
activities under Italian law (hereinafter "CPCC") with respect to that certain
Engineering, Procurement and Construction Contract dated May 7, 1997, as amended
(herein after the "EPC Contract") for the Casecnan Project. Each entity is
sometimes individually referred to herein as a "Party" and both entities are
sometimes collectively referred to herein as the "Parties".
Capitalized terms used herein and not defined shall have the meanings
ascribed to them in the EPC Contract.
WITNESSETH
A. On or about October 28, 1999, CPCC submitted to CE Casecnan a claim
denominated "Geomechanical Misdescription Claim" (the "GM Claim") for
compensation and modification of the Guaranteed Substantial Completion Date of
the Project.
B. CPCC also has submitted various other claims under the EPC Contract
or otherwise in connection with the Project.
C. In connection with the above the Parties, in order to avoid further
controversy, and possibly the need for arbitration have reached certain
agreements as to certain amendments and additions to the EPC Contract.
D. This Agreement sets forth those certain agreements between the
Parties and amends and supplements the EPC Contract.
NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein, the Parties agree as follows:
1. Extension of Guaranteed Substantial Completion Date; Completion of
Taan Weir Work. (a) CE Casecnan and CPCC hereby agree that the Guaranteed
Substantial Completion Date (including, notwithdstanding any provision of the
EPC Contract to the contrary, completion of the Taan Weir Work) is modified to
be 31 March 2001. The new Guaranteed Substantial Completion Date includes the
balance of the 90-day period available for Unforeseen Underground Conditions
pursuant to the EPC Contract. In connection therewith, CPCC hereby agrees that
it shall make no claim, whether for extension of the Guaranteed Substantial
Completion Date or for any other relief whatsoever, with respect to any alleged
Unforeseen Underground Condition, and CE Casecnan and CPCC each agree that the
definition and concept of Unforeseen Underground Condition shall have no further
applicability in any way to the EPC Contract or the Project.
(b) In furtherance of the content of paragraph 1(a) as to the
Guaranteed Substantial Completion Date, (i) the definition of Guaranteed
Substantial Completion Date in Section 1.1 of the EPC Contract as amended by the
June 30, 1997 letter is hereby deleted and replaced by the following text:
"Subject to any extensions specifically provided for in this
Contract, the date 31 March 2001."
and (ii) all other relevant provisions of the EPC Contract are
modified accordingly.
(c) In furtherance of the content of previous letter (a) as to the
completion of the Taan Weir Work the EPC Contract is hereby amended to delete
all references to "Taan Weir Work", including without limitation as follows:
(i) Amendment of Definition of "Substantial Completion". The
definition of "Substantial Completion" in Section 1.1 of the EPC Contract is
amended to read as follows:
"Satisfaction or waiver of all of the conditions set forth in Section
13.3."
(ii) Deletion of Definition of "Taan Weir Work". The definition of
"Taan Weir Work" in Section 1.1 of the EPC Contract is hereby deleted in its
entirety.
(iii) Amendment of Section 12.2 of the EPC Contract. Section 12.2 of
the EPC Contract is amended by deleting the parenthetical "(other than the Taan
Weir Work)" from the first sentence.
(iv) Amendment of Section 12.4 of the EPC Contract. Section 12.4 of
the EPC Contract is amended by deleting the parenthetical "(other than the Taan
Weir Work)" from the first sentence.
(v) Amendment of Section 13.5 of the EPC Contract. Section 13.5(c) of
the EPC Contract is amended by deleting the words "and successful completion of
the Taan Weir Work".
(v) Amendment of Section 19.1 of the EPC Contract. Section 19.1(g) of
the EPC Contract is amended by deleting the parenthetical "(including, for
purposes of this Section 19.1(g), Substantial Completion of the Taan Weir
Work)".
2. Modification of Delay Liquidated Damages. Section 14.1 of the EPC
Contract is hereby amended to read as follows:
"Contractor understands that if the Substantial Completion Date does
not occur on or before the Guaranteed Substantial Completion Date, Owner will
suffer substantial damages, including additional interest and financing charges
on funds obtained by Owner to finance the Work, reduction of the return on
Owner's equity investment in the Project, and other operating and construction
costs and charges. Therefore, Contractor agrees that if Substantial Completion
is not achieved by the Guaranteed Substantial Completion Date (unless and to the
extent such failure is due to the Owner's breach of its obligations under the
EPC Contract or, without duplication, the occurrence of Force Majeure),
Contractor shall pay to Owner liquidated damages in the amount of US$125,000 per
each day by which the Substantial Completion Date is delayed beyond the
Guaranteed Substantial Completion Date."
3. Bonus. Section 14.5 of the EPC Contract is hereby amended by
deleting the existing text thereof in its entirety and substituting the
following text:
"If and only if CPCC achieves Substantial Completion on or before
March 10, 2001, CE Casecnan agrees that it shall pay to CPCC a bonus equal to
$6,000,000. Such Bonus if earned shall be paid by CE Casecnan to CPCC by
installments each in the sum of $600,000 on November 15 of each year from and
including 2001 through and including 2010, provided that such amount shall be
payable solely from funds available for distribution to CE Casecnan's
shareholders in the relevant financial year of CE Casecnan without breaching any
covenant in the agreements between CE Casecnan and the Financing Entities. Such
payment shall rank immediately prior to and be paid prior to the declaration and
distribution of dividends. If any such payment is not made in full as aforesaid,
no payment (whether by way of dividends or repayment of subordinated debt) shall
be made to CE Casecnan's shareholders until such arrears have been paid in full.
If the bonus is earned and if CE Casecnan becomes insolvent and/or enters into
any form of receivership, the full amount of the bonus shall become immediately
due and payable."
4. Waiver of Claims. (a) CPCC hereby waives, releases and relinquishes
any and all Claims (as defined below) that it may have against CE Casecnan, its
affiliates, agents and independent contractors, and each of their respective
officers, directors and employees, under the EPC Contract or otherwise as of the
date hereof or which it might or could allege in the futre, whether known or
unknown in tort, at law, in equity or by statute, including without limitation
those with respect to or in connection with the following:
i. subject to paragraphs (b) (c) and (d) of this paragraph 4, Changes
in the Work;
ii. the content of any materials provided, directly or indirectly, to
CPCC or any of its member companies by CE Casecnan, Knight Piesold or by or on
behalf of such parties or any other party, before or after the date of the EPC
Contract, including without limitation any alleged defect, deficiency,
inaccuracy, misrepresentation, incorrectness or error in any of such materials;
iii. the bid specifications or materials, and unit quantities of any
materials estimated, anticipated, used or to be used by CPCC in any portion of
the Work, including without limitation the Taan or Casecnan diversion
structures;
iv. any site surface or subsurface condition or matter in any way
related thereto (including the presence or absence of water or any other
material, element or substance), including without limitation whether styled as
related to geology, rock, geomechanics, or geologic, rock or geomechanical
characterization, mischaracterization, description, misdescription, condition,
state, quality, classification, misclassification, behavior or misbehavior;
and/or
v. Major Existing Site Assets or the fitness (or failure thereof) of
any of the Major Existing Site Assets or any condition of the Site in connection
therewith, including without limitation design defects.
For purposes of this Agreement, "Claims" means any claim or cause of
action for damages, schedule relief or any other relief of any nature including
without limitation (i) the GM Claim, (ii) Changes in the Work, and/or (ii) those
based on theories of knowing or negligent misrepresentation or otherwise.
(b) Notwithstanding the foregoing, CPCC may make Claims
(i) in accordance with and subject to Article 15 of the EPC Contract
for events occurring in the future with respect to (A) Changes in Law, but only
as contemplated by and in strict accordance with Article 15 of the EPC Contract,
(B) Force Majeure events, but only as contemplated by and in strict accordance
with Article 15 (Changes in the Work) and Article 22 (Force Majeure) of the EPC
Contract, and (C) Hanbo-Related Events, but only as contemplated by and in
strict accordance with Article 15 of the EPC Contract.
(ii) for amounts due and owing to CPCC as compensation for the Work as
contemplated by the EPC Contract and pursuant to Contractor's Invoices submitted
in accordance with Section 7.1 of the EPC Contract and subject to Article 7 of
the EPC Congract,
(iii) based on fraud, willful misconduct, or gross negligence on the
part of CE Casecnan, or any breach by CE Casecnan of any of its representations,
warranties, covenants, obligations or responsibilities in the EPC Contract, or
(iv) claims which relate to circumstances which are completely
unforeseen as of the date hereof and which are based on (and which cite as their
basis) a specific provision of the EPC Contract;
provided that in the case of any claim pursuant to clause (b)(i) through (b)(iv)
above, each of CPCC and CE Casecnan acknowledges and agrees that in no event
shall any such claim be based on or related to any event or circumstance
described in or related directly or indirectly in any way to clauses (ii)
through (v) of paragraph (a) above.
(c) CE Casecnan and CPCC may agree to Changes in the Work as
contemplated by and in strict accordance with Section 15.1(a) of the EPC
Contract (it being agreed that as of the date hereof the only Change in the Work
falling into this category is that denoted as number 1 on Exhibit 2, as to which
the parties are in discussions).
(d) Except for those items described at numbers 2, 8, 12 and 15 on
Exhibit 2, no facts or circumstances prior to or existing as of the date hereof
shall provide the basis for, and shall not be used by CPCC as the basis for any
Claim or any damages, schedule relief or any other relief, all of which
(including without limitation those matters listed as items 3 through 7, 9
through 11, 13, 14, 16 and 17 on Exhibit 2) are hereby waived. The parties
acknowledge that there is disagreement as to whether any of such items 2, 8, 12
and/or 15 on Exhibit 2 constitute valid bases for any Change in the Work or
Claim, and each party hereby reserves its rights with respect to each of such
items, provided further that in no event shall CPCC claim or request, or be
entitled to, any increase in the Contract Price with respect to number 8 in
excess of $400,000 (the foregoing not constituting any acknowledgment whatsoever
by CE Casecnan as to the merits, if any, of such claim).
(e) Nothing in this Clause 4 or in this Agreement shall in any way
prejudice or impair any defense, in law or in equity, which CPCC may have to any
existing or future cause or right of action that CE Casecnan may initiate
against CPCC.
5. Delivery of Financial Statements, Monthly Certification. (a) Within
10 days of the date of this Agreement, CPCC shall deliver to CE Casecnan copies
of its, Cooperativa Muratori & Cementisti's and Impresa Pizzarotti & C. Spa's
most resent audited annual financial statements and its and their most recent
semi-annually financial statements (audited if available or certified as true
and correct by a duly authorized officer of each such company, if unaudited).
Thereafter, the Contractor shall deliver to the Owner copies of its, Cooperativa
Muratori & Cementisti's and Impresa Pizzarotti & Spa's most recent audited
annual financial statements and its and their most recent semi-annually
financial statements (audited if available or certified as true and correct by a
duly authorized officer of each such company, if unaudited), in each case within
220 days of the end of the relevant accounting period.
(b) Commencing with the Contractor's Invoice submitted in December,
CPCC, as a required part of each such monthly invoice, shall submit a
certification, signed by a duly authorized officer of each of CPCC, Cooperativa
Muratori & Cementisti and Impresa Pizzarotti & C. Spa., stating that each of
such companies are fully capable of satisfying, and undertake to satisfy, all
funding requirements of CPCC to enable it to meet all of its obligations under
the EPC Contract and this Agreement.
6. EPC Contract Critical Path Schedule. The schedule attached hereto as
Exhibit 1 shall be the Critical Path Schedule under the EPC Contract. The
Critical Path Schedule shall be changed only if (i) the Milestone Schedule
and/or the Guaranteed Substantial Completion Date are modified in accordance
with the terms of the EPC Contract, (ii) to incorporate agreed Changes in the
Work, if any, or (iii) with the written consent of CE Casecnan, such consent not
to be unreasonably withheld.
7. Extension of Bank Guaranty. On or prior to June 14, 2000, CPCC shall
procure the extension of the Banca di Roma Demand Bank Guaranty Nr. 822ILI379
through April 14, 2001, and shall deliver to CE Casecnan written evidence of
such extension satifactory to CE Casecnan. CPCC hereby authorizes CE Casecnan to
demand, and consents to CE Casecnan demanding, payment in full under such
guaranty if an extension is not so procured.
8. Transfer of Major Existing Site Assets. In consideration of CPCC's
waiver of Claims under Claise 4 hereof, CE Casecnan shall also transfer and
convey to CPCC the Major Existing Site Assets, provided that if CE Casecnan
determines in its reasonable discretion that it needs any of such assets for the
operation and maintenance of the Project then CE Casecnan may retain items
having a fair market value of not more than $150,000 in the aggregate. Such
determination and transfer shall be made within 60 days of Final Acceptance. CE
Casecnan shall make such transfer at no cost to CPCC, provided however, that
CPCC shall be solely responsible for and shall pay any and all transfer taxes,
fees imposts and levies of whatsoever nature, if any, which may be incurred by
reason of such transfer. Such transfer and conveyance shall be on a quitclaim,
as-is, where-is basis, WITH NO EXPRESS WARRANTIES OR REPRESENTATIONS, AND NO
IMPLIED WARRANTIES OR REPRESENTATIONS, OF ANY KIND WHATEVER RELATING TO THE
MAJOR EXISTING SITE ASSETS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. The transfer documents shall incorporate the text of
the previous sentence as CE Casecnan shall deem appropriate. CPCC hereby
acknowledges and agrees that (i) the Major Existing Site Assets were left behind
by the former contractor for the Project, (ii) such assets have been utilized by
CPCC during the subsequent approximately 42-month construction period and (iii)
certain of such assets may have been consumed during construction, and (iv) CE
Casecnan's only evidence of title is a statement made by Hanbo Corporation and
related entities conveying such assets to CE Casecnan "as-is, where-is" with no
corresponding warranties as to title or warranties as to the absence of any
liens, and CE Casecnan shall have no obligation to obtain any such documents or
other evidence of title.
9. Staffing and Management Changes. Section 4.1 of the EPC Contract is
hereby amended by adding after paragraph (ai) the following new paragraphs (aj)
and (ak):
"(aj) Fill 15 January 1999 and maintain filled the positions
in the Site Management Organisation Chart in Exhibit 3 with
the persons named therein (where applicable) or by persons of
equivalent qualification and experience."
"(ak) Mobilise to the Site by 15 April 2000 the Plant and
Equipment itemised in Exhibit 4."
10. Cooperation in Philippines. CPCC shall cooperate with CE Casecnan
in obtaining any necessary consents and approvals of any Authorities to the
extension of completion of the Project and shall otherwise cooperate in good
faith on a best efforts basis in connection with promoting the Project in the
Philippines as shall be requested by CE Casecnan.
11. Other Matters not Affected. Except as expressly set forth herein,
all other provisions of the EPC Contract shall remain unchanged and in full
force and effect. The Letter Agreement dated January 28, 1999 between CE
Casecnan and CPCC, except for paragraphs 2 and 4 thereof which shall survive, is
hereby terminated and voided in its entirety. CPCC acknowledges that neither
this Agreement nor the implementation of any action described herein or the
taking of any action by any party pursuant hereto shall (i) constitute the basis
for any request for a Change in the Work or any other claim on the part of CPCC
related to the Project, or constitute or deemed to constitute a change in the
scope of the Work or a change order and CPCC shall seek no relief under any
provision of the EPC Contract or otherwise as a result thereof, or (ii) modify
in any respect CPCC's obligation and responsibility to perform and complete all
of the Work and each element thereof as described and defined in the EPC
Contract, by the Guaranteed Substantial Completion Date for the Contract Price.
12. Approval of Stone & Webster. CPCC and CE Casecnan each agree that
the effectiveness of this Agreement is subject to the written approval of Stone
& Webster, as Consulting Engineer. CPCC shall cooperate as reasonably requested
by CE Casecnan in obtaining such consent. CE Casecnan shall notify CPCC promptly
in writing upon receipt of such consent. If Stone & Webster does not give its
written approval by December 7, 1999, this Agreement shall be null and void.
13. Governing Law. This Agreement shall be governed by the internal
laws of the State of New York.
14. Disputes. The provisions of Article 36 (Disputes) of the EPC
Contract shall apply to this Agreement, mutatis mutandis, as if set forth in
full herein.
15. Amendments. This Agreement shall not be amended or modified except
in writing signed by both parties hereto.
16. Entire Agreement. This Agreement, the June 30, 1997 letter from
CPCC to CE Casecnan, the July 15, 1997 letter from CE Casecnan to CPCC, the July
18, 1997 letter from CPCC to CE Casecnan, the July 25, 1997 letter from CPCC to
CE Casecnan, and the EPC Contract constitute the entire agreement between CPCC
and CE Casecnan with respect to the matters dealt with herein, and there are no
oral or written understandings, representations, or
commitments of any kind, express or implied, that are not expressly set forth in
such documents, taken collectively.
CP CASECNAN CONSORTIUM CE CASECNAN WATER & ENERGY
COMPANY, INC.
/s/ Angelo Franttini /s/ James D. Stallmeyer
- ------------------------------ ------------------------
Name: Angelo Franttini Name: James D. Stallmeyer
Title: Title: VP
Dated: November 20, 1999 Dated: November 20, 1999