SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to .
Commission file number 333-29005-01
PANDA GLOBAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2697755
(State or other jurisdiction of (IRS employer
incorporation or organization) Identification Number)
4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244
(Address of principal executive offices, including zip code)
(972) 980-7159
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Park III of this
Form 10-K or any amendment to this Form 10-K [x].
Aggregate market value of voting stock held by non-affiliates of the
registrant is not reflected herein because all voting stock of the
registrant is owned by an affiliate thereof.
As of March 25, 1998, the registrant had 1,000 shares of Common Stock,
$.01 par value, issued and outstanding.
Documents Incorporated by Reference
None
TABLE OF CONTENTS
PART I
Page
Item 1. Business 1
Item 2. Properties 22
Item 3. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 25
PART II
Item 5. Market for Registrant's Common Equity
and Related Shareholder Matters 25
Item 6. Selected Financial Data 26
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 27
Item 8. Financial Statements and Supplementary Data F-1
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 31
PART III
Item 10. Directors and Executive Officers of the Registrant 31
Item 11. Executive Compensation 33
Item 12. Security Ownership of Certain Beneficial
Owners and Management 33
Item 13. Certain Relationships and Related Transactions 34
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 34
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes "forward-looking
statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934. All statements other than statements of historical fact
included in this Annual Report on Form 10-K, including, without
limitation, statements regarding financial position, projects
under evaluation or development, construction or other budgets
and plans and objectives for future operations, are forward-
looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's
expectations ("Cautionary Statements") include the impact of
geopolitical occurrences world-wide; the results of financing
efforts; risks under contracts and swap agreements; changes in
laws and regulations; unforeseen engineering and mechanical or
technological difficulties; and other risks described in the
registrant's filings from time to time with the Securities and
Exchange Commission. All subsequent written and oral forward-
looking statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by the
Cautionary Statements.
Item 1. Business.
General
Panda Global Holdings, Inc. (the "Company") is a wholly-
owned subsidiary of Panda Energy International, Inc., a Delaware
corporation, ("PEII"), and was organized in Delaware on March 7,
1997. The Company has been organized for the purposes of working
with PEII and its affiliates in (i) investing in and holding
direct and indirect interests in entities engaged in the
development, construction, ownership, operation and management of
electric generating facilities, sources of fuel, pipelines and
other infrastructure projects, (ii) the marketing of electric
power, thermal energy and fuel, and (iii) the financing of any of
the above, including the entering into of indentures, contracts
and other agreements entered into in connection with the purposes
described in clauses (i) and (ii) above.
On April 22, 1997, a subsidiary of the Company (Panda
Global Energy Company, a Cayman Islands company) completed a
$155,200,000 offering of 12 1/2% Senior Secured Notes due 2004 and
is using the net proceeds therefrom to finance the construction
of an electric power plant facility in Luannan County, China. In
late December 1997, other subsidiaries of the Company completed
an approximately $98 million financing for the construction of an
electric power plant facility in Nepal.
The principal executive offices of the Company are located
at 4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244. The
telephone number at such offices is (972) 980-7159.
The Company operates in only one industry segment: electric
power generation. Financial information regarding the Company's
industry segment, its domestic operations, and regarding the
Company's capitalized costs for the construction of plants which
will constitute foreign operations upon completion, is set forth
in the financial statements hereto.
Strategy
The Company and its affiliates primarily are engaged in the
domestic and international development, acquisition,
construction, ownership and operation of electric power
generation facilities.
The principal business strategy of the Company and its
affiliates is to use their experience in evaluating, developing,
constructing, financing and managing electric power generation
facilities to provide low-cost electricity and electric
generating capacity. In addition, the Company believes that the
global trend of electricity market restructuring has created new
business opportunities for businesses like the Company. There is
a trend away from government-owned electricity systems toward
deregulated, competitive market structures, in both domestic and
international markets. Many countries have rewritten their laws
and regulations to allow foreign investment and private ownership
of electricity generation, transmission or distribution systems.
Some countries have been or are in the process of "privatizing"
their electricity systems by selling all or part of such systems
to private investors. As a result, the Company believes that
there is demand for both new and more efficiently operated
electric generating capacity in many regions around the world.
The Company and its affiliates therefore are continuously
engaged in the evaluation of opportunities for the development
and acquisition of additional domestic and international electric
power generation facilities. For example, the Company and its
affiliates currently are evaluating the development of various
merchant plant facilities in the United States. Such facilities,
if developed and constructed, could take advantage of cost
effective construction and new technology, as well as an ability
to sell power into markets with growing demand and aging supplies
of energy. Also, the People's Republic of China (the "PRC"),
Nepal, Brazil and Central America are current international
strategic target markets for the Company and its affiliates.
Substantial risks exist to the successful completion of any
domestic or international projects under development or being
considered for acquisition, including, as the case may be, those
relating to political risk, exchange rate risk, currency
inconvertibility, financing, governmental approvals, siting,
construction and permitting, as well as possible termination of
any applicable power sales agreement as a result of the failure
to meet certain construction milestones. No assurance can be
given that any projects being evaluated or developed by the
Company or any of its affiliates will be completed. Further, no
assurance can be given that any projects developed by PEII or
other affiliates of the Company would be contributed to the
Company's portfolio of projects, depending on the application of
various agreements among PEII and certain of its affiliates.
The major changes currently taking place in the independent
power producer industry are necessitating changes in the
financing capabilities of companies such as PEII (and its
affiliates), particularly in respect to the financing of larger
size projects and merchant plants. In this regard, PEII is
looking to reduce its costs of funds, find new sources of equity
capital and increase its financing flexibility. Accordingly,
PEII has commenced a strategic initiative whereby it is seeking
potential strategic partners to help address these issues.
Donaldson, Lufkin & Jenrette Securities Corporation has been
engaged by PEII to assist PEII in this search for strategic
partners. However, there can be no assurance that any transaction
with strategic partners will ever take place, or, in the event
any such transaction does take place, as to the nature or
structure thereof.
Plants in Operation
The Panda-Rosemary Facility
General. The Panda-Rosemary Facility (herein so called) is
a combined-cycle cogeneration facility located in Roanoke Rapids,
North Carolina, with a total electric generating capacity of
approximately 180 megawatts. A cogeneration facility produces
electric energy and forms of useful thermal energy (such as heat
or steam), used for industrial, commercial, heating or cooling
purposes through the sequential use of one or more energy inputs.
A properly designed and constructed cogeneration facility is able
to convert the energy contained in the input fuel source to
useful energy outputs more efficiently than plants employing what
was, historically, conventional utility electrical generation
technology. The Panda-Rosemary Facility uses natural gas as its
primary fuel input to produce electric energy for sale to
Virginia Electric Power Company ("VEPCO") and to produce useful
thermal energy in the form of steam and chilled water for sale to
The Bibb Company ("Bibb") pursuant to the Rosemary Steam
Agreement (herein so called). On February 18, 1997, Bibb
announced that it would sell the textile facility to WestPoint
Stevens, Inc. ("WestPoint"). The closing of the sale was
reported in the news media on February 21, 1997. The Rosemary
Steam Agreement cannot be assigned without the Panda-Rosemary
Partnership's consent, which has not been given as of the date
hereof. While there has been no resolution to this matter as of
the date hereof, it is assumed that (for purposes of discussion
herein only) the sale of the textile facility has closed and that
WestPoint is the purchasing party under the Rosemary Steam
Agreement and lessor under the Rosemary Site Lease (defined
below). The Panda-Rosemary Partnership has continued to sell
steam and chilled water to the purchaser in substantially the
same amounts as it sold prior to the announcement of the sale.
The Panda-Rosemary Facility uses No. 2 fuel oil as an
alternate fuel in the event gas supplies or transportation are
curtailed. The Panda-Rosemary Facility was designed and
constructed by Hawker Siddeley Power Engineering.
The Panda-Rosemary Facility began commercial operations in
December 1990. The Panda-Rosemary Facility is certified as a
Qualifying Facility ("QF") under PURPA (defined below) and thus
is exempt from rate regulation as an electric utility under
federal and state law, provided that it continues to meet the
applicable requirements of the Public Utility Regulatory Policies
Act of 1978 ("PURPA").
The Panda-Rosemary Facility is designed to be operated in a
combined-cycle mode. It uses natural gas or fuel oil to power two
General Electric combustion turbine generators, a GE Frame 6 and
a GE Frame 7, each fitted with a heat recovery steam generator
("HRSG"). The HRSGs use the reject heat from the combustion
turbines that might otherwise dissipate to produce steam which
drives a steam turbine generator. The combustion and steam
turbines generate electric energy for sale to VEPCO. When the
Panda-Rosemary Facility is being dispatched, some of the steam
produced by the HRSGs is sold pursuant to the Rosemary Steam
Agreement and some is used in two absorption chillers to supply
chilled water. The combustion turbines use natural gas as their
primary fuel and can use No. 2 fuel oil as an alternate fuel.
When the facility is not being dispatched, two auxiliary boilers
are available to be used to produce steam for direct use and to
produce chilled water for use by the purchaser under the Rosemary
Steam Agreement. The design of the Panda-Rosemary Facility
permits flexible operation, including the production of both
electricity and a sufficient amount of thermal energy to meet QF
requirements, using either one or both of the combustion turbine
generators.
Sale of Capacity and Electricity. The Panda-Rosemary
Partnership (herein so called) is an indirect wholly owned
subsidiary of the Company which owns the Panda-Rosemary Facility.
It sells electric capacity and energy to VEPCO pursuant to a
Power Purchase and Operating Agreement (the "Rosemary Power
Purchase Agreement"). The Rosemary Power Purchase Agreement has
an initial term ending December 26, 2015, and may be extended for
periods of up to five years if the parties so agree.
VEPCO has the right to dispatch the Panda-Rosemary Facility
(i.e., require the Panda-Rosemary Facility to deliver
electricity) on a daily basis within certain guidelines and
design limits (which specify load levels, start-up and shutdown
times and minimum run times consistent with prudent utility
practice).
The Rosemary Power Purchase Agreement provides for two types
of payments: a capacity payment and an energy payment. The
capacity payment is a fixed charge required to be paid regardless
of whether the Panda-Rosemary Facility is dispatched, subject to
reductions under certain circumstances as described below.
Energy payments are calculated based on the actual electrical
output transmitted to VEPCO and are designed to compensate the
Panda-Rosemary Partnership for its cost of fuel and its variable
operations and maintenance expense.
Monthly capacity payments throughout the term of the
Rosemary Power Purchase Agreement are calculated by multiplying
the Panda-Rosemary Facility's "Dependable Capacity" by the
following rates: $11.654 per kilowatt per month through December
1998; $10.821 per kilowatt per month through December 2005; and
$8.321 per kilowatt per month through December 2015. The Panda-
Rosemary Facility's Dependable Capacity is currently 165
megawatts for the summer period and 198 megawatts for the winter
period, which are the maximum Dependable Capacity levels for
which capacity payments must be made under the Rosemary Power
Purchase Agreement. Dependable Capacity is determined by semi-
annual tests which may be requested by VEPCO. Capacity payments
may be reduced in certain circumstances.
Energy payments are calculated based on the actual
electrical output transmitted to VEPCO and are designed to
compensate the Panda-Rosemary Partnership for its cost of fuel
and its variable operations and maintenance expense.
The Panda-Rosemary Partnership is required to maintain the
Panda-Rosemary Facility as a QF. VEPCO may terminate the Rosemary
Power Purchase Agreement within one year after the loss of QF
certification if the Panda-Rosemary Partnership has not obtained
all necessary governmental or regulatory approvals for the
Rosemary Power Purchase Agreement to remain in effect and for
electricity to continue to be sold to VEPCO.
Steam and Chilled Water Sales. The Panda-Rosemary
Partnership sells steam and chilled water for use in its textile
manufacturing facility, located adjacent to the Panda-Rosemary
Facility, pursuant the Rosemary Steam Agreement. The Rosemary
Steam Agreement has an initial term that expires on December 26,
2015. Upon expiration of the initial term, the purchaser has the
option to (i) negotiate a 10-year extension of the Rosemary Steam
Agreement, (ii) purchase the Panda-Rosemary Facility with VEPCO's
consent or (iii) terminate the Rosemary Steam Agreement. The
purchaser is obligated to pay $1.00 per 1,000 pounds of steam for
the first 45,000 pounds of steam delivered in an hour and $2.50
per 1,000 pounds of steam for any additional quantities of steam
delivered in an hour. The purchaser is obligated to pay the
following fixed prices for chilled water: $0.035/ton/hour through
December 27, 2000; $0.04/ton/hour thereafter through December 27,
2005; $0.045/ton/hour thereafter through December 27, 2010; and
$0.05/ton/hour thereafter through December 27, 2015.
Site Lease. The 4.83 acre site on which the Panda-Rosemary
Facility is located is leased to the Panda-Rosemary Partnership
pursuant to a Real Property Lease and Easement Agreement (the
"Rosemary Site Lease") in exchange for a nominal yearly rental
payment. The initial term of the Rosemary Site Lease expires on
December 31, 2015 and is automatically extended on the same terms
and conditions for 10 years if the Rosemary Steam Agreement is
extended for an additional 10-year period. At the Panda-Rosemary
Partnership's option, the initial term of the Rosemary Site Lease
may also be extended on the same terms and conditions for a 10-
year term if the Panda-Rosemary Partnership gives the lessor two
years' notice prior to December 31, 2015 and for an additional 10-
year term if the Panda-Rosemary Partnership gives the lessor two
years' notice prior to December 31, 2025, regardless of whether
the Rosemary Steam Agreement is extended or terminated.
Gas Supply and Fuel Management. The Panda-Rosemary
Partnership purchases certain quantities of natural gas on a firm
basis from Natural Gas Clearinghouse ("NGC") pursuant to a Gas
Purchase Contract (the "Rosemary Gas Supply Agreement"). The
Rosemary Gas Supply Agreement is effective through November 30,
2005, and thereafter from month-to-month until terminated by
either NGC or the Panda-Rosemary Partnership. NGC has agreed to
deliver natural gas on a firm basis to the Panda-Rosemary
Partnership, at pipeline points near the Gulf of Mexico or (at
the Panda-Rosemary Partnership's request and using the Panda-
Rosemary Partnership's firm transportation arrangements) to the
Panda-Rosemary Pipeline, up to the total contract quantity under
the Firm Gas Transportation Agreements (as defined below), which
is currently the thermal equivalent of 3,075 Mcf (one "Mcf"
constitutes one thousand cubic feet of natural gas) of natural
gas per day. The firm natural gas supplied under the Rosemary Gas
Supply Agreement enables the Panda-Rosemary Partnership to have
adequate natural gas supplies available to meet its estimate of
the requirements for steam and chilled water under the Rosemary
Steam Agreement.
The price paid by the Panda-Rosemary Partnership for natural
gas delivered by NGC is generally equal to an indexed price
(based upon monthly market-price indices determined by reference
to the receipt points where NGC delivers gas to the Panda-
Rosemary Partnership) plus $0.04 per MMBtu (one "MMBtu"
constitutes one million British thermal units). If natural gas is
required in daily volumes that are greater than those included in
monthly estimates delivered to NGC, the price for the excess
volume required is equal to NGC's actual cost incurred in
acquiring such excess plus $0.04 per MMBtu. If the Panda-Rosemary
Partnership fails to purchase the amount included in monthly
estimates delivered to NGC, and such failure is not excused by
force majeure, the Panda-Rosemary Partnership must pay NGC, as
liquidated damages for such failure, $0.14 for each MMBtu of
natural gas not purchased below the monthly estimates delivered.
Gas Transportation. The Panda-Rosemary Partnership receives
firm transportation service that provides for delivery to the
Panda-Rosemary Pipeline of up to the thermal equivalent of 3,075
Mcf of natural gas per day.
The rates and most of the significant terms and conditions
of service under these firm gas transportation agreements, are
set forth in the respective pipeline's effective Federal Energy
Regulatory Commission ("FERC") gas tariff. These rates, terms
and conditions are subject to review, approval and modification
by FERC.
Panda-Rosemary Pipeline. The Panda-Rosemary Partnership
owns, and North Carolina Natural Gas Corporation ("NCNG")
operates and maintains for the Panda-Rosemary Partnership, the
Panda-Rosemary Pipeline (herein so called), which runs for 10.26
miles through portions of Halifax and Northampton Counties, North
Carolina. The Panda-Rosemary Pipeline is located under, over and
upon properties owned, in certain instances, by private
landowners and, in others, by the State of North Carolina or the
City of Roanoke Rapids, pursuant to easement agreements or
encroachment agreements. The Panda-Rosemary Pipeline terminates
on a 1.26-acre parcel in Pleasant Hill Township, Northampton
County, North Carolina, which is owned by the Panda-Rosemary
Partnership. The meter stations and certain appurtenant
facilities interconnecting the Panda-Rosemary Pipeline and
certain interstate pipeline facilities are located on this
parcel.
The Panda-Rosemary Partnership has entered into a Pipeline
Operating Agreement with NCNG (the "Pipeline Operating
Agreement"), pursuant to which NCNG has agreed to operate the
Panda-Rosemary Pipeline and provide certain natural gas balancing
services for the Panda-Rosemary Partnership's gas supplies. The
term of the Pipeline Operating Agreement continues until December
27, 2005, and may be extended for two additional periods of five
years each upon the agreement of the parties.
Fuel Oil. The Panda-Rosemary Facility was constructed with
the capability to operate on No. 2 fuel oil and is designed to
change fuel sources from natural gas to fuel oil and back without
interrupting the generation of electricity. The Panda-Rosemary
Facility currently has on-site storage for approximately 2.0
million gallons of fuel oil, a supply sufficient to operate the
Panda-Rosemary Facility at full load for approximately 168 hours.
The Panda-Rosemary Partnership purchases fuel oil on a spot-
market basis. Since the fuel oil suppliers either own their own
trucks or have contracts with local trucking firms for regional
truck delivery and the purchase price includes delivery to the
Panda-Rosemary Facility, the Panda-Rosemary Partnership does not
independently arrange trucking service from the terminals to the
Panda-Rosemary Facility.
Operations and Maintenance. The Panda-Rosemary Partnership
purchases operations and maintenance services for the Panda-
Rosemary Facility from Panda Global Services, Inc. pursuant to an
Operation and Maintenance Agreement (the "Rosemary O&M
Agreement") which expires on December 31, 2003. Under the
Rosemary O&M Agreement, Panda Global Services, Inc. is to be
paid a fixed monthly fee of approximately $140,000 per month
during 1998, with annual adjustments based on changes in the
consumer price index for subsequent years. In addition, the
agreement includes bonus and penalty provisions based on
maintenance of dependable capacity levels, availability of the
Panda-Rosemary Facility for dispatch and the achievement of
certain safety and training goals established by the Panda-
Rosemary Partnership.
The Panda-Brandywine Facility
General. The Panda-Brandywine Facility (herein so called)
is a combined-cycle cogeneration facility located in Brandywine,
Maryland (near Washington, D.C.), with a total electric
generating capacity of 230 megawatts. The Panda-Brandywine
Facility uses natural gas as its primary fuel input and No. 2
fuel oil as an alternative fuel in the event that gas supplies or
transportation are curtailed. The Panda-Brandywine Facility was
constructed by Raytheon Engineers and Constructors, Inc.
("Raytheon") pursuant to the Amended and Restated Turnkey
Cogeneration Facility Agreement between the Panda-Brandywine
Partnership and Raytheon (the "Brandywine EPC Agreement").
Raytheon has met its performance guarantees and the requirements
for commercial operations and substantial completion under the
Brandywine EPC Agreement although the date on which commercial
operations was achieved is the subject of a dispute between the
Panda-Brandywine Partnership (herein so called), an indirect
wholly owned subsidiary of the Company which owns the Panda-
Brandywine Facility, and Raytheon. The Company currently
believes that the total amount in dispute is approximately $1.0
million. Such amount, if owed, would be payable over time and
from cash flows from the operation of the Brandywine Facility
which may otherwise have been available for distributions.
Pursuant to a power purchase agreement (the "Brandywine Power
Purchase Agreement") entered into in 1991 and amended in 1994,
the Panda-Brandywine Partnership sells the capacity of, and
energy produced by, the Panda-Brandywine Facility to Potomac
Electric Power Company ("PEPCO"), a utility that serves the
District of Columbia and parts of Maryland. The Panda-Brandywine
Facility commenced commercial operations under the Brandywine
Power Purchase Agreement on October 31, 1996. The term of the
Brandywine Power Purchase Agreement will expire on October 30,
2021.
The Panda-Brandywine Facility is currently leased by the
Panda-Brandywine Partnership pursuant to the Brandywine Facility
Lease (herein so called). The initial term of the Brandywine
Facility Lease is 20 years. At the end of the initial lease term,
so long as no default or event of default shall have occurred and
be continuing under the Brandywine Facility Lease, the Panda-
Brandywine Partnership may renew the Brandywine Facility Lease
for two consecutive five-year terms. Alternatively, the Panda-
Brandywine Partnership may purchase the Panda-Brandywine Facility
at fair sales market value at the end of the initial lease term
or any renewal term. If the Panda-Brandywine Partnership does not
renew the Brandywine Facility Lease or purchase the Panda-
Brandywine Facility, it must surrender possession of the Panda-
Brandywine Facility.
The Panda-Brandywine Facility is certified as a QF under
PURPA and thus is exempt from rate regulation as an electric
utility under federal and state law, provided that, upon and
during commercial operations, it continues to meet the applicable
requirements of PURPA.
Operations and Maintenance. The Panda-Brandywine
Partnership purchases operations and maintenance services from
Ogden Brandywine Operations, Inc. ("Ogden Brandywine") pursuant
to an Operation and Maintenance Agreement (the "Brandywine O&M
Agreement"). The Brandywine O&M Agreement is effective until
October 31, 1999, and may be extended thereafter by agreement of
the parties.
Sale of Capacity, Electricity and Steam. The Panda-
Brandywine Partnership sells electric capacity and energy to
PEPCO pursuant to the Brandywine Power Purchase Agreement. The
Brandywine Power Purchase Agreement has an initial term that
expires in October 2021, 25 years from the commercial operations
date, and may be extended by agreement of the parties.
The Brandywine Power Purchase Agreement provides for two
payments: a capacity payment and an energy payment. The capacity
payment is a fixed charge to be paid regardless of whether the
Panda-Brandywine Facility is dispatched, subject to reduction in
certain circumstances. Monthly capacity payments throughout the
term of the Brandywine Power Purchase Agreement are based on the
Panda-Brandywine Facility's dependable capacity, the capacity
rate and other factors. The capacity rate is a fixed schedule of
payments for each of the 25 years of the initial term of the
Brandywine Power Purchase Agreement, ranging (in kilowatt hours
per month) from $13.74 in 1997 to $23.63 in 2014, subject to
various adjustments, and also subject to certain modifications
thereto, as described in "Dispute With PEPCO Over Calculation of
Capacity Payments" below.
The energy payment is determined in accordance with a series
of formulas that reflect specified heat rates, hours of
synchronization and operation and a combination of fixed and
market prices for natural gas. The Brandywine Power Purchase
Agreement provides that the energy price will be increased to
compensate the Panda-Brandywine Partnership for its variable
costs of fuel oil if the gas supply is interrupted. In such
event, the Brandywine Power Purchase Agreement specifies a base
cost of oil, which is escalated at the annual rate of change
according to an oil index described therein.
The Panda-Brandywine Partnership has constructed a seven-
mile long electric transmission line to connect the Panda-
Brandywine Facility and the transmission facilities of PEPCO.
Consolidated Rail Corporation entered into an agreement with the
Panda-Brandywine partnership to provide transmission line
easements for a portion of the transmission line. The Panda-
Brandywine Partnership transferred ownership of the transmission
line to PEPCO on October 30, 1996.
The Panda-Brandywine Partnership sells steam to the
Brandywine Water Company pursuant to a Steam Sales Agreement
dated March 30, 1995 (the "Brandywine Steam Agreement").
Brandywine Water Company, which is an indirect wholly owned
subsidiary of the Company, uses the steam to generate distilled
water which is sold locally. This production and sale of thermal
energy allows the Panda-Brandywine Facility to achieve QF status.
The Brandywine Steam Agreement continues until October 31, 2021
and may be extended by agreement of the parties for additional
terms of five years.
Gas Supply and Fuel Maintenance. The Panda-Brandywine
Partnership purchases both firm and interruptible natural gas
supply from Cogen Development Company ("CDC") pursuant to the Gas
Sales Agreement, dated March 30, 1995, between the Panda-
Brandywine Partnership and CDC (the "Brandywine Gas Agreement").
MCN Corporation, the parent corporation of CDC, has
unconditionally guaranteed the payment and performance
obligations of CDC under the Brandywine Gas Agreement. The
Brandywine Gas Agreement commenced October 31, 1996 and continues
until October 31, 2011, and thereafter is automatically renewed
for an additional two-year term unless terminated by either party
upon nine months' written notice.
CDC is obligated to sell and deliver to the Panda-Brandywine
Partnership, at receipt points along the pipeline system of
Columbia Gas, up to 24,240 MMBtu of natural gas per day on a firm
basis and up to 24,240 MMBtu of gas per day on an interruptible
basis. Gas delivered by CDC within the firm basis limit falls
within one of the three following categories: "Limited Dispatch
Gas," "Scheduled Dispatch Gas" or "Dispatchable Gas" (each as
defined in the Brandywine Gas Agreement).
The price for the natural gas delivered by CDC varies
dependent upon the category of the natural gas delivered.
Gas Transportation. The Panda-Brandywine Partnership
purchases firm natural gas transportation service from Columbia
Gas Transmission Corporation ("Columbia Gas") pursuant to an
Amended and Restated FTS Service Agreement (the "Columbia Gas FT
Agreement"). Service under the Columbia Gas FT Agreement
commenced on November 1, 1996 and continues until October 31,
2021, and year-to-year thereafter unless terminated by either
party upon six months' notice.
Columbia Gas is obligated to provide the Panda-Brandywine
Partnership with up to 24,240 Dekatherms ("Dth") per day of firm
natural gas transportation service from a receipt point near
Monclova, Ohio to an interconnection between the facilities of
Columbia Gas and Cove Point LNG Limited Partnership ("Cove
Point") in Loudoun County, Virginia. Columbia Gas provides the
firm transportation service pursuant to the terms of the Columbia
Gas FT Agreement rate schedule and the general terms and
conditions of Columbia Gas's effective FERC natural gas tariff.
The Panda-Brandywine Partnership purchases from Cove Point
firm natural gas transportation service to transport natural gas
delivered by Columbia Gas to the facilities of Cove Point
pursuant to a FTS Service Agreement (the "Cove Point FT
Agreement"). The Cove Point FT Agreement continues until October
31, 2021.
Cove Point is obligated to provide the Panda-Brandywine
Partnership with up to 24,000 Dth per day of firm natural gas
transportation service from an interconnection between the
facilities of Cove Point and Columbia Gas in Loudoun, Virginia to
an interconnection between the facilities of Cove Point and
Washington Gas Light Company ("WGL") in Charles County, Maryland.
Cove Point provides the firm transportation service pursuant to
the Cove Point FT Agreement, and the general terms and conditions
of its effective FERC natural gas tariff.
The Panda-Brandywine Partnership purchases from WGL natural
gas transportation, natural gas sales and natural gas balancing
services pursuant to a Gas Transportation and Supply Agreement
(the "WGL Agreement"). The WGL Agreement continues until
October 31, 2021, and thereafter will continue year-to-year
unless terminated by either party upon six months' written
notice.
WGL is obligated to provide the Panda-Brandywine Partnership
with firm transportation service, up to the quantity of natural
gas nominated for such service on a given day, from an
interconnection between the facilities of Cove Point and WGL in
Charles County, Maryland to the interconnection between the WGL
facilities and the Panda-Brandywine Facility, provided that WGL
only must use its best efforts to deliver transportation natural
gas to the Panda-Brandywine Facility when the pressure on the
Cove Point pipeline is less than 500 psig. During the months of
January, February and December of any calendar year, WGL may,
under certain circumstances, request that the Panda-Brandywine
Partnership release to WGL for its system use a quantity of
natural gas purchased by the Panda-Brandywine Partnership under
the Brandywine Gas Agreement and transported to the WGL system.
Fuel Oil. The Panda-Brandywine Facility was constructed
with the capability to operate on No. 2 fuel oil and has the
ability to change fuel sources from natural gas to fuel oil and
back without interrupting the generation of electricity. The
Panda-Brandywine Facility has on-site storage for approximately
two million gallons of fuel oil, a supply sufficient to operate
the Panda-Brandywine Facility at full load for approximately six
days. In accordance with the fuel management plan for the Panda-
Brandywine Facility, which the Panda-Brandywine Partnership
developed with the assistance of its fuel manager (CDC) and which
was approved by PEPCO, the Panda-Brandywine Partnership will
endeavor to enter into fuel oil supply and transportation
contracts by October 10 of each year that will have a duration
through the immediately succeeding winter season (November
through March).
The Panda-Brandywine Partnership has entered into a Sales
Agreement with Northridge Petroleum Corporation ("Northridge")
and a related Storage Agreement with Stratus Terminals, Inc.
pursuant to which the Panda-Brandywine Partnership purchased and
maintains one million gallons of No. 2 fuel oil in storage tanks
located near Baltimore, Maryland. The respective terms of these
Agreements commenced November 1, 1997 and terminate March 31,
1998. The Panda-Brandywine Partnership has access to the stored
fuel oil at all times. Upon request of the Panda-Brandywine
Partnership, Northridge will use its best efforts to replenish
any fuel oil removed from the storage tank at market-based prices
plus additional storage charges. If Northridge is not able to
purchase the requested fuel oil within a specified time period,
the Panda-Brandywine Partnership may purchase such fuel oil from
another supplier.
The Panda-Brandywine Partnership has also entered into an
agreement (the "Hardesty Transportation Agreement") with Hardesty
& Son, Inc. ("Hardesty") pursuant to which the Panda-Brandywine
Partnership has rights to firm transportation of a minimum of 20
truckloads of fuel oil per day during the months of December
through February and ten truckloads of fuel oil per day during
the months of March through November. Hardesty will use its best
efforts to provide additional transportation upon the request of
the Panda-Brandywine Partnership. If Hardesty is unable to
provide such additional transportation when requested, the Panda-
Brandywine Partnership may use other means of delivery. The
Hardesty Transportation Agreement continues until October 1, 1998
and will automatically be renewed for successive one-year terms
unless terminated by either party.
Water. The Panda-Brandywine Partnership has entered into a
25-year Treated Effluent Water Purchase Agreement ("Water Supply
Agreement") with the County Commissioners of Charles County,
Maryland to purchase up to 2.7 million gallons per day of treated
effluent from a local sewage treatment plant. Treated effluent is
a byproduct of the sewage treatment process and is used as the
primary cooling water source for the Panda-Brandywine Facility's
cooling towers. The treated effluent is transported from the
sewage treatment plant to the Panda-Brandywine Facility by a
buried transmission pipeline that has the capacity to supply up
to 3.0 million gallons per day.
Dispute With PEPCO Over Calculation of Capacity Payments.
In late August 1996, the Panda-Brandywine Partnership and PEPCO
commenced discussions concerning commercial operation
requirements of the Panda-Brandywine Facility and conversion of
the construction loan to long-term financing. During these
discussions, two disagreements arose between the Panda-Brandywine
Partnership and PEPCO as to how capacity payments should be
calculated under the Brandywine Power Purchase Agreement.
The Panda-Brandywine Partnership has reached a tentative
agreement with PEPCO to make certain modifications to the
Brandywine Power Purchase Agreement, which modifications resolve
various outstanding issues as to the method of calculation of
capacity payments thereunder.
The first significant outstanding issue involved a
disagreement between the Panda-Brandywine Partnership and PEPCO
as to the date on which the yield to maturity on United States
Treasury Bonds with a maturity of 12 years ("12-year T-Bonds")
should be determined under a provision in the Brandywine Power
Purchase Agreement that requires capacity payments to be reduced
if such interest rate is less than 8%. Such provision states that
the interest rate of 12-year T-Bonds is to be determined, and
adjustments to capacity payments made, as of the date that the
interest rate for permanent financing for the Panda-Brandywine
Facility is designated pursuant to an executed commitment for
such financing. On October 6, 1994, the Panda-Brandywine
Partnership entered into a written commitment with General
Electric Capital Corporation ("GE Capital") with respect to
permanent financing for the Panda-Brandywine Facility, which
commitment designated an interest rate for such financing.
Accordingly, the Panda-Brandywine Partnership took the position
that October 6, 1994 should be the date used to determine the
interest rate of 12-year T-Bonds under the Brandywine Power
Purchase Agreement. The interest rate for 12-year T-Bonds on such
date was 7.94% per annum. PEPCO, on the other hand, took the
position that since the interest rate designated in such
commitment was a floating rate, the date to be used for
determining the interest rate of 12-year T-Bonds was the closing
date of the conversion of the Brandywine construction loan
facility to long-term financing in the form of a leveraged lease,
which occurred on December 18, 1996. The interest rate for 12-
year T-Bonds on such date was 6.36%.
The second significant outstanding issue involved a
disagreement between PEPCO and the Panda-Brandywine Partnership
as to the determination of PEPCO's system peak load, which is the
basis for certain reductions in capacity payments under the
Brandywine Power Purchase Agreement. Under such provision,
capacity payments are to be reduced, commencing in 2006, if
PEPCO's system peak load does not exceed 5,697 megawatts prior to
1998, and are reduced by a greater amount if PEPCO's system peak
load does not exceed such amount prior to 1999. PEPCO and
Baltimore Gas & Electric Company ("BG&E") had announced their
intention to merge during 1997 into a new entity to be known as
Constellation Energy Corporation ("Constellation"), and PEPCO had
asked the Panda-Brandywine Partnership to agree that peak load
under the Brandywine Power Purchase Agreement would be calculated
on the basis of the pre-merger PEPCO system and not the post-
merger Constellation system. Peak load based on the Constellation
system would have greatly exceeded 5,679 megawatts during 1997.
However, PEPCO's position was that the parties intended to use
the then existing PEPCO system in calculating peak load and that
the merger with BG&E should be disregarded for such purpose. The
Panda-Brandywine Partnership disagreed with such position. The
Brandywine Power Purchase Agreement does not contain any
provision requiring adjustments due to mergers or
reorganizations. It was the Panda-Brandywine Partnership's
position that Constellation, as the successor of PEPCO, would be
substituted for PEPCO under the Brandywine Power Purchase
Agreement and the Constellation system would be used to calculate
peak load. It is the Panda-Brandywine Partnership's current
understanding that the proposed merger between PEPCO and BG&E has
been terminated.
Under the agreement, the first issue discussed above was
resolved by adjusting the schedule for capacity payments to be
made by PEPCO to the Panda-Brandywine Partnership under the
Brandywine Power Purchase Agreement such that the amount of
capacity payments to be made during the first ten years following
the commencement of commercial operations (which occurred on
October 31, 1996) will be increased and the amount of capacity
payments to be made during the last fifteen years of the term of
the Brandywine Power Purchase Agreement (which expires on October
30, 2021) will be reduced. The agreement provides that PEPCO
will pay to the Panda-Brandywine Partnership within two business
days following the effective date of the settlement (as discussed
below) approximately $3.8 million, which represents the
difference between the previously scheduled capacity payments and
the capacity payments due under the agreement for the first nine
months of 1997.
The second issue discussed above was resolved by the
tentative agreement of both parties to base the peak load
adjustment on PEPCO's peak load.
In return for the resolution of the aforementioned
significant issues, PEPCO has agreed that the Panda-Brandywine
Partnership may acquire the exclusive right to broker (as defined
by FERC) capacity from the Panda-Brandywine Facility for resale,
up to certain specified amounts and for specified periods. PEPCO
will sell the capacity pursuant to its power sales tariff
currently on file with the FERC. The amount of released capacity
to be made available for brokering to the Panda-Brandywine
Partnership is 130 megawatts for the period January - May 1998,
200 megawatts for the period June 1998 - May 1999, and 100
megawatts for the period June 1999-May 2000. The Panda-
Brandywine Partnership will pay PEPCO $1.25/kilowatt/month for
the capacity released.
In addition, PEPCO has agreed to release to the Panda-
Brandywine Partnership on a periodic basis through the year 2002
the rights to sell energy for resale, which energy may or may not
be from the capacity released described above. Such releases
will be based upon PEPCO's projections of future facility
operations required to serve PEPCO's needs. Sales of energy not
related to released capacity will be subject to the availability
of the Panda-Brandywine Facility. Sales of energy outside the
Pennsylvania-New Jersey-Maryland Interconnection ("PJM Pool") not
related to released capacity will be on an interruptible basis in
accordance with PJM Pool rules and requirements.
In connection with sales of released energy, the Panda-
Brandywine Partnership may function as a power marketer or power
broker (in either case, as defined by FERC). If the Panda-
Brandywine Partnership elects to function as a power marketer, it
must become a member of the PJM Pool. In either case, the Panda-
Brandywine Partnership will be required to obtain all necessary
authorizations and approvals to engage in such transactions,
including any authorizations and approvals required by FERC. If
the Panda-Brandywine Partnership functions as a power marketer,
it will be required to pay PEPCO a base fee equal to two percent
of the Panda-Brandywine Partnership's gross revenues from each
sale of released energy, subject to an additional incentive
payment of up to 50% of the base fee based on the timing of
releases by PEPCO of blocks of energy available for resale by the
Panda-Brandywine Partnership.
If the Panda-Brandywine Partnership functions as a power
broker, it will be required to pay PEPCO a base fee, subject to
the incentive adjustment as described above, plus an additional
fee of one percent of the gross revenues from each sale. The PJM
Pool, not PEPCO, will supply transmission service. The agreement
also provides that PEPCO will enter into good faith negotiations
with the Panda-Brandywine Partnership prior to the end of the
year 2002 with respect to energy releases after 2002, although
neither party is obligated to enter into any such agreement
unless it is to their mutual economic benefit.
The agreement further provides that for purposes of
determining PEPCO's system peak load which is the basis for
reductions in capacity payments under the Brandywine Power
Purchase Agreement following any merger or other combination of
PEPCO with another utility, the actual peak load experienced by
the portion of the merged or combined company's system that
constituted the PEPCO system prior to such merger or combination
shall be used.
The agreement further provides that the Panda-Brandywine
Partnership will enter into good faith negotiations with PEPCO on
a buyout or buydown of the Brandywine Power Purchase Agreement in
a manner that maximizes and equitably shares the benefits of such
transaction between the parties, although neither party is
obligated to enter into any buyout or buydown agreement unless it
is to their mutual economic benefit.
The effectiveness of the agreement with PEPCO is subject to
the consent of the financing parties, including GE Capital, under
the long-term financing arrangements for the Panda-Brandywine
Facility. In this regard, the Panda-Brandywine Partnership has
commenced discussions with GE Capital and the other financing
parties concerning such consents, and has executed an agreement
in principle with GE Capital. Among other things, this agreement
in principle provides for (i) the re-allocation of lease payments
from the Panda-Brandywine Partnership to GE Capital in order to
match the revised capacity payments schedule with PEPCO, (ii) the
reimbursement to GE Capital by the Panda-Brandywine Partnership
of certain fees, and (iii) certain technical amendments to the
applicable financing documents. The closing of the agreement in
principle is subject to several conditions, including but not
limited to written consents from all other financing parties and
other applicable parties, receipt of legal opinions concerning
the tax and regulatory consequences of the transaction, and the
preparation of definitive legal documentation of the transaction
to the satisfaction of all parties involved.
To the Company's knowledge, no regulatory consents are
required in order for the agreement between PEPCO and the Panda-
Brandywine Partnership to take effect. There can be no assurance
that the requisite consents from GE Capital or the other
applicable financing parties can be obtained or that the
agreement with PEPCO will ever become effective.
Plants Under Construction
The Luannan Facility
General. The Luannan Facility (herein so called),
approximately 83% of which is owned by the Company and its
affiliates, is located in Luannan County, Tangshan Municipality,
Hebei Province, People's Republic of China. It achieved
financial closing in April 1997 and is currently under
construction (currently expected to reach commercial operation in
August 1999) and will be comprised of two steam/electric
generating units, each nominally rated at 50 megawatts but with
nameplate capability of up to 60 megawatt gross output under full
condensing conditions. Two pulverized coal-fired boilers, each
delivering steam to drive a three stage extraction/condensing
steam turbine electric generating unit, will be utilized.
Electric power generated by the Luannan Facility will be
interconnected to the local electricity grid network at 110
kilovolts. In addition, steam will be extracted from the steam
turbines for distribution by pipeline to local industrial and
commercial users and also used to heat water for district heating
use. The site of the Luannan Facility is leased from the PRC
pursuant to a land use rights agreement with an agency of the
PRC.
Sales of Power. The Luannan Facility will sell power to
North China Power Company pursuant to the Luannan Power Purchase
Agreement (herein so called). The North China Power Company
functions as the commercial arm of the North China Power Group.
The North China Power Group, which reports directly to the
Ministry of Electric Power ("MOEP"), operates the North China
Power Grid. The service area of North China Power Group
encompasses four regions, including the Beijing/Tianjin/Tangshan
area. Beijing and Tianjin are among the largest and most
economically developed cities in the PRC. The service area of
North China Power Group also includes Hebei Province, Shanxi
Province and western Inner Mongolia. The North China Power Group
owns most of the major power plants within its service area and
is reported to have had a total installed capacity of
approximately 25,140 megawatts in 1995 and to have generated
power of approximately 126.7 billion kilowatt hours in 1995. As
both a government and a commercial entity, the North China Power
Group regulates, manages and owns the power assets in its
territory including generation and distribution facilities. The
geographical extent of its service area makes North China Power
Group one of the largest power operating entities in the PRC.
The Luannan Power Purchase Agreement is a 20-year agreement.
The electricity price is established through a formula provided
in the applicable Pricing Document (herein so called) which is
separate from, but incorporated by reference in, the Luannan
Power Purchase Agreement. According to the formula contained in
the Pricing Document, the power price is comprised of fixed and
variable components that may be adjusted, subject to the approval
of the Tangshan Municipal Price Bureau to reflect changes in coal
costs, depreciation of plant and equipment and financing
expenses. Certain components of the power price calculation may
be adjusted to reflect local and U.S. inflation and foreign
exchange rate fluctuation in order to mitigate the Luannan
Facility's exposure to inflation and currency risks. Although it
is anticipated that the Luannan Facility will apply annually for
changes in rates, under the Luannan Power Purchase Agreement it
has the right to request a determination of a new power price
whenever it determines that changes in the price components
require a new determination. There are pass-through provisions in
the pricing formula for increases or decreases in the cost of
coal against an index cost that is stipulated in the Pricing
Document, and the pricing formula also has provisions for pass-
through or make-whole calculations relating to certain
construction capital cost items. The tariff is paid in Renminbi
(the currency of the PRC) and is required to be paid every 30
days by the North China Power Company.
Sales of Steam. The Company currently believes that the
Luannan Facility will sell approximately 349,680 tons per year of
steam for process and the equivalent of approximately 362,518
gigajoules per year of steam for heating to certain Luannan
County enterprises and local industries. The Company currently
believes that the Luannan Facility will be the single largest,
centralized heat supplier in Luannan County.
Engineering, Procurement and Construction Contract. Through
competitive bidding, Harbin Power Engineering Company Limited
(the "Luannan EPC Contractor") has been selected as the
engineering, procurement and construction contractor for the
Luannan Facility. The Luannan EPC Contractor has extensive
engineering, procurement and construction experience in the power
industry in the PRC and other countries. Chinese-manufactured
equipment and materials and Chinese labor are being utilized to
the maximum extent possible in order to lower the costs of the
Luannan Facility and the sale price of electricity.
The Luannan EPC Contractor is a wholly-owned subsidiary of
Harbin Power Equipment Company. Harbin Power Equipment Company,
a PRC company listed on the Hong Kong Stock Exchange, was
established in October 1994 through the restructuring of Harbin
Power Plant Equipment Group Corporation. Harbin Power Equipment
Company and its subsidiaries also provide a range of engineering
services for power stations, including turnkey construction of
power plants and the provision of engineering and technical
advisory services. Harbin Power Equipment Company's products
have been exported to Pakistan, the Philippines, Canada and other
countries.
Operations and Maintenance. Pursuant to the Luannan
Operations & Maintenance Contract (the "Luannan O&M Contract"),
operations and maintenance services for the Luannan Facility will
be provided by Duke/Fluor Daniel International Services
("Duke/Fluor"). The Luannan O&M Contract provides for a recovery
of costs by Duke/Fluor plus incentive payments based upon the
performance of the Luannan Facility. Duke/Fluor is a general
partnership formed in 1994 by affiliates of Duke Power Company
and Fluor Corporation for the purposes of providing services to
the solid fuel power generation market. Duke/Fluor is actively
engaged in the operation and maintenance of electric generation
facilities throughout the world. Pursuant to the Luannan O&M
Contract, almost all of the personnel will be trained PRC
technicians who will work under close supervision of the Luannan
O&M Contractor's managers.
Coal Supply. The Company currently believes that the Luannan
Facility will use approximately 450,000 metric tons of coal per
year. The principal fuel supply for the Luannan Facility will
come from the Qianjiaying Mine, which is owned and operated by
Kailuan Coal and is located 30 kilometers from the Luannan
Facility. Kailuan Coal, a state-owned coal mining company, has
approximately 5.0 billion metric tons of coal reserves in the
Tangshan area and produces approximately 18 million metric tons
of coal per year. The Qianjiaying Mine produced approximately
3.67 million metric tons of coal in 1996. Kailuan Coal has
committed to supply up to 300,000 metric tons per year of coal
from the Qianjiaying Mine to the Luannan Facility for ten years.
The remaining coal requirements for the Luanna Facility will be
supplied by other mines in the region.
The Nepal Facility
General. The Nepal Facility (herein so called) is located
on the upper Bhote Koshi River in Nepal. It achieved financial
closing during December 1997 and is currently under construction
(currently expected to reach commercial operation in April 2000).
It will be comprised of a 36 megawatt hydroelectric facility on
the upper Bhote Koshi River. The Nepal Facility will be a run-of-
the-river power plant; thus it will not have a large dam and
reservoir, but rather, a small diversion structure, and will
produce electricity in accordance with the river flow. It will
be located approximately 110 kilometers from Kathmandu, Nepal.
The switchyard and a separate 48 kilometer transmission line that
will transmit the power generated by the Nepal Facility to a sub-
station in Bhaktapur, Nepal will be built by the Nepal
Electricity Authority (the "NEA"), the state owned utility. Cash
flow attributable to the approximately 75% interest in the Nepal
Facility of the Company (including its affiliates) and its
investment partner will be allocated 85% to such partner and 15%
to the Company (including its affiliates) until such partner
achieves a 20% internal rate of return, and 90% to the Company
(including its affiliates) and 10% to such partner thereafter.
Sales of Power. The Nepal Facility will sell power to the
NEA pursuant to the Nepal Power Purchase Agreement (herein so
called), which is a 25-year agreement. At the end of the 25-year
term of the NEA Power Purchase Agreement, 50% of the ownership of
the Nepal Facility will be transferred to the NEA for a nominal
sum. Payment under the Nepal Power Purchase Agreement will equal
the product of a tariff rate of U.S. $0.060 per kilowatt hour in
1995 prices escalated by 3% per annum for the first 15 years, and
indexed thereafter to the U.S. Consumer Price Index rate and the
total monthly electrical output delivered by the Nepal Facility
subject to monthly deemed generation levels.
The NEA will have the ability to dispatch the Nepal Facility
at its discretion. However should the NEA dispatch the Nepal
Facility below the monthly deemed generation level, the NEA will
remain obligated to pay for the deemed generation. During the
dry months of the year (mid-November to mid-May), the NEA has the
option to purchase all electric power produced by the Nepal
Facility even if it exceeds the deemed generation level. The NEA
will not be required to purchase electrical output above the
deemed generation levels during the wet months of the year (mid-
November to mid-May). Payments under the Nepal Power Purchase
Agreement will be denominated in U.S. dollars and paid in
Nepalese rupees.
Engineering, Procurement and Construction Contract. The
engineering, procurement and construction contract for the Nepal
Facility is with China Gezhouba Construction Group Corporation
for Water Resources and Hydropower ("China Gezhouba"). China
Gezhouba is one of the largest construction firms in the PRC,
with extensive experience in the construction of hydropower
plants. In addition, China Gezhouba has engaged Harbin Electric
Machinery Works ("Harbin"), based in Harbin China, to supply the
turbine generators for the Nepal Facility. Harbin has supplied
hydro units to a large number of hydroelectric plants in several
countries in Asia, Europe, the Middle East and the United States.
Operations and Maintenance. Pursuant to the applicable
operations and maintenance agreement, Harza Engineering Company
International, L.P. ("Harza") will provide operations and
maintenance services for the Nepal Facility. The term of this
agreement is for five years of commercial operation, renewable
for additional five year periods. Harza has extensive experience
in the planning, design, construction, and operation of power
plants throughout the world.
The Site. The Bhote Koshi River is a perennial stream fed
by glaciers, snow melt and monsoons. The river drains an area of
2,132 square km, mostly in the PRC. The mean annual flow at the
proposed site was 66.4 cubic meters per second m3/s between 1965
and 1992. The Nepal Facility will be located in the
Sindhupalchok zone of central Nepal, close to the PRC-Nepal
border. The Bhote Koshi River rises to an elevation of 5,800
meters at Tang Pu, Tibet, PRC and flows south with a drop of
4,300 meters before reaching the project site. At the site, the
river's slope is about 10 percent. The land at the site for the
Nepal Facility is owned by the project company formed by the
Company and its partners, and is subject to a mortgage lien as
part of the financing for the Nepal Facility.
Competition
The business of developing electric generating power plants
is intensely competitive. The Company and its affiliates compete
both domestically and internationally with other independent
power producers, including affiliates of utilities.
Development of new power generation projects in foreign
markets is difficult and expensive, and many competitors in these
foreign markets have significantly larger capital resources and
greater local market expertise than the Company. In addition, due
to increased competition in the United States, there has been an
increasing number of entrants into these foreign markets.
In the United States, over the past decade, developing
electric generating power plants has become a progressively more
difficult, expensive and competitive process. In recent years,
more of such transactions have been awarded through competitive
bidding. Increased competition also has lowered profit margins of
successful projects in the United States.
Regulatory Matters
Regulation of the Electric Power Industry in the United States
Projects of the Company located in the United States are
subject to complex and stringent energy, environmental and other
governmental laws and regulations at the federal, state and local
levels in connection with the development, ownership and
operation of its electricity generation facilities. Federal laws
and regulations govern transactions by electric and gas utility
companies, the types of fuel that may be utilized by an electric
generating facility, the type of energy that may be produced by
such a facility and the ownership of the facility. State utility
regulatory commissions must approve the rates and terms and
conditions under which public utilities sell electric power at
retail and, under certain circumstances, purchase electric power
from independent producers. Under certain circumstances where
specific exemptions are otherwise unavailable, state utility
regulatory commissions may have broad jurisdiction over non-
utility electric power generation facilities. Energy producing
projects located in the United States also are subject to
federal, state and local laws and administrative regulations
governing the emissions and other substances produced, discharged
or disposed of by a facility and the geographical location,
zoning, land use and operation of a facility. Applicable federal
environmental laws typically have state and local enforcement and
implementation provisions. These environmental laws and
regulations generally require that a variety of permits and other
approvals be obtained before the commencement of construction or
operation of an energy-producing facility and that the facility
then operate in compliance with those permits and approvals.
Federal and State Energy Regulation
PURPA. PURPA and the regulations promulgated thereunder
provide certain rate and regulatory incentives to an electric
generating facility that is a qualifying cogeneration or small
power production facility (a "QF" or "Qualifying Facility"). The
Panda-Rosemary Facility and the Panda-Brandywine Facility are
QFs. A cogeneration facility is a QF if it (i) sequentially
produces both electricity and useful thermal energy that is used
for industrial, commercial, heating or cooling purposes, (ii)
meets certain energy efficiency and operating standards when oil
or natural gas is used as a fuel source and (iii) is not more
than 50%-owned by an electric utility, electric utility holding
company or an entity or person owned by either or any combination
thereof.
Under PURPA and the regulations promulgated thereunder, QFs
receive two primary benefits. First, most types of QFs are exempt
from most provisions of the Public Utility Holding Company Act of
1935, as amended ("PUHCA"), and from most provisions of the
Federal Power Act, as amended (the "FPA"), while all QFs are
exempt from certain state laws relating to organizational, rate
and financial regulation. Second, regulations promulgated by the
FERC under PURPA require that (i) electric utilities purchase
electricity generated by QFs, construction of which commenced on
or after November 9, 1978, at a price based on the purchasing
utility's full "avoided costs" and (ii) the utilities sell
supplementary, back-up, maintenance and interruptible power to
the QFs on a just and reasonable and non-discriminatory basis.
PURPA and the regulations promulgated thereunder define "avoided
costs" as the "incremental costs to an electric utility of
electric energy or capacity or both which, but for the purchase
from the qualifying facility or qualifying facilities, such
utility would generate itself or purchase from another source."
Utilities may also purchase power from QFs at prices other than
"avoided costs" pursuant to negotiations as provided by FERC
regulations. Any merchant plant, if developed and constructed by
the Company in the United States, probably would not qualify as a
QF, but nonetheless probably would be exempt from most provisions
of PUHCA by virtue of being an "exempt wholesale generator" "or
"EWG" (described hereinbelow).
The FERC's regulations also provide that if energy or
capacity is provided pursuant to a legally enforceable obligation
over a specified term, avoided costs may be determined, at the
option of the QF, either at the time the energy or capacity is
delivered or as calculated at the time the obligation is
incurred. The FERC's regulations further provide that, in the
case of rates based on estimates of avoided costs over the term
of a contract, the rates do not violate the FERC's rates if the
rates for such purchases differ from avoided costs at the time of
delivery.
In certain instances, payments based upon avoided costs
estimated at the time a contract is entered into have proven to
be greater than a utility's avoided costs at the time of
delivery. Many utilities have attempted to minimize the disparity
by implementing strategies designed to reduce avoided cost
payments under such contracts to levels that the utilities
believe will be more competitive in a short-term marginal cost
electric energy market. Such strategies include attempts to
renegotiate or buy out power purchase contracts with QFs. Some
utilities have sought rigorously to enforce the terms of such
contracts and to exercise their contractual termination rights if
the contracts are not strictly observed. In addition, some
utilities have engaged in litigation and regulatory action
against QFs to achieve these ends.
The FERC has refused to disturb QF contract rates on two
operating projects where estimates of a utility's avoided costs,
calculated at the time the contracts were signed, were higher
than the actual avoided costs at the time of delivery and the
contract rates were not challenged at the time the contracts were
signed and were not the subject of an ongoing challenge to the
state's avoided cost determination. New York State Electric & Gas
Corporation, 71 FERC 61,027, reconsideration denied, 72
FERC 61,067 (1995). This decision is currently the subject of a
complaint filed in the United States District Court for the
Northern District of New York.
Relying in part on the FERC's regulations, a federal court
of appeals has held that once a state commission has approved (by
final and nonappealable order) a QF contract rate as being
consistent with avoided costs, just, reasonable and prudently
incurred, any action or order by the state commission to
reconsider its approval or deny the pass-through of the QF's
charges to the utility's retail customers under purported state
authority is preempted by PURPA. Freehold Cogeneration Assocs.,
L.P. v. Board of Regulatory Comm'rs of New Jersey, 44 F.3d 1178
(3rd Cir.), cert. denied sub nom., Jersey Central Power & Light
Co. v. Freehold Cogeneration Assocs., L.P., 116 S. Ct. 68
(1995).
In Independent Energy Producers Assoc. v. California Public
Utilities Comm'n, 36 F.3d 848 (9th Cir. 1994), the U.S. Court of
Appeals for the Ninth Circuit held that states are not preempted
by PURPA from instituting a program that requires QFs to submit
operating data, to purchasing utilities for monitoring compliance
with QF status requirements, as long as the monitoring
requirements do not impose an undue burden on the QFs. However,
the same court determined that states and utilities are preempted
by federal law from taking action on their determination that a
QF is no longer in compliance with QF status requirements, other
than requesting that the FERC revoke the facility's QF status,
either by filing a request for revocation or by filing a petition
for a declaratory order that the facility is no longer a QF.
On May 29, 1996, VEPCO filed with the State Corporation
Commission of the Commonwealth of Virginia ("SCC") a request for
authorization to institute a formal QF status monitoring program.
On June 13, 1997, the SSC issued an order authorizing such a
monitoring program. The order states that the monitoring program
would apply to all QFs that have entered into power purchase
agreements with VEPCO. Under the program, QFs must submit to
VEPCO by July 1 of each year certain operational data from the
previous year and indicate significant changes from previous
years. VEPCO must report to the SSC by October 1 of each year
the results of VEPCO's QF compliance evaluation. VEPCO may seek
a declaration from the FERC that a QF does not qualify under the
FERC rules.
The North Carolina Utilities Commission ("NCUC") has
disallowed the pass-through to VEPCO's North Carolina retail
rates of a portion of capacity payments VEPCO had been making to
several non-utility generation plants. The capacity payment rates
for the plants had been determined by an arbitrator and approved
by the SCC. The NCUC found that bids from a 1988 solicitation
(the "1988 VEPCO Solicitation") were available at the time the
contract was approved and should have been used, instead of
arbitration, to determine VEPCO's avoided costs. The NCUC ruled
that rates in excess of the rates derived from bids received in
the 1988 VEPCO Solicitation were therefore disallowed in VEPCO's
North Carolina retail rates. The North Carolina Supreme Court
upheld the NCUC's decision, saying that the NCUC had simply
disallowed rates above avoided costs. North Carolina Utilities
Comm'n v. North Carolina Power, 338 N.C 412, 450 S.E.2d 896
(1994). The United States Supreme Court declined to review that
decision.
While the Rosemary Power Purchase Agreement with VEPCO was
not specifically approved by the SCC, the SCC did approve the
1988 VEPCO Solicitation that resulted in the Rosemary Power
Purchase Agreement. Although the NCUC used the 1988 VEPCO
Solicitation to determine the avoided costs in the North Carolina
decision discussed above, there can be no assurance that it would
not disallow the pass-through of the Rosemary Power Purchase
Agreement rates, which arose from the 1988 VEPCO Solicitation. If
the NCUC were to disallow such pass-through, and if the courts
were to allow the decision to stand, the Company believes that
any such disallowance would affect only that portion of VEPCO's
rates allocated to its North Carolina retail customers. The
Brandywine Power Purchase Agreement has been approved by both the
Maryland and District of Columbia Public Service Commissions.
The Company endeavors to develop its U.S. projects, monitor
compliance by the U.S. projects with applicable regulations and
choose its customers in a manner which minimizes the risks of
losing QF status. Certain factors necessary to maintain QF status
are, however, subject to the risk of events outside the Company's
control. For example, loss of a thermal energy customer or
failure of a thermal energy customer to take required amounts of
thermal energy from a cogeneration facility that is a QF could
cause the facility to fail to satisfy the criteria required for
QF status regarding the level of useful thermal energy output.
Upon the occurrence of such an event, the Company would seek to
replace the thermal energy customer or find another use for the
thermal energy that meets PURPA's requirements, but no assurance
can be given that this would be possible.
If one of the U.S. projects which is a QF and in which the
Company has an interest should lose its status as a QF, such
project would no longer be entitled to the exemptions from PUHCA
and the FPA. This could subject the U.S. project to rate
regulation as a public utility under the FPA and state law and
could result in the Company or certain of its affiliates
inadvertently becoming a public utility holding company by owning
more than 10% of the voting securities of, or controlling, a
facility that would no longer be exempt from PUHCA. This could
cause all of the Company's remaining U.S. projects which are QFs
to lose their QF status, because QFs may not be controlled, or
more than 50%-owned, by public utility holding companies. Loss of
QF status could also trigger defaults under covenants to maintain
QF status in the Company's U.S. project power purchase
agreements, steam sales agreements and financing agreements and
result in termination, penalties or acceleration of indebtedness
under such agreements. A facility may lose its QF status on a
retroactive or a prospective basis.
If a U.S. project which is a QF were to lose its QF status
(because, for example, it lost its steam customer), the Company
and its affiliates could attempt to avoid holding company status
(and thereby protect the QF status of its other QF projects) on a
prospective basis by restructuring its interests in the U.S.
project. For instance, the Company could change its voting
interest in the entity owning the nonqualifying project to
nonvoting or limited partnership interests and sell the voting
interest to an individual or company which could tolerate the
lack of exemption from PUHCA, or by otherwise restructuring
ownership of the project so as not to become a holding company.
These actions, however, would require approval of the Securities
and Exchange Commission (the "SEC") or a no-action letter from
the SEC, and would result in a loss of control over the
nonqualifying project, could result in a reduced financial
interest therein and might result in a modification of the
operation and maintenance agreement relating to such project. A
reduced financial interest could result in a gain or loss on the
sale of the interest in such project, the removal of the
affiliate through which the ownership interest is held from the
consolidated income tax group or the consolidated financial
statements of the Company and its affiliates, or a change in the
results of operations of the Company and its affiliates. Loss of
QF status on a retroactive basis could lead to, among other
things, fines and penalties being levied against the Company and
its affiliates, and its subsidiaries and claims by utilities for
refund of payments previously made.
Under the Energy Policy Act of 1992 ("Energy Policy Act"), a
company engaged exclusively in the business of owning and/or
operating a facility used for the generation of electric energy
exclusively for sale at wholesale may be exempted from PUHCA as
an "exempt wholesale generator" or "EWG." An exempt wholesale
generator may not make retail sales of electricity in the U.S. If
a project can be qualified as an EWG under Section 32 of PUHCA it
will be exempt from PUHCA even if it does not qualify as a QF.
Therefore, if a QF in the Company's project portfolio were to
lose its QF status, the Company could apply to have the project
qualified as an EWG. However, assuming this changed status would
be permissible under the terms of the applicable power purchase
agreement, rate approval from FERC would be required. In
addition, the project would be required to cease selling
electricity to any retail customers (such as the thermal energy
customer) and could become subject to state regulation of sales
of thermal energy.
PUHCA. PUHCA provides that any corporation, partnership or
other entity or organized group that owns, controls or holds
power to vote 10% or more of the outstanding voting securities of
a "public utility company" or a company that is a "holding
company" of a public utility company is subject to regulation
under PUHCA, unless an exemption is established or an SEC order
declaring it not to be a holding company is granted. Registered
holding companies under PUHCA are required to limit their utility
operations to a single integrated utility system and to divest
any other operations not functionally related to the operation of
the utility system. In addition, a public utility company that is
a subsidiary of a registered holding company under PUHCA is
subject to financial and organizational regulation, including
approval by the SEC of certain of its financing transactions.
As discussed above, most types of QFs are exempt from most
of the provisions of PUHCA. A foreign utility company is also
exempt from most of the provisions of PUHCA if certain notice and
other requirements are satisfied.
FPA. Under the FPA, the FERC has exclusive rate-making
jurisdiction over wholesale sales of electricity and transmission
in interstate commerce. These rates may be determined on either a
cost-of-service basis or a market-based approach. If a QF in the
Company's project portfolio were to lose its QF status, the rates
set forth in the applicable power purchase agreement would have
to be filed with the FERC and would be subject to initial and
potentially subsequent reviews by the FERC under the FPA, which
could result in reductions to the rates.
Industry Restructuring Proposals. The United States
Congress is currently considering legislation to repeal PURPA
entirely, or at least to repeal the obligation of utilities to
purchase from QFs. There is strong Congressional support for
grandfathering contracts of existing QFs if such legislation is
passed, and also support for requiring utilities to conduct
competitive bidding for new electric generation if the PURPA
purchase obligation is eliminated.
The FERC and many state utility commissions are currently
studying a number of proposals to restructure the electric
utility industry in the United States to permit utility customers
to choose their utility supplier in a competitive electric energy
market. The FERC has issued a final rule requiring utilities to
offer wholesale customers and suppliers open access on their
transmission lines, on a basis comparable to the utilities' own
use of the lines. Although the rule (Order No. 888) is currently
the subject of a petition for review in the Unites States Court
of Appeals for the D.C. Circuit, many utilities have already
filed "open access" tariffs. The utilities contend that they
should recover from departing customers their fixed costs that
will be "stranded" if their wholesale customers choose new
electric power suppliers. These stranded costs include the
capacity costs utilities are required to pay under many QF
contracts, which the utilities view as excessive when compared
with current market prices for capacity. Many utilities are
therefore seeking ways to lower these contract prices or
terminate the contracts altogether, out of fear that their
shareholders will have to bear all or part of such "stranded"
costs. Some utilities have engaged in litigation against QFs to
achieve these ends. The FERC's rule allows full recovery of
"legitimate and verifiable" prudently incurred stranded costs at
the wholesale level. However, the FERC has jurisdiction over only
a small percentage of electric rates, and there is likely to be
litigation over whether wholesale stranded costs are "legitimate
and verifiable."
In addition to restructuring proposals being considered by
regulatory agencies, a number of bills have been introduced in
the U.S. Congress to promote electric utility restructuring and
deregulation of electric rates. These bills differ as to how and
to what extent a utility's "stranded" or "transition" costs would
be recoverable if current captive customers left the utility's
system. The existence of this legislation may increase the desire
of utilities to renegotiate, buy out or attempt to terminate
existing power purchase agreements containing prices that the
utilities believe will not be competitive in a short-term
marginal cost electric energy market. In addition, if electric
energy prices are deregulated, electric energy producers will
have to sell electric energy at competitive market prices. In
Virginia, a restructuring bill has passed the two houses of state
legislature, and has been sent to the governor, whose signature
is required for such bill to become law
State Regulations. State public utility commissions
("PUCs") have broad authority to regulate both the rates charged
by and financial activities of electric utilities, and to
promulgate regulations implementing PURPA. Since a power purchase
agreement will become a part of a utility's cost structure (and
therefore generally is reflected in its retail rates), power
purchase agreements from independent power producers are
potentially subject to the regulatory purview of PUCs,
particularly the process by which the utility has entered into
the power purchase agreements. If a PUC has approved the process
by which a utility secures its power supply, a PUC generally will
be inclined to allow a utility to "pass through" the expenses
associated with an independent power contract to the utility's
retail customers. Moreover, a federal court of appeals has held
in one instance that a PUC may not disallow the full
reimbursement to a utility for the purchase of electricity from a
QF once the PUC has approved the rates as consistent with the
requirements of PURPA. See Freehold Cogeneration Assocs., L.P. v.
Board of Regulatory Comm'rs of New Jersey, 44 F.3d 1178 (3rd
Cir.), cert. denied sub nom., Jersey Central Power and Light Co.
v. Freehold Cogeneration Assocs., L.P., 116 S. Ct. 68 (1995). In
addition, retail sales of electricity or thermal energy by an
independent power producer may be subject to PUC regulation,
depending on state law.
Independent power producers that are not QFs under PURPA are
considered to be public utilities in many states and are subject
to broad regulation by PUCs ranging from the requirement that
certificates of public convenience and necessity be obtained to
regulation of organizational, accounting, financial and other
corporate matters. However, sales of electricity at wholesale (as
are currently contemplated by the Company regarding merchant
plants which it might develop in the U.S.) are subject to the
exclusive regulatory jurisdiction of the FERC. In addition,
states may assert jurisdiction over the siting and construction
of such facilities, and over the issuance of securities and the
sale or other transfer of assets by these facilities that are not
QFs.
State PUCs also have jurisdiction over the transportation
and retail sale of natural gas by local distribution companies.
Each state's regulatory laws are somewhat different; however, all
generally require a local distribution company to obtain approval
from the PUC to provide services and construct facilities. The
rates of local distribution companies are usually subject to
continuing oversight by the PUC.
In the case of the Panda-Rosemary Facility, the Panda-
Rosemary Partnership is subject to a number of conditions imposed
by the North Carolina Utilities Commission ("NCUC") pursuant to a
Certificate of Public Convenience and Necessity ("CPCN"),
including that the Panda-Rosemary Facility and the Rosemary
Pipeline both be owned by the Panda-Rosemary Partnership, that
the Panda-Rosemary Partnership not transport gas for or sell or
deliver gas to any other entity, that all electricity generated
at the Panda-Rosemary Facility be sold to an electric utility and
that all thermal energy produced at the Panda-Rosemary Facility
be sold only to the textile mill to which steam and chilled water
from the Panda-Rosemary Facility are currently delivered. On
February 18, 1997, The Bibb Company ("Bibb") announced that it
would sell the textile mill to WestPoint Stevens, Inc.
("WestPoint"). The closing of the sale was reported in the news
media on February 21, 1997. If, in fact, Bibb is no longer the
owner of the textile mill, the Panda-Rosemary Partnership is
obligated to notify the NCUC and VEPCO and the NCUC could order
such further proceedings as it deemed appropriate, which
proceedings could result in revocation of the CPCN or the
imposition of other conditions.
Natural Gas Regulation. The Company has an indirect 100%
interest in and operates two natural gas-fired cogeneration
projects in the United States, one of which is owned and one of
which is under a long term lease financing arrangement. The cost
of natural gas (other than debt costs) is ordinarily the largest
expense of a gas-fired power project and is critical to the
project's economics. The risks associated with using natural gas
can include the need to arrange transportation of the gas across
great distances, including obtaining removal, export and import
authority if the gas is transported from Canada, the possibility
of interruption of the natural gas supply or transportation
(depending on the quality of the natural gas reserves purchased
or dedicated to the project, the financial and operating strength
of the gas supplier and whether firm or non-firm transportation
is purchased), and obligations to take a minimum quantity of gas
or pay for it (take-or-pay obligations).
Pursuant to the Natural Gas Act, the FERC has jurisdiction
over the transportation and storage of natural gas in interstate
commerce. With respect to most transactions that do not involve
the construction of pipeline facilities, regulatory authorization
can be obtained on a self-implementing basis. However, pipeline
rates for such services are subject to continuing FERC oversight.
Order No. 636, issued by the FERC in April 1992, mandated the
restructuring of interstate natural gas pipeline sales and
transportation services. The restructuring required by the rule
includes (i) the separation ("unbundling") of a pipeline's sales
and transportation services, (ii) the implementation of a
straight fixed-variable rate design methodology under which all
of a pipeline's fixed costs are recovered through its reservation
charge, (iii) the implementation of a capacity release mechanism
under which holders of firm transportation capacity on pipelines
can release that capacity for resale by the pipeline, and (iv)
the opportunity for pipelines to recover 100% of their prudently
incurred costs ("transition costs") associated with implementing
the restructuring mandated by the rule.
Environmental Regulations. The development, construction
and operation of power projects in the United States is subject
to extensive federal, state and local laws and regulations
adopted for the protection of the environment and to regulate
land use. The laws and regulations applicable to the Company and
its subsidiaries primarily involve the discharge of emissions
into the water and air and the use of water, but can also include
wetlands preservation, endangered species, waste disposal and
noise regulations. These laws and regulations in many cases
require a lengthy and complex process of obtaining licenses,
permits and approvals from federal, state and local agencies.
Noncompliance with environmental laws and regulations can
result in the imposition of civil or criminal fines or penalties.
In some instances, environmental laws also may impose clean-up or
other remedial obligations in the event of a release of
pollutants or contaminants into the environment. The following
federal laws are among the more significant environmental laws
that may apply to the Company and its domestic subsidiaries. In
most cases, analogous state laws also exist that may impose
similar, and in some cases more stringent, requirements on the
Company and its subsidiaries.
Clean Air Act. The Federal Clean Air Act, as amended (the
"Clean Air Act"), provides for the regulation, largely through
state implementation of federal requirements, of ambient air
quality and emissions of air pollutants from certain facilities
and operations. As originally enacted, the Clean Air Act set
guidelines for emissions standards for major pollutants (e.g.,
sulfur dioxide and nitrogen oxide) from new sources. The 1990
Clean Air Act Amendments tightened regulations on emissions from
existing sources, particularly previously exempted older power
plants.
Clean Water Act. The Federal Clean Water Act, as amended
(the "Clean Water Act"), also provides for the regulation,
largely through state implementation of federal requirements, of
the quality of surface waters and imposes limitations on
discharges to those waters from point sources, including certain
facilities and operations. The water quality standards
established under the Clean Water Act are used as the basis for
developing specific pollutant discharge limitations from point
sources. The discharge limitations are incorporated into permits
called National Pollutant Discharge Elimination System ("NPDES")
permits. The Clean Water Act also imposes requirements with
respect to the discharge of stormwater runoff from industrial
sites. Those requirements are implemented through state
stormwater discharge permits. The Clean Water Act also restricts
discharges of fill materials to wetlands.
Resource Conservation and Recovery Act. The Resource
Conservation and Recovery Act of 1976 ("RCRA") regulates the
generation, treatment, storage, handling, transportation and
disposal of solid and hazardous waste.
Comprehensive Environmental Response, Compensation, and
Liability Act. The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA" or
"Superfund"), requires the remediation of sites from which there
has been a release or threatened release of hazardous substances
and authorizes the United States Environmental Protection Agency
to take any necessary response action at Superfund sites,
including ordering potentially responsible parties liable for the
release to take or pay for such actions. Potentially Responsible
Parties are broadly defined under CERCLA to include past and
present owners and operators of such sites, as well as
generators, arrangers and transporters of wastes sent to a site.
Regulation of the Electric Power Industry in the PRC
General. The PRC's electric power industry is regulated
primarily by the State Economic and Trade Commission ("SETC") as
successor to the Ministry of Electric Power ("MOEP") in
conjunction with the State Planning Commission ("SPC") and other
governmental agencies. For foreign investments in electric power
projects in the PRC, such governmental agencies include the
Ministry of Foreign Trade and Economic Cooperation of the PRC
(the "MOFTEC"), the SPC, the State Administration of Foreign
Exchange ("SAFE"), the State Administration of Industry and
Commerce of the PRC (the "SAIC") and certain other agencies.
Certain functions formerly exercised by the MOEP have been
transferred to the State Power Corporation of China ("SP") which
was formally approved in January 1997. Pursuant to resolutions
of the Ninth National People's Congress introduced in March 1998,
the governmental functions of the MEOP have been officially
transferred to the SETC and MOEP has been dissolved. National
grid management, ownership of state-funded electric generating
assets and development planning responsibilities will remain with
the SP. The reorganization will be accomplished over a period of
time. The regulatory and approval authorities of the Central
Government (herein so called) agencies are delegated to local
provincial or city governmental agencies performing similar
functions if the total amount of such foreign-invested projects
does not exceed certain thresholds (denominated in U.S. dollars),
although recent regulations promulgated by the MOEP (before its
replacement by SETC) would base approval authority on a power
project's unit size. However, it is unclear whether the
provincial planning commissions and the SPC are bound by or, if
not, will follow these regulations.
State Economic and Trade Commission. As the governmental
department responsible for the electric power industry, the SETC
has assumed responsibility previously exercised by the MOEP and
is responsible for formulating development strategies and
policies for the electric power industry in the PRC, including
investment, technical, and major production and consumption
policies. In addition to formulating electric power industry
planning in collaboration with the SPC and other governmental
agencies, the SETC (i) coordinates the development of the
electric power industry, (ii) supervises the implementation of
related national policies, decrees and plans and (iii) provides
services to electric power enterprises. The SETC shares certain
of its administrative responsibilities with the China Nuclear
Industry Corporation and the Ministry of Water Resources with
respect to nuclear-powered and hydro-powered electricity
generating facilities, respectively. In addition to these
regulatory and administrative functions, the SP is also in charge
of the overall financial management of the power industry,
including consolidating the profits and taxes and approving the
budgets of all the regional power entities annually
In an attempt to separate the regulatory and commercial
functions of the electric power industry, the PRC State Council
formally approved the establishment of the SP in January 1997.
The SP is a state-owned legal entity with funds provided directly
by the State Council (a body of the central government of the
PRC). The SP serves as the PRC's principal investor in and/or
operator of wholly or partially state-owned facilities in the
PRC. It also is responsible for the operation of the
interregional transmission facilities and the development of a
national power grid. After the establishment of the SP, the MOEP
continued (and the SETC now continues) to exercise the regulatory
function over Chinese electricity industry, but the MOEP's
enterprise management function and its function to operate state
assets were turned over to the SP. As part of the reform,
provincial power bureaus have transferred their regulatory
functions to other departments of the local government and have
become subsidiaries of the SP.
State Administration of Foreign Exchange. The SAFE is
responsible for administration of foreign exchange in the PRC.
It formulates and oversees the implementation of foreign exchange
regulations applicable to foreign investment enterprises
("FIEs"). The relevant approval authorities consult the SAFE in
respect of foreign exchange matters relating to FIEs. The SAFE
is also responsible for administrating the swap centers and
issuing permits to FIEs for access to the swap centers as well as
for monitoring the interbank system.
Regional, Provincial and Local Power Bureaus. The SETC
directly oversees the five interprovincial power groups (the
"Regional Power Groups") and the eight independent provincial and
two special administrative region power bureaus ("Provincial
Power Bureaus") in the PRC. The Regional Power Groups (i) manage
their respective regional power grids, (ii) dispatch the power
plants connected to such grids either directly or indirectly
through lower level power bureaus, and (iii) supervise the power
bureaus at lower administrative levels. The Regional Power
Groups also act through power companies which develop, construct,
own and operate certain power plants and transmission facilities
within their respective territories. The key personnel of the
Regional Power Groups are appointed by the SETC and the key
personnel of the Provincial Power Bureaus are appointed by the
provincial governments in consultation with the SETC.
A similar structure exists for the Provincial Power Bureaus
under the Regional Power Groups and the Provincial Power Bureaus
directly managed by the SP. Each Provincial Power Bureau manages
its provincial power grid and dispatches the power plants
connected to such grid to meet local demand. Many Provincial
Power Bureaus also act through power companies which operate
certain power plants and certain transmission facilities within
their respective provinces. Cities and counties directly under
the administration of the provinces may have power bureaus
(together with the Regional Power Groups and the Provincial Power
Bureaus, the "Power Bureaus") which perform, under the
administration of the Power Bureau at the next higher level of
government, similar functions within their respective
jurisdictions.
PRC Electric Power Law. Given the importance of the
continued rapid expansion of the PRC's power industry, the
National People's Congress adopted the Law of Electric Power on
December 28, 1995 (the "Power Law"). The Power Law, which became
effective on April 1, 1996, provides the legislative basis for
the regulation of China's electric power sector. It contains
guidelines in areas such as the generation, supply and use of
electric power, pricing and tariffs and regulatory supervision.
Under the Power Law, the appropriate administrative
department of the State Council is authorized within the scope of
its authority to supervise the electric power industry throughout
the country, and relevant departments of the State Council are
authorized within the scope of their respective authority to
supervise the electric power enterprises. While electric power
development planning will be carried out according to the needs
of the national economy, the Power Law also provides that each
administrative department of the local government at or above the
county level will be responsible for the supervision and control
of the electric power industry within its administrative region.
The Power Law states that independent power companies shall
be granted grid access upon their request, and provides that the
on-grid price of electricity shall be implemented on the basis of
"the same price for the same quality on the same grid." The
Power Law lists the criteria to be applied in the determination
of tariffs as including reasonable compensation for costs,
reasonable profits, inclusion of taxes in accordance with law,
firm adherence to the principle of equitable sharing of burdens,
and promoting electric power constructions. The law delineates
the approval process for on-grid tariffs and makes a distinction
between the approvals required for regional/provincial grids but
such approval is specifically required for independent grids.
The Power Law reiterates the position of the Central Government
of the PRC that entities involved in the construction of power
plants, power generation and grid operation are autonomous and
assume sole responsibility for their own profits and loses.
Rate Setting Mechanisms. Rates for electricity produced by
power plants that the SP directly or indirectly manages are
generally set by the Central Government, thus most electricity
has historically been purchased from power plants at such rates.
For certain power plants with local government, China Huaneng
Group or foreign investment, such as the Luannan Facility, rates
are set on the basis of discussions between such power plants and
the relevant provincial pricing bureau.
In the case of power plants managed by the SP, customers
purchase electricity from the Power Bureaus of each level of the
administration of the PRC at rates determined by the Central
Government of the PRC, which vary according to the category and
location of the user. The rates set by the Central Government
have traditionally been maintained at a low level, requiring the
subsidization of the electric power industry by the Central
Government. One of the stated goals of the Power Law (as
described above) is to reform power pricing to be consistent with
the development of the market economy. Trial implementation has
commenced in several cities of a time-sharing pricing policy
which charges consumers higher rates for peak load periods and
lower rates for off-peak load periods. North China Power has
adopted a similar program in its service area. Allowing the
market to influence the setting of power rates is intended to
provide incentives for greater efficiency in energy production,
reduction of energy use per unit of industrial output and
promotion of conservation technologies.
Transmission and Dispatch. The main system for the
dispatch, transmission and distribution of electric power in the
PRC consists of the five interprovincial power grids managed by
their respective Regional Power Groups and the eight provincial
and two autonomous region power grids managed by the Provincial
Power Bureaus.
The PRC's energy sources, such as coal and potential
hydroelectric resources, are principally located in the western,
northern and central inland provinces, but its high electricity
consumption regions are located in the eastern and southern
coastal areas. As a result of plans to develop large power plants
in areas with significant energy sources, the expansion of
China's electricity transmission capabilities is of major
importance. The PRC plans to interconnect the North China Power
Grid with the Northeast Power Grid around 2000. In 2003, with the
expected completion of the first phase of the Three Gorges
project, the Central China Power Grid is expected to be
interconnected on the east with the East China Power Grid and on
the west with the Sichuan Power Grid. A unified national power
grid is planned for completion sometime between 2010 and 2020.
All electricity produced in the PRC is dispatched by the
Power Bureaus, except for that generated by units not connected
to a grid. The grids and the electric power dispatch to each grid
are administered by dispatch centers ("Dispatch Centers")
operated by the Power Bureaus. Prior to November 1993, such
electric power dispatch had been carried out pursuant to MOEP
guidelines. In order to achieve more efficient and rational
dispatch of electric power, the State Council issued, with effect
from November 1, 1993, the Regulations on the Administration of
Electric Power Dispatch to Networks and Grids (the "Dispatch
Regulations"). The Dispatch Regulations are the first nationwide
regulations in the PRC governing the dispatch of electric power.
Under the Dispatch Regulations, Dispatch Centers were established
at each of five levels: the National Dispatch Center, the
Dispatch Centers of the Regional Power Groups, the Dispatch
Centers of the Provincial Power Bureaus, the Dispatch Centers of
the Power Bureaus of municipalities under provinces and the
Dispatch Centers of the county Power Bureaus. Dispatch Centers
are charged with setting production levels for the various power
plants connected to the grid. To effect this determination, each
power plant receives on a daily basis from its local Dispatch
Center an expected hour-by-hour output schedule for the following
day, based on expected demand, the weather and other factors.
The Dispatch Regulations provide that the Dispatch Centers
must dispatch electric power according to, among other things,
(i) power supply agreements entered into between a Power Bureau
and certain large or primary electricity customers, where such
agreements take into account the electric power generation and
consumption plans formulated annually by the Central Government
and set forth in the State Plan, (ii) agreements entered into
between a Dispatch Center and each power plant subject to its
dispatch, (iii) interconnection agreements between Power Bureaus
and (iv) actual conditions of the grid, including equipment
capabilities and safety reserve margins.
Regulation of Electric Power Industry in Nepal
General. The regulatory framework for private sector power
generation in Nepal primarily is based on legislation enacted by
its Parliament in 1992 and 1993. The legislation provides for
the licensing of private parties to construct, own, and operate
hydroelectric power projects for a time period of up to 50 years.
Projects that are more than 50% owned by foreign companies will
be automatically transferred, without compensation, to His
Majesty's Government of Nepal ("HMGN"), after the expiration of
the license.
Nepal's electric power industry is primarily regulated by
the Ministry of Water Resources ("MOWR") in conjunction with the
NEA. NEA was established in 1985 as a commercial entity with
responsibilities for generation, transmission and distribution of
electricity throughout Nepal. Decisions regarding the operation
and management of the NEA were made, historically, without taking
into account considerations such as efficiency and profitability.
However, NEA's overall operating performance and financial
position recently have improved following tariff increases and
technical assistance from various multinational institutions,
including the World Bank.
Tariff rates are subject to regulation. In August 1994, a
newly implemented Tariff Fixation Committee ("TFC"), which
includes representatives from HMGN and consumers and which is
responsible for setting electricity tariffs in accordance with
certain financial covenants, became operational.
The Ministry of Water Resources has the authority to issue
licenses for plant construction, water rights and to provide
financial guarantees. All hydroelectric projects with a capacity
of greater than 1,000 kilowatts require a license. Within the
Ministry, the Hydroelectricity Development Unit of the
Electricity Development Center (the "EDC") promotes the private
sector's participation in the industry, approves projects with a
capacity of more than 1,000 killowatts, and provides necessary
assistance to the private sector in the startup and operation of
projects. The EDC also may arrange for economic incentives to
private participants, including tax concessions and assistance in
importing goods, obtaining land and obtaining necessary
government authorizations.
Transmission System. The transmission system in Nepal
consists of 33 kilovolt, 66 kilovolt and 132 kilovolt
transmission lines. The 132 kilovolt, single-circuited 1,178-
mile Integrated Nepal Electric Power System is Nepal's most
extensive transmission mechanism, and is connected to India.
Nepal also has a 33 kilovolt, single-circuit system that measures
1,216 kilometers; a 66 kilovolt, single-circuit system of 179
kilometers; a 66 kilovolt double-circuit system of 153
kilometers; and a 132 kilovolt, double-circuit system of 27
kilometers. Under the applicable project agreements, the NEA has
the responsibility of building a 48 kilometer transmission line
connecting the Nepal Facility to an NEA substation.
Foreign Exchange. The Ministry of Finance has primary
responsibility for the regulation of foreign exchange in Nepal.
Nepal increased its foreign exchange reserves from approximately
US$ 270 million in the early 1980s to approximately US$ 600
million in 1996. The Nepalese rupee exchange rate is pegged
against the Indian rupee - a reflection of the high degree of
integration between the two economies.
Foreign Environmental Regulations
General. The Company and its subsidiaries have ownership
interests in power plants under construction in the PRC and
Nepal. Each of these countries and the localities therein have
separate laws and regulations governing the siting, permitting,
ownership and power sales from the Company's plants. These laws
and regulations are often quite different than those in effect in
the United States.
Based on current trends, the Company expects that
environmental and land use regulations affecting its plants under
construction outside the U.S. will likely become more stringent
over time. This appears to be due in part to a greater
participation by local citizenry in the monitoring and
enforcement of environmental laws, better enforcement of
applicable environmental laws by the regulatory agencies, and the
adoption of more sophisticated environmental requirements. If
foreign environmental and land use regulations were to change in
the future, the Company may be required to make significant
capital or other expenditures in order to comply. There can be
no assurance that the Company would be able to recover all or any
increased costs from its customers or that its business,
financial condition or results of operations would not be
materially and adversely affected by future changes in foreign
environmental and land use regulations.
PRC Environmental Regulations. The Luannan Facility is
subject to various PRC environmental laws and regulations which
are administered by both Central Government of the PRC and local
government environmental protection bureaus. Approval or review
by the relevant environmental protection bureaus is required at
each of the project proposal, feasibility study, design and
commissioning stages of a project. Filing of an environmental
impact statement or, in some cases, an environmental impact
assessment outline is required before the planning commission for
the same level of government can issue its approval. The filing
must demonstrate that the project conforms to applicable
environmental standards. Approvals and permits generally have
been issued for projects utilizing modern pollution control
technology. Pollution sources are also required to report their
pollution discharges in terms of types and amounts of pollutants
discharged into the water and air, and to secure discharge
permits for their wastewater discharges, airborne emissions and
solid waste shipments to ensure compliance with relevant
emissions standards.
The PRC's environmental laws and regulations establish
standards for the discharge of emissions into the air and water.
The rules set forth schedules of base-level discharge fees for
various polluting substances and specify that, if such levels are
exceeded, the polluting entity will be required to pay an excess
discharge fee to the local government. The local environmental
rules do not make it a violation to exceed these limits, but
rather set forth a set of graduated scale of fees that are
required for each incremental unit of excess discharge. Up to a
certain level, as the discharge levels increase, the fee per unit
also increases. Above a certain limit, local governments may
issue orders to cease or reduce such discharge levels which, if
not complied with, will after three years from the date of the
order, result in an annual increase of 5% in the pollution fees
assessed. Where pollution is causing environmental damage, the
local governments also have the authority to issue orders
requiring the polluting entities to cure the problem within a
certain period of time.
MOEP previously established technical standards for
environmental monitoring and exercises certain disciplinary
functions with regard to environmental compliance in connection
with the construction and operation of power plants.
Environmental protection equipment is required to be designed,
installed and commissioned in tandem with the design,
construction and commissioning of the generator or plant. Before
commencing operations, each plant or generator must be tested and
qualified with regard to emissions levels and abatement
equipment.
Nepal Environmental Regulations The Nepal Facility is
subject to certain environmental laws and regulations which are
administered by HMGN. For example, the Environmental Impact
Assessment Guidelines for the Forestry Sector, 1995, applies to
the Company's construction efforts in Nepal. Among other things,
an independent environmental impact assessment was required
pursuant thereto, as well as other ongoing compliance actions.
In addition, the Nepal Facility is subject to the Water Resources
Act, which establishes certain pollution tolerance limits for
water resources as well as quality standards for various uses of
water resources. As part of the financing of the Nepal Facility,
the Company is required to comply with World Bank environmental
standards.
Employees
At December 31, 1997, the Company and its subsidiaries had
no employees.
Robert W. Carter is Chairman of the Board, Chief Executive
Officer and also a director of the Company. Janice Carter is
Executive Vice President, Secretary and Treasurer of the Company,
and is married to Robert W. Carter. Otherwise, no family
relationships exist among the directors and executive officers of
the Company.
All executive officers of the Company are elected annually
by the Board of Directors of the Company to serve in such
capacities until their successors are duly elected and qualified.
Item 2. Properties.
The information regarding the properties of the Company is
set forth under Item 1. Business above and in the Notes to
Consolidated Financial Statements included in Part II hereof.
The Company's principal office, located at 4100 Spring Valley,
Suite 1001, Dallas, Texas 75244, is leased by PEII, which lease
expires May 2001.
Item 3. Legal Proceedings.
The Company is not a party to any legal proceedings.
However, affiliates of the Company are claimants or defendants in
various legal proceedings which have arisen in the ordinary
course of business. The Company believes such claims and legal
actions, individually or in the aggregate, will not have a
material adverse effect on the business, financial condition of
results of operations of the Company and its subsidiaries, taken
as a whole.
NNW, Inc. Proceeding
On July 12, 1996, Panda Energy Corporation, a subsidiary of
the Company ("PEC"), filed an action against NNW, Inc. ("NNW")
captioned Panda Energy Corporation v. NNW, Inc. f/k/a Nova
Northwest Inc. (No. 96-07151-C), in the District Court of Dallas
County, Texas (68th Judicial District). PEC's petition sought a
declaratory judgment that the NNW's cash flow participation
rights in PEC's credit agreement with NNW remain at 0.433% after
the restructuring of the Panda-Rosemary Partnership interest
pursuant to the terms of such credit agreement with NNW. The
parties settled this dispute in December 1997 pursuant to a
settlement agreement and mutual release of claims, the terms of
which are maintained as confidential pursuant to the provisions
of such agreement. PEC does not believe that the terms of this
settlement agreement and mutual release of claims will have a
material adverse effect on the business, financial condition or
results of operations of PEC and its subsidiaries, taken as a
whole, or the Company and its subsidiaries, taken as a whole.
Heard Proceedings
PEC is a party to a lawsuit captioned Panda Energy
Corporation, Plaintiff v. Heard Energy Corporation, CLF Energia Y
Electricidad, S.A., Robert A. Wolf, Armin Alexander Budzinsky,
Edward R. Gwynn, Donald L. Kinney, Morgan Stanley & Co., Inc.,
Allstate Insurance Company, Allstate Life Insurance Company,
Entergy Corporation, Entergy Enterprises, Inc., Entergy Power,
Inc., Entergy Power Development Corporation, Anil Desai, Drs. IR.
Poerwanto P., and PT Panca Serodja Pradhana, Defendants, (No.
94-0672-J), District Court of Dallas County, Texas (191st
Judicial District). PEC initiated this litigation in April 1994
and alleges that defendants Wolf, Gwynn and Kinney, former PEC
employees, formed a competing company (Heard Energy Corporation)
and misappropriated certain of PEC's international power project
opportunities. PEC alleges that the other defendants knowingly
participated, collaborated and/or conspired in the
misappropriation. PEC alleges causes of action for
misappropriation, conspiracy, fraud, breach of contract, breach
of fiduciary duty and legal malpractice against one or more of
the defendants and alleges damages in an unspecified amount.
Defendant Morgan Stanley filed a counterclaim on September
14, 1995 against PEC, alleging that it had performed services for
PEC pursuant to an engagement agreement relating to the
Brandywine Project. PEC terminated the engagement agreement on
May 4, 1993. Morgan Stanley alleges that the services it
performed prior to such termination included assisting PEC in
obtaining certain regulatory approvals, preparing a draft
solicitation booklet and identifying potential project financing
sources, including GE Capital. Morgan Stanley further alleges
that PEC obtained financing from GE Capital after Morgan Stanley
was terminated, and that Morgan Stanley is entitled to a
"transaction fee," either pursuant to the engagement agreement or
based on the value of the services it allegedly performed, in an
amount of not less than $4.3 million, plus attorneys' fees and
interest.
Defendants Heard Energy Corporation, Wolf, Gwynn, Kinney and
Budzinsky (the "Heard Defendants") also filed a counterclaim
during November 1994 against PEC and a third-party claim against
Robert Carter and Janice Carter, alleging that PEC, Robert Carter
and Janice Carter negligently made misrepresentations of PEC's
lack of a continued interest in developing international power
projects. The Heard Defendants allege that they would not have
engaged in allegedly competing international power project
transactions but for these misrepresentations and that they
incurred damages in the amount of approximately $5.0 million as a
result of these misrepresentations, such damages allegedly
consisting of expenses incurred by Heard Energy Corporation,
certain portions of which allegedly are guaranteed by the
individual Heard Defendants. In both the counterclaim and the
third-party claim, the Heard Defendants further allege that PEC,
Robert Carter and Janice Carter violated a confidentiality order
relating to certain documents produced by the Heard Defendants
during the discovery phase of this action by misappropriating
confidential information in these documents for the purpose of
gaining a competitive advantage over Heard Energy Corporation.
The Heard Defendants seek $5.0 million in damages as well as
unspecified "exemplary" damages based on this alleged violation.
PEC believes that the Heard Defendants' discovery order claim is
not actionable as a claim for damages.
On March 15, 1996, all of the defendants filed motions for
summary judgment, and PEC filed motions for summary judgment with
respect to Morgan Stanley's counterclaim and the Heard
Defendants' counterclaim and third-party claim. By letter dated
April 30, 1996, the court advised all counsel that it intended to
grant the defendants' motions for summary judgment, indicating
that PEC could not show legally sufficient evidence of damages to
sustain its claims. This order was entered on June 19, 1996.
PEC has appealed the court's ruling. In light of the court's
ruling and pending the appeal, Morgan Stanley and the Heard
Defendants have dismissed without prejudice their counterclaims
and third-party claims, and PEC has agreed that any applicable
statutes of limitations or other time-based defenses will be
tolled during the pendency of the appeal.
The Company has been informed by PEC that PEC does not
believe that either the Morgan Stanley counterclaim or the Heard
Defendants' counterclaims and third-party claims will be refiled
unless and until the judgment dismissing PEC's claims against
those parties is reversed and remanded to the trial court by the
appellate court. In any event, PEC does not believe that these
counterclaims or third-party claims, if reasserted, have any
merit, nor does PEC believe that these claims, if eventually
decided adversely to PEC, would have a material adverse effect on
the business, financial condition or results of operations of PEC
and its subsidiaries, taken as a whole, or the Company and its
subsidiaries, taken as a whole.
Brandywine Proceeding
On June 26, 1996, certain plaintiffs commenced a proceeding
against the Panda-Brandywine Partnership and one of its
contractors (as well as other subcontractors) captioned Jeannine
McConnell, McConnell Pool Service, Inc. and McConnell Fuel Oil,
Inc. v. Panda-Brandywine, L.P. and Flippo Construction (Case No.
CV 96-1344) in the Circuit Court for Charles County, Maryland. In
this proceeding, plaintiffs allege that in connection with the
construction of an effluent water pipeline, a contractor for the
Panda-Brandywine Partnership, Flippo Construction ("Flippo") (and
its subcontractors) and the Panda-Brandywine Partnership left
their easement and inadvertently trespassed on to plaintiffs'
property. While on plaintiffs' property, Flippo (and its
subcontractors) and the Panda-Brandywine Partnership allegedly
dug a deep and wide hole which extended onto the plaintiff's
property to locate a buried pipe. Plaintiffs allege that this
trespass damaged the property, decreased its fair market value
and resulted in loss of use thereof. Plaintiffs claim damages in
numerous counts that aggregate to $3.25 million in actual damages
against each defendant plus punitive damages aggregating $3.0
million against all defendants.
The Panda-Brandywine Partnership intends to vigorously
contest this proceeding. The Company does not believe that the
outcome of this proceeding will have any material adverse effect
on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, or the Panda-
Brandywine Partnership. In the opinion of the Panda-Brandywine
Partnership and the Company, the contract between the Panda-
Brandywine Partnership and Flippo requires Flippo to hold the
Panda-Brandywine Partnership harmless for any activities relating
to the plaintiffs' property.
Florida Power Proceedings
In January 1995, Florida Power Corporation, a Florida
corporation ("Florida Power"), commenced a proceeding before the
Florida Public Service Commission ("Florida PSC") against the
Kathleen Partnership, an affiliate of the Company, captioned In
re: Petition for Declaratory Statement Regarding Eligibility for
Standard Offer Contract and Payment Thereunder by Florida Power
Corporation, Case No. 950110-EI. Florida Power's petition sought
a declaratory statement that a power purchase agreement between
Panda-Kathleen, L.P., an affiliate of the Company (the "Kathleen
Partnership") and Florida Power, is not available to the Kathleen
Partnership because the Kathleen Partnership's proposed
cogeneration facility allegedly is not in compliance with the
Florida PSC's rules (because it may be capable of exceeding 75 MW
in electric generating capacity). Additionally, if the contract
is "available" to the Kathleen Partnership, Florida Power sought
a declaratory statement that it is only obligated to pay capacity
payments under the power purchase agreement relating to the
Kathleen Facility for a term of 20 years rather than for the
entire 30-year term of the power purchase agreement. The Kathleen
Partnership filed a cross-petition seeking a declaratory
statement that the milestone dates in the power purchase
agreement must be extended due to Florida Power's improper
actions and as a result of the delays in developing the Kathleen
Facility caused by Florida Power's petition and the ensuing
proceeding before the Florida PSC. The Kathleen Partnership filed
a motion to dismiss the proceeding based on lack of jurisdiction,
but that motion was denied by the Florida PSC. In February of
1996, the Florida PSC held a one-day hearing.
On May 20, 1996, the Florida PSC issued a decision granting
Florida Power's petition, and holding that the power purchase
agreement is not available to the Kathleen Facility as proposed
because it has an electric generating capacity in excess of 75 MW
and that Florida Power is only obligated to make capacity
payments under the power purchase agreement for 20 years. The
Florida PSC's decision also granted the Kathleen Partnership's
cross-petition insofar as it grants the Kathleen Partnership an
18-month extension to meet the construction commencement
milestone date and an 18-month extension to meet the commercial
operation milestone date. The Kathleen Partnership has appealed
the Florida PSC's order to the Florida Supreme Court and the
Florida Supreme Court upheld the decision. The Kathleen
Partnership filed a Writ of Certiorari with the Supreme Court of
the United States regarding this matter in February, 1998.
There are two actions related to this matter pending before
the Florida Supreme Court and the United States District Court
for the Middle District of Florida. The Company does not believe
that an adverse result in this case would have a material adverse
effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole,
or the Company and its subsidiaries, taken as a whole.
National Development and Research Corporation Proceeding
On October 14, 1997, Panda Global Energy Company, an
affiliate of the Company ("PGE"), commenced a proceeding in the
District Court of Dallas County, 101st Judicial District
captioned Panda Global Energy Company v. National Development and
Research Corporation and Robert E. Tang, Case No. 97-9315-E.
PGE's petition sought a declaratory judgment for the termination
of various agreements between PGE and National Development and
Research Corporation ("NDR") regarding the development of power
projects in the PRC. On December 9, 1997 NDR filed a counter-
claim against PGE and Robert W. Carter asserting that, among
other things, such agreements are still in effect and that NDR is
entitled to certain payments thereunder. This proceeding
currently is in the discovery stage. The Company does not
believe that an adverse result in this proceeding would have a
material adverse effect on the business, financial condition or
results of operations of PGE and its subsidiaries, taken as a
whole, or the Company and its subsidiaries, taken as a whole.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders
during the fourth quarter of the Company's fiscal year ended
December 31, 1997.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters.
There is no established market for the Company's Common Stock,
$.01 par value, all of which is owned by PEII. The Company has
not paid cash dividends on shares of its capital stock since its
inception. The indenture governing the Company's Guarantee of the
12 1/2% Senior Secured Notes due 2004 of Panda Global Energy Company
imposes certain restrictions on the Company's ability to declare
or pay cash dividends to PEII and make certain distributions on
its capital stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources."
Item 6. Selected Financial Data.
SELECTED FINANCIAL DATA
(in thousands, except ratios)
Presented below are selected consolidated financial data for
the Company as of and for each of the years in the five-year
period ended December 31, 1997, which have been derived from the
Company's financial statements. The selected financial data
should be read in conjunction with the information contained
under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the
consolidated financial statements of the Company, including the
notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Revenue:
Electric capacity and $ 29,856 $ 30,664 $ 29,859 $ 32,274 $ 65,005
energy sales:
Steam and chilled water 618 650 473 502 624
sales
Interest income 365 603 895 1,518 8,050
-------- -------- -------- -------- --------
Total revenue 30,839 31,917 31,227 34,294 73,679
Expenses:
Plant operating 7,676 8,940 9,348 12,050 26,245
expenses
Development and 2,434 1,779 2,550 5,187 11,580
administrative expenses
Interest expense 11,066 11,018 11,716 19,414 55,329
Depreciation 4,282 4,208 4,210 5,532 11,575
Amortization - Debt 502 600 554 494 1,418
issuance costs
Amortization - 533 533 533 533 -
Partnership formation
costs
-------- -------- -------- -------- --------
Total expenses 26,493 27,078 28,911 43,210 106,147
======== ======== ======== ======== ========
Income (loss) before
taxes and minority 4,346 4,839 2,316 (8,916) (32,468)
interest
Minority interest (5,474) (5,700) (5,048) (2,405) -
Provision for income - - - - -
taxes
-------- -------- -------- -------- --------
Income (loss) before (1,128) (861) (2,732) (11,321) (32,468)
extraordinary items
Extraordinary loss, - - - (21,336) -
net(1)
-------- -------- -------- -------- --------
Net loss $(1,128) $(861) $(2,732) $(32,657) $(32,468)
======== ======== ======== ======== ========
Other Data:
Ratio of earnings to 1.38x 1.32x (2) (2) (2)
fixed charges(2)
<CAPTION> December 31,
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and other current
assets $14,084 $15,639 $11,339 $36,626 $112,067
Power plant and
equipment (net) 93,815 96,136 220,145 268,725 293,008
Reserves and escrow
deposits, and other
assets 15,650 15,477 15,471 40,119 86,807
-------- -------- -------- -------- --------
Total assets $123,549 $127,252 $246,955 $345,470 $491,882
======== ======== ======== ======== ========
Current liabilities $11,252 $12,531 $18,457 $19,667 $25,994
Deferred revenue -- -- -- -- 13,140
Long-term debt
(including capital lease
obligation), less
current portion 98,454 106,343 234,608 427,319 580,947
Minority interest 34,479 35,588 36,836 - 5,741
Shareholder's deficit (20,636) (27,210) (42,946) (101,516) (133,940)
-------- -------- -------- -------- --------
Total liabilities and
shareholder's deficit $123,549 $127,252 $246,955 $345,470 $491,882
======== ======== ======== ======== ========
</TABLE>
Notes (in thousands):
(1) In 1996, there was an extraordinary loss from early
extinguishment of debt of $21,336.
(2) For purposes of computing the ratio of earnings to fixed
charges, earnings represent income (loss) before minority
interest, taxes and extraordinary items plus fixed charges
exclusive of capitalized interest. Fixed charges consist of
interest expense, capitalized interest and amortization of debt
issuance costs. Earnings were insufficient to cover fixed charges
in 1995 by $3,477, in 1996 by $19,971 and in 1997 by $34,525. In
1994, 1995, 1996 and 1997, fixed charges included capitalized
interest of $803, $5,793, $11,055 and $2,057, respectively.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
(Dollar amounts are in thousands unless otherwise noted)
General
The Company owns 100% equity interests in two completed
electric power generation facilities in the United States: the
Rosemary Facility, which began commercial operations in December
1990, and the Brandywine Facility, which began commercial
operations in October 1996. Prior to July 31, 1996, the Company
owned a 10% equity interest in the Rosemary Facility. The
Company also owns an approximately 83% indirect interest in the
Luannan Project in China, for which preliminary construction
activity commenced in December 1996 and full construction
activity commenced following the successful completion of
financing in April 1997. Additionally, the Company owns an
indirect equity interest in the Nepal Project, financing for
which was completed in December 1997.
Results of Operations
The Company's revenues from electric power generation are
derived from long-term contracts which include both a fixed
capacity payment and a variable energy payment. The capacity
payments, which are based upon the specified power generating
capacity of a project, are designed to cover fixed costs and to
provide an acceptable return on equity. The energy payments,
which are based on actual electricity output, are designed to
cover variable costs including fuel costs and variable operating
expenses incurred in connection with electricity output.
Accordingly, the impact of price fluctuations on the results of
operations is generally not material. The extent to which a
facility is dispatched (i.e., required to deliver electricity),
and therefore the actual electricity output for a given period,
are subject to the discretion of the power purchaser, with
certain limitations. The capacity payments are the predominant
source of revenue for the Company. The Company currently
believes that it can meet its liquidity requirements solely from
the capacity payments in the unlikely event that its facilities
are not dispatched at all. See "Liquidity and Capital Resources.
1997 compared to 1996
The Company incurred a net loss of $32,468 in 1997 on
revenues of $73,679 compared to net loss before extraordinary
item of $11,321 on revenues of $34,294 during 1996. The increase
in revenues in 1997 was primarily caused by operations of the
Brandywine Facility (which commenced operations on October 31,
1996) and by increased interest income, partially offset by a
decrease in revenues at the Rosemary Facility. The 1997 results
include operations of both the Rosemary and Brandywine
facilities, whereas the 1996 results include operations of the
Rosemary Facility for a full year and the Brandywine Facility for
the final two months of 1996. For 1997 and 1996, capacity
revenues for the Rosemary Facility were $25,361 and $27,204,
respectively, reflecting a contractual decrease of $1,843. Energy
revenues for the Rosemary Facility for 1997 and 1996 were $2,355
and $2,011, respectively. The increase in energy revenues for
the Rosemary Facility is attributable to higher dispatch hours at
that facility compared to 1996. During 1997, the Rosemary
Facility was dispatched 743 hours as compared to 636 hours in
1996. Capacity revenues and energy revenues from Potomac
Electric Power Company ("PEPCO") for the Brandywine Facility for
1997 were $21,612 and $11,905, respectively. The Brandywine
Facility was dispatched 3,552 hours during 1997. Capacity
revenues for the Brandywine Facility for 1997 were lower than
originally anticipated due to a disagreement with PEPCO over the
calculation of the capacity payments. As discussed in Note 9 to
the consolidated financial statements, the Company and PEPCO have
reached a tentative agreement under which PEPCO will pay
approximately $3.8 million to the Company for the retroactive
effect of higher capacity payments for the first nine months of
1997. In October 1997, PEPCO commenced increased capacity
payments to the Company under the terms of the tentative
agreement. The agreement is subject to the consent of the
financing parties. Additionally, the Company had energy revenues
of $3,771 from the sale of natural gas and fuel oil to other
purchasers in the 1997. Plant operating expenses, which included
fuel cost, operation and maintenance expense, insurance and
property taxes, increased to $26,245 (36% of revenues) in 1997
from $12,050 (35% of revenues) in 1996, primarily due to
commencement of operations at the Brandywine Facility and lower
margins obtained on the sale of natural gas and fuel oil to other
purchasers. Additionally, the 1996 plant operating expenses
included approximately $700 for the insurance deductible and
other non-covered costs relating to hurricane damage sustained in
September 1996 at the Rosemary Facility.
Project development and administrative expenses were $11,580
(16% of revenues) and $5,187 (15% of revenues) for 1997 and 1996,
respectively. The increase in 1997 was primarily attributable to
additional administrative activities related to the commencement
of commercial operations at the Brandywine Facility and higher
administrative costs required to support the increased size and
complexity of the Company's operations.
Interest expense increased to $55,329 (75% of revenues) in
1997 from $19,414 (57% of revenues) in 1996 as a result of the
increase in outstanding indebtedness from the issuance of $111.4
million original principal amount of first mortgage bonds for the
Rosemary Facility (the "Rosemary Bonds"), $105.5 million
original principal amount of pooled project bonds ("Series A
Bonds"), the capital lease financing for the Brandywine Facility
and $145.0 million discounted principal amount of Senior Secured
Notes issued in April 1997 for the Luannan Facility. The
impact of such new indebtedness was partially offset by the
refinancing of the taxable revenue bonds issued in 1989 for the
Rosemary Facility and the repayment of other term loan financing
on July 31, 1996 from portions of the proceeds of the Rosemary
Bonds and the Series A Bonds.
Depreciation, amortization of debt issue costs and
amortization of partnership formation costs amounted to $12,993
(18% of revenues) in 1997 and $6,559 (19% of revenues) in 1996.
The increase was primarily attributable to depreciation for the
Brandywine Facility in 1997.
For 1996, minority interest in net income was $2,405. There
is no minority interest in 1997 due to the Company's acquisition
on July 31, 1996 of the minority interest holder's limited
partnership interest in Panda-Rosemary. As a result of this
acquisition, the Company owns 100% of Panda-Rosemary.
For 1996, the Company incurred an extraordinary loss on
early extinguishment of debt of $21,336 as a result of the
refinancing of the taxable revenue bonds issued in 1989 for the
Rosemary Facility and the repayment of other term loan financing
on July 31, 1996 from portions of the proceeds of the Rosemary
Bonds and the Series A Bonds.
As a result of the various factors discussed above, the
Company incurred net losses of $32,468 and $32,657 for 1997 and
1996, respectively.
1996 compared to 1995
The Company incurred a net loss before extraordinary item of
$11,321 in 1996 on revenues of $34,294, compared to a net loss of
$2,732 on revenues of $31,227 in 1995. The 10% increase in
revenues was primarily caused by the commencement of commercial
operations at the Brandywine Facility on October 31, 1996 and by
increased interest income. For 1996 and 1995, capacity revenues
were $27,204 in both periods and energy revenues were $5,070 and
$2,655, respectively. Capacity revenues for the Brandywine
Facility commenced in January 1997; accordingly, capacity
revenues for 1996 and 1995 relate only to the Rosemary Facility.
The increase in energy revenues is attributable to operations of
the Brandywine Facility for the last two months of 1996,
partially offset by a decrease in energy revenues at the Rosemary
Facility which resulted from lower dispatch hours at that
facility compared to 1995. During 1996, the Rosemary Facility
was dispatched 635 hours as compared to 2,224 hours in 1995,
resulting in a decrease in energy revenues from that facility of
$644. (The number of dispatched hours in 1995 was unusually
high, as explained below.) Plant operating expenses, which
included fuel cost, operation and maintenance expense, insurance
and property taxes related to the Rosemary Facility (and the
Brandywine Facility commencing October 31, 1996), increased from
$9,348 (30% of revenues) in 1995 to $12,050 (35% of revenues)
during the same period in 1996, primarily due to the inclusion of
the costs of operating the Brandywine Facility for two months in
1996. Because the Brandywine Facility earned no capacity
revenues during its period of operation in 1996, plant operating
expenses (and all other categories of expenses) were higher than
normal as a percentage of revenues. Another significant cause of
the increased plant operating expenses was the insurance
deductible and other non-covered costs of approximately $700
relating to hurricane damage sustained in September 1996 at the
Rosemary Facility as discussed below. Other factors contributing
to the increase in plant operating expenses at the Rosemary
Facility included additional scheduled maintenance costs and the
fuel cost increases relating to increased operation of the
auxiliary boiler for steam and chilled water production.
Project development and administrative expenses were $2,550
(8% of revenues) and $5,187 (15% of revenues) for 1995 and 1996,
respectively. The increase in 1996 was primarily attributable to
increased development activity on the Luannan Facility and the
commencement of commercial operations at the Brandywine Facility
on October 31, 1996.
Interest expense increased from $11,716 (38% of revenues) in
1995 to $19,414 (57% of revenues) in 1996 as a result of the
increase in outstanding indebtedness under a term loan which was
partially offset by the scheduled reduction in outstanding
indebtedness under the taxable revenue bonds issued in 1989 for
the Rosemary Facility, and as a result of the increase in
outstanding indebtedness from the issuance of the Rosemary Bonds
and the Series A Bonds on July 31, 1996. The impact of such new
indebtedness was partially offset by the refinancing of the
taxable revenue bonds issued in 1989 for the Rosemary Facility
and the repayment of a term loan on July 31, 1996. Additionally,
commencement of commercial operations at the Brandywine Facility
resulted in the recognition of interest expense on the related
debt for the last two months of 1996. Prior to commercial
operations, interest on the Brandywine debt was capitalized.
Depreciation, amortization of debt issue costs and
amortization of partnership formation costs increased from $5,297
(17% of revenues) in 1995 to $6,559 (19% of revenues) in 1996.
The increase was primarily attributable to the commencement of
commercial operations at the Brandywine Facility on October 31,
1996.
On September 6, 1996, a transformer and two switches at the
Rosemary Facility sustained damage from a hurricane. A
substitute transformer was temporarily installed pending repair
of the damaged transformer, which was substantially completed
during the first quarter of 1997. The Company estimated the
total cost to repair the Rosemary Facility (including substitute
transformer rental costs) at approximately $2,450, all of which
was covered by insurance except for deductible and certain non-
covered items in the amount of approximately $700. This event
did not have a material adverse effect on the Company's financial
condition or results of operations.
For 1996 and 1995, minority interest in net income was
$2,405 and $5,048, respectively. The decrease in 1996 was due to
lower net income (before minority interest and extraordinary
item) in the Rosemary Partnership and the acquisition on July 31,
1996 of the minority interest holder's limited partnership
interest as discussed below.
In connection with the issuance of the Rosemary Bonds and
the Series A Bonds, the Company refinanced the taxable revenue
bonds issued in 1989 for the Rosemary Facility and repaid a term
loan. The Company incurred an extraordinary loss of $21,336 on
the early extinguishment of these obligations. Additionally, the
Company acquired the minority interest holder's limited
partnership interest in the Rosemary Partnership for a purchase
price of approximately $34,256. As a result of this acquisition,
the Company owns 100% of the Rosemary Partnership. The
acquisition was accounted for using the purchase method of
accounting. The excess of minority interest over the purchase
price (approximately $3.8 million) was allocated to plant and
equipment. Additionally, the Company advanced approximately
$34,779 to Panda International for project development and
general corporate purposes.
As a result of the various factors discussed above, the
Company incurred net losses of $32,657 and $2,732 for 1996 and
1995 respectively.
1995 compared to 1994
The Company incurred a net loss of $2,732 on revenues of
$31,227 in 1995 compared to $861 on revenues of $31,917 in 1994.
The decrease in revenues was primarily the result of a scheduled
contractual decrease in capacity payments of $1,526, which was
partially offset by additional income generated due to an
increase in the number of hours the Rosemary Facility was
dispatched by VEPCO and an increase in interest income. The
Rosemary Facility was dispatched 2,224 hours in 1995 versus 764
hours in 1994, due primarily to forced outages at two VEPCO
generating plants that are not likely to be repeated. For 1995
and 1994, capacity revenues were $27,204 and $28,730 and energy
revenues were $2,655 and $1,934, respectively. For approximately
1,200 of the dispatch hours in 1995, the Rosemary Facility used
natural gas provided directly by VEPCO under a special fueling
arrangement provided for in the Rosemary Power Purchase
Agreement. The Rosemary Facility's margin on energy sales is
lower when VEPCO supplies natural gas for the Rosemary Facility
than when the Rosemary Facility is dispatched under normal energy
pricing terms. However, overall margins at the Rosemary Facility
are increased in such circumstances (relative to not operating at
all) by the ability to provide steam and chilled water from the
steam turbine offtake, which reduces the operating costs of the
auxiliary boilers.
Plant operating expenses, which included fuel cost,
operations and maintenance expense, insurance and property taxes
related to the Rosemary Facility, were $9,348 (30% of revenues)
in 1995 as compared to $8,940 (28% of revenues) in 1994,
primarily due to additional maintenance expenses and fuel related
costs incurred due to the increase in the number of hours the
Rosemary Facility was dispatched by VEPCO. Project development
and administrative expense increased from $1,779 (6% of revenues)
in 1994 to $2,550 (8% of revenues) in 1995 primarily due to
additional administrative expenses relating to construction of
the Brandywine Facility and development of the Luannan Facility.
Interest expense was $11,716 (38% of revenues) in 1995
compared to $11,018 (35% of revenues) in 1994. The increase in
1995 was attributable to additional borrowings. Depreciation,
amortization of debt issue costs and amortization of partnership
formation costs were stable and collectively amounted to 17% of
revenues in 1995 and 1994.
In 1995, the Company incurred a net loss of $2,732 as
compared to a net loss of $861 in 1994. An allocation of $5,048
was made in 1995 for minority interest, a decrease of $652 from
1994 as a result of the overall decrease in net income of the
Rosemary Partnership.
Liquidity and Capital Resources
In 1997, the Company obtained cash from operations of the
Rosemary Facility and the Brandywine Facility. The Company
utilized this cash to service its debt obligations, make
distributions to its parent to fund project development efforts,
and for general and administrative expenses. The Company also
issued $145.0 million discounted principal amount of 12.5% Senior
Secured Notes in April 1997, the proceeds of which are restricted
to use in the construction of the Luannan Project.
In 1996, the Company obtained cash from operations of the
Rosemary Facility, issuance of the Rosemary Bonds and the Series
A bonds, and borrowings under non-recourse project debt for the
Brandywine Facility. The Company utilized this cash to refinance
existing debt, fund development and construction of the
Brandywine Facility, service its debt obligations, make
distributions to its parent to fund project development efforts,
and for general and administrative expenses. Additionally, the
Company purchased the minority interest holder's remaining
limited partnership interest in Panda-Rosemary.
The principal future cash requirement of the Company will
be payment of its debt service obligations. The Company will rely
almost exclusively on distributions from Panda Global Energy
Company and Panda Interfunding Corporation to meet its cash
requirements. Those entities in turn will rely almost
exclusively on distributions from the project entities to meet
their cash requirements. The project entities' ability to make
such distributions will depend upon the financial performance of
the Rosemary Facility, the Brandywine Facility, the Luannan
Facility and the Nepal Facility and will be subject to a number
of limitations on distributions contained in the project-level
debt agreements. The Company currently believes that it will
have sufficient liquidity from the cash flows available for
distribution from the project entities, together with amounts
held in debt service reserves and other restricted cash reserves,
to satisfy its obligations. The Company's restricted cash
balances are available only for specific uses as stated in the
indentures, such as payment of debt service obligations, project
construction and overhaul, and are not available for general
corporate purposes.
The project entities are dependent on capacity payments
under their respective power purchase agreements to meet their
fixed obligations, including payment of project-level debt
service, and to make distributions to the Company. Capacity
payments can be adversely affected by a major equipment failure,
resulting in a facility being unavailable for dispatch for an
extended period of time. Capacity payments can also be subject
to reduction pursuant to regulatory disallowance and, under
contractual provisions, as a result of events outside the
Company's control. In 1999 and 2006, the capacity payments for
the Rosemary Facility are scheduled to decrease by approximately
$1.8 million (7.1%) and $5.4 million (23.1%), respectively, based
on the facility's current capacity rating. The Company currently
believes it will be able to continue to meet its obligations
during the periods such reductions are applicable.
Each of the electric energy purchasers under the power
purchase agreements for the Rosemary Facility and the Brandywine
Facility has a contractual right to schedule the facility for
dispatch largely at the purchaser's discretion. Thus, revenues
from energy payments will vary depending on the hours these
facilities are dispatched by such purchasers. The Company
currently believes that it can meet its liquidity requirements
solely from the capacity payments in the unlikely event that
these facilities are not dispatched at all.
Impact of Inflation
Inflationary increases in the Company's costs, primarily
project development costs, energy costs, and capital costs, may
be offset by increases in revenue as provided in the various
purchase agreements, although competition may limit the Company's
ability to fully recover all such increases. The Company
attempts, where possible, to obtain provisions in its power
purchase agreements whereby certain revenue components, such as
energy payments, may be adjusted with inflationary increases. The
Company currently believes that inflation will not have a
material adverse effect on the Company's financial position,
results of operations or cash flows in the foreseeable future.
Year 2000 Matters
The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that
have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar
normal business activities.
In 1998, the Company initiated a review of existing
accounting software to determine the impact of the Year 2000
Issue. Although such review is still in process, management
estimates that the Year 2000 Issue will not pose significant
operational problems for its computer systems. All costs
associated with this conversion, which are not anticipated to be
material, are being expensed as incurred.
Item 8. Financial Statements and Supplementary Data.
The Financial Statements and Supplementary Data filed
herewith begin on page F-1 hereof.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The number of members of the Board of Directors of Company
has been set at two, but the number may be increased or decreased
by the Board of Directors or the stockholders. Directors of the
Company are elected annually and each elected director holds
office until a successor is elected. Robert W. Carter and Brian
G. Trueblood are the current directors of and the Company. All
executive officers of the Company are elected annually by the
Board of Directors of the Company to serve in such capacities
until their respective successors are duly elected and qualified.
The Certificate of Incorporation of the Company provides
that the Company shall always have an individual serving as an
"Independent Director" who shall have the right to vote or
consent only on, and whose affirmative vote or consent shall be
required with respect to, any decision by the Company or the Board
of Directors of the Company to (i) file a bankruptcy petition,
make an assignment for the benefit of creditors, apply for the
appointment of a custodian, receiver or trustee for it or its
property, consent to the filing of such proceeding or admit in
writing to its inability to pay its debts generally as they
become due; (ii) commence the dissolution, liquidation,
consolidation, merger or sale of all or substantially all of its
assets; (iii) amend the Certificate of Incorporation to broaden
the purposes of the Company and in other respects; (iv) authorize
the Company to engage in any activity other than those set
forth in the Certificate of Incorporation; or (v) authorize any
subsidiary with an Independent Director to take any action set
forth in (i) through (iv). The Certificate of Incorporation of
the Company provides that the Independent Director shall be a
person who is not and has not been, for the five years preceding
his election, (i) a direct or indirect legal or beneficial owner
of the Company or its affiliates (or a member of the immediate
family of such owner), (ii) a creditor, supplier, officer,
director, promoter, underwriter, manager or contractor of the
Company or any of its affiliates (or a member of the immediate
family of any such officer or director) or (iii) a person (or a
member of the immediate family of a person) employed by the
Company or any of its affiliates or by any creditor, supplier,
employee, stockholder, officer, director, promoter, underwriter,
manager or contractor thereof. The Independent Director may,
however, serve in such capacity for other affiliates of the
Company. In March 1998, Brian G. Trueblood was elected as the
Independent Director of the Company.
The following table sets forth the names and ages of the
directors and the executive officers of the Company and their
positions with the Company. Since the formation of the Company,
each executive officer of the Company has held the same office(s)
with the Company that he or she has held with each other
corporation that is currently affiliated with the Company.
Name Age Position with the Issuer and the
Company
Robert W. Carter 59 Director, Chairman of the Board
and Chief Executive Officer
Darol S. Lindloff 59 President
Janice Carter 55 Executive Vice President,
Secretary and Treasurer
William C. Nordlund 43 Executive Vice President,
Finance
Ralph T. Killian 51 Executive Vice President and
Operations Manager
Steven W. Crain 47 Senior Vice President, Business
Development
Ted C. Hollon 47 Senior Vice President, Project
Development
L. Stephen Rizzieri 42 Senior Vice President and
General Counsel
Brian G. Trueblood 36 Independent Director
Robert W. Carter has been the Chairman of the Board and
Chief Executive Officer of PEII, an affiliate of the Company,
since January 1995. Mr. Carter has held similar chief executive
positions with PEC, also an affiliate of the Company, and its
subsidiaries since he founded PEC in 1982. Mr. Carter also is
President of Robert Carter Oil & Gas, Inc. (an oil and gas
exploration company), which he founded in 1980. From 1978 to
1980, Mr. Carter was Vice President of oil and gas lease sales
for Reserve Energy Corporation (an oil and gas exploration
company). From 1974 to 1978, he served as a marketing consultant
to Forward Products, Inc. (a petrochemical company). Mr. Carter
was Executive Vice President of Blasco Industries (a chemical and
textile manufacturer) from 1970 to 1974. He served as a sales
representative and sales manager for Olin Mathieson Chemical
Corporation (a petrochemical, pulp and paper company) from 1965
to 1970. From 1960 to 1965, he was a sales representative for
Inland, Mead Paper Company in Atlanta. Mr. Carter attended the
University of Georgia. Mr. Carter is married to Janice Carter.
Darol S. Lindloff was appointed President of PEII in
February 1997. Prior thereto, he served as Senior Vice President,
project Development of PEII from January 1996. He served as Vice
President of PEII from January 1993 to January 1996 in the
capacities of Business Development, Technical Director and
project Development. Mr. Lindloff served as Marketing Manager for
PEC from October 1989 until January 1993. From December 1987 to
October 1989, Mr. Lindloff established a regional office in
Dallas for Southwest Research Institute (a research and
development company) and served as Regional Director. From
January 1986 to December 1987, Mr. Lindloff worked on the
development of cogeneration facilities for Hawker Siddeley Power
Engineering, Inc. (a British engineering company). During 1984
and 1985, he worked in the development of cogeneration facilities
for Central & Southwest Corporation's subsidiary, C&SW Energy,
Inc. (an energy company). Mr. Lindloff graduated from
Southwestern University with a Bachelor of Science degree in
organic chemistry.
Janice Carter has been the Executive Vice President,
Secretary, Treasurer and a Director PEII since January 1995 and
has served in such capacities with PEC since its inception in
1982. From 1975 to 1980, Mrs. Carter was office manager of
Reserve Energy Corporation. From 1969 to 1972, Mrs. Carter worked
for University Computing, and from 1962 to 1968 she directed
administration for the engineering department of Otis
Engineering, a division of Halliburton International. Mrs. Carter
also serves as Vice President and Secretary/Treasurer of Robert
Carter Oil & Gas, Inc. Mrs. Carter attended Texas Tech
University. Mrs. Carter is married to Robert W. Carter.
William C. Nordlund has served as Executive Vice President,
Finance of PEII since February 1997. Prior thereto, he served as
Senior Vice President and General Counsel of PEII since August
1996, as Vice President and General Counsel of PEII since January
1995 and of PEC since January 1994. Mr. Nordlund was General
Counsel of PEC from April 1993 to January 1994. He was Senior
Vice President and General Counsel from August 1992 to April 1993
and Vice President and General Counsel from September 1991 to
August 1992 for The Oxford Energy Company, a developer of
independent power facilities. From July 1990 to September 1991,
Mr. Nordlund was an attorney with Constellation Holdings, Inc.,
an affiliate of Baltimore Gas & Electric Company which developed
independent power facilities. Prior to July 1990, he was a
partner in the law firm of Winston & Strawn in Chicago. Mr.
Nordlund earned a Bachelor of Arts degree from Vanderbilt
University, a Juris Doctor degree from Duke University and a
Master of Management degree from the J.L. Kellogg Graduate School
of Business at Northwestern University.
Ralph T. Killian served as Senior Vice President of PEII
since May 1994, and has been Executive Vice President and
Operations Manager since March 1998. Mr. Killian has overall
responsibility for asset management which includes operations &
maintenance, fuel, procurement and management, and power
marketing for facilities. Mr. Killian also leads a group
responsible for development of PEII's merchant plants in the
United States. Between November 1989 and April 1994, Mr. Killian
served as Vice President of Natural Resources for PEC. From 1988
to 1989, he was Senior Vice President of Texas Eastern
Corporation (an energy company). From 1969 to 1988, he held
various natural gas marketing and engineering management
positions with Amoco Corporation (an energy company) including
Regional Natural Gas Marketing Manager for Amoco Production
Company's Denver region. Mr. Killian graduated from the
University of Florida with a Bachelor of Science degree in
chemical engineering.
Steven W. Crain has served as Senior Vice President,
Business Development of PEII since February 1997. Mr. Crain
joined Panda in 1996, originally serving as Director of Business
Development for the Asian sub-continent. Prior to joining Panda,
Mr. Crain served for over 18 years in various capacities for
Eagleton Engineering Company, an engineering and construction
management firm specializing in oil and gas processing and
transportation. Mr. Crain served as a Vice President for
Business Development and member of the Board of Directors from
1987 and 1995. He also served as the resident Managing Director
of the Eagleton Saudi Arabia office for six years. From 1974 to
1977, Mr. Crain served as a Design Engineer for Stearns-Roger
(now Raytheon) where he was involved in the design of coal-
burning power plants. Mr. Crain earned a Bachelor of Science
Degree in Electrical Engineering from Rice University, and is a
registered professional engineer.
Ted C. Hollon has served as Senior Vice President, Project
Development of PEII since August 1997. Prior to his current
position, he served as Vice President of Construction for PEII
since March 1995. Mr. Hollon served as project manager for the
Company's 230 megawatt Panda-Brandywine Facility from March 1993
until March 1995. Mr. Hollon previously held various positions
with several prominent international engineering and construction
companies such as Brown & Root International and CSR Serrine.
Mr. Hollon has over 25 years of international construction
experience. He earned a Bachelor of Science degree from Texas
A&M University.
L. Stephen Rizzieri served as Vice President and General
Counsel of PEII since February 1997 and has been Senior Vice
President and General Counsel since March 1998. Prior thereto,
he served as Deputy General Counsel since April 1996. From 1993
until he joined PEII, he was Assistant General Counsel of ENSERCH
Development Corporation, the independent power development
affiliate of ENSERCH Corporation. From 1985 to 1993, Mr. Rizzieri
served in various capacities with Sunshine Mining Company and its
affiliated companies, most recently as Assistant General Counsel
and Secretary. From 1981 to 1985, he served in various capacities
with Woods Petroleum Corporation (which was purchased by Sunshine
Mining Company in 1985) and its affiliates, most recently as
President of Woods Securities Corporation. In 1980, Mr. Rizzieri
served as Deputy General Counsel - Enforcement Division, Oklahoma
Securities Commission. Mr. Rizzieri earned a Bachelor of Arts
degree from the State University of New York at Geneseo and a
Juris Doctor degree from the University of Oklahoma.
Brian G. Trueblood became the Independent Director of the
Company in March 1997. He has served since February 1997, and
also from September 1989 through August 1994, as a senior partner
in the Dallas office of Lucas Associates (an Atlanta-based
executive search firm). From August 1994 to February 1997, Mr.
Trueblood served as Vice President of TNS Partners, Inc. (a
Dallas-based retained executive search firm). Mr. Trueblood
received a Bachelor of Science degree in general engineering from
the United States Military Academy. Mr. Trueblood also serves as
the Independent Director of various other subsidiaries of PEII.
Item 11. Executive Compensation and Benefits
No cash, stock options or other non-cash compensation has
been paid or is proposed to be paid in the current calendar year,
or in the last completed fiscal year, to any of the officers and
directors listed under "Management" for their services to the
Company. Mr. Trueblood is currently paid $1,000 annually by the
Company for serving as an Independent Director thereof.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
PEII owned beneficially, at March 25, 1998, one hundred
percent (100%) of the issued and outstanding shares of the
Company's common stock, $.01 par value, which is the only
security entitled to vote for the election of the Company's
directors. No director or officer of the Company owns any shares
of any class of the Company's equity securities.
Item 13. Certain Relationships and Related Transactions
Since the date of incorporation of the Company, there have
been no transactions, and there currently are not any proposed
transactions, or series of similar transactions, to which the
Company (or any of it's subsidiaries) was or is to be party, in
which the amount involved exceeds $60,000 and in which a director
or executive officer of the Company, has a material interest.
Additionally, there are no business relationships that currently
exist or have existed since the date of incorporation of the
Company, involving the Company, on the one hand, and any director
of the Company (or an affiliate thereof), on the other hand. No
director or executive officer of the Company has been indebted to
the Company, since the date of incorporation of the Company.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) The following documents are filed as a part of this
Annual Report on Form 10-K:
1. Consolidated Financial Statements.
See Index to Financial Statements and Financial Statement
Schedules on page F-1 hereof.
2. Consolidated Financial Statement Schedules.
See Index to Financial Statements and Financial Statement
Schedules on page F-1 hereof.
Schedules other than those listed on the accompanying Index
to Financial Statements and Financial Statement Schedules are
omitted for the reason that they are either not required, not
applicable or the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits.
Exhibit
Number Exhibit Description
3.01 Certificate of Incorporation of Panda Global Holdings,
Inc. (2)
3.02 Bylaws of Panda Global Holdings, Inc. (2)
4.01 Trust Indenture, dated April 22, 1997, between Panda
Global Energy Company and Bankers Trust Company as
Trustee, (2)
4.02 First Supplemental Indenture between Panda Global
Energy Company and Bankers Trust Company, as Trustee,
dated April 22, 1997. (2)
4.03 Registration Rights Agreement among Panda Global Energy
Company, Panda Global Holdings, Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, dated April
22, 1997. (2)
4.04 Form of 12-1/2% Senior Secured Notes due 2004 of Panda
Global Energy Company. (2)
4.05 Form of 12-1/2% Registered Senior Secured Note due 2004
of Panda Global Energy Company. (2)
4.06 Trust Indenture, dated April 22, 1997, between Panda
Global Holdings, Inc. and Bankers Trust Company, as
Trustee. (2)
4.07 First Supplemental Indenture, dated April 22, 1997,
between Panda Global Holdings, Inc. and Bankers Trust
Company, as Trustee. (2)
4.08 Trust Indenture dated July 31, 1996, among Panda
Funding Corporation, Panda Interfunding Corporation and
Bankers Trust Company, as Trustee. (1)
4.09 First Supplemental Indenture to Trust Indenture, dated
July 31, 1996, among Panda Funding Corporation, Panda
Interfunding Corporation and Bankers Trust Company, as
Trustee. (1)
4.10 Second Supplemental Indenture to Trust Indenture, dated
January 6, 1997, among Panda Funding Corporation, Panda
Interfunding Corporation and Bankers Trust Company, as
Trustee. (1)
4.11 Form of 11-5/8% Pooled Project Bonds, Series A due 2012
of Panda Funding Corporation. (1)
4.12 Form of 11-5/8% Pooled Project Bonds, Series A-1 due
2012 of Panda Funding Corporation. (1)
4.13 Registration Rights Agreement, dated July 31, 1996,
among Panda Funding Corporation, Panda Interfunding
Corporation and Jefferies & Company Inc. (1)
4.14 Collateral Agency Agreement, dated July 31, 1996, among
Panda Interfunding Corporation, Panda Funding
Corporation and Bankers Trust Company, as Trustee and
Collateral Agent. (1)
4.15 Subrogation and Contribution Agreement, dated July 31,
1996, among Panda Interfunding Corporation, Panda
Funding Corporation and Panda Interholding Corporation
and each PIC U.S. Entity that is a signatory thereto.
(1)
4.16 Guaranty Agreement (PIC U.S. Entity Subsidiaries),
dated July 31, 1996 by Panda Interholding Corporation
in favor of Bankers Trust Company, as Collateral Agent
for the benefit of the Secured Parties. (1)
10.01 PIC Loan Agreement, dated July 31, 1996, between Panda
Funding Corporation, as Lender, and Panda Interfunding
Corporation, as Borrower. (1)
10.02 Loan Agreement, dated July 31, 1996, between Panda
Interfunding Corporation, as Lender, and Panda Cayman
Interfunding Company, as Borrower. (1)
10.03 Promissory Note issued by Panda Interfunding
Corporation on July 31, 1996 to Panda Funding
Corporation in the original principal amount of
$105,525,000, endorsed to Bankers Trust Company, as
Collateral Agent. (1)
10.04 Security Agreement, dated July 31, 1996, between Panda
Interfunding Corporation and Bankers Trust Company, as
Collateral Agent. (1)
10.05 Security Agreement, dated July 31, 1996, between Panda
Funding Corporation and Bankers Trust Company, as
Collateral Agent. (1)
10.06 Security Agreement, dated July 31, 1996, between Panda
Cayman Interfunding Company, as Debtor, and Panda
Interfunding Corporation, as Secured Party. (1)
10.07 Stock Pledge Agreement (Panda Interfunding Corporation
Stock), dated July 31, 1996, between Panda Energy
Corporation and Bankers Trust Company, as Collateral
Agent. (1)
10.08 Stock Pledge Agreement (Panda Funding Corporation and
PIC Entity Stock), dated July 31, 1996, between Panda
Interfunding Corporation and Bankers Trust Company, as
Collateral Agent. (1)
10.09 Trust Indenture, dated July 31, 1996, among Panda-
Rosemary Funding Corporation, Panda-Rosemary, L.P. and
Fleet National Bank, as Trustee. (1)
10.10 First Supplemental Indenture to Trust Indenture, dated
July 31, 1996, among Panda-Rosemary Funding
Corporation, Panda-Rosemary, L.P. and Fleet National
Bank, as Trustee. (1)
10.10.1 Second Supplemental Indenture to Trust Indenture, dated
January 15, 1997, among Panda-Rosemary Funding
Corporation, Panda-Rosemary, L.P. and Fleet National
Bank, as Trustee. (1)
10.11 Form of 8-5/8% First Mortgage Bonds due 2016 of Panda-
Rosemary Funding Corporation. (1)
10.12 Deposit and Disbursement Agreement, dated July 31,
1996, among Panda-Rosemary Funding Corporation, Panda-
Rosemary, L.P., Fleet National Bank, as Collateral
Agent, and Fleet National Bank, as Depositary Agent.
(1)
10.13 Collateral Agency and Intercreditor Agreement, dated
July 31, 1996, among Panda Rosemary Funding
Corporation, Panda-Rosemary, L.P., The L/C Issuer, The
Trustee Under The Trust Indenture, The Depositary
Agent, The Collateral Agent and The Other Secured
Parties, all as named therein. (1)
10.14 Deed of Trust and Security Agreement, dated July 31,
1996, by Panda-Rosemary, L.P., Grantor, Ross J. Smyth,
Trustee, and Fleet National Bank, as Collateral Agent,
the Beneficiary. (1)
10.15 Security Agreement, dated July 31, 1996, by Panda-
Rosemary, L.P. to Fleet National Bank, as Collateral
Agent. (1)
10.16 Security Agreement, dated July 31, 1996, by Panda-
Rosemary Funding Corporation to Fleet National Bank, as
Collateral Agent. (1)
10.17 General Partner Pledge and Security Agreement, dated
July 31, 1996, by Panda-Rosemary Corporation to Fleet
National Bank, as Collateral Agent. (1)
10.18 Limited Partner Pledge and Security Agreement, dated
July 31, 1996, by PRC II Corporation to Fleet National
Bank, as Collateral Agent. (1)
10.19 Stock Pledge and Security Agreement, dated July 31,
1996, by Panda Interholding Corporation to Fleet
National Bank, as Collateral Agent. (1)
10.20 Stock Pledge and Security Agreement, dated July 31,
1996, by Panda-Rosemary, L.P. to Fleet National Bank,
as Collateral Agent. (1)
10.21 Partnership Guaranty, dated July 31, 1996, by Panda-
Rosemary, L.P. in favor of Fleet National Bank, as
Trustee. (1)
10.22 Reimbursement Agreement, dated July 31, 1996, between
Panda-Rosemary, L.P., Panda-Rosemary Funding
Corporation and Bayerische Vereinsbank AG, New York
Branch. (1)
10.23 Irrevocable Direct Pay Letter of Credit issued by
Bayerische Vereinsbank AG. (1)
10.24 Construction Loan Agreement and Lease Commitment, dated
March 30, 1996, between Panda-Brandywine, L.P. and
General Electric Capital Corporation. (1)
10.24.1 Participation Agreement, dated December 18, 1996, among
Panda-Brandywine, L.P., Panda Brandywine Corporation,
General Electric Capital Corporation, Fleet National
Bank, First Security Bank, National Association, and
Credit Suisse. (1)
10.24.2 Letter of Credit Reimbursement Agreement, dated
December 18, 1996, among Panda-Brandywine, L.P., Panda
Brandywine Corporation and General Electric Capital
Corporation. (1)
10.24.3 Equity Loan Facility Letter Agreement, dated December
18, 1996, among Panda Brandywine Corporation, Panda
Energy Corporation and General Electric Capital
Corporation. (1)
10.25 Bill of Sale and Severance Agreement, dated December
30, 1996, between Panda-Brandywine, L.P., as Seller,
and Fleet National Bank, Owner Trustee, as Buyer. (1)
10.26 Facility Lease, dated December 18, 1996, between Fleet
National Bank, as Owner Trustee, and Panda-Brandywine,
L.P. (1)
10.27 Steam Lease, dated as of December 18, 1996, between
Panda-Brandywine, L.P. and Brandywine Water Company.
(1)
10.28 Amended and Restated Security Deposit Agreement, dated
December 18, 1996, among Panda-Brandywine, L.P., Panda
Brandywine Corporation, General Electric Capital
Corporation, Fleet National Bank, Credit Suisse and
First Security Bank, National Association. (1)
10.28.1 First Amendment to Amended and Restated Security
Deposit Agreement, dated February 21, 1997, among Panda
Brandywine, L.P., General Electric Capital Corporation,
Fleet National Bank, Credit Suisse and First Security
Bank, National Association. (1)
10.29 Amended and Restated Deed of Trust and Security
Agreement, dated December 18, 1996, by Panda-
Brandywine, L.P. to Chicago Title Insurance Company,
Trustee for the benefit of Fleet National Bank, as
Security Agent, Beneficiary. (1)
10.30 Amended and Restated Steam Lessee Security Agreement,
dated December 18, 1996, by Brandywine Water Company in
favor of Fleet National Bank, as Security Agent. (1)
10.31 Amended and Restated Security Agreement, dated December
18, 1996, by Panda-Brandywine, L.P. in favor of Fleet
National Bank, as Security Agent. (1)
10.32 Amended and Restated Trust Agreement, dated December
18, 1996, between General Electric Capital Corporation,
as Owner Participant, and Fleet National Bank, as Owner
Trustee. (1)
10.33 Amended and Restated General Partner Pledge Agreement,
dated December 18, 1996, by Panda Brandywine
Corporation to Fleet National Bank, as Security Agent.
(1)
10.34 Amended and Restated Limited Partner Pledge Agreement,
dated December 18, 1996, by Panda Energy Corporation
to Fleet National Bank, as Security Agent. (1)
10.35 Amended and Restated Stock Pledge Agreement, dated
December 18, 1996, by Panda Interholding Corporation to
Fleet National Bank, as Security Agent. (1)
10.36 Assumption Agreement and Release, dated July 31, 1996,
by Panda Interholding Corporation in favor of General
Electric Capital Corporation and Fleet National Bank.
(1)
10.37 Power Purchase and Operating Agreement, dated January
24, 1989, between Panda Energy Corporation and Virginia
Electric and Power Company. (1)
10.38 Amendment No. 1 to Power Purchase and Operating
Agreement, dated October 24, 1989, between Panda Energy
Corporation and Virginia Electric and Power Company.
(1)
10.39 Amendment No. 2 to Power Purchase and Operating
Agreement, dated July 30, 1993, between Panda-Rosemary,
L.P. and Virginia Electric and Power Company. (1)
10.40 Fuel Supply Management Agreement, dated October 10,
1990, between Panda-Rosemary Corporation and Natural
Gas Clearinghouse. (1)
10.41 Amendment No. 1 to Fuel Supply Management Agreement,
dated March 5, 1991, between Panda-Rosemary Corporation
and Natural Gas Clearinghouse. (1)
10.42 Gas Purchase Contract, dated April 12, 1990, between
Panda-Rosemary Corporation and Natural Gas
Clearinghouse. (1)
10.43 Amendment of Gas Purchase Contract between Panda-
Rosemary Corporation and Natural Gas Clearinghouse. (1)
10.44 Pipeline Operating Agreement, dated February 14, 1990,
between Panda Energy Corporation, Panda-Rosemary
Corporation and North Carolina Natural Gas Corporation.
(1)
10.45 Amendment No. 1 to Pipeline Operating Agreement, dated
May 7, 1990, between Panda Energy Corporation, Panda-
Rosemary Corporation and North Carolina Natural Gas
Corporation. (1)
10.46 Assignment Agreement, dated June 15, 1990, between
Panda Energy Corporation and Panda-Rosemary
Corporation. (1)
10.47 Amendment No. 2 to Pipeline Operating Agreement, dated
November 19, 1991, among Panda Energy Corporation,
Panda-Rosemary Corporation and North Carolina Natural
Gas Corporation. (1)
10.48 Real Property Lease and Easement Agreement, dated June
9, 1989, between The Bibb Company and Panda-Rosemary
Corporation. (1)
10.49 First Amendment to Real Property Lease and Easement
Agreement, dated October 1, 1989, between The Bibb
Company and Panda-Rosemary Corporation. (1)
10.50 Second Amendment to Real Property Lease and Easement
Agreement, dated January 31, 1990, between The Bibb
Company and Panda-Rosemary Corporation. (1)
10.51 Leasehold and Real Property Assignment and Assumption
Agreement, dated January 6, 1992, between Panda-
Rosemary Corporation and Panda-Rosemary, L.P. (1)
10.52 Third Amendment to Real Property Lease and Easement
Agreement, dated March 15, 1996, between The Bibb
Company and Panda-Rosemary, L.P. (1)
10.53 Cogeneration Energy Supply Agreement, dated January 12,
1989, between Panda Energy Corporation and The Bibb
Company. (1)
10.54 First Amendment to Cogeneration Energy Supply
Agreement, dated October 1, 1989, between Panda Energy
Corporation, Panda-Rosemary Corporation and The Bibb
Company. (1)
10.55 Service Agreement, dated July 26, 1996, between
Transcontinental Gas Pipe Line Corporation and Panda-
Rosemary, L.P. (1)
10.55.1 Form of Amendment to Service Agreement, effective
January 1, 1997, between Transcontinental Gas Pipe Line
Corporation and Panda-Rosemary, L.P. (1)
10.56 Service Agreement Applicable to Transportation of
Natural Gas Under Rate Schedule FT, dated August 20,
1996, between CNG Transmission Corporation and Panda-
Rosemary, L.P. (1)
10.57 Gas Transportation Agreement, dated August 1, 1996,
between Texas Gas Transmission Corporation and Panda-
Rosemary, L.P. (1)
10.58 Assignment and Assumption Agreement, dated May 15,
1989, between Panda Energy Corporation and Panda-
Rosemary Corporation. (1)
10.59 Bill of Sale and Assignment and Assumption Agreement,
dated January 6, 1992, between Panda-Rosemary
Corporation and Panda-Rosemary, L.P. (1)
10.60 Assignment and Assumption Agreement, dated January 6,
1992, between Panda Energy Corporation and Panda-
Rosemary Corporation. (1)
10.61 Power Purchase Agreement, dated August 9, 1991, between
Panda-Brandywine, L.P. and Potomac Electric Power
Company. (1)
10.62 First Amendment to Power Purchase Agreement, dated
September 16, 1994, between Panda-Brandywine, L.P. and
Potomac Electric Power Company. (1)
10.62.1 Present Assignment of Power Purchase Agreement, dated
December 18, 1996, by Panda-Brandywine, L.P. to Fleet
National Bank, as Owner Trustee, for the benefit of
General Electric Capital Corporation, as Owner
Participant. (1)
10.62.2 Amended and Restated Consent and Agreement, dated
December 30, 1996, among Potomac Electric Power
Company, Panda-Brandywine, L.P., Fleet National Bank,
as Security Agent and Owner Trustee, General Electric
Capital Corporation, as the issuer of the Letters of
Credit, the Interest Hedging Counterparty and Owner
Participant, First Security Bank, National
Association, as Indenture Trustee, and Credit Suisse,
as Administrative Agent. (1)
10.63 Amended and Restated Turnkey Cogeneration Facility
Agreement, dated March 30, 1995, between Panda-
Brandywine, L.P. and Raytheon Engineers & Constructors,
Inc. (1)
10.64 Raytheon Parent Guaranty, dated May 18, 1994, between
Raytheon Company and Panda-Brandywine, L.P. (1)
10.65 Steam Sales Agreement, dated March 30, 1995, between
Panda-Brandywine, L.P. and Brandywine Water Company.
(1)
10.66 Gas Sales Agreement, dated March 30, 1995, between
Cogen Development Company and Panda Brandywine, L.P.
(1)
10.67 Precedent Agreement, dated February 25, 1994, between
Columbia Gas Transmission Corporation and Panda-
Brandywine, L.P. (1)
10.68 Amending Agreement, dated March 24, 1995, between
Columbia Gas Transmission Corporation and Panda-
Brandywine, L.P. (1)
10.69 Amended and Restated FTS Service Agreement, dated March
23, 1995, between Columbia Gas Transmission Corporation
and Panda-Brandywine, L.P. (1)
10.70 FTS Service Agreement, dated of as March 30, 1995,
between Cove Point LNG Limited Partnership and Panda-
Brandywine, L.P. (1)
10.71 Gas Transportation and Supply Agreement, dated November
10, 1994, between Panda-Brandywine, L.P. and Washington
Gas Light Company. (1)
10.72 Amended and Restated Site Lease, dated December 18,
1996, between Panda-Brandywine, L.P. and Fleet National
Bank, as Owner Trustee. (1)
10.73 Amended and Restated Site Sublease, dated December 18,
1996, between Fleet National Bank, Owner Trustee, as
Sublessor, and Panda-Brandywine, L.P., as Sublessee.
(1)
10.74 Purchase Agreement, dated July 26, 1996, between Panda
Funding Corporation and Jefferies & Company, Inc. (1)
10.75 Additional Projects Contract, dated July 31, 1996,
among Panda Energy International, Inc., Panda Energy
Corporation, and Panda Interfunding Corporation. (1)
10.76 Non-Petition Agreement, dated July 31, 1996, among
Panda Interfunding Corporation, Panda Interholding
Corporation, Panda-Rosemary Corporation, PRC II
Corporation, Panda-Rosemary Funding Corporation and
Panda-Rosemary, L.P. (1)
10.77 Non-Petition Agreement, dated July 31, 1996, among
Panda Funding Corporation, Panda Interholding
Corporation, Panda Interfunding Corporation and Panda
(Cayman) Interfunding Company. (1)
10.78 Joint Venture Contract for Tangshan Panda Heat and
Power Co., Ltd., dated September 4, 1994, between
Luannan County Heat & Power Plant and Pan-Western
Energy Corp., LLC, as amended July 19, 1996 and
November 18, 1996, respectively. (2)
10.79 Joint Venture Contract for Tangshan Pan-Western Heat
and Power Co., Ltd., dated September 3, 1994, between
Tangshan Luanhua Co. (Group) and Pan-Western Energy
Corp., LLC, as amended July 19, 1996 and November 18,
1996, respectively. (2)
10.80 Joint Venture Contract for Tangshan Cayman Heat and
Power Co., Ltd., dated May 11, 1996, between Luannan
County Heat & Power Plant and Pan-Western Energy Corp.,
LLC, as amended July 19, 1996 and November 18, 1996,
respectively. (2)
10.81 Joint Venture Contract for Tangshan Pan-Sino Heat Co.,
Ltd., dated May 28, 1996, between Luannan County Heat
Company and Pan-Western Energy Corp., LLC, as amended
July 19, 1996 and November 18, 1996, respectively. (2)
10.82 Coal Supply Agreement between Tangshan Panda Heat and
Power Co., Ltd. and Kailuan Coal Mining Administration,
dated February 3, 1996. (2)
10.83 General Interconnection Agreement between North China
Power Group Company, Tangshan Panda Heat and Power Co.,
Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
dated September 22, 1995. (2)
10.84 Electric Energy Purchase and Sales Agreement between
North China Power Group Company, Tangshan Panda Heat
and Power Co., Ltd. and Tangshan Pan-Western Heat and
Power Co., Ltd., dated September 22, 1995. (2)
10.85 Supplemental Agreement for General Interconnection and
Electric Energy Purchase and Sales Agreement Between
North China Power Group Company, Tangshan Panda Heat
and Power Co., Ltd. and Tangshan Pan-Western Heat and
Power Co., Ltd. dated February 10, 1996. (2)
10.86 Construction Agreement between North China Power Group
Company, Tangshan Panda Heat and Power Co., Ltd. and
Tangshan Pan-Western Heat and Power Co., Ltd., dated
February 10, 1996. (2)
10.87 Loan Agreement between North China Power Group Company,
Tangshan Panda Heat and Power Co., Ltd. and Tangshan
Pan-Western Heat and Power Co., Ltd., dated February
10, 1996, as amended June 18, 1996. (2)
10.88 Agency Contract for Entrusted Loan between China
Information Trust and Investment Corporation, Tangshan
Panda Heat and Power Co., Ltd. and Tangshan Pan-Western
Heat and Power Co. Ltd., dated June 18, 1996, as
amended July 17, 1996. (2) (4)
10.89 Transfer of Loan Agreement among Tangshan Panda Heat
and Power Co., Ltd., Tangshan Pan-Western Heat and
Power Co., Ltd. and Tangshan Pan-Sino Heat Co., Ltd.
(2)
10.90 Engineering, Procurement and Construction Contract
among Tangshan Panda Heat and Power Co., Ltd., Tangshan
Pan-Western Heat and Power Co., Ltd. and Harbin Power
Engineering Company Limited, dated April 24, 1996, as
amended July 4, 1996, September 14, 1996 and December
17, 1996, respectively. (2) (4)
10.91 Engineering and Design Contract among Hebei Electric
Power Survey and Design Institute, Tangshan Panda Heat
and Power Company, Ltd. and Tangshan Pan-Western Heat
and Power Company, Ltd., dated December 21, 1995, as
amended June 21, 1996. (2)
10.92 Guaranty by China Harbin Power Equipment Group Company,
dated July 16, 1996. (2)
10.93 Performance Guarantee by The Export-Import Bank of
China, dated January 3, 1997. (2)
10.94 Amended and Restated Operation and Maintenance
Agreement between Tangshan 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 Daniel International Services,
dated March 6, 1997. (2) (4)
10.95 Construction Agreement of Heat and Steam Network
between Tangshan Pan-Sino Heat Co., Ltd. and Tangshan
Heat and Engineering Company, dated June 20, 1996. (2)
10.96 Amended and Restated Shareholder Loan Agreement between
Pan-Western Energy Corporation, LLC and Tangshan Panda
Heat and Power Co., Ltd., April 1, 1997 (2) (4)
10.97 Amended and Restated Shareholder Loan Agreement between
Pan-Western Energy Corporation, LLC and Tangshan Pan-
Western Heat and Power Co., Ltd., April 1, 1997 (2) (4)
10.98 Amended and Restated Shareholder Loan Agreement between
Pan-Western Energy Corporation, LLC and Tangshan Cayman
Heat and Power Co., Ltd., April 1, 1997 (2) (4)
10.99 Amended and Restated Shareholder Loan Agreement between
Pan-Western Energy Corporation, LLC and Tangshan Pan-
Sino Heat and Power Co., Ltd., April 1, 1997 (2) (4)
10.100 Water, Heat, Steam and Hot Water Supply and Usage
Agreement between Tangshan Cayman Heat and Power
Company, Ltd., and Tangshan Panda Heat and Power
Company, Ltd., dated October 3, 1996. (2) (4)
10.101 Water, Heat, Steam and Hot Water Supply and Usage
Agreement between Tangshan Cayman Heat and Power
Company, Ltd. and Tangshan Pan-Western Heat and Power
Company, Ltd., dated October 3, 1996. (2) (4)
10.102 Steam for Process and Heating Water Sales Agreement
between Tangshan Cayman Heat and Power Company, Ltd.,
and Tangshan Pan-Sino Heat Company, Ltd., dated October
16, 1996. (2)
10.103 Articles of Association of Tangshan Panda Heat and
Power Co., Ltd. between Luannan County Heat & Power
Plant and Pan-Western Energy Corp., LLC dated September
4, 1994. (2)
10.104 Articles of Association for Tangshan Pan-Western Heat
and Power Co., Ltd., between Tangshan Luanhua Co.
(Group) and Pan-Western Energy Corp., LLC, dated
September 3, 1994. (2)
10.105 Articles of Association for Tangshan Cayman Heat and
Power Co., Ltd., between Luannan County Heat & Power
Plant and Pan-Western Energy Corp., LLC, dated May 11,
1996. (2)
10.106 Articles of Association for Tangshan Pan-Sino Heat Co.,
Ltd., between Luannan County Heat Company and Pan-
Western Energy Corp., LLC, dated May 28, 1996. (2)
10.107 Application Regarding Power Price among Tangshan Panda
Heat and Power Co., Ltd., Tangshan Pan-Western Heat and
Power Co., Ltd., and Tangshan Municipal Price Bureau
dated October 17, 1995, as amended October 18, 1995 and
May 8, 1996, respectively. (2) (4)
10.108 Administrative Services Agreement between Panda Energy
International, Inc. and Panda Global Holdings, Inc.,
dated April 22, 1997. (2)
10.109 Development Services Agreement between Panda Energy
International, Inc. and Panda Global Holdings, Inc.,
dated April 22, 1997. (2)
10.110 Form of Purchase Agreement among Donaldson, Lufkin &
Jenrette Securities Corporation, Panda Global Energy
Company, Panda Global Holdings, Inc. and Panda Energy
International, Inc., dated April 11, 1997. (2)
10.111 Form of Issuer Loan Agreement between Panda Global
Energy Company and Pan-Western Energy Corporation, LLC,
dated April 22, 1997. (2)
10.112 Form of Issuer Note of Pan-Western Energy Corporation,
LLC, dated April 22, 1997. (2)
10.113 Registered Capital Contribution and Agency Agreement
among Tangshan Panda Heat and Power Company, Ltd.,
Tangshan Pan-Western Heat and Power Company, Ltd.,
Tangshan Cayman Heat and Power Company, Ltd., Tangshan
Pan-Sino Heat Company, Ltd., Luannan County Heat and
Power Plant, Tangshan Luanhua (Group) Co., Luannan
County Heat Company and Pan-Western Energy Corporation,
LLC, dated March 26, 1997. (2)
10.114 Form of Account Agreement among Panda Interfunding
Corporation, Panda Energy Corporation and Panda Global
Holdings, Inc., dated April 22, 1997. (2)
10.115 Form of Pledge Agreement between Panda Global Energy
Company and Bankers Trust Company, as Trustee, dated
April 22, 1997. (2)
10.116 Form of Pledge Agreement between Pan-Sino Energy
Development Company, LLC and Bankers Trust Company, as
Trustee, dated April 22, 1997. (2)
10.117 Form of Pledge Agreement between Pan-Western Energy
Corporation, LLC and Bankers Trust Company, as Trustee,
dated April 22, 1997. (2)
10.118 Form of Pledge Agreement between Panda Global Holdings,
Inc. and Bankers Trust Company, as Trustee, dated April
22, 1997. (2)
10.119 Form of Cash Collateral Agreement between Panda Global
Energy Company and Bankers Trust Company, as Trustee,
dated April 22, 1997. (2)
10.120 Form of Cash Collateral Agreement between Pan-Western
Energy Corporation, LLC and Bankers Trust Company, as
Trustee, dated April 22, 1997. (2)
10.121 Form of Cash Collateral Agreement between Pan-Sino
Energy Development Company, LLC and Bankers Trust
Company, as Trustee, dated April 22, 1997. (2)
10.122 Form of Pledge Agreement between Panda Energy
International, Inc. and Bankers Trust Company, as
Trustee, dated April 22, 1997. (2)
10.123 Form of Cash Collateral between Panda Global Holdings,
Inc. and Bankers Trust Company, as Trustee, dated April
22, 1997. (2)
10.124 Form of Cash Collateral Agreement between Panda Energy
Corporation and Bankers Trust Company, as Trustee,
dated April 22, 1997. (2)
10.125 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Panda Heat and Power Co.,
Ltd. and Tangshan Cayman Heat and Power Co., Ltd.,
dated September 24, 1996. (2)
10.126 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Panda Heat and Power Co.,
Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
dated September 24, 1996. (2)
10.127 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Panda Heat and Power Co.,
Ltd. and Tangshan Pan-Sino Heat Co., Ltd., dated
September 24, 1996. (2)
10.128 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Western Heat and Power
Co., Ltd. and Tangshan Pan-Sino Heat Co., Ltd., dated
September 24, 1996. (2)
10.129 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Western Heat and Power
Co., Ltd. and Tangshan Panda Heat and Power Co., Ltd.,
dated September 24, 1996. (2)
10.130 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Western Heat and Power
Co., Ltd. and Tangshan Cayman Heat and Power Co., Ltd.,
dated September 24, 1996. (2)
10.131 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Cayman Heat and Power Co.,
Ltd. and Tangshan Panda Heat and Power Co., Ltd., dated
September 24, 1996. (2)
10.132 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Cayman Heat and Power Co.,
Ltd. and Tangshan Pan-Sino Heat Co. Ltd., dated
September 24, 1996. (2)
10.133 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Cayman Heat and Power Co.,
Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
dated September 24, 1996. (2)
10.134 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd. and
Tangshan Cayman Heat and Power Co., Ltd., dated
September 24, 1996. (2)
10.135 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd. and
Tangshan Pan-Western Heat and Power Co., Ltd., dated
September 24, 1996. (2)
10.136 Form of Guarantee between Pan-Western Energy
Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd. and
Tangshan Panda Heat and Power Co., Ltd., dated
September 24, 1996. (2)
10.137 Operation and Maintenance Agreement between Bhote Koshi
Power Company Private Limited and Harza Engineering
Company International L.P. dated April 24, 1997. (2)
10.138 Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric project between China Gezhouba
Construction Group Corporation and Bhote Koshi Power
Company Private Limited dated December 19, 1996 ("EPC
Contract"). (2)
10.138.01 Change Order No. 001 to EPC Contract, dated February 1,
1997. (3)
10.138.02 Change Order No. 002 to EPC Contract, dated April 26,
1997. (3)
10.138.03 Change Order No. 003 to EPC Contract, dated September
4, 1997. (3)
10.138.04 Change Order No. 004 to EPC Contract, dated September
5, 1997. (3)
10.138.05 Change Order No. 005 to EPC Contract, dated November
12, 1997. (3)
10.139 Project Agreement between His Majesty's Government of
Nepal and Bhote Koshi Power Company Private Limited
dated July 21, 1996. (2)
10.140 Power Purchase Agreement between His Majesty's
Government of Nepal and Bhote Koshi Power Company
Private Limited dated July 21, 1996. (2)
10.141 Services Agreement between Panda of Nepal and Harza
Engineering Company International L.P. (for services
provided outside of Nepal) dated July 11, 1997. (2)
10.142 Services Agreement between Panda of Nepal and Harza
Engineering Company International L.P. (for services
provided in Nepal) dated July 11, 1997. (2)
10.143 Investment Agreement, General Conditions between Bhote
Koshi Power Company Private Limited, International
Finance Corporation and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH dated December 18, 1997.
(3)
10.143.01 Investment Agreement, Special Conditions between Bhote
Koshi Power Company Private Limited and DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH dated
December 18, 1997. (3)
10.143.02 Investment Agreement, Special Conditions between Bhote
Koshi Power Company Private Limited and International
Finance Corporation dated December 18, 1997. (3)
10.143.03 Investment Agreement, Definitions (Schedule A) dated
December 18, 1997. (3)
10.144 Participation Agreement in respect of B Loan to Bhote
Koshi Power Company Private Limited between Dresdner
Bank AG, New York and Grand Cayman Branches and
International Finance Corporation dated December 18,
1997. (3)
10.145 Participation Agreement in respect of B Loan to Bhote
Koshi Power Company Private Limited between Bayerische
Vereinsbank AG and International Finance Corporation
dated December 18, 1997. (3)
10.146 Participation Agreement in respect of B Loan to Bhote
Koshi Power Company Private Limited between Nederlandse
Financierings-Maatschappij Voor Ontwikkelingslanden
N.V. and International Finance Corporation dated
December 18, 1997. (3)
10.147 Share Retention and Project Funds Agreement between
Bhote Koshi Power Company Private Limited, Panda Energy
International, Inc., Panda Bhote Koshi, Panda of Nepal,
Harza Engineering Company International, a Limited
Liability Company, Harza Engineering Company
International, L.P., Resource Development Consultants,
a Limited Liability Company, RDC of Nepal, Soaltee
Enterprises Private Ltd., Soaltee Hotel Ltd., Surya
Enterprises Private Ltd., Himal International Power
Corporation Pvt. Ltd., International Finance
Corporation, and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH dated December 18, 1997.
(3)
10.148 Equity Subscription Agreement between Bhote Koshi Power
Company Private Limited, Himal International Power
Corporation Ltd., and Wilmington Trust Company dated
December 18, 1997. (3)
10.149 Equity Subscription Agreement between Bhote Koshi Power
Company Private Limited, Panda of Nepal and Wilmington
Trust Company dated December 18, 1997. (3)
10.150 Equity Subscription Agreement between Bhote Koshi Power
Company Private Limited, RDC of Nepal and Wilmington
Trust Company dated December 18, 1997. (3)
10.151 Shareholder's Agreement between Bhote Koshi Power
Company Private Limited, Himal International Power
Corporation Pvt. Ltd., Panda of Nepal, RDC of Nepal,
and International Finance Corporation dated December
18, 1997. (3)
10.152 Shareholder's Agreement between Panda Bhote Koshi, a
Cayman Islands exempted company, Panda of Nepal, a
Cayman Islands exempted company and Panda Global Energy
Company and MCNIC Nepal Limited, as the Shareholders of
Panda Bhote Koshi, dated December 18, 1997. (3).
10.152.01 Guarantee Agreement of MCN Investment Corporation,
dated December 18, 1997. (3)
10.152.02 Guarantee Agreement of Panda Energy International,
Inc., dated December 18, 1997. (3)
10.153 Master Agreement between Bhote Koshi Power Company
Private Limited and International Finance Corporation,
dated December 12, 1997. (3)
10.153.01 Schedule and Annexes to Master Agreement between Bhote
Koshi Power Company Private Limited and International
Finance Corporation, dated December 12, 1997. (3)
10.154 HMGN Letter Approval of Financing Documents addressed
to International Finance Corporation, DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH and
Wilmington Trust Company dated December 8, 1997. (3)
10.155 Risk Management Facility Agreement between Bhote Koshi
Power Company Private Limited and International Finance
Corporation dated December 18, 1997. (3)
10.156 Trust and Retention Agreement between Bhote Koshi Power
Company Private Limited, International Finance
Corporation, DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH and Wilmington Trust
Company dated December 18, 1997. (3)
10.157 Nepal Agency and Retention Agreement between Bhote
Koshi Power Company Private Limited, International
Finance Corporation, DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH, Wilmington Trust Company,
as Trustee, and Nepal Grindlays Bank Limited dated
December 18, 1997. (3)
10.158 Mortgage Deed between Bhote Koshi Power Company Private
Limited, DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH and International Finance
Corporation dated December 19, 1997. (3)
10.159 Security Agreement and Assignment between Bhote Koshi
Power Company Private Limited, International Finance
Corporation, DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH and Wilmington Trust
Company, as Trustee, dated December 18, 1997. (3)
10.160 Security Agreement and Assignment between Panda of
Nepal, International Finance Corporation, DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH and
Wilmington Trust Company, as Trustee, dated December
18, 1997. (3)
10.161 Share Pledge Agreement between Himal International
Power Corporation Pvt. Ltd., Wilmington Trust Company,
as Trustee, and Bhote Koshi Power Company Private
Limited dated December 18, 1997. (3)
10.162 Share Pledge Agreement between RDC of Nepal, Wilmington
Trust Company, as Trustee, and Bhote Koshi Power
Company Private Limited dated December 18, 1997. (3)
10.163 Share Pledge Agreement between Panda Bhote Koshi,
Wilmington Trust Company, as Trustee, and Panda of
Nepal, dated December 18, 1997. (3)
10.164 Share Pledge Agreement between Panda of Nepal,
Wilmington Trust Company, as Trustee, and Bhote Koshi
Power Company Private Limited, dated December 18, 1997.
(3)
10.165 Performance Guarantee by Industrial and Commercial Bank
of China dated December 10, 1997. (3)
10.166 Equity Letter of Credit by The Northern Trust Company
for the account of RDC of Nepal, dated December 16,
1997. (3)
10.167 Equity Letter of Credit by The First National Bank of
Chicago for the account of Panda of Nepal, dated
December 17, 1997. (3)
10.168 Bhote Koshi Power Company Private Limited Amended and
Restated Joint Venture Agreement between Himal
International Power Corporation Ltd., Panda of Nepal,
RDC of Nepal and International Finance Corporation,
dated December 12, 1997. (3)
10.169 Articles of Association of Bhote Koshi Power Company
Private Limited, dated August 22, 1997. (3)
10.170 Memorandum of Association of Bhote Koshi Power Company
Private Limited, dated August 22, 1997. (3)
10.171 Engineering Services Agreement between Bhote Koshi
Power Company Private Limited and Harza Engineering
Company International L.P., dated December 1, 1997. (3)
12.00 Computation of Ratio of Earnings to Fixed Charges. (3)
21.00 Subsidiaries of Registrant. (3)
24.00 Powers of Attorney, included on signature page hereof
(3)
27.00 Financial Data Schedule (3)
(1) Previously filed as an exhibit to the Registration
Statement on Form S-1 (Registration No. 333-19445) of Panda
Funding Corporation, Panda Interfunding Corporation and Panda
Interholding Corporation (affiliates of the registrant), and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Registration
Statement on Form S-1 (Registration No. 333-29005) of Panda
Global Holdings, Inc. and Panda Global Energy Company, and
incorporated herein by reference.
(3) Filed herewith.
(4) Confidential treatment of certain information
identified in these exhibits has been granted by the
Securities and Exchange Commission.
(b) Reports on Form 8-K The Company filed a Report on Form
8-K (reflecting disclosure under "Item 5. Other
Events") with the Securities and Exchange Commission on
February 19, 1998. No financial statements were
included in such filing.
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have
Not Registered Securities Pursuant to Section 12 of the Act.
No annual report or proxy statement or other proxy
soliciting material was sent to security holders of the
registrant during the registrant's last fiscal year.
F-1
INDEX TO FINANCIAL STATEMENTS
Panda Global Holdings, Inc. and Subsidiaries Consolidated
Financial Statements:
Independent Auditors' Report F-2
Consolidated Balance Sheets as of December 31, 1996
and 1997 F-3
Consolidated Statements of Operations for the years
ended December 31, 1995, 1996 and 1997 F-5
Consolidated Statements of Shareholder's Deficit for
the years ended December 31, 1995, 1996 and 1997 F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1996 and 1997 F-7
Notes to Consolidated Financial Statements for the
years ended December 31, 1995, 1996 and 1997 F-8
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Panda Energy International, Inc.:
We have audited the accompanying consolidated balance sheets of
Panda Global Holdings, Inc. and subsidiaries (the "Company") as
of December 31, 1996 and 1997, and the related consolidated
statements of operations, shareholder's deficit and cash flows
for each of the three years in the period ended December 31,
1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
March 23, 1998
PANDA GLOBAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
ASSETS
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................... $ 1,335,086 $ 2,929,289
Restricted cash - current ............................... 17,809,921 92,828,082
Accounts receivable ..................................... 9,402,685 9,786,837
Fuel oil, spare parts and supplies ...................... 7,913,777 6,264,549
Other current assets .................................... 164,905 257,877
------------- -------------
Total current assets .................................. 36,626,374 112,066,634
Plant and equipment:
Electric generating facilities .......................... 288,716,711 291,515,328
Furniture and fixtures .................................. 494,418 533,663
Less: accumulated depreciation .......................... (26,539,539) (38,114,058)
Construction in progress ................................ -- 36,131,069
Development costs ....................................... 6,053,361 2,942,340
------------- -------------
Total plant and equipment, net ........................ 268,724,951 293,008,342
Investment in joint venture ............................... -- 836,654
Restricted cash - debt service reserves and escrow deposits 32,548,366 72,430,527
Debt issuance costs, net of accumulated
amortization of $165,015 and $1,583,368 respectively .... 7,570,521 13,539,612
------------- -------------
$ 345,470,212 $ 491,881,769
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE>
PANDA GLOBAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
LIABILITIES AND SHAREHOLDER'S DEFICIT
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses:
Construction costs ................................. $ 660,167 $ 5,600,000
Interest and letter of credit fees ................. 6,297,558 9,697,648
Operating expenses and other ....................... 6,991,796 4,879,522
Current portion of long-term debt .................... 5,717,623 5,816,974
------------- -------------
Total current liabilities ........................ 19,667,144 25,994,144
Deferred revenue ....................................... -- 13,140,387
Long term debt, less current portion ................... 209,830,918 349,667,769
Capital lease obligation ............................... 217,488,645 231,278,528
Minority interest ...................................... -- 5,741,166
Commitments and contingencies (Note 9)
Shareholder's deficit:
Common stock, $.01 par value; 1,000 shares authorized,
issued and outstanding ............................ 10 10
Advances to parent ................................... (52,782,940) (52,738,381)
Accumulated deficit .................................. (48,733,565) (81,201,854)
------------- -------------
(101,516,495) (133,940,225)
------------- -------------
$ 345,470,212 $ 491,881,769
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE>
PANDA GLOBAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
REVENUE:
Electric capacity and energy sales ............................... $ 29,858,475 $ 32,273,736 $ 65,004,373
Steam and chilled water sales .................................... 473,040 502,757 623,934
Interest income .................................................. 895,268 1,518,006 8,050,356
-------------
------------ ------------- -------------
31,226,783 34,294,499 73,678,663
------------ ------------- -------------
EXPENSES:
Plant operating expenses ......................................... 9,347,707 12,050,495 26,245,012
Project development and administrative ........................... 2,550,376 5,187,348 11,579,911
Interest expense and letter of credit fees ....................... 11,715,929 19,414,012 55,329,157
Depreciation ..................................................... 4,209,453 5,531,502 11,574,519
Amortization of debt issuance costs .............................. 554,311 493,799 1,418,353
Amortization of partnership formation costs ...................... 533,116 533,100 --
------------ ------------- -------------
28,910,892 43,210,256 106,146,952
------------ ------------- -------------
INCOME (LOSS) BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM ...... 2,315,891 (8,915,757) (32,468,289)
Minority interest ................................................ (5,047,580) (2,405,160) --
------------ ------------- -------------
LOSS BEFORE EXTRAORDINARY ITEM ..................................... (2,731,689) (11,320,917) (32,468,289)
Extraordinary item - loss on early extinguishment of debt ........ -- (21,336,550) --
------------ ------------- -------------
NET LOSS ........................................................... $ (2,731,689) $ (32,657,467) $ (32,468,289)
============ ============= =============
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
PANDA GLOBAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK Total
------------- Advances Accumulated Shareholder's
Shares Amount to Parent Deficit Deficit
------------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1995 ................ 1,000 $10 $(13,864,929) $(13,344,409) $ (27,209,328)
Advances to parent, net ............... -- -- (13,004,619) -- (13,004,619)
Net loss .............................. -- -- -- (2,731,689) (2,731,689)
----- --- ------------ ------------ -------------
BALANCE, December 31, 1995 ............. 1,000 10 (26,869,548) (16,076,098) (42,945,636)
Advances to parent, net ............... -- -- (25,913,392) -- (25,913,392)
Net loss .............................. -- -- -- (32,657,467) (32,657,467)
----- --- ------------ ------------ -------------
BALANCE, December 31, 1996 ............. 1,000 10 (52,782,940) (48,733,565) (101,516,495)
Advances from parent, net ............. -- -- 44,559 -- 44,559
Net loss .............................. -- -- -- (32,468,289) (32,468,289)
----- --- ------------ ------------ -------------
BALANCE, December 31, 1997 ............. 1,000 $10 $(52,738,381) $(81,201,854) $(133,940,225)
===== === ============ ============ =============
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE>
PANDA GLOBAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss ..................................................... $ (2,731,689) $ (32,657,467) $ (32,468,289)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Loss on early extinguishment of debt ..................... -- 21,336,550 --
Minority interest ........................................ 5,047,580 2,405,160 --
Depreciation ............................................. 4,209,453 5,531,502 11,574,519
Amortization of debt issuance costs ...................... 554,311 493,799 1,418,353
Amortization of partnership formation costs .............. 533,116 533,100 --
Amortization of loan discount and deferred
interest on capital lease obligation ................... 124,176 391,491 22,250,146
Changes in assets and liabilities:
Accounts receivable ........................................ 460,319 (4,202,686) (384,152)
Fuel oil, spare parts and supplies ......................... 261,516 (4,829,609) 1,649,228
Other current assets ....................................... 26,484 (152,241) (92,972)
Accounts payable and accrued expenses ...................... (81,728) 9,529,946 1,287,815
------------ ------------- -------------
Net cash provided (used) by operating activities ......... 8,403,538 (1,620,455) 5,234,648
------------ ------------- -------------
INVESTING ACTIVITIES:
Restricted cash - current .................................... 695,684 (15,933,779) (75,018,161)
Additions to property, plant and equipment ................... (124,109,566) (62,881,838) (30,918,077)
Investment in joint venture .................................. -- -- (836,654)
Acquisition of minority interest ............................. -- (34,256,423) --
Restricted cash - debt service reserves and escrow deposits .. (747,655) (21,600,418) (39,882,161)
------------ ------------- -------------
Net cash provided (used) by investing activities ......... (124,161,537) (134,672,458) (146,655,053)
------------ ------------- -------------
FINANCING ACTIVITIES:
Contributions from minority interest owners .................. -- -- 5,741,166
Distributions to minority interest owner ..................... (3,800,279) (1,152,113) --
Advances (to) from parent .................................... (13,004,619) (25,913,392) 44,559
Deferred revenue ............................................. -- -- 13,140,387
Proceeds from long term debt ................................. 147,541,291 299,677,926 145,025,088
Repayment of long term debt .................................. (17,500,000) (128,415,271) (5,717,621)
Repayment of capital lease obligation ........................ -- -- (7,831,527)
Debt issuance costs .......................................... (334,391) (7,735,536) (7,387,444)
------------ ------------- -------------
Net cash provided (used) by financing activities ......... 112,902,002 136,461,614 143,014,608
------------ ------------- -------------
Increase (decrease) in cash and cash equivalents ............... (2,855,997) 168,701 1,594,203
Cash and cash equivalents, beginning of period ................. 4,022,382 1,166,385 1,335,086
------------ ------------- -------------
Cash and cash equivalents, end of period ....................... $ 1,166,385 $ 1,335,086 $ 2,929,289
============ ============= =============
$ --
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized .................... $ 11,799,297 $ 15,656,801 $ 51,929,067
NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:
Accrued construction costs ................................... $ 5,597,818 $ 660,167 $ 5,600,000
</TABLE>
See accompanying notes to consolidated financial statements
F-7
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995, 1996 and 1997
1. ORGANIZATION AND BASIS OF PRESENTATION
Panda Global Holdings, Inc. ("Panda Global", or collectively
with its subsidiaries the "Company"), a wholly owned subsidiary
of Panda Energy International, Inc. ("PEII"), was formed in March
1997 to hold the ownership interests in independent power
projects which were formerly owned by other wholly owned
subsidiaries of PEII. The ownership interests were transferred
to the Company at PEII's historical cost. Because the transfers
occurred between entities under common control, the transactions
have been accounted for in a manner similar to a pooling of
interests. The Company has two direct wholly owned subsidiaries:
Panda Energy Corporation ("PEC")( a Texas corporation) which
indirectly holds the Company's ownership interests in domestic
projects, and Panda Global Energy Company ("Global Cayman") (a
Cayman Islands company) which indirectly holds the Company's
ownership interests in international projects.
PEC, through its wholly owned subsidiary Panda Interfunding
Corporation ("PIC") and PIC's wholly owned subsidiary Panda
Interholding Corporation ("Interholding"), holds the Company's
ownership interests in the Rosemary project and the Brandywine
project. The entities holding such ownership interests include
the following: Panda Rosemary Corporation ("PRC"), a 91% general
partner in Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II
Corporation ("PRC II"), a 9% limited partner in Panda-Rosemary;
Panda Brandywine Corporation, a 50% general partner in Panda-
Brandywine, L.P. ("Panda-Brandywine"); Panda Energy Corporation
(a Delaware corporation), a 50% limited partner in Panda-
Brandywine; and Brandywine Water Company. The Company, through
its general and limited partnership interests, owns 100% of Panda-
Brandywine and, as of July 31, 1996, owns 100% of Panda-Rosemary.
Prior to July 31, 1996, the Company owned 10% of Panda-Rosemary.
The Rosemary and Brandywine projects are located in the United
States. Other direct or indirect wholly owned subsidiaries of
PIC include Panda Funding Corporation ("PFC"), Panda-Rosemary
Funding Corporation ("PRFC") and Panda Cayman Interfunding
Corporation ("PIC Cayman"), which have been formed to facilitate
the financing of the development and acquisition of independent
power projects.
Additionally, PEC holds the Company's 100% ownership
interest in the Kathleen project through its wholly owned
subsidiaries.
Global Cayman (which collectively with its subsidiaries is a
development stage enterprise having no operating revenues) holds
a 95.5% ownership interest in Pan-Sino Energy Development Company
LLC ("Pan-Sino")(a Cayman Islands company), which in turn holds a
99% ownership interest in Pan-Western Energy Corporation LLC
("Pan-Western")(a Cayman Islands company), which in turn owns an
approximately 88% interest in four joint venture companies (the
"Joint Venture Companies") organized under the laws of the
People's Republic of China ("China") to develop and construct an
independent power project located in China. The Joint Venture
Companies are: Tangshan Panda Heat and Power Company, Ltd.
("Tangshan Panda"), Tangshan Pan-Western Heat and Power Company,
Ltd. ("Tangshan Pan-Western"), Tangshan Cayman Heat and Power
Company, Ltd. ("Tangshan Cayman") and Tangshan Pan-Sino Heat
Company, Ltd. ("Tangshan Pan-Sino"). Additionally, Global Cayman
indirectly holds an equity investment in Bhote Koshi Power
Company Pvt. Ltd. (a Nepal company), which was organized under
the laws of Nepal to develop and construct an independent power
project in Nepal.
Collectively, PEC, Pan-Sino and Pan-Western are the
predecessors of the Company.
All material intercompany accounts and transactions have
been eliminated in consolidation.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. Any differences from those estimates are recorded in
the period in which they are identified.
Cash -- Included in cash and cash equivalents are highly
liquid investments with original maturities of three months or
less.
Restricted Cash - Current -- Restricted cash-current
represents escrowed cash which may be used to pay operating
expenses and make debt payments and distributions to partners
pursuant to the trust indenture agreements.
Restricted Cash - Debt Service Reserves and Escrow Deposits
- -- Debt service reserves and escrow deposits include cash held
by the bank to pay debt service and capital improvements pursuant
to the trust indenture agreements.
Fuel Oil, Spare Parts and Supplies -- These items include
fuel oil stored on-site and various spare parts and supplies
necessary for plant maintenance. The items are valued at cost
using the weighted average method, and are expensed, as plant
operating expenses, when used.
Plant and Equipment -- Electric generating facility assets
are recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets, generally
twenty-five years. Depreciation of office furniture, equipment,
and leasehold improvements is provided using the straight-line
method over the estimated useful lives of the assets, generally
three to five years. Costs, including interest on funds borrowed
to finance the construction of facilities, related to projects
under construction are capitalized as construction in progress.
Construction in progress balances are transferred to electric
generating facilities when the assets are ready for their
intended use. Capitalized interest was $5,793,296, $11,055,172
and $2,057,000 during 1995, 1996 and 1997, respectively.
Maintenance and repair costs are charged to expense as incurred.
Other projects currently under development by PEII may be
transferred to the Company at PEII's historical cost when
construction financing has been obtained or when the completed
projects have commenced commercial operations, subject to certain
limitations in the Company's indentures (see Note 7).
Debt Issuance Costs -- The costs related to the issuance of
debt are capitalized and amortized using the effective interest
method over the term of the related debt.
Partnership Formation Costs -- The costs related to the
formation of Panda-Rosemary were capitalized and amortized over a
five year period ended December 31, 1996.
Deferred revenue -- Revenue from the sale of rights to
future interest income from certain of the Company's restricted
cash accounts (debt service reserves and escrow deposits) is
deferred and recognized as interest revenue over the lives of the
related debt obligations.
Environmental Matters -- The operations of the Company are
subject to federal, state and local laws and regulations relating
to protection of the environment. Although the Company believes
that its operations are in compliance with applicable
environmental regulation, risks of additional costs and
liabilities are inherent in cogeneration operations, and there
can be no assurance that significant costs and liabilities will
not be incurred by the Company. Management is not aware of any
contingent liabilities that currently exist with respect to
environmental matters.
Environmental expenditures are expensed or capitalized as
appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are
recorded if environmental assessments and/or remedial efforts
become probable, and the costs reasonably estimable.
Revenue Recognition -- Revenue generated from the sale of
electric capacity and energy from the Rosemary and Brandywine
projects is recognized based on the amount billed under the power
purchase agreements. The revenue generated from the sale of
electric capacity and energy from other projects will be
recognized based on the lesser of the amount billable under the
power purchase agreement or an amount determined by the annual
kilowatts made available multiplied by the estimated average
revenue per kilowatt over the term of the power purchase
agreement. Revenue from the sale of steam and chilled water is
recognized based on the output delivered at rates specified under
contract terms.
Income Taxes -- The Company records income taxes according
to Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" (SFAS 109) which requires deferred
tax liabilities or assets to be recognized for the anticipated
future tax effects of temporary differences that arise as a
result of the differences in the carrying amounts and the tax
bases of assets and liabilities. SFAS 109 also requires a
valuation allowance for deferred tax assets in certain
circumstances.
The Company is included in the consolidated federal income
tax return of PEII. PEII's policy is to allocate income tax
expense or benefits to the Company as if it filed a separate tax
return.
Allocation of Administrative Costs -- PEII performs certain
accounting, legal, insurance, and consulting services for the
Company. These general and administrative costs are generally
allocated to the Company using the percentage of time PEII
personnel spent performing these services. The expenses allocated
were $1,599,200, $3,308,000 and $5,975,000 in 1995, 1996 and
1997, respectively, and are included in project development and
administrative expenses in the statement of operations.
Management believes the method used to allocate these costs is
reasonable.
Asset Impairment -- In accordance with Statement of
Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" (SFAS 121), the Company evaluates the impairment of
long-lived assets if circumstances indicate that the carrying
value of those assets may not be recoverable. The Company adopted
SFAS 121 in 1996 and such adoption had no material impact on its
financial position or results of operations.
Interest Cost -- Total interest cost incurred, including
capitalized interest, was $17,509,225, $30,469,184 and
$57,386,157 in 1995, 1996 and 1997, respectively.
3. ADVANCES TO PARENT
Advances to parent represent cash advances to the parent,
allocations of general and administrative expenses from the
parent, and the excess of liabilities assumed over the assets
contributed on projects owned by the parent and contributed in
connection with the formation of the Company.
The advances to parent for the years ended December 31,
1995, 1996 and 1997 consist of the following:
<TABLE>
<S> <C>
Balance, January 1, 1995 $13,864,929
Cash advanced to parent, net 14,603,819
Administrative costs allocated from parent (1,599,200)
Balance, December 31, 1995 26,869,548
Cash advanced to parent, net 29,221,392
Administrative costs allocated from parent (3,308,000)
Balance, December 31, 1996 52,782,940
Cash advanced to parent, net. 5,930,441
Administrative costs allocated from parent. (5,975,000)
Balance, December 31, 1997. $52,738,381
</TABLE>
The average balance of advances to parent was $20,367,000,
$39,826,000 and $52,760,000 during 1995, 1996 and 1997,
respectively.
4. FUEL OIL, SPARE PARTS AND SUPPLIES
Fuel oil, spare parts and supplies are comprised of the
following amounts:
<TABLE>
<CAPTION> 1996 1997
<S> <C> <C>
Fuel oil $3,496,269 $3,232,983
Spare parts and supplies 4,417,508 3,031,566
Total $7,913,777 $6,264,549
</TABLE>
5. POWER PROJECTS
Rosemary Project -- Effective May 5, 1989, PEII formed a
wholly-owned subsidiary, now a wholly-owned subsidiary of the
Company, to develop, construct, and operate the 180 megawatt gas-
fired Rosemary cogeneration facility in Roanoke Rapids, North
Carolina ("Rosemary Project"). Construction on the Rosemary
Project began in September 1989, and commercial operation of the
facility began on December 27, 1990.
The Rosemary Project produces both electricity and useful
thermal energy in the form of steam. Electric capacity and energy
sales are based on the terms of the power purchase agreement
between Panda-Rosemary and Virginia Electric Power Company
("VEPCO") dated January 24, 1989. The agreement requires Panda-
Rosemary to provide VEPCO with all the available capacity of the
Rosemary Project on an as-needed basis with VEPCO obligated to
pay for the power delivered and dependable capacity of the
facility at a rate per kilowatt which decreases in certain
periods as defined by the agreement. The term of the agreement is
25 years and expires December 2015. A financial institution has
provided a letter of credit for approximately $5 million
guaranteeing Panda-Rosemary's performance under the power
purchase agreement. Steam and chilled water are sold to a third
party under a separate agreement which also has a term of 25
years and expires December 2015. The Rosemary Project is managed
by PRC, the general partner, and was operated by an unrelated
third party through 1996. Effective January 1, 1997, the
Rosemary Project is operated by a subsidiary of PEII. The
Company incurred management fees of $1,675,142 to the affiliated
management company for the year ended December 31, 1997.
On January 6, 1992, PRC contributed substantially all
project assets and liabilities and $216,553 in cash to Panda-
Rosemary, in exchange for a 10% combined general partnership and
limited partnership interest. The assets and liabilities were
recorded at historical cost, resulting in $19,874,216 in
partners' deficit being contributed by PRC. An institutional
investor ("Investor") contributed $30,948,987 in cash in exchange
for a 90% limited partnership interest. On July 31, 1996, the
Company acquired the Investor's limited partnership interest in
Panda-Rosemary for a purchase price of approximately $34.3
million. As a result of this acquisition, the Company owns 100%
of Panda-Rosemary. The acquisition was accounted for using the
purchase method of accounting. The excess of minority interest
over the purchase price (approximately $3.8 million) was
allocated to plant and equipment.
Prior to July 31, 1996, the Investor received percentage
allocations of income, expense, and cash flow which would decline
over time if certain rate of return requirements were achieved.
For the duration of the Investor's participation in Panda-
Rosemary, the allocation to the Investor remained at 90%.
Prior to acquiring the Investor's 90% limited partnership
interest on July 31, 1996, the Company controlled Panda-Rosemary
through its general partner interest. As general partner, the
Company has exclusive management authority over the operations of
Panda-Rosemary. Accordingly, Panda-Rosemary's statements of
operations and of cash flows for the year ended December 31, 1995
and for the period January 1, 1996 through July 31, 1996 (in
addition to the post-acquisition period) have been consolidated
in the accompanying financial statements. The capital of the
Investor and Panda-Rosemary's net income allocated to the
Investor are presented as minority interest in the accompanying
financial statements.
Brandywine Project -- On August 9, 1991, Panda-Brandywine
entered into a power purchase agreement ("PPA") with Potomac
Electric Power Company ("PEPCO") to build a 230 megawatt gas-
fired facility in Brandywine, Maryland ("Brandywine Project").
The Brandywine Project, constructed by Raytheon Engineers and
Constructors, Inc. ("Raytheon") under a fixed fee, turn-key
contract, was substantially completed and commenced commercial
operations in October, 1996.
The PPA requires Panda-Brandywine to supply PEPCO with all
available capacity from the facility for the 25-year term of the
agreement with a guaranteed dispatch level of at least 60 hours
per week for the first 15 years. In late 1997, Panda-Brandywine
and PEPCO reached a tentative agreement for modification of the
PPA (see Note 9). A construction loan commitment in the amount of
$215 million was provided by General Electric Capital Corporation
("GECC") in April, 1995. On December 30, 1996 the loan converted
to a capital lease with GECC in the amount of $217.5 million with
a twenty year term and two five year renewal options (see Note
7). GECC has committed to provide letters of credit up to a
maximum of approximately $7.3 million (under certain
circumstances) guaranteeing Panda-Brandywine's performance under
the agreement.
Kathleen Project -- In 1991, through a wholly-owned
subsidiary, the Company entered into a 30-year power purchase
agreement with Florida Power Corporation ("Florida Power") to
build a 75 megawatt gas-fired facility near Lakeland, Florida
("Kathleen Project"). The Company and Florida Power are engaged
in litigation before various state and federal forums in Florida
over the interpretation of the Kathleen power purchase agreement
(see Note 9). Actual construction of the Kathleen Project has
not yet commenced and is subject to the outcome of the related
litigation and the successful completion of financing. The
Company has incurred development costs for the Kathleen Project
of $2.8 million and $2.9 million as of December 31, 1996 and
1997, respectively, which are included in plant and equipment
under development costs in the accompanying balance sheet.
Luannan Project -- In 1994, PEII entered into a preliminary
letter of intent with a subsidiary of the North China Power Group
Company ("NCPGC") for the purchase and sale of electric energy
from two 50 megawatt coal-fired cogeneration plants to be located
in Luannan County, Tangshan Municipality, Hebei Province, China
("Luannan Project"). On September 22, 1995, Tangshan Panda and
Tangshan Pan-Western entered into a Power Purchase Agreement with
NCPGC for the purchase and sale of electric energy from the
Luannan Project. Under the terms of the 20-year agreement, all
electrical output of the project will be sold to NCPGC. The
steam and hot water generated by Tangshan-Cayman's facility
within the project will be sold to the domestic Chinese
industrial and commercial markets by Tangshan Pan-Sino.
Financing for the project was completed in April 1997 (see Note
7). The Luannan Project is being constructed pursuant to a fixed-
price, turnkey contract with Harbin Power Engineering Company
Limited, subject to escalation under certain circumstances. The
Company has incurred costs for the Luannan Project of $3.3
million and $36.1 million as of December 31, 1996 and 1997,
respectively, which are included in plant and equipment under
development costs (1996) and under construction in progress
(1997) in the accompanying balance sheet. The costs were
reclassified from development costs to construction in progress
due to the completion of financing and the commencement of
construction activity for the project in 1997.
The Luannan Project is subject to political, regulatory and
economic uncertainties, risks of expropriation of property and
cancellation or modification of contract rights, foreign exchange
restrictions, construction risk, dependence on limited number of
customers and other risks arising from foreign governmental
sovereignty.
Nepal Project -- The Company has an equity investment in a
hydroelectric power project in Nepal. See Note 6.
6. INVESTMENT IN JOINT VENTURE
The Company has an investment in a joint venture (Bhote
Koshi Power Company, Pvt. Ltd., referred to as "BKPC" ) with a
major hydroelectric engineering company and a local Nepalese
party to build a 36 megawatt hydroelectric facility on the upper
Bhote Koshi River in Nepal ("Nepal Project"). The investment is
accounted for under the equity method. The Company's ownership
interest was transferred from a subsidiary of PEII to the Company
at historical cost in June 1997. A 25-year power purchase
agreement with the Nepal Electricity Authority was signed in July
1996. The Nepal Project is being constructed pursuant to a fixed-
price, turnkey contract with China Gezhouba Construction Group
Corporation. Commercial operations are scheduled to commence in
2000.
On December 29, 1997 financial closing occurred with respect
to the Nepal Project. BKPC received commitments for (i) up to
approximately $68.8 million in nonrecourse debt financing from a
group of international lenders and (ii) up to approximately $29.5
million in equity from the Company and a group of third-party
investors which includes one of the lenders. At December 31,
1997, approximately $17.9 million of the debt commitments had
been funded and were outstanding. The interest rates on the loans
are a combination of fixed and variable rates, generally at the
annual rate of 325 to 350 basis points above the London Interbank
Offered Rate. Semiannual interest and principal payments on the
loans commence in March 1998 and March 2001, respectively. Final
maturity of the loans occurs at dates ranging from 2008 through
2011. Commitment fees of 1% to 2% are payable on undisbursed
portions of the loan commitments.
The equity commitments of up to approximately $29.5 million
referred to above include approximately $3.1 million in project
development and administrative expenses previously incurred by
PEII and the investors which cannot be capitalized under GAAP and
which therefore are not reflected in BKPC's balance sheet. At
December 31, 1997, approximately $5.1 million of the equity
commitment (in addition to the $3.1 million of project
development and administrative expenses referred to above) had
been contributed. The Company had contributed $10.8 million in
capitalized development costs (in addition to $1.2 million in
project development and administrative expenses) and received
cash reimbursement from BKPC at financial closing for $10.0
million of those costs. The Company has satisfied its equity
commitment of $2 million as of December 31, 1997. In addition
to the basic equity commitment, the Company and the investors are
required to contribute up to $10 million on a pro-rata basis in
the event of cost overruns.
The Company and an outside investor ("Investor") jointly own
a 75% interest in BKPC and other investors own the remaining 25%.
Based on the agreement with the Investor, cash flow attributable
to the Company's and the Investor's combined 75% ownership
interest will be allocated 85% to the Investor and 15% to the
Company until the Investor achieves a 20% internal rate of return
on its investment (the "Flip Date"), and 90% to the Company and
10% to the Investor thereafter.
BKPC is a development stage enterprise. All development and
construction costs incurred to date have been capitalized.
Summarized balance sheet information for BKPC at December 31,
1997 is as follows:
<TABLE>
<S> <C>
Cash $ 146,000
Restricted cash - current 5,637,608
Construction in progress 18,332,944
Debt issue costs 1,967,758
Total assets $ 26,084,310
Current liabilities $ 3,126,827
Long-term debt 17,851,667
Stockholders' equity 5,105,816
Total liabilities and equity $ 26,084,310
</TABLE>
7. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION
Long-term debt and capital lease obligation of the Company
as of December 31, 1996 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
First Mortgage Bonds for
Rosemary Project $110,023,541 $104,521,719
Series A Bonds 105,525,000 105,309,201
Senior Secured Notes - 145,653,823
Total long-term debt 215,548,541 355,484,743
Less current portion (5,717,623) (5,816,974)
------------ ------------
$209,830,918 $349,667,769
============ ============
Capital lease obligation for
Brandywine Project $217,488,645 $231,278,528
============ ============
</TABLE>
Taxable Revenue Bonds -- In October 1989, PRC obtained long-
term financing for the Rosemary Project in the form of $116
million of taxable revenue bonds ("Tax Bonds") issued by the
Halifax Regional Economic Development Corporation ("Halifax"), a
nonprofit corporation organized in North Carolina. In connection
with the issuance of first mortgage bonds for the Rosemary
Project in July 1996 as discussed below, the Company refinanced
the Tax Bonds and incurred a loss of $13.3 million on the early
extinguishment of that obligation. The Tax Bonds bore interest at
a fixed rate of 9.25% payable semiannually.
Term Loan -- On October 27, 1995, PEII obtained a term loan
in the amount of $20 million from Trust Company of the West
("TCW"). This loan amended and restated the loan agreement dated
November 8, 1994. In July 1996, in connection with the offering
of Series A Bonds as discussed below, a portion of the proceeds
was used to retire all of the term loan debt. The Company
incurred a loss of $8 million on the early extinguishment of this
obligation. The loan bore interest at a rate of 13.5%, payable at
a rate of 11.0%. The 2.5% interest not payable currently was
added to the principal balance of the loan.
Under the loan agreement, TCW also received 1,004,000
warrants to purchase shares of PEII stock. A loan discount of
$1,241,812 was created as a result of allocating value to the
warrants. The carrying value of the warrants is adjusted
annually to the redemption price. Such adjustment, which was
allocated to the Company from PEII until the debt was retired in
July 1996, was $153,861 and $172,924 in 1995 and 1996,
respectively, and was recorded as interest expense in the
accompanying statements of operations.
First Mortgage Bonds -- In July 1996, Panda-Rosemary
Funding Corporation ("PRFC"), a wholly-owned subsidiary of Panda-
Rosemary, issued $111,400,000 of first mortgage bonds ("Rosemary
Bonds"). The Rosemary Bonds bear interest at a fixed rate of 8-
5/8% payable quarterly commencing November 15, 1996. Scheduled
principal payments are required quarterly commencing November 15,
1996, and will continue through maturity on February 15, 2016.
The Rosemary Bonds are subject to mandatory redemption prior to
maturity under certain conditions. The Rosemary Bonds are
unconditionally guaranteed by Panda-Rosemary but are non-recourse
to the Company, and are secured by substantially all of the
assets of Panda-Rosemary as well as all of the outstanding
capital stock of PRC, PRC II and PRFC. The indenture contains
certain covenants, including limitations on distributions,
additional debt and certain other transactions.
While amounts are outstanding under the Rosemary Bonds, all
revenues of Panda-Rosemary are paid to a collateral agent. Funds
held by the collateral agent are included in the accompanying
consolidated balance sheets as restricted cash-current. On a
monthly basis, the collateral agent remits to Panda-Rosemary
remaining funds available after payment of all expenditures
relating to the Rosemary project, including debt service,
provided that Panda-Rosemary is in compliance with the debt
covenants. Additionally, the collateral agent withholds funds to
meet future debt service, maintenance and pollution control
requirements, if required under the indenture. These amounts are
included in the accompanying consolidated balance sheets as
restricted cash-current and restricted cash-debt service reserves
and escrow deposits.
Series A Bonds -- In July 1996, Panda Funding Corporation
("PFC"), a wholly-owned subsidiary of the Company, issued
$105,525,000 of pooled project bonds ("Series A Bonds"). The
Series A Bonds bear interest at a fixed rate of 11-5/8% payable
semiannually commencing February 20, 1997. Scheduled principal
payments are required semiannually commencing February 20, 1997
and will continue through maturity on August 20, 2012. The
Series A Bonds are subject to mandatory redemption prior to
maturity under certain conditions. The Series A Bonds are fully
and unconditionally guaranteed by PIC and are guaranteed on a
limited basis by Interholding up to a maximum amount specified by
the guarantee agreement which approximates $25.1 million at
December 31, 1997. Additionally, the Series A Bonds are secured
by (i) all of the capital stock of PFC, PIC and Interholding,
(ii) 60% of the capital stock of PIC Cayman, (iii) PIC's interest
in distributions from Interholding, and (iv) certain other
collateral. The Series A Bonds are effectively subordinated to
the obligations of PIC's subsidiaries under project-level
financing arrangements. The indenture contains certain
covenants, including limitations on distributions, additional
debt and certain other transactions.
While amounts are outstanding under the Series A Bonds, all
distributions to PIC from Interholding and certain proceeds
received from PIC Cayman will be paid to a collateral agent. On
a monthly basis, the collateral agent will remit to PIC remaining
funds available after satisfaction of PIC's debt service
obligations (including amounts withheld, if necessary, to meet
future debt service and reserve fund requirements as required by
the indenture) provided that PIC is in compliance with the debt
covenants.
In connection with the issuance of the Series A Bonds, the
Company advanced approximately $34.8 million to PEII for project
development and general corporate purposes. See Note 3.
Senior Secured Notes for Luannan Project -- In April 1997,
Global Cayman issued $155.2 million original principal amount of
senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior
Secured Notes, which were issued at a discount for gross proceeds
of $145.0 million, bear interest at a fixed rate of 12 1/2%
payable semiannually commencing October 15, 1997. Scheduled
principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004.
The Senior Secured Notes are subject to mandatory redemption
prior to maturity under certain conditions. The Senior Secured
Notes are secured by (i) a pledge of 100% of the capital stock of
Global Cayman, 99% of the capital stock of Pan-Western and at
least 90% of the capital stock of Pan-Sino, and (ii) a security
interest in certain funds of Global Cayman and its subsidiaries
established under the indenture. Additionally, the Senior
Secured Notes are fully and unconditionally guaranteed by Panda
Global, whose guarantee (the "Senior Secured Notes Guarantee") is
secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of
Panda Global established under the indenture. The Senior Secured
Notes Guarantee is effectively subordinated to the obligations of
PIC and its subsidiaries under the Series A Bonds and project-
level financing arrangements. The indenture contains certain
covenants, including limitations on distributions, additional
debt and certain other transactions.
Construction Loan and Capital Lease -- On April 10, 1995,
Panda-Brandywine closed the initial funding of a $215 million
construction loan commitment with GECC. The construction loan
bore an interest rate of the Eurodollar rate plus 2.5%.
The Brandywine Project commenced commercial operations on
October 31, 1996. The construction loan was converted to long-
term non-recourse financing of $217.5 million in the form of a
capital lease on December 30, 1996. To effect the lease
financing, title to the Brandywine Project was transferred to a
third party trustee and leased back to Panda-Brandywine. The
Brandywine facility lease is a net lease with an initial term of
20 years and two five-year renewal options. The minimum lease
payments through 2000 are less than the interest expense on the
capital lease obligation, resulting in increases in the principal
amount of the capital lease obligation. Amortization of the
original principal amount of the capital lease obligation begins
in 2007. The documents governing the lease financing contain
various affirmative and negative covenants, including limitations
on the ability of Panda-Brandywine to make distributions to its
partners. In connection with the capital lease financing, GECC
has committed to provide letters of credit up to a maximum of
approximately $7.3 million under certain circumstances (see Note
5). The letters of credit have an annual fee of 1.50% on any
amounts outstanding.
The future minimum lease commitments under the capital lease
for the Brandywine Project are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 10,419,439
1999 17,584,915
2000 20,489,320
2001 25,613,918
2002 27,770,137
Thereafter 473,645,389
-------------
Total minimum lease payments 575,523,118
Amounts representing interest (344,244,590)
-------------
Present value of net minimum
payments $231,278,528
=============
</TABLE>
Long-term Debt Maturities -- The principal maturities of
long-term obligations, excluding the capital lease relating to
the Brandywine Project, for each of the five years succeeding
December 31, 1997 and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 5,816,974
1999 5,926,269
2000 7,674,598
2001 11,629,603
2002 18,081,509
Thereafter 315,901,967
Total 365,030,920
Less discount (9,546,177)
$355,484,743
</TABLE>
8. INCOME TAXES
A provision for income taxes for 1995, 1996 and 1997 has not
been recorded since operating losses were incurred for each year.
The Company has approximately $47 million of domestic net
operating loss carryforwards at December 31, 1997, the benefits
of which will be available to the Company when realized by PEII.
The net operating loss carryforwards will expire during the years
2007 to 2012. PEII may become subject to a limitation on the
amount of net operating loss carryforwards which may be used
annually to offset income should certain changes in its ownership
occur in the future. Should PEII become subject to such a
limitation, the amount of tax benefits available to the Company
could be reduced. Additionally, the Company's foreign
subsidiaries have approximately $10 million of net operating loss
carryforwards which are considered to be permanently invested
outside the United States and are not currently available to
offset U.S. taxable income.
Domestic deferred tax assets of approximately $14 million
and $24 million as of December 31, 1996 and 1997, respectively,
consist primarily of interest in partnerships and net operating
losses and are offset by a valuation allowance. The deferred tax
asset for interest in partnerships relates to the difference
between the tax basis of the assets contributed to the
partnership upon its formation and the Company's financial
reporting basis in those assets. Additionally, the Company has
foreign deferred tax assets of approximately $3 million which
consist primarily of net operating losses and are offset by a
valuation allowance.
SFAS No. 109 requires that a valuation allowance be recorded
against tax assets which are not likely to be realized. The
Company's carryforwards expire at specific future dates and
utilization of certain carryforwards is limited to specific
amounts each year. However, due to the uncertain nature of their
ultimate realization based upon past performance and expiration
dates, the Company has established a full valuation allowance
against these carryforward benefits and will recognize the
benefits only when reassessment demonstrates that it is more
likely than not that such benefits will be realized. Realization
is entirely dependent upon future earnings in specific tax
jurisdictions. While the need for this valuation allowance is
subject to periodic review, if the allowance is reduced, the tax
benefits of the carryforwards will be recorded in future
operations as a reduction of the Company's income tax expense or
as an income tax benefit.
9. COMMITMENTS AND CONTINGENCIES
In connection with a previous borrowing from Nova Northwest
Inc. ("Nova"), Nova received a cash flow participation interest
in the distributions from the Rosemary Project for the term of
the Panda-Rosemary L.P. partnership agreement. Such
participation interest amounted to 4.33% of the Company's own
participation interest, which was 10% at the time the agreement
was entered into. PEII filed an action with the District Court
of Dallas County, Texas seeking a declaratory judgment that
Nova's cash flow participation is 0.433% of the Company's 100%
interest after the acquisition of the institutional investor's
90% limited partnership interest. In 1997, this dispute was
settled. The settlement cost will be paid by PEII; accordingly,
the cost is not reflected in the Company's financial statements.
The settlement did not have a material impact on the consolidated
financial position, results of operations or cash flows of PEII.
In August 1996, Panda-Brandywine and PEPCO commenced
discussions concerning commercial operational requirements of the
Brandywine Project and conversion of the construction loan to
long-term financing in the form of a lease. During these
discussions, disagreements arose between Panda-Brandywine and
PEPCO with respect to certain provisions of the Brandywine Power
Purchase Agreement which relate to the determination of the
interest rate that is the basis for reduction in capacity
payments thereunder (the "PEPCO Interest Rate Dispute"). In late
1997, Panda-Brandywine reached a tentative agreement with PEPCO
under which the amount of capacity payments will be increased (as
compared with the capacity payments originally anticipated)
during the first ten years following the commencement of
commercial operations, and will be reduced during the final
fifteen years of the Power Purchase Agreement. The agreement
provides that PEPCO will pay to Panda-Brandywine within two
business days following the effective date of the settlement (as
discussed below) approximately $3.8 million, which represents the
difference between the originally scheduled capacity payments and
the capacity payments due under the agreement for the first nine
months of 1997. Capacity payments for the final three months of
1997 were made in accordance with the tentative agreement.
Additionally, PEPCO has agreed to release certain amounts of
capacity to Panda-Brandywine for resale of energy to other
parties, and to grant Panda-Brandywine the right to sell
additional energy to other parties subject to the availability of
the facility. The effectiveness of the agreement with PEPCO is
subject to the consent of the financing parties, including GECC,
under the capital lease financing arrangements for the facility.
In this regard, Panda-Brandywine has commenced discussions with
GECC and the other financing parties concerning such consents,
and has executed an agreement in principle with GECC. Among
other things, this agreement in principle provides for (i) the
reallocation of lease payments to GECC in order to match the
revised capacity payment schedule with PEPCO, (ii) the
reimbursement to GECC by Panda-Brandywine of certain fees, and
(iii) certain technical amendments to the applicable financing
documents. The finalization of the tentative agreement is
subject to several conditions, including but not limited to
written consents from all other financing parties and other
applicable parties, receipt of legal opinions concerning the tax
and regulatory consequences of the transaction, and the
preparation of definitive legal documentation of the transaction
to the satisfaction of all parties involved.
As discussed in Note 5, Raytheon constructed the Brandywine
Project pursuant to a fixed-price, turnkey engineering,
procurement and construction contract (the "Brandywine EPC
Agreement") with Panda-Brandywine. Raytheon completed the
construction and start-up of the Brandywine Project and has met
the requirements for commercial operations and substantial
completion under the Brandywine EPC Agreement, although the date
on which commercial operations were achieved and the entitlement
of Raytheon to certain early completion bonuses under the
Brandywine EPC Agreement are the subject of a dispute between
Panda-Brandywine and Raytheon. The Company estimates that the
amount in dispute is less than $1 million and believes that the
resolution of this dispute will not have a material adverse
effect upon the financial position, results of operations or cash
flows of the Company.
The Company has entered into various long-term contracts for
the purchase and transportation of fuel subject to termination
only in certain limited circumstances. These contracts have
remaining terms of 10 to 25 years. The Company's minimum
purchase commitment under these contracts is 2.3 million British
thermal units of gas annually from October 31, 1996 through
October 31, 2011. In the aggregate, such commitments are not at
prices in excess of the current market.
PEII is also involved in other legal and administrative
proceedings in the ordinary course of business. Management
believes, based on the advice of counsel, the amount of ultimate
liability allocable to the Company with respect to these matters
will not have a material affect on the financial position,
results of operations or cash flows of the Company.
10. RELATED PARTY TRANSACTIONS
The Company purchases insurance coverage through an agency
owned by a major shareholder of PEII who is also a member of the
board of directors of PEII and a relative of PEII's chairman.
The Company believes such coverage is on terms that are no less
favorable than reasonably available from unaffiliated third
parties. Total insurance purchases through this agency were
$298,728, $754,388 and $1,666,623 for the years ended December
31, 1995, 1996 and 1997, respectively.
The Rosemary Project is operated by an affiliated management
company which is a subsidiary of PEII (see Note 5).
11. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF
CREDIT RISK
The estimated fair values of the Company's financial
instruments as of December 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
Carrying Value Fair Value
<S> <C> <C>
1996: Long-term debt,
including current portion $215,548,541 $220,824,791
1997: Long-term debt,
including current portion 355,484,743 360,485,472
</TABLE>
The Rosemary Bonds, the Series A Bonds and the Senior
Secured Notes have limited trading. The fair value of these bonds
is estimated based on a third party quotation.
The Company is also a party to letters of credit.
Historically, no claims have been made against these financial
instruments and management does not expect any material losses to
result from these off-balance-sheet instruments because
performance is not usually expected to be required. Therefore,
management is of the opinion that the fair value of these
instruments is zero.
The Company's electric capacity and energy sales are
currently under two power sales contracts with two customers. The
failure of these customers to fulfill their contractual
obligations could have a substantial negative impact on the
Company's revenue. However, the Company does not anticipate non-
performance by the customers under these contracts.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PANDA GLOBAL HOLDINGS,
INC.
Date: March 27, 1998 By: /s/ Robert W. Carter
Robert W. Carter,
Chairman of the
Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that each of the
undersigned officers and directors of Panda Global Holdings, Inc.
(the "Company") hereby constitutes and appoints Robert W. Carter
or Janice Carter or any of them (with full power to each of them
to act along), his or her true and lawful attorney-in-fact and
agent, with full power of substitution, for him or her and on his
or her behalf and in his or her name, place and stead, in any
and all capacities, to sign, execute, and file any and all
documents relating to the Company's Form 10-K for the year ending
December 31, 1997, including any and all amendments and
supplements hereto, with any regulatory authority, granting said
attorneys and each of them; full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself, or she
herself, might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of Securities Exchange Act of 1934,
this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/ Robert W. Carter Chairman of the Board, March 27, 1998
Robert W. Carter Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ Janice Carter Executive Vice President, March 27, 1998
Janice Carter Secretary and Treasurer
(Principal Financial
and Accounting Officer)
EXHIBIT NO. 10.138.01
CHANGE ORDER
UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
Change Order No. 001
This Change Order No. 001 is submitted by the Owner to
account for and accommodate a limited Notice to Proceed
(herein called "Limited Notice to Proceed" or "LNTP") prior
to issuance of the Notice to Proceed described in Article 5
of the Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric Project dated December 19, 1996 (the
"Contract"). The LNTP shall allow the Contractor to proceed
with certain critical portions of the Work, as detailed in
the Construction Schedule, attached hereto as Exhibit A, and
shall limit the Owner's payment obligations that shall be
paid to the Contractor prior to full Notice to Proceed.
Contract References: Articles 3, 5, 6, 7, 9 and others.
Change in Work:
The Contractor shall limit Work to items of a critical
nature, as set forth in the attached LNTP Construction
Schedule, that shall allow Contractor to maintain the
Construction Schedule in Exhibit A of the Contract and the
Contract Price under the Contract, within the Limited Notice
to Proceed constraints set forth below.
Allowed Adjustments:
1. To Schedule: The Parties mutually agree to extend the
date of full Notice to Proceed, as described in Article 5.1
of the Contract, to May 1, 1997. Guaranteed Unit Delivery
Dates for the First Unit and Second Unit shall remain the
same as described in the Contract. The following Critical
Dates in Article 5.2.3 are amended as listed below:
Milestone Critical Date
Start Mobilization 5/15/97
Health, Safety and Environmental 6/01/97
Plan Complete
Owner's Office and Residence 60 days after
Complete Notice to Proceed
Surge Shaft Complete 6/01/98
Headrace Tunnel Excavation 50% 7/31/98
Complete
Headrace Tunnel Complete 8/01/99
2. To Costs: None
Special Considerations:
1. Term. The Limited Notice to Proceed period shall not
exceed ninety (90) Days (LNTP Term), unless extended by
mutual agreement of the Parties. The Owner shall be
obligated to pay for Work performed in accordance with the
attached LNTP Construction Schedule and only in the amounts
described herein, except as otherwise noted. Owner shall be
entitled to withhold further payments for failure by the
Contractor to complete the Work in the time and manner
described herein. The Contractor shall not conduct Work
other than that described in Exhibit A herein, nor incur any
additional costs, except at its own risk.
2. LNTP Performance Guarantee. Within seven (7) Days of
the effective date of this Change Order No. 001, Contractor
agrees to provide Owner with a Performance Guarantee, to be
issued in the form required by Owner attached as Exhibit C
and from an Acceptable Performance Guarantee Issuer (as such
term is defined in the Contract), in the amount of Five
Hundred Thousand and No/100 Dollars ($500,000.00). The
Performance Guarantee shall remain in effect throughout the
LNTP Term and may be extended by mutual agreement of the
Parties.
3. EPC Performance Guarantee, Acknowledgment and Consent.
Contractor agrees to continue in good faith to negotiate
with Owner and Financing Parties to resolve the issues
relating to the form of the Performance Guarantee and
issuing bank and the Acknowledgment and Consent prior to
Financial Closing and full Notice to Proceed. As long as
Contractor complies with its obligations under the Contract,
Contractor shall not be held responsible for failure to
provide a Performance Guarantee and Acknowledgment and
Consent acceptable to the Lenders, in the event that, in the
sole discretion of the Owner, the Financing Parties requests
are unreasonable.
4. Insurance. Prior to mobilization and commencement of
construction and without limiting Contractor's obligations
under Article 9 of the Contract, Contractor shall effect and
maintain during the LNTP Term at its own expense for the
benefit of Owner, Contractor and Subcontractors, insurance
for: (i) Contractor's Equipment; (ii) accidents to Laborers;
(iii) Motor Liability with a limit of US$1,000,000; and (iv)
Marine Cargo. Contractor shall present copies of the above
Insurance policies to Owner and evidence that such insurance
policies are in full force and effect. The Parties agree
that in no event shall Contractor's failure to obtain these
insurance policies in a timely manner constitute grounds for
schedule or cost relief and that in no event shall Owner be
responsible for furnishing insurance to cover the Contractor
during the LNTP Term.
5. Payments. Payments for Work performed during the LNTP
Term shall be deducted from the respective Milestone Payment
Schedule in Exhibit E-2 of the Contract once the full Notice
to Proceed is issued pursuant to Article 5.1 of the
Contract. The Parties agree that the retainage required to
be withheld from these payments pursuant to Article 7.2.2 of
the Contract and the Contractor Tax shall be deducted from
the Mobilization Payment which shall be paid after Notice to
Proceed. Within seven (7) Days subsequent to the issuance
of the LNTP, Owner shall send via wire transfer an advance
payment in the amount of $400,000.00 and shall show proof of
wire transfer to Contractor. Said payment shall represent
the Work to be performed by the Contractor in the first
thirty (30) Days of the LNTP Term. Each subsequent payment
made to Contractor shall be due on the last day of each
month that the Work is performed as set forth in the LNTP
Monthly Payment Schedule attached as Exhibit B. Conditions
precedent to Owner making subsequent payments include
Contractor's satisfaction of the obligations to provide a
Performance Guarantee and insurance during the LNTP Term as
set forth in Sections 2 and 4 herein.
6. On or before the end of the LNTP Term, unless extended
by mutual agreement of the Parties, the Owner shall issue
the full Notice to Proceed as described under Article 5 of
the Contract.
7. This Change Order No. 001 does not prevent the
Contractor, or Owner, from exercising any remedies or
actions provided for under the Contract.
8. This Change Order No. 001 shall constitute the entire
agreement between Owner and Contractor relating to the
subject matter hereof, shall operate as an amendment to the
Contract, and shall be deemed to be part of the Contract.
9. Except as amended by this Change Order No. 001, all
other terms and conditions of the Contract are hereby
ratified and shall remain in full force and effect.
Mutually Agreed this 1st day of February, 1997 between:
OWNER CONTRACTOR
Bhote Koshi Power Company China Gezhouba Construction
Private Limited Group Corporation For Water
Resources and Hydropower
By: By:
Ted Hollon Zhang Chong Jiu
Chief Economist
[EXHIBIT A -- CHART OF UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
CONSTRUCTION SCHEDULE (LIMITED NOTICE TO PROCEED)]
EXHIBIT B
UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
Limited Notice to Proceed
Monthly Payment Schedule
<TABLE>
<CAPTION>
February March April May
Milestone Value US$ 1997 1997 1997 1997 Comments
<S> <C> <C> <C> <C> <C> <C>
Personnel $269,500 $103,383 $126,117 $40,000 $0 Includes Contractor's
direct costs to mobilize
and maintain personnel
Equipment $272,671 $42,042 $204,538 $26,091 $0 Lump sums to be paid
Mobilization monthly
Worker's Comp $75,000 $25,000 $25,000 $25,000 $0 Lump sums to be paid
monthly
River Crossing #1 $69,575 $69,575 $0 $0 $0 Included in advance
payment
River Crossing #2 $253,035 $0 $84,345 $168,690 $0 Based on proportional
quantity of Work completed
with respect to total Work
Left Bank Access $30,000 $30,000 $0 $0 $0 Included in advance
Road payment
Site Leveling $70,000 $0 $0 $70,000 $0 Based on proportional
quantity of work completed
with respect to total Work
Seepage Cutoff $285,252 $0 $0 $285,252 $0 Minimum 20% Completion of
total Work for full
payment as shown
Slope Protection $154,330 $0 $0 $154,330 $0 Minimum 40% Completion of
total Work for full
payment
Desanding Physical $50,000 $0 $0 $50,000 $0 Lump sum monthly payment
Model
Temporary Batch $30,000 $30,000 $0 $0 $0 Included in advance
Plant Facility payment
Design $220,000 $100,000 $60,000 $60,000 $0 Lump sum to be paid
monthly
Demobilization $360,000 $0 $0 $0 $360,000 See Note 1
TOTAL $2,139,363 $400,000 $500,000 $879,363 $360,000
</TABLE>
NOTE: Budget figure only; actual and reasonable costs to be paid if full
NTP is not issued by May 1, 1997 for equipment and personnel
demobilization.
EXHIBIT C
FORM OF
PERFORMANCE GUARANTEE
FOR LIMITED NOTICE TO PROCEED
THIS GUARANTEE is given on the day of February, 1997.
BY
INDUSTRIAL AND COMMERCIAL BANK OF CHINA, SINGAPORE
BRANCH (the "Guarantor") of 6 Raffles Quay HEX12-01,
John Hancock Tower, Singapore, 048580,
AT THE REQUEST OF
CHINA GEZHOUBA CONSTRUCTION GROUP CORPORATION FOR WATER
RESOURCES & HYDROPOWER (the "Contractor") of No. 10
Qinbo Road Yichang, Hubei, China,
IN FAVOR OF
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED, of KHA 1-
960, Kalimati, Tachachal, Kathmandu, Nepal, (hereafter
referred to as "Owner").
WHEREAS:
(a) Pursuant to Article 6 of the Amended and Restated
Contract for the Engineering, Procurement and
Construction of the Project on the Bhote Koshi River in
the Sindhupalchok District of Nepal (the "ContractEPC
Contract") dated as of December 19, 1996 between the
Owner and the Contractor; Owner and the Contractor
agreed to a Change Order dated February 1, 1997, to
effectuate a limited notice to proceed (the "Limited
Notice to Proceed"); and
(b) Under the terms of the Limited Notice to Proceed,
Contractor agrees to provide an irrevocable,
unconditional bank guarantee from a financial
institution acceptable to Owner for the term of the
Limited Notice to Proceed.
NOW THEREFORE, THIS GUARANTEE WITNESSETH AS FOLLOWS:
1. This Guarantee is issued at the request of the
Contractor as per Exhibit C (as revised and agreed upon
between the Owner and the Contractor) of the Limited
Notice to Proceed, and shall take effect within seven
(7) days of the date of the Limited Notice to Proceed,
without any further action or confirmation by the
Guarantor or the Contractor. This Guarantee shall be a
continuing guarantee remaining in full force and effect
during the entire term of the Limited Notice to
Proceed. Owner shall return this Performance Guarantee
to the Guarantor with instructions for cancellation
within two (2) days of the expiration of the term of
the Limited Notice to Proceed unless the Parties agree
otherwise.
2. This is an irrevocable and unconditional guarantee
issued by the Guarantor, whereby the Guarantor shall
assume the liability of a primary obligor, and not
merely as guarantor under an ordinary guarantee, and
shall be jointly and severally liable with the
Contractor to the Owner for US $500,000.00 (the United
States Dollars five hundred thousand) (the "Guaranteed
Amount").
3. Under this Guarantee, the Owner is hereby granted with
absolute and unconditional rights, to draw on this
Performance Guarantee, in the event that the Contractor
fails to perform its obligations under the ContractEPC
Contract or the Limited Notice to Proceed. The Owner
shall be entitled to issue a written demand to the
Guarantor for payment up to an aggregate amount not to
exceed the Guaranteed Amount. Such written demand
shall (i) state that the Contractor has failed to
perform its obligations under the ContractEPC Contract
or the Limited Notice to Proceed and, (ii) bear the
original hand-written signatures of two (2) purportedly
authorized officers of the Owner in conformance with
the specimen signatures of such officers (which may be
replaced or re-designated from time-to-time by the
Owner upon written notice to the Guarantor). The
Guarantor shall not require that such written demand be
accompanied by any documents from any third parties.
4. Under this Guarantee, the Guarantor is hereby committed
to honor such written demand from the Owner for payment
immediately upon presentation. The payment by the
Guarantor hereunder shall be made in US Dollars. The
Guarantor shall neither require the Owner to exercise
its recourse against the Contractor first, nor require
the Owner to exhaust its remedies against the
Contractor first, and shall not set such requirements
as a precondition of the Guarantor to effect its
payment under this Guarantee. In particular, the
Guarantor shall not raise any contractual defense by
the Contractor under the ContractEPC Contract, but
shall honor its obligations hereunder as an
indebtedness independent of the ContractEPC Contract or
any obligations of the Contractor thereunder.
5. This Guarantee is not assignable by either the
Guarantor or the Owner. This Guarantee shall be
binding on the Guarantor and its successors and shall
inure to the benefit of the Owner.
6. The obligations of the Guarantor hereunder shall not be
discharged by (i) any time, grace, indulgence, waiver
or consent at any time given to the Contractor, (ii)
any amendment to any clause of the ContractEPC
Contract, provided that any amendment to the
ContractEPC Contract which involves the Guarantor's
assuming greater obligation for the Guaranteed Amount
(with the exception of any increase of such amount
pursuant to Article 6 in the case of change orders)
will require the prior written consent of the
Guarantor, (iii) any failure or delay in the
enforcement or release of any rights of or under the
ContractEPC Contract limiting any other provisions of
this Guarantee, the Guarantor acknowledges and agrees
that it will remain liable hereunder notwithstanding
that the Contractor may cease to exist or for any other
reason the Owner may no longer be able to deal with the
Contractor.
7. The Guarantor hereby represents and warrants to the
Owner as follows:
(a) The Guarantor is a state-owned bank duly
organized and validly existing under the laws of
Singapore and has full power, authority and legal
capacity to execute and deliver this Guarantee and
to assume and perform the obligations provided for
herein;
(b) The Guarantor has taken all appropriate and
necessary legal actions to authorize the
execution, delivery and performance of this
Guarantee;
(c) This Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable in
accordance with its terms;
(d) The obligations of the Guarantor hereunder
rank and will rank at least pari passu in priority
of payment and in all other respects with all
other unsecured indebtedness of the Guarantor; and
(e) The Guarantor shall supply to the Owner, upon
request, copies of the annual financial statements
of the Guarantor.
8. This Bank Guarantee is a commercial act of the
Guarantor in relation to a commercial transaction and
all obligations of the Guarantor arising under this
Guarantee are commercial in nature. The Guarantor
hereby irrevocably agrees not to raise any claim of
immunity (if any) from suit, attachment or execution in
respect of any claims which may be made against it at
any time concerning its obligations under this Bank
Guarantee.
9. Any demand from the Owner to the Guarantor for payment
must be in written form, in the English language
delivered to the Guarantor at the following address (or
any new address designated by the Guarantor in writing
duly notified to the Owner in future) in the following
manner.
(a) Method of delivery: (i) personally delivered,
(ii) transmitted by postage prepaid registered
mail (airmail if international), (iii) transmitted
by internationally recognized courier service; or
(iv) transmitted by telex or facsimile (with
postage prepaid mail confirmation).
(b) Address of the Guarantor:
6 Raffles Quay, HEX- 01
John Hancock Tower
Singapore 048580
Telephone No.: 0065-5382780
Fax No.: 0065-5381370
Attn.: Ms. Wu Xinyu
10. This Guarantee shall be governed by and construed in
accordance with Singapore Law.
IN WITNESS WHEREOF, the undersigned Guarantor has executed
this Guarantee by its duly authorized officer the day and
year first above-written.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
By:
Name:
Title:
EXHIBIT NO. 10.138.02
CHANGE ORDER
TO THE
AMENDED AND RESTATED CONTRACT
FOR THE
ENGINEERING, PROCUREMENT AND CONSTRUCTION
OF THE
UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
CHANGE ORDER NO. 002
Recitals:
1. Whereas in accordance with Article 6, the Owner herein has
requested a Change to the Contract and the Parties have mutually
agreed to this Change Order No. 002;
2. Whereas Financial Closing shall not occur on or before May
1, 1997, and that the Owner wishes to provide Contractor with
sufficient funds for the payment for the Work, in accordance with
Article 7.2 of the Contract, until such time as Financial Closing
occurs;
3. Whereas pursuant to Recital No. 2 above, the Parties have
otherwise mutually agreed, in accordance with Article 5.3 of the
contracts, that the Owner shall be allowed to issue an Interim
Notice to Proceed (as defined below) without the occurrence of
Financial Closing; and
4. Whereas, the Owner and the Financing Parties require that an
Acceptable Letter of Credit be issued to replace the Performance
Guarantee attached as Exhibit G in the Contract, and the
Contractor shall make diligent efforts to obtain the Acceptable
Letter of Credit (as defined below).
A. Defined Terms:
For the purposes of this Change Order No. 002, the following
terms shall apply:
"Interim Notice to Proceed" shall mean a Notice from Owner to
Contractor to perform the Work under the Contract during the
Interim Notice to Proceed Period.
"Interim Notice to Proceed Period" shall mean the time between
the date of the Interim Notice to Proceed and the earlier of the
date of Financial Closing or November 30, 1997.
"Acceptable Letter of Credit" shall mean a stand-by letter of
credit issued in a form and substance acceptable to Owner and
Financing Parties and from a financial institution acceptable to
Owner and Financing Parties.
Pursuant thereto and as evidence of the agreement of the Parties,
this Change Order No. 002 is hereby executed and confirmed as
provided below.
B. Special Considerations:
1. The Parties agree that the Owner shall issue an Interim
Notice to Proceed prior to Financial Closing as provided in
Article 5.3 and notwithstanding any other provision of the
Contract, and further that the Owner represents that there will
be sufficient funds available to make payments under Article 7
until such time as Financial Closing occurs.
2. Upon issuance of the Interim Notice to Proceed (as allowed
under this Change Order No. 002), Contractor shall continue
performance of the Work as required and in accordance with the
terms of the Contract.
3. Within seven (7) Days of the issuance of the Interim Notice
to Proceed, provided that the Contractor has provided the Interim
Performance Guarantee as defined in Section 5 below, the Owner
shall pay to Contractor a mobilization payment in the mutually
agreed upon amount equal to US$3,451,507.00 which shall be
inclusive of the agreed upon value of the Work performed through
April 30, 1997 under the Change Order No. 001, details of which
are attached as Exhibit 1.
4. The Parties agree that: (1) the Contractor shall diligently
seek to provide an Acceptable Letter of Credit substantially in
the form and substance attached hereto as Exhibit 2, which shall
supersede Exhibit G of the Contract, prior to May 31, 1997, and
(2) if the Acceptable Letter of Credit is not provided by the
Contractor on or before May 31, 1997, Owner shall be entitled to
withhold payments until such time as the Acceptable Letter of
Credit is provided by the Contractor, unless the Parties
otherwise mutually agree.
5. Contractor shall amend the Limited Notice to Proceed
Performance Guarantee (as defined in Change Order No. 001)
provided by the Contractor under Change Order No. 001 to: (1)
extend the term until the earlier of the effective date of the
Acceptable Letter of Credit or the date of expiration of the
Interim Notice to Proceed Period, and (2) increase the amount to
US$3,400,000.00 (hereinafter defined as the "Interim Performance
Guarantee"). Upon the occurrence of one of the events listed in
sub-section 1 above, Owner shall release the Interim Performance
Guarantee by written notice to the Interim Performance Guarantee
issuer.
6. This Change Order No. 002 shall supersede Change Order No.
001, which shall be and hereby automatically rescinded upon
issuance of the Interim Notice to Proceed and shall be of no
further force or effect.
7. Article 15.3.1 of the Contract is amended to read as
follows:
"15.3.1 Upon Notice to Owner, Contractor may terminate
this Contract if Financial Closing has not
occurred by November 30, 1997 and Owner has failed
to make timely payments during the Interim Notice
to Proceed Period provided, however, that failure
to make such payments is not during a period in
which the payment is being disputed in good
faith."
8. If during the Interim Notice to Proceed Period, Owner fails
to make a timely payment of amounts due to Contractor under this
Contract, which failure continues for a period of sixty (6) Days
after Notice of such non-payment, Contractor may terminate the
Contract, provided, however, that the failure to make such
payment is not during a period in which the payment is being
disputed in good faith.
9. If Contractor terminates the Contract pursuant to Sections 7
and 8 above, Owner shall pay to Contractor a Termination Payment
as defined in Article 15.2.2 of the Contract. Owner shall give
Notice to the issuing bank to cancel the Acceptable Letter of
Credit, and within thirty (30) Days of termination by Contractor,
Owner shall return the retainage, less taxes required by
Applicable Law, as the date of such termination. Owner shall
release such retainage for taxes at such time as Contractor
provides documentation that the taxes have been paid.
10. Except as amended by this Change Order No. 002, all other
terms and conditions of the Contract are hereby ratified and
confirmed and shall remain in full force and effect.
11. This Change Order No. 002 shall constitute the entire
agreement between Owner and Contractor relating to the subject
matter hereof, shall operate as an amendment to the Contract and
shall be deemed to be a part of the Contract.
12. The effective date of this Change Order No. 002 shall be
April 30, 1997.
C. Cost Adjustments:
Pursuant to Article 6.1.1 of the Contract, Contractor shall not
be deemed to have waived all cost claims or offsets associated
with the issuance of the Acceptable Letter of Credit under this
Change Order No. 002. Contractor, herein, provides Notice to
Owner that any reasonable costs, if applicable, and documented
proof thereof, shall be submitted on or before May 10, 1997 for
Owner's review and approval.
D. Schedule Adjustments:
The Critical Dates in Article 5.2.3 are amended as follows:
Milestones Critical Date
Start Mobilization 6/01/97
Health, Safety and Environmental Plan Complete 6/01/97
Owner's Office and Residence Complete 7/01/97
Surge Shaft Complete 6/01/98
Headrace Tunnel Excavation 50% Complete 7/31/98
Penstock Complete 8/01/99
Headrace Tunnel Complete 8/01/99
Agreed to this 26th day of April 1997 by and between:
OWNER: CONTRACTOR
Bhote Koshi Power Company China Gezhouba Construction Group
Private Limited Corporation For Water Resources
and Hydropower
By: By:
Ted Hollon Zhang Chong Jiu
Chief Economist
EXHIBIT 1
SUMMARY OF MOBILIZATION PAYMENT
UNDER CHANGE ORDER No. 002
The mobilization payment, as determined below, under Change Order
No. 002 is inclusive of the estimated value of the Work performed
through April 30, 1997 under Change Order No. 001.
Net Mobilization Payment $3,148,916
LNTP Payment for April 1997 $ 302,656
Overfunding of Milestone No. 4 $ (65)
Total $3,451,507
Agreed to this 26th day of April 1997 by and between:
ACCEPTED: ACCEPTED:
By: By:
Ted Hollon Mr. Zhang Chong Jiu
Bhote Koshi Power Company China Gezhouba Construction
Private Limited Group Corporation for
Water Resources and Hydropower
page 1 of 3
Exhibit 1
SUMMARY OF MOBILIZATION PAYMENT
UNDER CHANGE ORDER No. 002
<TABLE>
<CAPTION>
Authorized ------- LNTP PAYMENT ------- Agreed to value
Amount Under Nego- as of April 30, 1997
Milestone Contract Milestone Change Order Change Order -- Already Paid -- tiated ---------- --------
Pymt No. Payment Name No. 1 Item No. 001 Feb Mar for Apr Unfinished Finished
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Mobilization Personnel $269,500 $103,383 $126,117 $ 40,000 $ - $ 269,500
Equipment
Mobilization $272,671 $ 42,042 $204,538 $ 26,091 $ - $ 272,671
Worker Camp $ 75,000 $ 25,000 $ 25,000 $ 25,000 $ - $ 75,000
Temporary
Batch Plant $ 30,000 $ 30,000 $ - $ - $ - $ 30,000
Site Leveling $ 70,000 $ - $ 70,000 $ - $ - $ 70,000
3 Engineering Desanding
Basin Model $ 50,000 $ - $ - $ 50,000 $ - $ 50,000
Design $220,000 $100,000 $ 60,000 $ 60,000 $ - $ 220,000
4 River Crossing #1 River
Crossing
No. 1 $ 69,575 $69,575 $ - $ - $ - $ 69,575
5 River Crossing #2 River
Crossing
No. 2 $253,035 $ - $ 14,345 $ 61,565 $177,125 $ 75,910
6 Construction Roads Left Bank
hw area Access Road $ 30,000 $ 30,000 $ - $ - $ - $ 30,000
8 Stabilization, Seepage
Cutoff Wall Cutoff $285,252 $ - $ - $ 10,000 $275,252 $ 10,000
Slope
Protection $154,330 $ - $ - $ 30,000 $124,330 $ 30,000
---------- -------- -------- -------- -------- ----------
Totals $1,779,363 $400,000 $500,000 $302,656 $576,707 $1,202,656
</TABLE>
page 2 of 3
<TABLE>
<CAPTION>
Milestone Contract Milestone Adjusted
Payment Payment Name Contract 10% 5% Net Amount Already With- Payment
No. Amount Retainage Cont. Tax Paid holding Request Comment
Adjustment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Mobilization $4,634,000 $(463,400) $(231,700) $3,938,900 $(717,171) $(72,813) $3,148,916 after
LOC
issued
3 Engineering $ 773,878 $ (77,388) $ (38,694) $ 657,796 $(270,000) $ 40,500 $ 428,296 RFP
expected
July 1
4 River Crossing #1 $ 69,510 $ (6,951) $ (3,476) $ 59,064 $ (69,575) $ 10,427 $ (65) Take
from mob
payment
5 River Crossing #2 $ 421,694 $ (42,169) $ (42,169) $ 358,440 $ (75,910) $ 11,387 $ 293,916 RFP
expected
July 1
6 Construction Roads $ 92,166 $ (92,217) $ (46,106) $ 783,841 $ (30,000) $ 4,500 $ 758,341 RFP
hw area expected.
June 1
8 Stabilization, $1,955,548 $(195,555) $ (97,777) $1,662,216 $ (40,000) $ 6,000 $1,628,216 RFP
Cutoff Wall expected
after
Jan '96
RFP =
Request
for
payment
</TABLE>
page 3 of 3
[Form of Letter Agreement Re: EPC Letter of Credit]
[Date]
To: International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
U.S.A.
Ladies and Gentlemen:
This Letter Agreement (this "Agreement") dated as of
________________, 1997, is made among Industrial and Commercial
Bank of China, acting its Singapore branch (the "Obligor"),
International Finance Corporation, an international organization
organized and existing by virtue of the Article of Agreement
among its member countries. ("IFC") and Wilmington Trust
Company, in its capacity as trustee for and on behalf of IFC (the
"Trustee").
WHEREAS, the Obligor has issued its Irrevocable Standby
Letter of Credit (the "EPC Peformance Letter of Credit") in favor
of the Trustee (for and on behalf of IFC) as security in respect
of the obligations of China Gezhouba Construction Group
Corporation for Water Resources and Hydropower (the "EPC
Contractor") under the Amended and Restated Contract for the
Engineering, Procurement and Construction of the Upper Bhote
Koshi Hydroelectric Project dated December 19, 1996 (the "EPC
Contract") between the EPC Contractor and Bhote Koshi Power
Company Private Limited.
WHEREAS, the parties hereto wish to provide for the future
amendment of the stated amount of the EPC Performance Letter of
Credit as provided herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. The sum referred to in Paragraph 1 of the EPC Performance
Letter of Credit shall be amended as follows:
(i) Upon receipt by the Obligor of a certificate from the
Trustee or IFC stating that there has been an increase or
decrease of the Contract Price pursuant to Article 6 of EPC
Contract and stating the amount of such increase or decrease, the
sum referred to in Paragraph 1 shall be increased or decreased,
as applicable, by the amount stated in such certificate from the
Trustee or IFC;
(ii) Upon receipt by the Obligor of a certificate from the
Trustee or IFC stating that there has been a drawing under the
EPC Performance Letter of Credit for amounts due from the EPC
Contractor for Performance Liquidated Damages or Schedule
Liquidated Damages pursuant to Article 13.3 of the EPC Contract
and stating the amount of such drawing, the Obligor shall
increase the amount of the EPC Performance Letter of Credit by
the amount of any such drawing;
(iii) Promptly, upon receipt of a certificate at any time and
from the time to time pursuant to clause (i) or (ii) above from
the Trustee or IFC, the Obligor shall execute and deliver by
international courier to the Trustee (or to its order) an
amendment to the EPC Peformance Letter of Credit, in the from of
Annex A (correctly completed), confirming the adjustment of the
amount of the EPC Performance Letter of Credit in accordance with
the terms hereof.
2. This Agreement shall terminate and have no further
effect after the final expiration of the EPC Performance Letter
of Credit as provided in such EPC Performance Letter of Credit.
3. The Obligor hereby agrees not to raise any defense
hereunder which would be available to the EPC Contractor under
the EPC Contract or otherwise.
4. Any notice, request or other communication to be given
or made under this Agreement shall be in writing and may be
delivered by hand, airmail, facsimile, established courier
service or telex to the party's address specified below or at
such other address as such party notifies to the other party from
time to time and will be effective upon receipt or, in the case
of delivery by hand or by established courier service, upon
refusal to accept delivery.
For Industrial and Commercial Bank of China,
Acting through its Singapore branch
Facsimile:
For IFC:
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20043
Facsimile:
For the Trustee:
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Facsimile:
5. This Agreement shall be binding upon he inure to the benefit
of the parties hereto and their respective successors, assigns
and participants, provided, however, that the Obligor may not
assign this Agreement (or any obligations, rights or interests
herein) without the prior written consent of the Trustee and IFC.
6. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability but shall not invalidate the remaining
provisions of this Agreement or affect such provision in any
other jurisdiction.
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SINGAPORE.
8. The Obligor will at any time and from time to time upon the
written request of IFC or the Trustee, execute and deliver such
further documents and do such further acts and things as IFC or
the Trustee may reasonably request in order to effect the
purposes of this Agreement.
9. This Agreement may be executed in any number of counterparts
and by the different parties hereto in separate counterparts,
each of which when all of the requisite counterparts are so
executed and delivered, shall be an original, but all of which
shall together constitute one and the same instrument.
10. Neither this Agreement nor any of the terms hereof may be
changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by all of
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and acknowledged by their
respective duly authorized officers or representatives as of
the date first above written.
THE INDUSTRIAL AND COMMERICAL BANK OF CHINA,
ACTING THROUGH ITS SINGAPORE BRANCH
By:
ACKNOWLEDGED AND AGREED TO:
INTERNATIONAL FINANCE CORPORATION
By:
Authorized Representative
WILMINGTON TRUST COMPANY, as Trustee
By:
Authorized Representative
Annex A
Form of Letter of Amendment to Amount of EPC Performance
Letter of Credit
Wilmington Trust Company (the "Trustee")
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Amendment to the PEC Performance Letter of Credit
No. dated [ ] 1997
In favour of Wilmington Trust Company (the "EPC Performance
Letter of Credit"
Whereas we, Industrial and Commercial Bank of China, acting
through its Singapore Branch, as the Obligor under the EPC
Performance Letter of Credit issued such EPC Performance Letter
of Credit in favour of the Trustee on [ ________] 1997 and have
received a certificate from the Trustee in accordance with
Paragraph [1(i) or 1(ii)] of the Letter Agreement dated as of
____________, 1997, among the Industrial and Commercial Bank of
China, acting through its Singapore Branch, the International
Finance Corporation and the Trustee.
NOW THIS AMENDMENT WITNESSETH as follows:
1. The sum set out in paragraph 1 of the EPC Performance Letter
of Credit shall be [increased] [reduced] by the amount of US$
[amount certified by the Trustee].
2. As a consequence of paragraph 1 of this Amendment, the sum
set out in paragraph 1 of the EPC Performance Letter of Credit
shall be amended to [amount specified in paragraph 1 of the EPC
Performance Letter of Credit prior to amendment increased or
decreased, as applicable, by the amount specified in paragraph 1
of this Amendment].
3. All other terms and conditions of the EPC Performance Letter
of Credit shall remain unchanged.
Yours faithfully
(Authorized Signatories)
For and on behalf of
Industrial and Commercial Bank of China
Form of Irrevocable Standby Letter of Credit for EPC Performance
Dated , 1997
To: Wilmington Trust Company (the "Trustee") of Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
acting for and on behalf of International Finance Corporation
("IFC"), 2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433
Irrevocable Standby Letter of Credit
WHEREAS
A. We are informed that under the terms of a purported Amended
and Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project dated
December 19, 1996 (the "EPC Contract") between Bhote Koshi Power
Company Private Limited (the "Company") and China Gezhouba
Construction Group Corporation for Water Resources and Hydropower
(the "EPC Contractor), the EPC Contractor has undertaken to
design, supply plant and equipment and construct a 36 MW
hydroelectric facility on the Bhote Koshi River in the
Sindhupalchok District of Nepal (the "Project").
B. We are informed that under Section 3.26 of the purported EPC
Contract, the EPC Contractor agreed to provide this Letter of
Credit as security in respect of the obligations of the EPC
Contractor with respect to the Performance Guarantee (as defined
in the EPC Contract).
By order of the EPC Contractor, Industrial and Commercial Bank of
China, acting through its Singapore branch (the "Obligor") issues
this Irrevocable Standby Letter of Credit (the "EPC Performance
Letter of Credit") in favour of the Trustee (for and on behalf of
IFC) upon the following terms and conditions.
1. Upon receipt by Obligor of a certificate or certificates in
compliance with the terms of this EPC Performance Letter of
Credit, the Obligor shall pay to the Trustee a sum or sums which
shall not cumulatively exceed the amount of US$11,600,000.00.
2. Subject to the other terms of this EPC Performance Letter of
Credit, payment by the Obligor under this EPC Performance Letter
of Credit shall be made in accordance with paragraph 3 hereof
against delivery by letter or [tested telex] to the Obligor at
[Obligor's address], [telex] number [Obligor's telex number] (or
such other address or telex number as the Obligor may from time
to time notify to the Trustee and IFC at its respective above
mentioned address) of a certificate in the form of Annex 1 dated
the date of intended delivery thereof. Such certificate may be
delivered by either IFC or the Trustee.
3. If a certificate is delivered to the Obligor in accordance
with paragraph 2 above by 11:00 a.m. on any business day that the
Obligor is ordinarily open for business, then by 2:00 p.m. of the
next succeeding business day, the Obligor shall pay in United
States dollars to the Trustee's account with the bank indicated
on Annex 1 in same day funds a sum equal to the amount demanded
of the Obligor hereunder but not exceeding the maximum amount
available to the Trustee from the Obligor under this EPC
Performance Letter of Credit at the time of such payment.
4. This is not a contract of guarantee and all payments which
are to be made by the Obligor hereunder will be made free and
clear of and without deduction for or on account of any set-off
or counterclaim or the raising of any defense which would be
available to the EPC Contractor under the EPC Contract or
otherwise.
5. Multiple drawings are permitted under this EPC Performance
Letter of Credit.
6. If the Obligor wishes to change the address to which notices
should be served on it pursuant to paragraph 3 above, then it may
do so by not less than ten (10) days prior written notice to the
Trustee and IFC.
7. Annex 1 hereto has been signed by the Obligor for the
purposes of identification and shall form part of this EPC
Performance Letter of Credit.
8. This EPC Performance Letter of Credit is irrevocable and
shall not be assigned by the Trustee or the Obligor, save that
the Obligor hereby consents to the assignment by the Trustee of
the benefit of this EPC Performance Letter of Credit to any one
or more lenders (or to an agent or trustee acting on their behalf
or to any other designee of any such lenders) providing finance
to the Company in connection with the Project and to any person
acquiring an interest in the Project and undertakes following
receipt of notice of any such assignment to make payments
hereunder in accordance with the directions of such assignee.
The Obligor hereby acknowledges and agrees that this EPC
Performance Letter of Credit is transferable to the
beneficiary(ies) specified in any such notice of assignment.
9. This EPC Performance Letter of Credit shall become effective
on the date hereof and shall expire at the close of business at
our office in Singapore, on the date which is one (1) year from
the date hereof (the "Stated Expiration Date"); provided,
however, that the State Expiration Date shall be automatically
extended for a period of one year effective upon the Stated
Expiration Date and each annual anniversary of the Stated
Expiration Date (each such annual anniversary date being referred
to herein as the "New Stated Expiration Date") unless, at lease
sixty (60) days prior to the Stated Expiration Date or any such
New Stated Expiration Date, as the case may be, we notify the
Trustee and IFC, by registered mail or similar overnight courier
service at the above addresses, that this Letter of Credit shall
not be extended beyond the Stated Expiration Date or the New
Stated Expiration Date, as the case may be. If the Trustee or
IFC is so notified, the Trustee or IFC may on or before the
Stated Expiration Date or the New Stated Expiration Date, as the
case may be, draw the full amount available hereunder.
10. This EPC Performance Letter of Credit shall not be modified
or amended by reference to any instrument or document except as
expressly provided herein.
11. This EPC Performance Letter of Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication NO. 500
(the "UCP"); provided that this EPC Performance Letter of Credit
shall be governed and construed in accordance with the laws of
Singapore to the extent that the UCP is not applicable.
Yours faithfully
(Authorized Signatories)
For and on behalf of
[Name of Obligor]
Annex 1
Form of Certificate
To: Industrial and Commercial Bank of China, acting through its
Singapore Branch
Certificate under the EPC Performance Letter of Credit issue by
your
No. dated [ ] 1997
In favour of Wilmington Trust Company (the "EPC Performance
Letter of Credit")
We refer to the EPC Performance Letter of Credit and certify
that:
1. US$ [specify amount] has become due and payable by the EPC
Contractor under the EPC Contract and has not been paid; and/or a
notice has been received from the Issuer indicating that the
Letter of Credit shall not be extended beyond the Stated
Expiration Date or the New Stated Expiration Date (as defined in
the EPC Performance Letter of Credit), as the case may be.
2. If applicable, no previous demand has been made of you in
respect of the above amount.
3. We demand payment of US$ [specify amount].
4. Payment is to be made to [specify name, address and account
of bank].
(A term defined in the EPC Performance Letter of Credit has the
same meaning in this Certificate).
For and on behalf of
Wilmington Trust Company
EXHIBIT NO. 10.138.03
CHANGE ORDER
TO THE
AMENDED AND RESTATED CONTRACT
FOR THE
ENGINEERING, PROCUREMENT AND CONSTRUCTION
OF THE
UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
CHANGE ORDER NO. 003
RECITALS:
Whereas in accordance with Article 6, the Contractor and Owner
mutually agree to amend the following items in the Amended and
Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project,
dated December 19, 1996:
1. amend the schedule for selecting spare parts described in
Article 3.18,
2. amend the Critical Dates described under Article 5.2.3,
3. amend the Construction Schedule contained as Exhibit A, and
4. amend the Milestone Payment Schedule contained as Exhibit E-1.
A. DEFINED TERM:
1. For the purposes of this Change Order No 003, the following
term shall apply:
"River Closure" shall mean that the river is closed and
diverted and the cofferdam is sufficiently sealed to allow
continuous excavation of the dam.
Pursuant thereto and as evidence of the agreement of the Parties,
this Change Order No. 003 is hereby executed and confirmed as
provided below:
B. SPECIAL CONSIDERATIONS
1. Article 3.18 shall be amended to read:
3.18.1 Contractor shall be responsible for obtaining and
for the cost of all spare parts and Equipment tools required for
start-up and testing of the Facility. The Contractor shall, and
shall cause its Equipment vendors to, submit to the Owner a list
of recommended spare parts by the earlier of thirty (30) Days
after an order is placed for any components of the Equipment or
February 1, 1998. Said lists shall include prices, inclusive of
spare parts and prices listed in Exhibit L, to be used by the
Owner for the operation of the Facility. Such prices shall
remain valid for any spare parts ordered prior to the Unit
Delivery Date of the Second Unit. No later than thirty (30) Days
after the receipt of any list of recommended spare parts, Owner
may select and order spare parts, to be used by the Owner for the
operation of the Facility, to be furnished by Contractor at
Owner's expense. Contractor shall deliver such spare parts to
the Facility Site on a scheduled agreed to between the Owner and
Contractor, provided that such spare parts shall be delivered
prior to the Unit Delivery Date of the Second Unit.
2. The Parties herein agree to amend the Critical Dates in
Article 5.2.3, as amended in Change Order No. 001 and Change
Order No. 002, as follows:
a. Delete the following Milestones and Critical Dates:
MILESTONES CRITICAL DATES
Owners Office and Residence Complete 07/01/97
Right Bank Stabilization 06/25/97
Headworks Foundation Cut-Off Wall 50% Complete 10/15/97
All Major Equipment Ordered 07/01/97
b. Add the following Milestones and Critical Dates:
MILESTONES CRITICAL DATES
Turbine, Generator, Inlet Valve and Governor
Ordered 08/31/97
Cut-Off Wall under Spillway Complete 12/01/97
River Closure 01/01/98
Transformer and Powerhouse Crane Ordered 11/15/97
c. Revise the following Critical Date:
MILESTONE CRITICAL DATE
Powerhouse Excavation Complete 1/31/98
3. Replace the Construction Schedule attached as Exhibit A to
the Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric Project, dated December 19, 1996 with the
Construction Schedule attached as Exhibit 3.1 to this Change
Order No. 003.
4. Replace the Milestone Payment Schedule attached as Exhibit
E-2 to the Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi Hydroelectric
Project, dated December 19, 1996 with the Milestone Payment
Schedule attached as Exhibit 3.2 to this Change Order No. 003.
Agreed to this __________ day of September 1997 by and between
OWNER: CONTRACTOR:
Bhote Koshi Power Company China Gezhouba Construction Group
Private Limited Corporation for Water Resources
and Hydropower
By:__________________________ By:__________________________
Ted C. Hollon Xie Yi
Exhibit 3.1
[Bar Chart diagram of Construction Schedule]
Exhibit 3.2
UPPER BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Milestone Payment Schedule
Percent
of
Milestone Milestone Description Contract
Portion
1 Mobilization payment upon receipt of 10.00
Notice to Proceed.
2 Health, Safety and Environmental Plan 0.39
submitted and approved by Owner, Nepalese
style, 4 apartment building provided as
Owner's office/residence, mobilization
complete and in compliance with Health,
Safety and Environmental Plan and
environmental laws.
3 Project engineering design and desanding 1.87
basin physical model and testing complete;
project design report, including design
drawings, and report on desanding basin
physical model testing delivered to Owner.
4 River crossing No. 1 complete. 0.15
5 River crossing No. 2 complete. 0.91
6 Construction roads for access along the 1.99
left bank at the headworks, adit A, adit
B, penstock and surge shaft complete.
7 Construction roads for switchyard and 0.78
powerhouse construction area complete.
8 Left bank high slope protection above 0.83
elevation 1435 m complete.
9 Diversion tunnel and diversion channel 3.01
complete, cut-off wall spillway section
complete (20% of cut-off wall).
10 Upper and lower cofferdams complete. 1.77
11 Excavation of desanding basin (Stage I), 0.91
by-pass conduit inlet, spillway and dam
foundation, complete.
12 Cut-off wall under right bank slope and 4.00
right section of dam, foundation concrete
of spillway and dam complete.
13 Concrete of by-pass conduit inlet, 9.86
desanding basin forebay and right side
wall at El. 1430 m, spillway at El. 1430 m
and dam at El. 1426 m complete; grouted
riprap and backfilling complete; desanding
basin area protected for wet season
construction.
14 Right bank slope stabilization, remove 1.19
tower crane and cofferdams.
15 Stage II excavation of desanding basin and 4.56
excavation of headrace tunnel intake
complete. Concrete desanding basin,
headrace tunnel intake and by-pass
conduit below El. 1435 m, complete.
Install gates for desanding basin and by-
pass channel.
16 Install gates for spillway and headrace 1.06
tunnel intake.
17 Completion of dam and spillway concrete; 2.23
cut-off wall (including Arniko Highway
section) complete.
18 Adit A and B excavation and rock support 0.68
complete, headrace tunnel excavation and
support from surge shaft to downstream
outlet complete.
19 Milestone 16, plus 825 m of headrace 2.47
tunnel excavation and rock support
complete.
20 Milestone 17, plus 825 m of headrace 2.47
tunnel excavation and rock support
complete.
21 Milestone 18, plus 825 m of headrace 2.47
excavation and rock support complete.
22 Headrace tunnel excavation and rock 2.47
support complete.
23 1100 m of headrace tunnel lining complete. 2.52
24 Milestone 21 plus 1100 m of headrace 2.52
tunnel lining complete.
25 Headrace tunnel lining complete. 2.60
26 Grouting and drain holes complete in 1600 0.39
m of headrace tunnel.
27 Grouting and drain holes complete in 0.39
headrace tunnel, and adit A and B plugged
and complete.
28 Surge shaft and vent tunnel excavation, 0.57
rock support and concrete complete.
29 Orders placed for Major Equipment; order 3.61
placed for steel and hardware for penstock
and spillway gates.
30 Penstock steel and hardware delivered to 1.88
the site; and Contractor penstock
construction operation ready to proceed.
31 Penstock tunnel section, including steel 0.31
liner, concrete encasement and grouting,
complete.
32 Exposed section of penstock complete, 1.57
including provisions for drainage,
restoration of public roadway, and
completion of penstock and tunnel leakage
test.
33 Power house cofferdam in place and 0.91
tailrace excavation complete.
34 Tailrace concrete placement, gate 0.78
installation, backfill and cofferdam
removal complete.
35 Powerhouse foundation excavation complete. 0.88
36 Placement of first stage concrete (maximum 1.13
flood protection level) and embedded parts
complete.
37 Powerhouse second stage concrete, 1.11
superstructure, roof and architectural
work complete, backfilling around
powerhouse and slope protection complete.
38 Operators village and maintenance facility 1.86
building foundations, concrete framing,
exterior walls, roof, all subfloors
completed; water and electrical services
"roughed-in"; underground utilities
installed; perimeter security walls,
initial road grading.
39 Operators village and maintenance facility 1.86
complete and accepted by Owner.
40 Transmission towers delivered to the 0.83
Facility Site.
41 Survey and subsurface testing of all tower 1.00
locations, foundations for each tower
complete.
42 All towers erected and hardware and 0.99
conductors installed, inspected and
tested, complete.
43 Delivery of First Unit and auxiliary 6.89
equipment to the Facility Site.
44 Delivery of Second Unit to the Facility 2.04
Site.
45 Powerhouse bridge crane and draft tube 1.69
gate hoisting equipment installed,
complete.
46 Achievement of First Unit Delivery Date, 0.91
in accordance with the requirements of the
Contract.
47 Installation of all electrical and 2.15
mechanical auxiliary and miscellaneous
equipment and systems, including all
switchyard equipment, complete.
48 Achievement of Second Unit Delivery Date, 0.91
in accordance with the requirements of the
Contract.
49 Final Acceptance in accordance with 1.83
requirements of the Contract.
TOTAL 100.00
EXHIBIT NO. 10.138.04
CHANGE ORDER
TO THE
AMENDED AND RESTATED CONTRACT
FOR THE
ENGINEERING, PROCUREMENT AND CONSTRUCTION
OF THE UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
CHANGE ORDER NO. 004
Recitals:
1. WHEREAS, in accordance with Article 6, of the Amended and
Restated Contract for the Engineering, Procurement and
Construction of the Project on the Bhote Koshi River in the
Sindhupalchok district of Nepal dated as of December 19, 1996
between Owner and Contractor (the "Contract") the Parties have
mutually agreed to this Change Order No. 004; and
2. WHEREAS, the Owner, CGGC and the Financing Parties have
agreed that a Revised Performance Guarantee (as defined below and
as attached hereto) be issued to replace the Initial Performance
Guarantee (as defined below) in the Contract;
NOW THEREFORE, the Parties agree to the following:
A. Defined Terms
For the purposes of this Change Order No. 004, the following
terms shall apply:
"Initial Performance Guarantee" shall mean the Performance
Guarantee issued by the Industrial and Commercial Bank of China
"ICBC" on October 8, 1996.
"Revised Performance Guarantee" shall mean the Performance
Guarantee issued in the form and substance acceptable to Owner
and Financing Parties and from a financial institution acceptable
to Owner and Financing Parties and attached hereto as "Attachment
1". The Revised Performance Guarantee shall have the same
meaning as the term "Performance Guarantee" in the EPC Contract.
B. Special Considerations
1. The Parties agree to the terms of the Form of Revised
Performance Guarantee attached hereto and such form shall replace
and supercede the previous form of Performance Guarantee attached
to the EPC Contract as "Exhibit G".
2. The Parties agree that immediately or within fourteen (14)
days of the signing of this Change Order No. 004, the Contractor
shall issue the Revised Performance Guarantee.
3. The Parties agree that Article 3.26 of the Contract is
amended to read as follows:
"3.26 Performance Guarantee
(a) Upon execution of this Contract, Contractor shall
provide Owner with a Performance Guarantee, issued in
the form provided in Attachment 1 (the "Performance
Guarantee") and from a financial institution acceptable
to Owner and Financing Parties, in their sole
discretion ("Acceptable PG Issuer"). As set forth on
Attachment 1, the Performance Guarantee shall contain
the following provisions, together with such other
provisions as set forth on Attachment 1:
`1. By and Amended and Restated Contract for the
Engineering, Procurement and Construction of the Upper
Bhote Koshi Hydroelectric Project on the Bhote Koshi
River in the Sindhupalchok District of Nepal (the `EPC
Contract') dated as of December 19, 1996 between the
Owner and China Gezhouba Construction Group Corporation
for Water Resources and Hydropower (the `Contractor'),
the Contractor shall provide an irrevocable,
unconditional bank guarantee from a financial
institution acceptable to Owner in an amount equal to
twenty-five percent (25%) of the Contract Price, namely
US$11,600,000 (subject to increase or decrease pursuant
to Paragraph 2 hereof), and
(the `Guarantor'), which has been requested by the
Contractor in favor of the Owner. Terms defined and
expressions construed in the EPC Contract have the same
meaning and construction in this Guarantee.
2. The sum referred to in Paragraph 1 of this
Guarantee shall be amended as follows:
(i) Upon receipt by the Guarantor of a certificate from the
Owner stating that there has been an increase or decrease of
the Contract Price pursuant to Article 6 of the EPC Contract and
stating the amount of such increase or decrease, the sum
referred to in Paragraph 1 shall be increased or decreased, as
applicable, by the amount stated in such certificate from the
Owner (it being understood that the aforesaid certificate
shall have a copy of the relevant change order attached);
(ii) Upon receipt by the Guarantor of a certificate from the
Owner stating that there has been a drawing under this Guarantee
for amounts due from the Contractor for Performance Liquidated
Damages or Schedule Liquidated Damages pursuant to Article 12 or
Article 13 of the EPC Contract and stating the amount of such
drawing, the Guarantor shall increase the amount of this
Guarantee by the amount of any such drawing;
(iii) Promptly, upon receipt of a certificate at any time and
from time to time pursuant to clause (i) or (ii) above from the
Owner, the Guarantor shall execute and deliver by international
courier to the Owner (or to its respective order) (with a copy
to the Trustee) an amendment to this Guarantee, in the form of
Annex A (correctly completed), confirming the adjustment of the
amount of the Guarantee in accordance with the terms hereof.
It is the express understanding and agreement of
the Guarantor, the Owner, and the Contractor that,
except on account of increases pursuant to Clause
(i) of Paragraph 2 hereof, the maximum amount of
the Contractor's liability which is being
guaranteed by the Guarantor pursuant to this
Guarantee is an amount equal to thirty-five
percent (35%) of the Contract Price, namely
US$16,240,000.'
(b) During the term of this Contract, Owner shall have the
unconditional right to draw upon such Performance
Guarantee for damages, compensation or otherwise under
Articles 11, 12, 13, and 15, or for the completion of
Punch Lists if Contractor has failed to complete such
Punch Lists or in connection with any other breach of
the Contractor's obligations under this Contract.
(c) At the same time that the Performance Guarantee is issued,
the Contractor shall cause delivery from the Acceptable PG Issuer
to the Financing Parties of an Acknowledgement and Consent in
form and substance satisfactory to the Financing Parties."
4. This Change Order No. 004 shall constitute the entire
agreement between Owner and Contractor relating to the subject
matter hereof and shall operate as an amendment to the Contract
and shall be deemed to be part of the Contract. This Change
Order No. 004 shall supercede Sections of Change Order No. 002,
including Special Considerations, Section 4, which are in
conflict with this Change Order No. 004. All other terms and
conditions of the Contract are hereby ratified and confirmed and
shall remain in full force and effect.
5. The effective date of this Change Order No. 004 shall be the
date written below.
C. Cost Adjustments:
None
D. Schedule Adjustments:
None
Agreed to this ___ day of September 1997 by and between:
OWNER: CONTRACTOR
Bhote Koshi Power Company China Gezhouba Construction Group
Private Limited Corporation for Water Resources and
Hydropower
By: By:
Ted C. Hollon Wang Heming
3. The Parties agree that Article 3.26 of the Contract is
amended to read as follows:
"3.26 Performance Guarantee
(a) Upon execution of this Contract, Contractor shall
provide Owner with a Performance Guarantee, issued in
the form provided in Attachment 1 (the "Performance
Guarantee") and from a financial institution acceptable
to Owner and Financing Parties, in their sole
discretion ("Acceptable PG Issuer"). As set forth on
Attachment 1, the Performance Guarantee shall contain
the following provisions, together with such other
provisions as set forth on Attachment 1:
`1. By and Amended and Restated Contract for the
Engineering, Procurement and Construction of the Upper
Bhote Koshi Hydroelectric Project on the Bhote Koshi
River in the Sindhupalchok District of Nepal (the `EPC
Contract') dated as of December 19, 1996 between the
Owner and China Gezhouba Construction Group Corporation
for Water Resources and Hydropower (the `Contractor'),
the Contractor shall provide an irrevocable,
unconditional bank guarantee from a financial
institution acceptable to Owner in an amount equal to
twenty-five percent (25%) of the Contract Price, namely
US$11,600,000 (subject to increase or decrease pursuant
to Paragraph 2 hereof), and
(the `Guarantor'), which has been requested by the
Contractor in favor of the Owner. Terms defined and
expressions construed in the EPC Contract have the same
meaning and construction in this Guarantee.
2. The sum referred to in Paragraph 1 of this
Guarantee shall be amended as follows:
(i) Upon receipt by the Guarantor of a certificate from the
Owner stating that there has been an increase or decrease of the
Contract Price pursuant to Article 6 of the EPC Contract and
stating the amount of such increase or decrease, the sum referred
to in Paragraph 1 shall be increased or decreased, as applicable,
by the amount stated in such certificate from the Owner (it being
understood that the aforesaid certificate shall have a copy of
the relevant change order attached);
(ii) Upon receipt by the Guarantor of a certificate from the
Owner stating that there has been a drawing under this Guarantee
for amounts due from the Contractor for Performance Liquidated
Damages or Schedule Liquidated Damages pursuant to Article 12 or
Article 13 of the EPC Contract and stating the amount of such
drawing, the Guarantor shall increase the amount of this
Guarantee by the amount of any such drawing;
(iii) Promptly, upon receipt of a certificate at any time and
from time to time pursuant to clause (i) or (ii) above from the
Owner, the Guarantor shall execute and deliver by international
courier to the Owner (or to its respective order) (with a copy to
the Trustee) an amendment to this Guarantee, in the form of Annex
A (correctly completed), confirming the adjustment of the amount
of the Guarantee in accordance with the terms hereof.
It is the express understanding and agreement of
the Guarantor, the Owner, and the Contractor that,
except on account of increases pursuant to Clause
(i) of Paragraph 2 hereof, the maximum amount of
the Contractor's liability which is being
guaranteed by the Guarantor pursuant to this
Guarantee is an amount equal to thirty-five
percent (35%) of the Contract Price, namely
US$16,240,000.'
(b) During the term of this Contract, Owner shall have the
unconditional right to draw upon such Performance
Guarantee for damages, compensation or otherwise under
Articles 11, 12, 13, and 15, or for the completion of
Punch Lists if Contractor has failed to complete such
Punch Lists or in connection with any other breach of
the Contractor's obligations under this Contract.
(d) At the same time that the Performance Guarantee is issued,
the Contractor shall cause delivery from the Acceptable PG Issuer
to the Financing Parties of an Acknowledgement and Consent in
form and substance satisfactory to the Financing Parties."
4. This Change Order No. 004 shall constitute the entire
agreement between Owner and Contractor relating to the subject
matter hereof and shall operate as an amendment to the Contract
and shall be deemed to be part of the Contract. This Change
Order No. 004 shall supercede certain Sections of Change Order
No. 002 including, Special Considerations, Section 4. All other
terms and conditions of the Contract are hereby ratified and
confirmed and shall remain in full force and effect.
5. The effective date of this Change Order No. 004 shall be the
date written below.
C. Cost Adjustments:
Owner agrees to pay US$ as full compensation to CGGC
for increasing the Performance Guarantee replenishment amount
from 25% to 35% for the Contract Price pursuant to the EPC
Contract and Change Order No. 4, as agreed to between the
Parties.
D. Schedule Adjustments:
None
Agreed to this _____ day of September 1997 by and between:
OWNER: CONTRACTOR
Bhote Koshi Power Company China Gezhouba Construction Group
Private Limited Corporation for Water Resources and
Hydropower
By: By:
Ted C. Hollon Wang Heming
ATTACHMENT 1
EXHIBIT G
FORM OF PERFORMANCE GUARANTEE
Irrevocable, Unconditional Guarantee
No. _____________
DATE:
TO: Bhote Koshi Power Company
Private Limited (hereinafter referred to as the
"Owner")
Dear Sirs:
1. By an Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric Project on the Bhote Koshi River in the
Sindhupalchok District of Nepal (the "EPC Contract") dated
as of December 19, 1996 between the Owner and China Gezhouba
Construction Group Corporation for Water Resources and
Hydropower (the "Contractor"), the Contractor shall provide
an irrevocable, unconditional bank guarantee from a
financial institution acceptable to Owner in an amount equal
to twenty-five percent (25%) of the Contract Price, namely
US$11,600,000 (subject to increase or decrease pursuant to
Paragraph 2 hereof), and Industrial and Commercial Bank of
China (the "Guarantor"), acting through its Singapore
branch, which has been requested by the Contractor, hereby
agrees to provide such Guarantee for the Contractor in favor
of the Owner. Terms defined and expressions construed in
the EPC Contract have the same meaning and construction in
this Guarantee.
2. The sum referred to in Paragraph 1 of this Guarantee shall
be amended as follows:
(i) Upon receipt by the Guarantor of a
certificate from the Owner stating that there has
been an increase or decrease of the Contract Price
pursuant to Article 6 of the EPC Contract and
stating the amount of such increase or decrease,
the sum referred to in Paragraph 1 shall be
increased or decreased, as applicable, by the
amount stated in such certificate from the Owner
(it being understood that the aforesaid
certificate shall have a copy of the relevant
change order attached);
(ii) Upon receipt by the Guarantor of a
certificate from the Owner stating that there has
been a drawing under this Guarantee for amounts
due from the Contractor for Performance Liquidated
Damages or Schedule Liquidated Damages pursuant to
Article 12 or Article 13 of the EPC Contract and
stating the amount of such drawing, the Guarantor
shall increase the amount of this Guarantee by the
amount of any such drawing;
(iii) Promptly, upon receipt of a
certificate at any time and from time to time
pursuant to clause (i) or (ii) above from the
Owner, the Guarantor shall execute and deliver by
international courier to the Owner (or to its
respective order) (with a copy to the Trustee) an
amendment to this Guarantee, in the form of Annex
A (correctly completed), confirming the adjustment
of the amount of the Guarantee in accordance with
the terms hereof.
It is the express understanding and agreement of the
Guarantor, the Owner, and the Contractor that, except on
account of increases pursuant to Clause (i) of Paragraph 2
hereof, the maximum amount of the Contractor's liability
which is being guaranteed by the Guarantor pursuant to this
Guarantee is an amount equal to thirty-five percent (35%) of
the Contract Price, namely US$16,219,000.
3. It is a condition precedent to the Owner's obligation under
the EPC Contract to employ the Contractor or to continue
such employment anytime during the term of the EPC Contract
that the Guarantor enters into this first demand Guarantee
in favor of the Owner of such twenty-five percent (25%) of
the Contract Price (subject to increase and decrease
pursuant to Paragraph 2 hereof).
4. This Guarantee is issued at the request of the Contractor as
per Exhibit G (as revised and agreed upon between the Owner
and the Contractor) of the EPC Contract, and shall
automatically become effective at Financial Closing, without
any further action or confirmation by the Guarantor or the
Contractor. This Guarantee shall be a continuing guarantee
remaining in full force and effect during the entire term of
the EPC Contract and until the later of (i) the date falling
thirty (30) days after WTC has indicated, in a written
notice to the Guarantor, the agreement (a copy of which
agreement does not need to be presented to the Guarantor) of
IFC that the Final Acceptance of the Facility (as defined in
the EPC Contract) has occurred, and (ii) the date the
Contractor has delivered to the Owner (with a copy to the
Trustee) a Warranty Guarantee (in accordance with the EPC
Contract) in form and substance satisfactory to the Trustee,
at which time the Owner (or, if applicable, the Trustee)
shall return this Performance Guarantee to the Guarantor
with instructions for cancellation.
5. It is acknowledged and agreed that an intended assignee of
this Guarantee is Wilmington Trust Company, or any
substitute or replacement therefor from time to time
(provided IFC (as defined below) has given written notice to
the Guarantor of such substitute or replacement) (Wilmington
Trust Company or, as applicable, any such substitute or
replacement hereinafter referred to as "WTC"), in each case
acting on behalf of and for the benefit of International
Finance Corporation, an international organization organized
and existing by virtue of the Articles of Agreement among
its member countries ("IFC") (WTC, acting on behalf of and
for the benefit of IFC, referred to herein as the
"Trustee").
6 This is an irrevocable and unconditional guarantee issued by
the Guarantor, whereby the Guarantor shall assume the
liability of a primary obligor, and not merely as guarantor
under an ordinary guarantee, and shall be jointly and
severally liable with the Contractor to the Owner for the
twenty-five percent (25%) of the EPC Contract Price, namely
US $11,600,000.00 (subject to increase and decrease pursuant
to Paragraph 2 hereof). Accordingly, the Guarantor hereby
unconditionally and irrevocably guarantees the due and
punctual payment by the Contractor of all sums whatsoever
that the Owner shall certify (in a manner set out in
paragraph 6 below) are due and owing by the Contractor to
the Owner, whether actually or contingently, under or in
connection with the EPC Contract, up to a maximum amount of
US$11,600.000.00 (the "Guaranteed Amount") (subject to
increase and decrease pursuant to Paragraph 2 hereof) and
the Guarantor unconditionally and irrevocably agrees that,
if the Owner notifies (in writing) the Guarantor that for
any reason the Contractor has not made payment on first
demand of any such sums, the Guarantor will pay such sums on
first demand by the Owner, up to the Guaranteed Amount.
Should there be any increase or decrease of the Contract
Price pursuant to Paragraph 2 hereof, the Guaranteed Amount
automatically shall be adjusted accordingly immediately upon
the delivery to the Guarantor of a certificate in accordance
with Paragraph 2 hereof, and any delay by the Owner to
deliver to the Guarantor a certificate in accordance with
Paragraph 2 hereof shall not affect the increase or decrease
of the Guaranteed Amount immediately upon delivery of such
certificate, nor shall the failure of the Guarantor to
execute and deliver an amendment in accordance with
Paragraph 2(iii) hereof affect the increase or decrease of
the Guaranteed Amount.
7. Under this Guarantee, the Owner is hereby granted with
absolute and unconditional rights to make multiple drawings
from time to time, and in the event that the Contractor
fails to perform its obligations under the EPC Contract, the
Owner shall be entitled to issue a written demand to the
Guarantor for payment up to an aggregate amount not to
exceed the Guaranteed Amount, as increased or decreased from
time to time as aforesaid. Such written demand shall be in
the following form:
"Re: Guarantee No. [___________________]
(i) We refer to the Irrevocable Unconditional
Guarantee No. [______________] (the "Guarantee") for a
maximum amount of US$11,600,000.00 (or such other
amount as may be provided for therein). Terms defined
in the Guarantee shall have the same meaning in this
Certificate.
(ii) We hereby state that the Contractor has failed to
perform its obligations under the EPC Contract.
(iii) We hereby demand from you the sum of
US$[_____________] under the Guarantee.
(iii) We hereby confirm and certify to you that as
at the date of this Certificate, the sum being drawn is
due and owing by the Contractor under the EPC Contract
and the Contractor has not fulfilled its obligations
under the EPC Contract to pay such sum on first demand
and that, accordingly, we are entitled to make a claim
on you under the Guarantee.
(iv) Please pay such amount by wire transfer, in
immediately available funds, in US Dollars, to Account
No. , in the name of [Corporate Trust
Administration], at Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Tel: (302) 651-87226, Fax: (302)
651-8882.
The Guarantor shall not require that such written demand be
accompanied by any documents from any third parties or any
evidence of the Contractor's non-compliance with the EPC
Contract.
8. Under this Guarantee, the Guarantor is hereby committed to
honor such written demand from the Owner for payment
immediately upon presentation. Each payment by the
Guarantor hereunder shall be made in US Dollars and shall
reduce the cumulative amount of the Guaranteed Amount on a
dollar-for-dollar basis, subject, however, to the
Guarantor's obligation to increase the amount of this
Guarantee pursuant to Paragraph 2 hereof. The Guarantor
shall neither require the Owner to exercise its recourse
against the Contractor first, nor require the Owner to
exhaust its remedies against the Contractor first, and shall
not set such requirements as a precondition of the Guarantor
to effect its payment under this Guarantee. In particular,
the Guarantor shall not raise any contractual defense by the
Contractor under the EPC Contract, but shall honor its
obligations hereunder as an indebtedness independent of the
EPC Contract or any obligations of the Contractor
thereunder. Without limiting the foregoing, any evidence or
assertion submitted or made by the Contractor or any third
party shall not impact in any way the Guarantor's
obligations to make payments under this Guarantee upon
written demand therefor from the Owner.
9. This Guarantee is not assignable by either the Guarantor or
the Owner, except by the Owner to the Trustee or by the
Owner to any person to whom the Trustee or IFC may sell an
interest in the Facility upon delivery to the Guarantor of a
completed notice of assignment, signed by the assignor and
counter-signed by the assignee. This Guarantee shall be
binding on the Guarantor and its successors and shall inure
to the benefit of the Owner (and its successors and
permitted assignees).
10. The obligations of the Guarantor hereunder shall not be
discharged by (i) any time, grace, indulgence, waiver or
consent at any time given to the Contractor, (ii) any lack
of validity or enforceability of, or any termination of,
amendment to or affecting, or waiver of, any clause of the
EPC Contract, provided that any amendment to the EPC
Contract which increases the Contract Price (with the
exception of any increase pursuant to Paragraph 2 hereof)
will not increase the amount guaranteed by the Guarantor
hereunder, (iii) any failure or delay in the enforcement or
release of any rights in connection with or under the EPC
Contract or this Guarantee. The Guarantor further
acknowledges and agrees that it will remain liable hereunder
notwithstanding that the Contractor may cease to exist or
for any other reason the Owner may no longer be able to deal
with the Contractor.
11. The Guarantor hereby represents, warrants and covenants to
the Owner as follows:
(a) The Guarantor is a state-owned bank duly organized
and validly existing under the laws of China, is duly
registered to do business in Singapore as a branch and
has full power, authority and legal capacity to execute
and deliver this Guarantee and to assume and perform
the obligations provided for herein;
(b) The Guarantor has taken all appropriate and
necessary legal and other actions to authorize the
execution, delivery and performance of this Guarantee;
(c) This Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable in
accordance with its terms;
(d) The obligations of the Guarantor hereunder rank
and will rank at least pari passu in priority of
payment and in all other respects with all other
unsecured indebtedness of the Guarantor;
(e) The Guarantor shall supply to the Owner and the
Trustee, upon request, copies of the annual financial
statements of the Guarantor; and
(f) There are no conditions precedent to the
obligation of the Guarantor to perform under, or for
the effectiveness of, this Guarantee.
12. This Guarantee is a commercial act of the Guarantor in
relation to a commercial transaction and all obligations of
the Guarantor arising under this Guarantee are commercial in
nature. The Guarantor hereby irrevocably waives, and agrees
not to raise, any claim of immunity (if any) from suit,
attachment or execution in respect of any claims which may
be made against it at any time concerning its obligations
under this Guarantee, and the Guarantor agrees that the
waivers and agreements set forth herein shall have the
fullest scope permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States and are intended
to be irrevocable for the purposes of such Act.
13. Any demand from the Owner to the Guarantor for payment must
be in written form, in the English language delivered to the
Guarantor at the following address (or any new address
designated by the Guarantor in writing duly notified to the
Owner in the future) in the following manner:
(a) Method of delivery: (i) personally delivered, (ii)
transmitted by postage prepaid registered mail (airmail
if international), (iii) transmitted by internationally
recognized courier service, or (iv) transmitted by
telex or facsimile.
(b) Address of the Guarantor:
c/o Singapore Branch
6 Raffles Quay, #12-01
John Hancock Tower
Singapore 048580
Telephone Number: (65)538 2780
Fax Number: (65)538 1370
Attn.: General Manager
14. This Guarantee sets out the entire undertaking of the
Guarantor to the Owner.
15. This Guarantee shall be governed by and construed in
accordance with Singapore Law.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guarantee by its duly authorized officer the day and year first
above-written.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
c/o Singapore Branch
6, Raffles Quay, #12-01,
John Hancock Tower
Singapore 048580
By:____________________________________
Name:_________________________________
Title:__________________________________
ANNEX A
Form of Letter of Amendment to Amount of Performance Guarantee
To: Bhote Koshi Power Company Private Limited and
Trustee
Amendment to the Performance Guarantee
No. dated [ ] 1997
Whereas we, Industrial and Commercial Bank of China, acting
through its Singapore Branch, as the Guarantor under the
Performance Guarantee, issued such Performance Guarantee in
favour of the Owner on [ ] 1997 and have received
a certificate from the Owner in accordance with Paragraph 2 of
the Performance Guarantee.
NOW THIS AMENDMENT WITNESSETH as follows:
1. The sum set out in Paragraph 1 of the Performance Guarantee
is [increased] [reduced] by the amount of US$ [amount
certified by the Owner, as applicable].
2. As a consequence of the [increase] [decrease] referred to in
Paragraph 1 of this Amendment, the sum set out in Paragraph
1 of the Performance Guarantee is [amount specified in
Paragraph 1 of the Performance Guarantee prior to amendment
increased or decreased, as applicable, by the amount
specified in Paragraph 1 of this Amendment].
3. All other terms and conditions of the Performance Guarantee
shall remain unchanged.
4. A term defined in the Performance Guarantee has the same
meaning in this Annex A.
Yours faithfully
__________________________________
(Authorized Signatories)
For an on behalf of
Industrial and Commercial Bank of China
EXHIBIT NO. 10.138.05
CHANGE ORDER
TO THE
AMENDED AND RESTATED CONTRACT
FOR THE
ENGINEERING, PROCUREMENT AND CONSTRUCTION
OF THE
UPPER BHOTE KOSHI HYDROELECTRIC PROJECT
CHANGE ORDER NO. 005
RECITALS:
Whereas, in accordance with Article 6, the Contractor and Owner
mutually agree to amend certain terms in the Amended and Restated
Contract for the Engineering, Procurement and Construction of the
Upper Bhote Koshi Hydroelectric Project, dated December 19, 1996
including Change Orders 1, 2, 3 and 4 (the "Contract"),
including, the Critical Dates, the Construction Schedule, and the
Milestone Payment Schedule, and have mutually agreed to this
Change Order No. 005.
Now therefore, the Parties agree to the following:
A. SCHEDULE ADJUSTMENTS
1. The Parties herein agree to amend and restate the Critical
Dates defined in Article 5.2.3, Change Order No. 001, Change
Order No. 002, and Change Order No. 003 as follows:
Milestones Critical Date
Start Mobilization 6/1/97
Health, Safety and Environmental Plan 7/5/97
Complete
Turbine, Generator, Inlet Valve and 8/31/97
Governor Ordered
Transformer and Powerhouse Crane Ordered 11/15/97
River Closure 3/20/98
Cutoff Wall Under Spillway Complete 12/15/97
Powerhouse Excavation Complete 2/28/98
Draft Tubes Delivered to the Site 3/1/98
Surge Shaft Complete 9/15/98
Headrace Tunnel Excavation 50% Complete 9/30/98
Dam, Spillway and Right Side Wall of 6/15/98
Desanding Basin Foundations Complete
Powerhouse Roof Complete 4/30/99
All Transmission Towers Erected 4/30/99
All Major Equipment on Site 6/1/99
Headrace Tunnel Complete 9/20/99
Operators Village Complete 7/1/99
Transmission Line Complete 8/31/99
Penstock Complete 10/31/99
Stage 2 Headworks Concrete Complete 9/20/99
Unit Delivery Date of First Unit 11/15/99
Unit Delivery Date of Second Unit 12/31/99
2. The Parties agree to amend and replace the Construction
Schedule attached as Exhibit A to the Contract as previously
amended in Change Order No. 003, Exhibit 3.1, with the revised
Construction Schedule attached as Exhibit 5.1 to this Change
Order No. 005.
3. The Parties agree to amend and replace the Milestone Payment
Schedule attached as Exhibit E-2 to the Contract as amended in
Change Order No. 003, Exhibit 3.2, with the revised Milestone
Payment Schedule attached as Exhibit 5.2 to this Change Order No.
005.
B. SPECIAL CONSIDERATIONS
1. The Parties agree that the definition "Guaranteed Unit
Delivery Date" shall be revised to read:
"shall mean with respect to the First Unit,
November 15, 1999, and with respect to the Second
Unit , December 31, 1999".
2. Article 12.1 of the Contract shall be amended as follows:
"12.1 GUARANTEE OF TIMELY COMPLETION. Contractor
warrants and guarantees that (1) the First Unit Delivery shall
occur on or before the Guaranteed Unit Delivery Date of the First
Unit, or November 15, 1999, and (2) the Second Unit Delivery
shall occur on or before the Guaranteed Unit Delivery Date of the
Second Unit, or December 31, 1999, but in no event shall such
date be before September 1, 1999."
3. Article 12.2 of the Contract shall be amended as follows:
"12.2 BONUS FOR EARLY UNIT DELIVERY
12.2.1 Bonus for Early Delivery of First Unit.
In the event that the Unit Delivery Date of the First Unit occurs
prior to November 15, 1999, but not earlier than September 1,
1999, Owner shall pay Contractor a bonus equal to the relevant
amount set forth in the following table:
Delivery Date* Bonus Amount
November 8 $75,000
through November 14
November 1 $150,000
through November 7
October 25 $225,000
through October 31
October 18 $300,000
through October 24
October 11 $385,000
through October 17
October 4 through $470,000
October 10
September 27 $555,000
through October 3
September 20 $640,000
through September 26
September 13 $725,000
through September 19
September 6 $810,000
through September 12
September 1 $895,000
through September 5
* Note that all Dates referenced are in 1999.
No bonus shall be paid for any Day prior to September 1, 1999 and
this provision shall not be modified by any Force Majeure Event."
12.2.2 Bonus for Early Delivery of Second Unit. In the
event that the Unit Delivery Date of the Second Unit occurs prior
to December 31, 1999, but not earlier than September 1, 1999,
Owner shall pay Contractor a bonus equal to the relevant amount
set forth in the following table:
Delivery Date* Bonus Amount
December 25 $100,000
through December 31
December 18 $200,000
through December 24
December 11 $310,000
through December 17
December 4 $420,000
through December 10
November 27 $540,000
through December 3
November 20 $660,000
through November 26
November 13 $780,000
through November 19
November 6 $900,000
through November 12
October 30 $1,020,000
through November 5
October 23 $1,140,000
through October 29
October 16 $1,260,000
through October 22
October 9 through $1,380,000
October 15
October 2 through $1,500,000
October 8
September 25 $1,620,000
through October 1
September 18 $1,740,000
through September 24
September 11 $1,860,000
through September 17
September 4 $1,980,000
through September 10
September 1 $2,100,000
through September 3
* Note that all Dates referenced above are in 1999.
No bonus shall be paid for any Day prior to September 1, 1999 and
this provision shall not be modified by any Force Majeure Event."
4. Article 12.3 of the Contract shall be amended as follows:
"12.3 Delay in Unit Delivery Date. If the Unit
Delivery Date of the first Unit and second Unit are not achieved
on each respective Guaranteed Unit Delivery Date, in addition to
the liability imposed pursuant to Article 18, Contractor shall be
obligated to pay liquidated damages equal to the following
amounts:
12.3.1 If the Unit Delivery Date of the First Unit
does not occur on or before the Guaranteed Unit Delivery Date of
the First Unit, Contractor shall pay to Owner Twenty Thousand
Dollars ($20,000) for each Day that the Unit Delivery Date of the
First Unit is delayed beyond the Guaranteed Unit Delivery Date of
the First Unit, up to and including December 15, 1999, and shall
pay to Owner Twenty-Five Thousand Dollars ($25,000) for each Day
that the Unit Delivery Date of the First Unit is delayed from
December 16, 1999 up to and including December 31, 1999.
12.3.2 If the Unit Delivery Date of the Second Unit
does not occur on or before the Guaranteed Unit Delivery Date of
the Second Unit, or December 31, 1999, Contractor shall pay to
Owner Forty Thousand Dollars ($40,000) for each Day that the Unit
Delivery Date of the Second Unit is delayed beyond the Guaranteed
Unit Delivery Date of the Second Unit, up to and including March
15, 2000. For any such delay after March 15, 2000, Contractor
shall pay to Owner Forty-Five Thousand Dollars ($45,000) for
each Day that the Unit Delivery Date of the Second Unit is
delayed beyond March 15, 2000 up to and including the termination
date of this Contract pursuant to the last paragraph of this
Article 12, or until the maximum limit on Schedule Liquidated
Damages is reached, whichever occurs first.
5. Exhibit F of the Contract shall be amended and restated as
follows:
"Desanding Basin Trapping Efficiency:
A test of the desanding basin trapping efficiency
shall be carried out to demonstrate that the
desanding basin meets the Minimum Desanding Basin
Trapping Efficiency criteria. The desanding basin
trapping efficiency tests shall be planned and
performed during the Wet Season that occurs prior
to the Final Acceptance Date. At least three tests
shall be performed prior to September 1, under
conditions that are suitable to demonstrate that
the desanding basin will perform as intended. If
the tests cannot be carried out prior to September
1, the Contractor shall devise a procedure for
mobilizing suspended material in the river water
to simulate the high suspended solid
concentrations that typically prevail during July
and August. The simulated conditions shall be
developed during each test. If during the
performance of the test, the plan for mobilizing
suspended material does not appear to be adequate,
the Owner shall not accept the test.
The Contractor shall design and submit a program
for approval by Owner that causes a diversion of
river water through the desanding basin at a rate
that is approximately equal to the combined
discharge capacity of both Units while operating
at full gate.
On each testing Day, one set of three samples
shall be taken at the upstream end of the
desanding basin and the second set of three
samples shall be taken just upstream from the
headrace tunnel intake. At each location, three
samples each shall be taken near the right bank,
in the middle and near the left bank of the basin.
The samples shall be taken with a U.S. Geological
Survey (USGS) depth-integrating D-74 sampler. The
procedures of sampling shall be as per USGS
guidelines, or equivalent guidelines proposed by
the Contractor and as agreed to by the Owner.
All samples shall be analyzed for suspended
sediment concentrations in milligrams (mg) per
liter and particle size distributions as
percentage of the total sediment.
Headworks Seepage and Leakage Loss:
The design criteria for the maximum allowable
seepage through the dam, foundation and abutments
is 200 liters per second. The design of the
headworks shall adopt conservative design
procedures and assumptions so that the constructed
Facility shall meet this criteria.
The Contractor shall design and submit for
approval by Owner an appropriate program to test
and establish the rate of seepage and leakage
through the dam, foundation and the headworks.
The test shall be performed prior to the Delivery
Date of the Second Unit.
Seepage and leakage loss from the headworks shall
be established by monitoring the river inflow, the
flow through the Units, the discharge from the
desanding basin or spillway to the Bhote Koshi
River, minimum required release through the
headworks to the Bhote Koshi River, and any other
loss, such as gate and valve leakage or change in
reservoir storage, as applicable, during the 168
hour continuous run test as required by Exhibit I
Part 3.10 of the Scope of Work.
River inflow shall be measured at a suitable
location upstream of the headworks. Flow through
the Units shall be measured by Unit flow metering
equipment supplied with the Units. The Contractor
shall develop measuring methods that are
acceptable to the Owner.
The 168-hour difference, established during the
testing of the Second Unit, between river inflow
and flow through the Units, adjusted for the
discharge from the desanding basin or spillway to
the Bhote Koshi River, minimum required release
through the headworks to the Bhote Koshi River,
and any other loss, such as gate and valve leakage
or change in reservoir storage, as applicable, and
seepage and leakage loss from the tunnel and
penstock (see below), shall be the seepage and
leakage loss at the headworks.
The criteria for acceptance of the test will
recognize the accuracy of measurement procedures
adopted in the Performance Test.
To obtain the most accurate assessment of the
headworks seepage and leakage loss, the
Performance Testing Guidelines may be modified, as
agreed upon by the Owner to suit the conditions
that are discovered during the design and the
construction of the Facility."
6. The Parties agree that any and all claims of a
Force Majeure Event submitted by Contractor to Owner
claiming delay due to the non-availability of
explosives are hereby withdrawn. The Parties understand
and agree that this Change Order No. 5 resolves any
claims for schedule or cost relief submitted by
Contractor relating to the non-availabilities of
explosives, up to, and including, the date of signing
this Change Order No. 5 as indicated below.
7. This Change Order No. 005 shall constitute the entire
agreement between Owner and Contractor relating to the
subject matter hereof and shall operate as an amendment to
the Contract. This Change Order No. 005 shall supercede
Change Order No. 001, Change Order No. 2, Section D, and
Change Order No. 3, Sections B (2), (3) and (4). All other
terms and conditions of the Contract are hereby ratified
and confirmed and shall remain in full force and effect.
C. COST ADJUSTMENTS
None.
Agreed to this __________ day of November 1997 by and between:
OWNER: CONTRACTOR:
Bhote Koshi Power Company China Gezhouba Construction Group
Private Limited Corporation for Water Resources
and Hydropower
By:__________________________ By:__________________________
Robert L. Ransom Xie Yi
EXHIBIT NO. 10.143
INVESTMENT AGREEMENT
General Conditions
AGREEMENT AS TO CERTAIN REPRESENTATIONS,
WARRANTIES, COVENANTS AND OTHER TERMS
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED,
INTERNATIONAL FINANCE CORPORATION,
and
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
Dated as of the Closing Date
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION;
GENERAL CONDITIONS AND SPECIAL CONDITIONS
Section 1.1. Special Conditions and General Conditions 1
Section 1.2. Definitions 1
ARTICLE 2.
ROLE OF INDEPENDENT ENGINEER
Section 2.1. Independent Engineer 1
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Initial Disbursement 1
Section 3.2. Conditions Precedent to Certain Disbursements 8
Section 3.3. Conditions Precedent to All Disbursements On
or After May 31, 1998 9
Section 3.4. Conditions Precedent to Disbursements On or
After the Date Which is 180 Days Prior to the
Scheduled First Unit Delivery Date for the
First Unit and to Disbursements On or After
the First Unit Delivery Date 9
Section 3.5. Conditions Precedent to All Disbursements 9
Section 3.6. No Waiver, Etc 11
ARTICLE 4.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 4.1. Company Representations and Warranties 12
Section 4.2. Lenders' Reliance 18
ARTICLE 5.
AFFIRMATIVE COVENANTS
Section 5.1. Information Covenants. 18
Section 5.2. Books, Records and Inspections; Accounting
and Auditing Matters. 23
Section 5.3. Insurance. 24
Section 5.4. Corporate Franchises; Enforcement of
Principal Documents. 26
Section 5.5. Hedging Transactions. 27
Section 5.6. Compliance with Laws. 27
Section 5.7. Project Implementation; Use of Project Funds. 27
Section 5.8. Repair of Roads. 28
Section 5.9. Taxes; Duties; Proper Legal Form. 28
Section 5.10. Performance of Obligations. 29
Section 5.11. Further Assurances. 29
Section 5.12. Deposit of Revenues and Funding of Accounts. 29
Section 5.13. Security of the Site. 30
Section 5.14. Environmental Compliance. 30
Section 5.15. Additional Sponsor Contributions. 30
Section 5.16. Equity Letters of Credit. 31
Section 5.17. Default under EPC Contract 31
Section 5.18. Spare Parts 31
Section 5.19. Panda of Nepal; Harza Engineering Company
International L.P. 31
ARTICLE 6.
NEGATIVE COVENANTS
Section 6.1. Liens. 31
Section 6.2. Consolidation, Merger, Sale of Assets, Etc. 31
Section 6.3. Dividends; Restricted Payments. 32
Section 6.4. Leases. 33
Section 6.5. Indebtedness. 33
Section 6.6. Contingent Obligations; Guarantees. 33
Section 6.7. Investments; Subsidiaries. 33
Section 6.8. Arm's-Length Transactions. 33
Section 6.9. Other Transactions. 33
Section 6.10. No Modifications. 34
Section 6.11. No Other Business. 36
Section 6.12. Abandonment. 36
Section 6.13. Improper Use. 36
Section 6.14. Expenditures. 36
Section 6.15. Approvals. 37
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1. Events of Default 37
Section 7.2. Acceleration on Default 44
Section 7.3. Right to Cure. 44
ARTICLE 8.
MISCELLANEOUS
Section 8.1. Payment of Fees and Expenses. 44
Section 8.2. Right of Setoff. 46
Section 8.3. Notices. 46
Section 8.4. Successors or Assigns. 48
Section 8.5. Remedies Cumulative. 48
Section 8.6. Severability. 48
Section 8.7. Documents. 48
Section 8.8. Calculations, Computations. 48
Section 8.9. Governing Law; Submission to Jurisdiction; Venue. 48
Section 8.10. Execution in Counterparts. 49
Section 8.11. Headings. 49
Section 8.12. Amendments. 49
Section 8.13. Survival. 49
SCHEDULE 3.1(c)
"IN-PRINCIPLE" COMMITMENT LETTERS 51
SCHEDULE 3.1(e)
TITLE TO THE SITE 60
SCHEDULE 3.1(f)(i)
MINIMUM INSURANCE REQUIREMENTS 61
SCHEDULE 3.1(i)
CERTIFICATE OF AUTHORIZED OFFICER
OF COMPANY, SPONSOR, O&M OPERATOR,
OR OWNER'S ENGINEER 71
SCHEDULE 3.1(i)
CERTIFICATE OF AUTHORIZED OFFICER
OF EPC CONTRACTOR 73
SCHEDULE 3.1(j)
CERTIFICATE OF INDEPENDENT ENGINEER 75
SCHEDULE 3.1(j)(ii)
DISBURSEMENT SCHEDULE 76
SCHEDULE 3.1(u)
CERTIFICATE OF THE COMPANY
REGARDING THE PROTECTION DEVICES
REQUIRED BY THE PPA 77
SCHEDULE 3.1(x)
CERTIFICATE OF AUTHORIZED OFFICER OF COMPANY
CONCERNING CONDITIONS PRECEDENT TO EACH
DISBURSEMENT 78
SCHEDULE 4.1(d)
GOVERNMENTAL OR OTHER APPROVALS 81
SCHEDULE 5.2(c)
CERTIFICATE OF AUTHORIZED OFFICER OF
COMPANY REGARDING AUTHORIZATION TO AUDITORS 84
SCHEDULE 6.10(e)
SUBSTANTIAL SUBCONTRACTORS AND SUBSTANTIAL VENDORS 86
ARTICLE 1.
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION;
GENERAL CONDITIONS AND SPECIAL CONDITIONS
Section 1.1. Special Conditions and General Conditions.
This document is entitled "Investment Agreement General
Conditions" (the "General Conditions"). It is appended to a
document entitled "IFC Special Conditions" between International
Finance Corporation ("IFC") and Bhote Koshi Power Company Private
Limited ("the Company") dated as of the date hereof (the General
Conditions and the IFC Special Conditions together constitute the
IFC Investment Agreement) and a document entitled "DEG Special
Conditions" between DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG") and the Company dated as of
the date hereof (the General Conditions and the DEG Special
Conditions together constitute the DEG Investment Agreement).
The IFC Investment Agreement and the DEG Investment Agreement
together constitute the "Investment Agreement," dated as of the
date of the IFC Special Conditions and the DEG Special Conditions
(collectively, this "Agreement"). If any provision of the
General Conditions is inconsistent with a provision of the IFC
Special Conditions or the DEG Special Conditions, the provision
of the IFC Special Conditions or the DEG Special Conditions, as
the case may be, shall prevail.
Section 1.2. Definitions. For all purposes of this
Agreement, (a) capitalized terms not otherwise defined herein
shall have the meanings set forth in Schedule A hereto, and (b)
the principles of construction set forth in Schedule A shall
apply.
ARTICLE 2.
ROLE OF INDEPENDENT ENGINEER
Section 2.1. Independent Engineer. It is acknowledged and
agreed that, in each case where the approval of any matter by the
Independent Engineer is required hereunder, the Independent
Engineer shall be deemed to be acting on behalf of the Lenders.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Initial Disbursement.
The obligation of each of the Lenders to make an initial
Disbursement shall be subject to the fulfillment in all respects,
prior to or on the Financial Closing Date, demonstrated in a
manner, and otherwise in form and substance, satisfactory to each
of the Lenders of the conditions set forth below:
(a) Each of the following documents shall have been entered
into by the respective parties thereto, shall be unconditional,
except for the condition that the conditions precedent set forth
in this Section 3.1 have been satisfied, and fully effective in
accordance with its terms, and no party shall be in default
thereunder:
(i) this Agreement;
(ii) the Hedging Documents;
(iii) the Intercreditor Agreement;
(iv) Participation Agreements;
(v) the Security Documents (other than the NEA Letter
of Credit, the Panda Letter of Credit, the Panda Project
Completion Letter of Credit and the EPC Warranty Performance
Guarantee);
(vi) Joint Venture Agreement;
(vii) Subscription Agreements;
(viii) Share Retention and Project Funds Agreement;
(ix) PPA;
(x) Project Agreement;
(xi) EPC Contract;
(xii) Operations and Maintenance Agreement;
(xiii) Services Agreements;
(xiv) Project Licenses;
(xv) Real Estate Documents;
(xvi) Shareholders' Agreement;
(xvii) Independent Engineer's Agreement;
(xviii) Insurance Consultancy Services Agreement;
(xix) EPC Performance Guarantee;
(xx) Equity Letters of Credit;
(xxi) HSE Plan (for the construction period and an outline
for the operations phase of the Project);
(xxii) EMMP;
(xxiii) Resettlement Plan;
(xxiv) detailed outline of the Facility Procedures Manual;
(xxv) detailed outline of the scope of the Operations and
Maintenance Plan; and
(xxvi) all Government Approvals;
and each of the Lenders has received a true, complete and correct
copy, certified as such by an Authorized Officer of the Company,
of each of the foregoing Principal Documents, and any other
Principal Document existing on the Financial Closing Date.
(b) All of the conditions precedent under the Project
Agreement and PPA (other than the occurrence of the Loan Signing
Date referred to in Section 3.1 of the PPA) shall have been
satisfied or waived.
(c) "In-principle" commitment letters substantially in the
form of Schedule 3.1(c) hereto, shall have been obtained from a
bank acceptable to the Lenders for the establishment of the NEA
Letter of Credit.
(d) The EPC Performance Guarantee and the Equity Letters of
Credit shall have been issued by banks acceptable to the Lenders
and delivered to the Trustee.
(e) Each of the Lenders shall have received satisfactory
certified copies of certificates of title and leases evidencing
that the Company has acquired all necessary rights to the Site
(other than title to the portions of the Site listed on Part II
of Schedule 3.1(e) to the General Conditions) and all other
rights necessary to the construction of the Project (including,
without limitation, water and other items described in the
Project Agreement), and the original land ownership certificates
relating to portions of the Site shall have been received by the
Trustee. The Company shall have made any and all payments
required to be made by the Company to the lessors during the
entire term of the Leases.
(f) (i) The Company shall have obtained the insurance
coverages described in, and meeting the requirements of, Schedule
3.1(f)(i) to the General Conditions and shall have furnished to
each of the Lenders and the Insurance Consultant a certificate
from the Company's insurers or insurance brokers (including
confirmation of the payment of all premiums then due in respect
of insurance policies set forth in Schedule 3.1(f)(i) to the
General Conditions), indicating the properties insured, amounts
and risks covered, names of the beneficiaries, loss payees, and
additional insureds, expiration dates, names of the insurers, and
special features of the insurance policies in effect on the date
of such certificate. The Trustee shall have received original
binders (with copies received by the Insurance Consultant and
each of the Lenders) of the insurance policies set forth in
Schedule 3.1(f)(i) to the General Conditions, such binders to be
issued on behalf of companies acceptable to the Lenders.
(ii) The EPC Contractor shall have obtained the
insurance coverages described in, and meeting the requirements
of, Schedule 3.1(f)(i) to the General Conditions, and required to
be in effect on the Financial Closing Date, and shall have
furnished to each of the Lenders and the Insurance Consultant a
certificate from the EPC Contractor's insurers or insurance
brokers (including confirmation of the payment of all premiums
then due in respect of insurance policies set forth in Schedule
3.1(f)(i) to the General Conditions), indicating the properties
insured, amounts and risks covered, names of beneficiaries, loss
payees, and additional insureds, expiration dates, names of the
insurers, and special features of the insurance policies in
effect on the date of such certificate. The Trustee shall have
received original binders (with copies thereof received by the
Insurance Consultant and each of the Lenders) of the insurance
policies set forth in Schedule 3.1(f)(i) to the General
Conditions, such binders to be issued on behalf of companies
acceptable to the Lenders.
(iii) The Trustee and each of the Lenders shall
each have been named as an additional insured, loss payee,
assignee or beneficiary, as applicable, in respect of the
Company's and the EPC Contractor's insurance policies set forth
in Schedule 3.1(f)(i) to the General Conditions.
(iv) The Insurance Consultant shall have issued an
opinion with respect to the adequacy and effectiveness of the
insurance coverages set forth in Schedule 3.1(f)(i) to the
General Conditions, and with respect to such other matters as the
Lenders may request, including an opinion that the Company has
made adequate arrangements for insurance in accordance with the
requirements of all the Principal Documents to which the Company
is a party.
(g) The Security shall have been created and (except as
otherwise specifically approved in writing by the Lenders)
perfected, each of the Security Documents shall be effective and
shall constitute the valid, binding and enforceable obligations
of the Company or, in the case of the Pledged Shares, the
Sponsors (other than Panda Energy International, Inc. and Harza
Engineering Company International, a limited liability company),
and all expenses in respect thereof shall have been paid. The
share certificates in respect of the Pledged Shares theretofore
acquired by the Sponsors (other than Panda Energy International,
Inc. and Harza Engineering Company International, a limited
liability company), shall have been delivered to the Trustee
(marked by the Company to acknowledge the pledge thereof to the
Trustee for the benefit of the Lenders), together with executed
and undated stock powers.
(h) On or before the date of the first Disbursement of the
Loans the Sponsor Shareholders shall have subscribed and paid
into the Company all of the Sponsor Shareholders' equity then due
under the Financial Plan in accordance with Section 2.1 of their
respective Subscription Agreements and such equity shall have
been applied to pay Project Costs.
(i) (i) Each of the Lenders shall have received
a certificate, dated the Financial Closing Date,
signed by an Authorized Officer of the Company,
and attested to by the secretary of the Company,
substantially in the form of Schedule 3.1(i) to
the General Conditions, together with evidence
that the Company is a company duly registered
under the laws of Nepal, validly existing and in
good standing under the laws of Nepal. Copies of
the Charter Documents of the Company and the
resolutions of the Company referred to in such
certificate shall be attached to such certificate.
(ii) Each of the Lenders shall have received
a certificate, dated the Financial Closing Date,
signed by an Authorized Officer of each Sponsor
and attested to by the secretary of such Sponsor,
substantially in the form of Schedule 3.1(i) to
the General Conditions, together with evidence
that each such Sponsor is a duly constituted and
validly existing company in good standing under
the laws of its jurisdiction of organization, and
is duly authorized and qualified to conduct
business in Nepal to the extent required by law.
Copies of the Charter Documents of such Sponsor,
and the resolutions of such Sponsor pursuant to
which each such Sponsor is authorized to perform
its obligations under the Principal Documents to
which it is party shall be attached to the
certificate.
(iii) Each of the Lenders shall have
received a certificate, dated the Financial
Closing Date, signed by an Authorized Officer of
each of the EPC Contractor, the Owner's Engineer,
and the O&M Operator and attested to by the
secretary of each such entity, as applicable,
substantially in the form of Schedule 3.1(i) to
the General Conditions, together with evidence
that each of the EPC Contractor, the Owner's
Engineer, and the O&M Operator, respectively, is a
duly constituted and validly existing company in
good standing under the laws of its jurisdiction
of organization, and, with respect to the EPC
Contractor and the Owner's Engineer, is duly
authorized and qualified to conduct business in
Nepal. Copies of the Charter Documents of each of
the EPC Contractor, the Owner's Engineer, and the
O&M Operator and the resolutions of each such
Person pursuant to which each such Person is
authorized to perform its obligations under the
Principal Documents to which it is party shall be
attached to the certificate.
(j) (i) Arrangements shall have been made (A)
for the Company and the Project to comply with,
and for the implementation of, the EMMP, the
Resettlement Plan, and the HSE Plan for the
construction period, and (B) for the Company and
the Project to comply with all applicable Nepalese
environmental laws, statutes, rules and
regulations and all other Environmental Laws.
(ii) Each of the Lenders shall have received
a certificate of the Independent Engineer,
substantially in the form of Schedule 3.1(j) to
the General Conditions, stating that it has (x)
reviewed and found acceptable the Disbursement
Schedule attached to the General Conditions as
Schedule 3.1(j)(ii), and (y) reviewed and found
reasonable and acceptable the HSE Plan for the
construction period, and (z) reviewed and found
reasonable and acceptable the outline of the HSE
Plan for the operations phase of the Project, the
detailed outline of the Facility Procedures
Manual, the outline of the Operations and
Maintenance Plan and the matters referred to in
Section 3.1(j)(i) above.
(k) (i) The Company shall have received
satisfactory confirmation from the relevant
Governmental Authority that the Company has the
authority to establish U.S. Dollar bank accounts
within and outside of Nepal and concessions with
respect to import duties on plant and equipment
imported in the name of the Company such that the
amount thereof does not exceed 1% of the value of
such plant and equipment and from income Taxes
(for a period of 15 years from the first Unit
Delivery Date (as defined in the PPA)) and stamp
taxes, and repatriation and remittance rights of
the IFC Subscription and the Loans.
(ii) The Company has obtained, or made
arrangements satisfactory to the Lenders for
obtaining, all Governmental Approvals for:
(A) the Loans and IFC
Subscription;
(B) the carrying on of the
business of the Company as it is contemplated
to be carried on;
(C) the carrying out of the
Project and the implementation of the
Financing Plan;
(D) the due execution, delivery,
validity and enforceability of, and
performance under, this Agreement and each
other Principal Document; and
(E) the remittance to each of the
Lenders or its assigns in US Dollars or
Deutsche Marks, as the case may be, of all
monies payable in respect of the Principal
Documents and the IFC Shares;
and has provided each of the Lenders with copies
of those Governmental Approvals, certified as true,
complete and correct copies by an Authorized Officer of
the Company, if the Lenders so require;
(l) The Company shall have (i) appointed Auditors approved
by the Lenders and each of the Lenders shall have received a copy
of the authorization to such Auditors pursuant to Section 5.2(c)
of the General Conditions, and (ii) the Company shall have
established an accounting, cost control and management
information system (in accordance with U.S. GAAP).
(m) Each of the Lenders shall have received (i) the
Financial Statements for the most recent Quarter and Fiscal Year
of the Company, and (ii) the Financial Statements for the most
recent Quarter and Fiscal Year of the EPC Contractor, the O&M
Operator, the Owner's Engineer and each Sponsor (other than Panda
of Nepal, RDC of Nepal, Panda Bhote Koshi, Harza Engineering
Company International, a limited liability company and Resource
Development Consultants, a limited liability company).
(n) NEA shall have delivered a letter, satisfactory in form
and substance to the Lenders and the Independent Engineer,
regarding the installation of the NEA Interconnection Facilities.
(o) Each of the Company, each Sponsor, the EPC Contractor,
the O&M Operator and the Owner's Engineer shall have appointed,
with respect to each of the Principal Documents (other than Non-
Material Agreements) to which it is party, an agent for service
of process in the State of New York, and such other jurisdictions
as may be required by the Lenders, as such Person's agent to
receive service of process, and each of the Lenders shall have
received satisfactory letters from such process agents indicating
its consent to each such appointment without reservation until
six months after all Obligations have been indefeasibly paid in
full.
(p) Each of the Lenders shall have received at no expense
to the Lenders the following legal opinions, in form and
substance satisfactory to the Lenders:
(i) an opinion of Chadbourne and Parke LLP,
New York counsel to the Company and the Sponsors;
(ii) an opinion of Panth, Panth & Bhatta,
Nepalese counsel to the Company and the Sponsors
(other than Himal International Power Corporation
Pvt. Ltd., Soaltee Hotel Ltd., Soaltee Enterprises
Private Ltd. and Surya Enterprises Private Ltd.);
(iii) an opinion of Haynes & Boone, Texas
counsel to Panda Energy International, Inc.;
(iv) an opinion of Frank M. Dickerson, in-
house counsel to Harza Engineering Company
International L.P.;
(v) an opinion of Holland & Hart, L.L.P.,
Wyoming counsel, and an opinion of Frank M.
Dickerson, in-house counsel to Harza Engineering
Company International, a limited liability
company;
(vi) an opinion of Beijing Xie Zhao Hua Law
Firm, Chinese counsel to the EPC Contractor;
(vii) an opinion of the Ministry of Law
and Justice, His Majesty's Government of Nepal;
(viii) an opinion of Morris, Nichols,
Arsht & Tunnells, Delaware counsel to the Company
and to Harza Engineering Company International
L.P.;
(ix) an opinion of the Legal Counsel of NEA,
counsel to NEA;
(x) an opinion of Richards, Layton & Finger
P.A., counsel to the Trustee;
(xi) an opinion of Ghimire & Company, counsel
to the Company, Himal International Power
Corporation Pvt. Ltd., Soaltee Hotel Ltd., Soaltee
Enterprises Private Ltd. and Surya Enterprises
Private Ltd.;
(xii) an opinion of Sudheer Shrestha, in-
house counsel to the Agent;
(xiii) an opinion of Pioneer Law
Associates, Nepalese counsel to the Lenders;
(xiv) an opinion of Allen & Gledhill,
Singapore counsel to the Lenders;
(xv) an opinion of Maples & Calder, Cayman
Islands counsel to Panda of Nepal;
(xvi) an opinion of Maples & Calder,
Cayman Islands counsel to RDC of Nepal;
(xvii) an opinion of Maples & Calder,
Cayman Islands counsel to Panda Bhote Koshi;
(xviii) an opinion of Read & Laniado, New
York counsel to Harza Engineering Company
International L.P.; and
(xix) an opinion of Holland & Hart,
L.L.P., Wyoming counsel, and an opinion of Frank
M. Dickerson, in-house counsel to Resource
Development Consultants, a limited liability
company.
(q) The Company shall have delivered to each of the Lenders
a Letter of Information providing a detailed description of the
Company, the Project, the Sponsors, the Financing Plan, the award
of the Project by HMGN to the Sponsors and any specific
concessions related to the award, actions taken or to be taken by
the Company and the Sponsors regarding the environmental and
socio-economic impact of the Project and such other matters as
the Lenders may request.
(r) Each of the contracts to which the Company is a party
shall contain environmental mitigation clauses that ensure
compliance with the EMMP, if applicable to such contract.
(s) The Lenders shall have approved the Company's detailed
breakdown of Project Costs and the Base Case Financial
Projections for the Project.
(t) The Lenders shall have received a favorable Independent
Engineer's Report addressing, among other things, Project design,
Project performance, Project Costs, Construction Schedule, Annual
Budgets for the construction period, and the technical and
economic feasibility of the Project.
(u) The Company shall have delivered to each of the Lenders
a certificate signed by an Authorized Officer of the Company,
substantially in the form of Schedule 3.1(u) to the General
Conditions, certifying that the protection devices required under
Section 7.4 of the PPA have been approved by NEA in accordance
with such Section.
(v) The Company shall have delivered written instructions
to the EPC Contractor to the effect that the Company shall manage
and administer all insurance policies set forth in Article 9 of
the EPC Contract (other than those insurances required of the EPC
Contractor under Article 9.2 of the EPC Contract) and including
the filing of all claims and the taking of all necessary or
appropriate actions to collect any proceeds on behalf of the
relevant insured party.
(w) The Company shall have delivered to the Trustee and to
each of the Lenders the insurance certificates or other evidence
required pursuant to Section 5.3(c) of the General Conditions
that the insurances are maintained in accordance with Schedule
3.1(f)(i) to the General Conditions.
(x) Each of the Lenders shall have received a certificate
of the Company substantially in the form of Schedule 3.1(x) to
the General Conditions, signed by an Authorized Officer of the
Company, stating that all of the foregoing conditions have been
satisfied.
(y) IFC shall have entered into Participation Agreements
with Participants for the acquisition by them of Participations
in an aggregate amount equal to the full amount of the B Loan and
those commitments are in full force and effect.
(z) The Company shall have delivered to each of the Lenders
the Panda Bhote Koshi Documents.
(aa) The Company shall have delivered to each of the Lenders
a clarification letter from the NEA in form and substance
satisfactory to the Lenders with respect to the applicability of
Section 9.5 of the PPA to the DEG Loan.
Section 3.2. Conditions Precedent to Certain
Disbursements.
(a) The obligation of each of the Lenders to make its first
Disbursement following Disbursements aggregating 50% of the
aggregate Commitments shall be subject to fulfillment, prior to
or concurrently with such Disbursement, in a manner satisfactory
to the Lenders, of the condition that NEA shall have made all
necessary arrangements (in each case satisfactory in form and
substance to the Lenders) for installation of the NEA
Interconnection Facilities.
(b) The obligations of each of the Lenders to make the
second Disbursement shall be subject to the Company obtaining all
Governmental Approvals, if any, which may be required for the
Hedging Transactions contemplated to be entered into under the
Hedging Documents.
Section 3.3. Conditions Precedent to All Disbursements On
or After May 31, 1998. The obligations of each of the Lenders to
make any Disbursement on or after May 31, 1998 shall be subject
to each of the Lenders receiving evidence in form and substance
satisfactory to the Lenders that the Company has established and
implemented a GLOF early warning system which is satisfactory to
the Lenders.
Section 3.4. Conditions Precedent to Disbursements On or
After the Date Which is 180 Days Prior to the Scheduled First
Unit Delivery Date for the First Unit and to Disbursements On or
After the First Unit Delivery Date.
(a) The obligation of each of the Lenders to make any
Disbursement on or after the date which is 180 days prior to the
Scheduled First Unit Delivery Date for the First Unit shall be
subject to fulfillment, prior to or concurrently with such
Disbursement, of the condition that each of the Lenders shall
have received a certificate, signed by an Authorized Officer of
the O&M Operator and attested to by the secretary of such entity,
substantially in the form of Schedule 3.1(i) to the General
Conditions, together with evidence that the O&M Operator is duly
authorized and qualified to conduct business in Nepal.
(b) The obligation of each of the Lenders to make any
Disbursement on or after the First Unit Delivery Date shall be
subject to fulfillment, prior to or concurrently with such
Disbursement, of the condition that the NEA Letter of Credit, in
form and substance satisfactory to the Lenders, shall have been
issued by a bank acceptable to the Lenders and delivered to the
Trustee, and a true, complete and correct copy thereof, certified
as such by an Authorized Officer of the Company, shall have been
delivered to each of the Lenders.
Section 3.5. Conditions Precedent to All Disbursements.
The obligation of each of the Lenders to make any Disbursement
shall be subject to the fulfillment, prior to or concurrently
with each such Disbursement, demonstrated in a manner, and
otherwise in all respects in form and substance, satisfactory to
the Lenders, of the conditions set forth below:
(a) The Company and each of the Sponsors shall have
performed in all material respects all of its obligations
theretofore to be performed under this Agreement and the other
Principal Documents to which it is a party.
(b) Each of the Lenders shall have received quarterly
written progress reports in form and substance satisfactory to
the Lenders from the Independent Engineer.
(c) The proceeds of the Disbursement shall be needed by the
Company to pay Project Costs.
(d) Immediately before and after giving effect to such
Disbursement:
(i) there shall be no existing Default or
Event of Default which has not been cured or
waived; and
(ii) all representations and warranties
contained herein and in the other Principal
Documents shall be true and correct in all
material respects with the same effect as though
such representations and warranties had been made
on and as of the date of such Disbursement, except
where expressed to be made on a specified date.
(e) The Security Documents shall create a first priority
(except as otherwise specifically approved in writing by the
Lenders) security interest and charge over the Collateral in
existence at the date of such Disbursement, and each of the
Lenders shall have received satisfactory evidence that all
actions necessary or appropriate to perfect (except as otherwise
specifically approved in writing by the Lenders) and protect the
security interests purported to be created by the Security
Documents have been taken.
(f) All Governmental Approvals and each relevant
shareholder's and creditor's permit, license and consent,
including, without limitation, all Repatriation and Remittance
Approvals, necessary for the then-current stage of implementation
of the Project shall have been obtained or made, shall be validly
issued, shall be in full force and effect and shall not be the
object of a currently pending action or appeal.
(g) No Material Adverse Change shall have occurred, and no
Force Majeure Event shall have occurred, and the effect of either
of which has not been cured.
(h) Each of the Lenders shall have received, at least ten
(10) Business Days prior to the date of any Disbursement, an IFC
Disbursement Request or DEG Disbursement Request, as the case may
be, signed by an Authorized Officer of the Company, together with
a certificate of the Independent Engineer which shall confirm
that (A) the work scheduled to be completed by the relevant dates
has been completed in a manner satisfactory to the Independent
Engineer, and (B) the expenditures reflected in the disbursement
request (which shall be set forth in a certificate of the Company
attached to the disbursement request) have been properly incurred
under the EPC Contract and the Services Agreements or are
scheduled to be properly incurred as anticipated on the
construction schedule.
(i) All funds required to be paid or advanced by the
Sponsors under the Subscription Agreements or the Share Retention
and Project Funds Agreement prior to the Disbursement shall have
been paid or advanced and applied in accordance with the Trust
and Retention Agreement, and each of the Lenders shall have
received evidence thereof, satisfactory in form and substance to
the Lenders.
(j) The Company shall have paid all fees, expenses and
other charges then payable by it under the Loan Documents,
including, without limitation, fees, expenses and other charges
of each of the Lenders' legal counsel, the Independent Engineer,
the Insurance Consultant, and, with the prior consultation of the
Company, other consultants.
(k) The Company shall have the corporate authority to
borrow the amount requested to be disbursed.
(l) After giving effect to the Disbursement the Company
shall not be in violation of its Articles of Association or
Memorandum of Association, any provision contained in any
agreement to which the Company is a party (including this
Agreement) or by which the Company is bound, or any law, rule,
regulation or Governmental Approval directly or indirectly
limiting or otherwise restricting the Company's borrowing power
or authority or its ability to borrow.
(m) All corporate and legal proceedings necessary to
authorize the borrowing and the other transactions contemplated
in this Agreement shall have been obtained or made.
(n) Each of the Lenders shall have received satisfactory
certificates of land ownership and copies of all Leases
evidencing that the Company has acquired all necessary rights for
each portion of the Site, each portion of the Site and each Lease
being listed in Schedule 3.1(e) hereto; provided, however, that
title to those portions of the Site listed in Part II of such
Schedule 3.1(e) are not required to be obtained by the Financial
Closing Date but must be obtained by no later than the date
specified on Part II of Schedule 3.1(e).
(o) All fees, charges, Taxes, or expenses in respect of the
Security Documents shall have been indefeasibly paid in full.
(p) Each of the Security Documents shall have been duly
filed and registered or recorded in every jurisdiction in which
such filing and registration or recording is necessary to make
valid, effective, and enforceable the Liens intended to be
created thereby, and the rights of the Trustee and the Lenders
thereunder. Each of the Lenders and the Trustee shall have
received evidence that such filing and registration or recording
has been made and that all fees and expenses required in
connection with such registration or recording have been paid.
(q) The Company shall have delivered to the Trustee and
each of the Lenders a certification, substantially in the form of
Schedule 3.1(x) of the General Conditions, signed by an
Authorized Officer of the Company and expressed to be effective
as of the date of the relevant Disbursement, certifying that all
the foregoing conditions to Disbursement have been satisfied, and
stating that the receipt of the Disbursement will not result in
the violation of any agreement, instrument, note or contract to
which the Company is a party or by which it is bound or of any
law, statute, ordinance, rule, regulation or judgment to which it
is subject, or any Governmental Approval relating to the Company
or the Project.
(r) Each Lender is satisfied that the other Lender is
prepared to make its Disbursement.
Section 3.6. No Waiver, Etc. No course of dealing or
waiver by either of the Lenders or the Trustee (other than a
written waiver signed by each of the Lenders and only with
respect to the particular matter stated therein) in connection
with any condition of Disbursement under this Agreement or any
Loan Document shall impair any right, power or remedy of the
Trustee or the Lenders with respect to any condition of
Disbursement, or be construed to be a waiver thereof, nor shall
the action of any Lender in respect of any Disbursement affect or
impair any right, power or remedy of the Trustee or any other
Lender in respect of the same or any other Disbursement. One or
both of the Lenders, acting together or independently, may
exercise any or all rights and remedies available at law or in
equity under this Agreement or under any Loan Document without
prejudice to the rights and remedies of or on behalf of the other
Lender. Notwithstanding anything which may be contained herein
to the contrary, any approval, consent, waiver or similar action
which is required, or which may be given in connection with this
Agreement by the Lenders must, in order to be effective and
binding on all the Lenders, be given in writing by all of the
Lenders. Any policies or other information required to be given
under or in connection with this Agreement to the Lenders must be
given to all of the Lenders. The right of the Trustee or the
Lenders to require compliance with any condition under this
Agreement which may be waived by the Lenders in respect of any
Disbursement is expressly preserved for the purposes of any
subsequent Disbursement, unless such condition shall have been
permanently waived in writing by the Lenders. All the
certificates, legal opinions, bylaws or articles of association,
articles of incorporation and other documents and papers referred
to in this Article 3, unless otherwise specified, shall be
delivered to the Trustee and each of the Lenders at their
addresses specified in Section 8.3 of the General Conditions, or
at such other office as any of them may hereafter designate in
writing to the other parties hereto, in sufficient counterparts
for the Trustee and the Lenders, and shall be satisfactory in
form and substance to the Lenders.
ARTICLE 4.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 4.1. Company Representations and Warranties. In
order to induce each of the Lenders to enter into this Agreement
and the other Loan Documents to which it is a party and to make
the Loans, the Company makes the following representations,
warranties and agreements:
(a) Corporate Status. The Company (i) is a private limited
liability company duly incorporated and registered under the
Company Act of Nepal 2021, validly existing and in good standing
under the laws of Nepal and (ii) has the power and authority to
own its property and assets and to transact the business in which
it is engaged or proposes to be engaged and to do all things
necessary or appropriate in respect of the Project and to
consummate the transactions contemplated by the Principal
Documents.
(b) Corporate Power and Authority. The Company has the
corporate power to execute, deliver and perform the terms and
provisions of each of the Principal Documents to which it is a
party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such
Principal Documents. The Company has duly executed and delivered
each of the Principal Documents to which it is a party, and each
such Principal Document constitutes its legal, valid and binding
obligation enforceable in accordance with its terms.
(c) No Violation. Neither the execution and delivery by
the Company of the Principal Documents to which it is a party,
nor the Company's compliance with or performance of the terms and
provisions thereof, nor the use of the proceeds of the Loans as
contemplated by this Agreement and the other Loan Documents
(i) will contravene any provision of any applicable law, statute,
rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality or any Governmental
Approval relating to the Company or the Project, including,
without limitation, any Remittance and Repatriation Approval,
(ii) conflicts or is inconsistent with or results in any breach
of any of the terms, covenants, conditions or provisions of, or
constitutes a default under, or results in the creation or
imposition of (or the obligation to create or impose) any Lien
(except Permitted Liens) upon any of the property or assets of
the Company pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement, Loan Document, Principal
Document or any other material agreement, contract or instrument
to which the Company is a party or by which it or any of its
property or assets is bound or to which it may be subject or
(iii) violates any provision of the Memorandum of Association or
Articles of Association of the Company.
(d) Governmental or Other Approvals. No Governmental
Approval nor any relevant shareholder's or creditor's permit,
license or consent, except those which are listed in
Schedule 4.1(d) to the General Conditions, is required to
authorize, or is required in connection with (i) the execution,
delivery or performance of any Principal Document to which the
Company is a party or (ii) the legality, validity, binding effect
or enforceability of any such Principal Document. All such
Governmental Approvals and relevant shareholders' and creditor's
permits, licenses and consents, including, without limitation,
all Remittance and Repatriation Approvals, obtained or to be
obtained or made are set forth in Schedule 4.1(d) to the General
Conditions and each such Governmental Approval and relevant
shareholders' and creditor's permit, license or consent is not
the object of a currently pending action or appeal.
(e) Financial Statements.
(i) The statements of financial condition of
the Company at September 30, 1997 heretofore
furnished to the Lenders present fairly the
financial condition of the Company at the date of
such statements of financial condition and the
results of the operations of the Company for the
Fiscal Year then ended. Such financial statements
have been prepared in accordance with U.S. GAAP.
Since September 30, 1997, no event, condition or
circumstance has existed or has occurred which
would be reasonably likely to constitute a
Material Adverse Change.
(ii) Except as fully reflected in the
financial statements delivered pursuant to
Section 4.1(e)(i) hereof, there are no liabilities
or obligations with respect to the Company of any
nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due)
for the period to which such financial statements
relate which, either individually or in the
aggregate, would be material to the Company. The
Company does not know of any reasonable basis for
the assertion against the Company of any material
liability or obligation of any nature whatsoever
for such relevant period that is not fully
reflected in the financial statements delivered
pursuant to Section 4.1(e)(i) hereof which, either
individually or in the aggregate, could constitute
a Material Adverse Change.
(f) Litigation. There are no actions, suits or proceedings
pending, or, to the best knowledge of the Company, threatened (i)
to the Company's best knowledge after due inquiry, with respect
to any Sponsor, the EPC Contractor, the O&M Operator or the
Owner's Engineer which could be material to the Company or the
Project, or (ii) with respect to the Company or the Project.
(g) True and Complete Disclosure.
(i) All information (taken as a whole)
furnished by or on behalf of the Company, the
Sponsors, the O&M Operator or the Owner's Engineer
in writing to the Lenders is true and accurate in
all material respects on the date hereof and does
not contain any untrue statement of a material
fact or omit any material fact necessary in order
to make such information (taken as a whole) not
misleading in any material respect.
(ii) To the Company's knowledge after due
inquiry, all information (taken as a whole)
furnished by or on behalf of the EPC Contractor in
writing to the Lenders is true and accurate in all
material respects on the date hereof and does not
contain any untrue statement of a material fact or
omit any material fact necessary in order to make
such information (taken as a whole) not misleading
in any material respect.
(iii) Without limiting the foregoing
clauses (g)(i) and (g)(ii), the Financing Plan set
forth in Schedule 2.2(a) of each of the IFC
Special Conditions and the DEG Special Conditions
and the statement of Project Costs set forth in
Schedule 2.2(b) of each of the IFC Special
Conditions and the DEG Special Conditions are true
and accurate in all material respects on the date
hereof and do not omit any fact necessary to make
the same not misleading in any material respect.
There are in existence no documents or agreements
which have not been disclosed to the Lenders the
performance or non-performance of which would
result in a Material Adverse Change or which could
reasonably be expected to have the effect of
varying any of the Principal Documents (other than
Non-Material Agreements).
(h) Tax Returns and Payments. The Company has filed all
Tax returns required by law to be filed by it and has paid or
caused to be paid all income Taxes payable by it which have
become due and payable pursuant to such Tax returns and all other
Taxes payable by it which have become due, other than those not
yet delinquent and except for those contested in good faith and
for which adequate reserves have been established.
(i) Capitalization. As of the date of this Agreement the
authorized share capital of the Company consists of
Rs. 5,414,500,000, divided into 54,145,000 shares, Rs. 100 par
value per share.
(j) Subsidiaries; Investments. The Company has no
subsidiaries, owns no equity interest in any other Person and is
not a party to any agreement to purchase or acquire any stock,
obligations or securities of or any other interest in, or make
any capital contribution to, any other Person. The Company has
no investments other than Permitted Investments.
(k) Compliance with Laws.
(i) The Company is in compliance with all
applicable laws, statutes, regulations,
authorizations and orders of, and all applicable
restrictions imposed by, all Governmental
Authorities in respect of the conduct of its
business and the ownership of its property
(including all Environmental Laws) and all
Governmental Approvals relating to the Company or
the Project, including, without limitation, all
Remittance and Repatriation Approvals.
(ii) Without limitation to the foregoing
clause (i), the Company's business and the Project
are being carried out in compliance with the EMMP.
(l) Patents, Licenses, Franchises and Formulas. The
Company owns or has the right to use all the patents, trademarks,
permits, service marks, trade names, copyrights, licenses,
franchises and formulae, or rights with respect thereto, and has
obtained assignments of all leases and other rights of whatever
nature, necessary for the present and proposed conduct of its
business and the carrying out of the Project, without any known
conflict with the rights of others which, or the failure to
obtain which, as the case may be, would constitute a Material
Adverse Change.
(m) Governing Law and Submission to Jurisdiction. The
choice of governing law for each of the respective Principal
Documents will be recognized in the courts of Nepal.
(n) Indebtedness. The Obligations constitute direct,
unconditional, and general obligations of the Company and are
superior in priority of payment to all other Indebtedness of the
Company. The Company has no Indebtedness other than Permitted
Indebtedness and the Company has not secured or agreed to secure
any Indebtedness (other than the Obligations) by any Lien (other
than a Permitted Lien) upon any of its present or future revenues
or assets or capital stock.
(o) Fees and Enforcement. Other than amounts that have
been paid in full, no fees or Taxes, including without limitation
stamp, transaction, registration or similar Taxes, are required
to be paid for the legality, validity or enforceability of this
Agreement or any of the Principal Documents. This Agreement and
the other Principal Documents (other than Non-Material
Agreements) are each in proper legal form under the laws of
Nepal, and under the respective governing law selected in each
such Principal Document, for the enforcement thereof in such
jurisdiction without any further action on the part of the
Trustee or any of the Lenders.
(p) Availability and Transfer of Foreign Currency. All
Remittance and Repatriation Approvals have been validly obtained
and are in full force and effect, to the extent required to
assure the availability of U.S. Dollars to enable the Company to
perform all of its obligations under this Agreement or any of the
other Principal Documents, in accordance with their respective
terms.
(q) Title and Rights to Property. The Company has obtained
(or will obtain prior to the Financial Closing Date), or, with
respect to portions of the Site listed in Part II of Schedule
3.1(e) to the General Conditions, will obtain on or before the
date specified on Part II of Schedule 3.1(e), all necessary
rights to the Site and other rights necessary to the
construction, use and operation of the Project. The Company has,
or when obtained will have, good title to all portions of the
Site other than portions which have been leased by the Company,
free and clear of Liens other than the Liens created under the
Security Documents and Permitted Liens. Each of the Leases is in
full force and effect. The Company represents and warrants that
the portions of the Site listed on Part I of Schedule 3.1(e) to
the General Conditions constitute the only real property which is
required for the construction, use and operation of the Project
and that the failure to have title or other rights to or in those
portions of the Site listed on Part II of Schedule 3.1(e) will
not result in any interruption of construction of the Project or
interference with the use or operation of the Project.
(r) Labor. There are no strikes, slowdowns, or work
stoppages by the employees of the Company, any Sponsor, the EPC
Contractor, the Owner's Engineer, the O&M Operator, or any other
Person on-going, or threatened, which have caused or could be
expected to cause a Material Adverse Change.
(s) Liens and Indebtedness. The Security Documents create
in favor of the Lenders and/or the Trustee legal, valid, and
enforceable first priority Liens (except as otherwise
specifically approved in writing by the Lenders) on all of the
Collateral, are in full force and effect and enforceable against
the Company, the Sponsors, any subsequent holder of a Lien
(including a judgment lienor), any third party, any holder of a
fixed or floating charge, or any transferee for or not for value,
in bulk, by operation of law, for the benefit of creditors, or
otherwise. Prior to the Financial Closing Date, all fees,
charges, Taxes or expenses in respect of the Security Documents
will have been paid in full. Each of the Security Documents has
been duly executed, become effective, and constitutes the valid,
binding and enforceable obligations of the Company, and, in the
case of the Pledged Shares, of the Sponsors (other than Panda
Energy International, Inc. and Harza Engineering Company
International, a limited liability company). Each of the
Security Documents has been duly filed and registered and
recorded in every jurisdiction in which such filing and
registration or recording is necessary to make valid and
effective the Liens created thereby, and the rights of the
Lenders thereunder.
(t) Environmental Matters. The Company has duly complied
with, and the Project is in compliance with, the provisions of
the HMGN License, the HSE Plan, the EMMP, the Resettlement Plan,
and all Environmental Laws, health and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder.
(u) Regulatory Matters.
(i) The Company is a "foreign utility
company" under Section 33 of PUHCA and, as such,
is not considered to be an "electric utility
company" or a "public utility company" under PUHCA
and is exempt from all provisions of PUHCA except
as otherwise provided under Section 33 of PUHCA
with respect to certain reporting requirements
under PUHCA. The Company does not sell or
transmit electric power in the United States,
including the District of Columbia, or any
organized territory of the United States, nor is
it subject to regulation as a "public utility," an
"electric utility," or an entity primarily engaged
in the generation or sale of electric power under
the FPA. As such, none of the Company's
Affiliates (as such term is defined in PUHCA) nor
DEG and IFC (and their participants, if any) is or
will be, solely as a result of the participation
by such parties individually or as a group in the
ownership of the Company and the Company's use or
operation of the Project and sale of power
generated by the Project, subject to regulation as
a "public utility company," an "electric utility
company," or a Subsidiary or Affiliate (as such
terms are defined in PUHCA) of any of the
foregoing, under PUHCA, nor as a "public utility,"
an "electric utility," or an entity primarily
engaged in the generation or sale of electric
power under FPA.
(ii) So long as the Company is a "foreign
utility company" under Section 33 of PUHCA and no
electric power from the Project is sold or
transmitted in the United States, including the
District of Columbia, or any organized territory
of the United States, the Lenders (and their
participants, if any) shall not, solely by reason
of their ownership or operation of the Project
upon the exercise of remedies under the Security
Documents, be subject to regulation as a "public
utility company," an "electric utility company,"
or a "holding company," or a Subsidiary or
Affiliate (as such terms are defined in PUHCA) of
any of the foregoing, under PUHCA, nor as a
"public utility," an "electric utility" or an
entity primarily engaged in the generation or sale
of electric power under the FPA.
(v) Insurance.
(i) The Company has obtained the insurance
coverages described in, and meeting the
requirements of, Schedule 3.1(f)(i) to the General
Conditions and has furnished to each of the
Lenders and the Insurance Consultant a certificate
from the Company's insurers or insurance brokers
(including confirmation of the payment of all
premiums then due in respect of insurance policies
set forth in Schedule 3.1(f)(i) to the General
Conditions), indicating the properties insured,
amounts and risks covered, names of the
beneficiaries, loss payees, and additional
insureds, expiration dates, names of the insurers,
and special features of the insurance policies in
effect on the date of such certificate. The
Trustee has received original binders (with copies
received by the Insurance Consultant and each of
the Lenders) of the insurance policies set forth
in Schedule 3.1(f)(i) to the General Conditions,
such binders issued on behalf of companies
acceptable to the Lenders (and such companies are
authorized agencies, such as Lloyds or LIRMA).
(ii) The EPC Contractor has obtained the
insurance coverages described in, and meeting the
requirements of, Schedule 3.1(f)(i) to the General
Conditions, and required to be in effect on the
Financial Closing Date, and has furnished to each
of the Lenders a certificate from the EPC
Contractor's insurers or insurance brokers
(including confirmation of the payment of all
premiums then due in respect of insurance policies
set forth in Schedule 3.1(f)(i) to the General
Conditions), indicating the properties insured,
amounts, and risks covered, names of
beneficiaries, loss payees, and additional
insureds, expiration dates, names of the insurers,
and special features of the insurance policies in
effect on the date of such certificate. The
Trustee has received original binders (with copies
thereof received by each of the Lenders) of the
insurance policies set forth in Schedule 3.1(f)(i)
to the General Conditions, such binders issued on
behalf of companies acceptable to the Lenders.
(iii) The Trustee and each of the Lenders
have been named as an additional insured, loss
payee, assignee or beneficiary, as applicable, in
respect of the Company's and the EPC Contractor's
insurance policies set forth in Schedule 3.1(f)(i)
to the General Conditions.
(iv) The Insurance Consultant has issued an
opinion with respect to the adequacy and
effectiveness of the insurance coverages set forth
in Schedule 3.1(f)(i) to the General Conditions,
and with respect to such other matters as the
Lenders have reasonably requested, including an
opinion that the Company has made adequate
arrangements for insurance in accordance with the
requirements of all the Project Documents to which
the Company is a party.
Section 4.2. Lenders' Reliance. The Company acknowledges
that it makes the representations in this Agreement with the
intention of persuading each of the Lenders to enter into this
Agreement (and the Participants to enter into the Participation
Agreements) and the other agreements referred to herein and make
the Loans and the subscription and disbursement under the IFC
Subscription, and that the Lenders enter into this Agreement (and
the Participants will enter into the Participation Agreements)
and such other agreements on the basis of, and in full reliance
on, each of such representations. The Company warrants to each
of the Lenders (for itself and for the benefit of the
Participants) that each of such representations is true and
correct as of the date of this Agreement and that none of them
omits any matter necessary to make such representation not
misleading in any material respect. The rights and remedies of
the Lenders in relation to any misrepresentations or breach of
warranty on the part of the Company shall not be prejudiced by
any investigation by or on behalf of the Lenders (or the
Participants) into the affairs of the Company, by the execution,
delivery or performance of this Agreement (or the Participation
Agreements) or any other Principal Document or by any other act
or thing which may be done by or on behalf of the Lenders in
connection with this Agreement (or the Participation Agreements)
or any other Loan Document and which might, apart from this
Section, prejudice such rights or remedies.
ARTICLE 5.
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until all of the
Obligations are paid in full and the obligations of the Lenders
under the Loan Documents have terminated, and unless otherwise
permanently waived in writing by the Lenders:
Section 5.1. Information Covenants. The Company shall
furnish to each of the Lenders, the Trustee and, prior to the
Project Completion Date, the Independent Engineer:
(a) As soon as available but, in any event within forty-
five (45) days after the close of each quarterly accounting
period in each Fiscal Year,
(i) two copies of complete unaudited
statements of financial condition of the Company
as at the end of such quarterly period, with a no
default certification signed by an Authorized
Officer of the Company, and with related
statements of income and retained earnings and
statements of changes in cash flow for such
quarterly period and for the elapsed portion of
the Fiscal Year ending on the last day of such
quarterly period, in each case setting forth
comparative figures for the related periods in the
prior Fiscal Year, all of which shall be in
agreement with the Company's books of account,
subject to normal year-end audit adjustments, and
certified by an Authorized Officer of the Company;
(ii) a report on any event or condition which
constitutes or is reasonably likely to constitute
a Material Adverse Change; and
(iii) a statement of all financial
transactions in such quarterly period between the
Company and any Affiliate of the Company,
including a certification that such transactions
were on ordinary commercial terms negotiated on an
arms-length basis.
(b) As soon as available but, in any event, within one
hundred twenty (120) days after the close of each Fiscal Year,
two copies of the following, all in form satisfactory to the
Lenders:
(i) statements of financial condition of the
Company, approved by the Board of Directors of the
Company, as at the end of such Fiscal Year with
the related statements of income and retained
earnings, statements of changes in cash flow for
such Fiscal Year, in each case with supporting
schedules and setting forth comparative figures
for such Fiscal Year and certified by the Auditors
and Deloitte & Touche (all such statements being
in agreement with the Company's books of account
and prepared in accordance with U.S. GAAP
consistently applied);
(ii) the Auditor's and Deloitte &
Touche's statements setting forth all transactions
of the Company with Affiliates for such Fiscal
Year, other than (A) any transaction under a
Principal Document or (B) any transaction having a
price or value less than fifty thousand Dollars
($50,000) or (C) any series of transactions having
an aggregate price or value of less than three
hundred thousand Dollars ($300,000); and
(iii) a report of the Auditors and
Deloitte & Touche stating that in the course of
its regular audit of the financial statements of
the Company, which audit was conducted in
accordance with U.S. GAAP, the Auditors and
Deloitte & Touche obtained no knowledge of any
Default or Event of Default which has occurred and
is continuing or, if in the opinion of the
Auditors and Deloitte & Touche such a Default or
Event of Default has occurred and is continuing, a
statement as to the nature thereof, and a copy of
any "management letter" or other similar
communication received by the Company from the
Auditors and Deloitte & Touche in relation to the
Company's financial, accounting and other systems,
management and accounts.
(c) Without limiting any other requirement herein, with
each request for Disbursement, the Company shall submit to each
of the Lenders a detailed line item budget relating to Project
Costs other than those Project Costs payable pursuant to the EPC
Contract showing the budgeted amount of each line item, the
cumulative amount of each line item used through the date of the
request for Disbursement and the amounts being requested from the
Disbursement for application to each line item. The consent of
each of the Lenders shall be required in order to exceed the
budgeted amount for any such line item or to apply the amounts
budgeted for any such line item toward another line item. As
soon as available, but in any event within sixty (60) days prior
to the first day of each Fiscal Year, an Annual Budget (including
budgeted statements of income, a schedule of capital
expenditures, sources and applications of funds statement and
balance sheets) prepared by the Company for each of the four
fiscal quarters of such Fiscal Year and accompanied by (i) a
statement of the Independent Engineer approving the assumptions
upon which such Annual Budget was based and (ii) a statement of
an Authorized Officer of the Company to the effect that, to the
best of his knowledge, the budget is a reasonable estimate for
the period covered thereby. The Annual Budget shall be
accompanied by the Company's cash flow projections for such
Fiscal Year and the Company's calculation of the Debt Service
Coverage Ratio (calculated on the basis of assumptions developed
by the Company and approved by the Lenders (after consultation
with the Independent Engineer)) for the preceding and upcoming 12-
month periods. The Annual Budget will be subject to approval by
the Lenders and the Independent Engineer, which approval will not
be unreasonably withheld or delayed. If the Lenders and the
Company fail to agree on any Annual Budget prior to the
commencement of the relevant Fiscal Year, the Annual Budget for
the immediately preceding Fiscal Year shall be used until the
Lenders and the Company agree, with the amounts adjusted in
accordance with the increase in the U.S. Consumer Price Index.
(d) At the time of the delivery of the financial statements
in accordance with Section 5.1(a) or (b) hereof, a certificate of
an Authorized Officer of the Company to the effect that, to the
best of his knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default
has occurred and is continuing, specifying the nature and extent
thereof and what action the Company is taking or proposes to take
in response thereto.
(e) (i) Immediately upon obtaining knowledge
thereof, notice, by facsimile, cable or telex, of
any event which constitutes a Default or Event of
Default, specifying the nature of such Default or
Event of Default and any steps the Company is
taking to remedy the same, and (ii) promptly, and
in any event within five (5) Business Days after
the Company obtains knowledge thereof, notice of:
(A) any litigation or governmental
proceeding pending (x) against the Company
(or against a Person whom the Company must
indemnify) involving a claim in excess of one
hundred thousand Dollars ($100,000), or
against the O&M Operator or any Sponsor, or,
prior to the later of the date of expiration
of the Defects Liability Period and the
Project Completion Date, the EPC Contractor
or the Owner's Engineer involving a claim in
excess of two hundred fifty thousand Dollars
($250,000) or which could constitute a
Material Adverse Change or (y) with respect
to any Principal Document;
(B) any proposal by any
Governmental Authority to acquire
compulsorily the Company or any of the
Collateral;
(C) any substantial dispute
between (x) the Company, the O&M Operator or
any Sponsor, or, prior to the later of the
date of expiration of the Defects Liability
Period and the Project Completion Date, the
EPC Contractor or the Owner's Engineer and
(y) any Governmental Authority or other
Person relating to the Project;
(D) any actual or proposed
termination, rescission, discharge (otherwise
than by performance) or amendment of, or
waiver or indulgence under, any material
provision of any Principal Document;
(E) any material notice, or
correspondence outside the ordinary course,
received from or initiated by the Company,
the O&M Operator or any Sponsor, or, prior to
the later of the date of expiration of the
Defects Liability Period and the Project
Completion Date, the EPC Contractor or the
Owner's Engineer relating to a Governmental
Approval, including, without limitation, a
Remittance and Repatriation Approval,
necessary for the performance by it of its
obligations under the Principal Documents;
(F) any Lien becoming enforceable
over any of the Company's assets;
(G) any one or more events,
conditions or circumstances that exist or
have occurred which would reasonably be
expected to constitute a Material Adverse
Change or a Force Majeure Event;
(H) any pending investigation of
the Company, the O&M Operator or any Sponsor,
or, prior to the later of the date of
expiration of the Defects Liability Period
and the Project Completion Date, the EPC
Contractor or the Owner's Engineer or any of
the principals, directors, officers or direct
or indirect shareholders, other than natural
persons, of the Company, the O&M Operator or
any Sponsor, or, prior to the later of the
date of expiration of the Defects Liability
Period and the Project Completion Date, the
EPC Contractor or the Owner's Engineer;
(I) any default by NEA or HMGN
under any Principal Document whether or not
such default is cured by NEA or HMGN; or
(J) any damage or casualty to the
Project in excess of five hundred thousand
Dollars ($500,000).
(f) At least 10 Business Days prior to the first Payment
Date specified in this Agreement, a certificate of an Authorized
Officer of the Company to the effect that no Default or Event of
Default has occurred and is continuing, or, if any Default or
Event of Default has occurred or is continuing, specifying the
nature and extent thereof and what action the Company is taking
in response thereto.
(g) Prior to the Project Completion Date, within 30 days of
the end of each Quarter, a report, in form and substance
satisfactory to the Lenders and the Independent Engineer, on the
implementation and progress of the Project, including (i) a
comparison between actual expenditures and construction progress
with that anticipated in the then-current Annual Budget and the
approved schedule, (ii) any factors materially and adversely
affecting or which might reasonably be expected to materially and
adversely affect the carrying out of the Project or the
implementation of the Financing Plan and any proposed cure plan,
and (iii) copies of any reports received by the Company from any
outside technical consultant identifying any matter that is of
material adverse significance to the operation of the Project.
(h) Contemporaneously with delivery to the Company's
shareholders, a copy of each notice of a shareholders' meeting,
together with the meeting agenda. Promptly, and in any event
within five (5) Business Days after each shareholders' meeting,
the Company shall deliver to each of the Lenders a true, complete
and correct copy of the minutes of such meeting.
(i) Promptly, and in any event within five (5) Business
Days after receipt by the Company thereof, copies of all notices,
reports, or other information given to or by the Company pursuant
to Sections 3.16, 3.3.11, 3.32.2, 3.32.14, and 3.33 of the EPC
Contract.
(j) Promptly, and in any event within five (5) Business
Days after receipt by the Company thereof, the Company shall
cause the EPC Contractor to deliver to each of the Lenders and
the Independent Engineer (in addition to delivery to the
Company), copies of all notices, reports, or other information
given by the EPC Contractor pursuant to Sections 3.3.10, 3.9,
3.19, 5.2, 5.2.3, 6.2.2, 10, and 11.12 of the EPC Contract.
(k) Immediately upon obtaining knowledge thereof, the
Company shall deliver to each of the Lenders a notice, signed by
an Authorized Officer of the Company, with a copy to the
Independent Engineer, of any event, condition or circumstances
which could reasonably be expected to lead to a violation of
Environmental Laws.
(l) Promptly, and in any event within five (5) Business
Days after receipt by the Company thereof, the Company shall
deliver to each of the Lenders and the Independent Engineer a
copy of any complaint (other than an inconsequential complaint),
order, directive, claim, citation, or notice by any Governmental
Authority or any Person with respect to: (A) solid or liquid
waste disposal, (B) the use, generation, storage, transportation,
or disposal of toxic or Hazardous Materials, (C) rare or
endangered species, or (D) other environmental, health or safety
matters, including Environmental Laws.
(m) The Company will cause each of Panda Energy
International, Inc. and Harza Engineering Company International
L.P. to deliver to each of the Lenders the financial statements
specified in Sections 4.1(d) and (e) of the Share Retention and
Project Funds Agreement.
(n) From time to time, such other information or documents
(financial or otherwise) as either of the Lenders may reasonably
request.
Section 5.2. Books, Records and Inspections; Accounting
and Auditing Matters.
(a) The Company shall keep proper books of record and
account adequate to reflect truly and fairly the financial
condition and results of operations of the Company (including the
progress of the Project) in which full, applicable, true and
correct entries in conformity with U.S. GAAP and all requirements
of law shall be made of all dealings and transactions in relation
to its business and activities. The Company will permit officers
and designated representatives of the Lenders to visit and
inspect, under guidance of officers of the Company, any of the
properties of the Company, and to examine and make copies of the
books of record and account of the Company and discuss the
affairs, finances and accounts of the Company with, and be
advised as to the same by, its and their officers. Any such
visits will be made during normal business hours and with
reasonable advance notice, and all visitors to the Site will
comply with the Company's safety programs while present at the
Site.
(b) The Company shall (i) maintain cost control and
management information systems and (ii) maintain a system of
accounting and prepare its financial statements in accordance
with U.S. GAAP, all as required in the Facility Procedures
Manual.
(c) The Company shall authorize the Auditors (whose fees
and expenses shall be for the account of the Company) to
communicate directly with each of the Lenders at any time
regarding the Company's accounts and operations and furnish to
each of the Lenders a copy of such authorization, which shall be
substantially in the form of Schedule 5.2(c) to the General
Conditions. The Lenders shall provide the Company with prior
notice of its intent to communicate with the Auditors unless the
Lenders, under the circumstances at such time, determine in good
faith that it would not be prudent to provide such notice.
(d) The Company shall permit representatives of the Lenders
(including, without limitation, the Independent Engineer) to
visit the Site and all other premises of the Company and to have
access to its outside advisors, contractors and employees. Any
such visits by such representatives shall be conducted during
normal business hours and with reasonable advance notice. All
such representatives shall comply with the Company's safety
program while present at the Site.
(e) In the event that T.R. Upadhya & Company should cease
to be the Auditors of the Company for any reason, the Company
shall appoint and maintain as the Auditors another firm of
independent public accountants approved by the Lenders.
(f) The Company shall provide to the Nepal Rastra Bank all
bank statements required pursuant to all approvals issued by the
Nepal Rastra Bank for the Offshore Retention Account and the
Nepal Retention Account as and when required pursuant to such
approvals.
Section 5.3. Insurance.
(a) Unless the Lenders otherwise agree, the Company shall
maintain at all times (in a manner appropriate for the stage of
completion of the Project) insurance of its properties and
business with financially sound and reputable insurers against
loss or damage in such manner and to the same extent as shall be
no less than generally accepted as customary in regard to
property and business of like character (including, without
limitation to the generality of the foregoing, the requirements
of Schedule 3.1(f)(i) to the General Conditions).
(b) Insurance Proceeds shall be applied as follows:
(i) All Insurance Proceeds relative to any
single loss in excess of seven hundred fifty
thousand Dollars ($750,000) shall be paid by the
respective insurers directly to the Trustee. All
Insurance Proceeds relative to a single loss of
seven hundred fifty thousand Dollars ($750,000) or
less shall be paid directly to the Company. If
any Insurance Proceeds relative to any single loss
in excess of seven hundred fifty thousand Dollars
($750,000), or, during the occurrence and
continuation of an Event of Default, relative to
any loss are paid to the Company, such Insurance
Proceeds shall be received only in trust for the
Lenders, shall be segregated from other funds of
the Company, and shall be promptly paid over to
the Trustee in the same form as received (with any
necessary endorsement) for deposit in the
Insurance Proceeds Sub-Account. If any Insurance
Proceeds are paid to any Lender, such Lender shall
promptly pay over such Insurance Proceeds to the
Trustee for deposit in the Insurance Proceeds Sub-
Account.
(A) If there does not exist an
Event of Default, Insurance Proceeds relative
to a single loss of seven hundred fifty
thousand Dollars ($750,000) or less shall be
applied by the Company to pay the necessary
costs of repair, restoration or replacement
of the Project (in each case, to the extent
such Insurance Proceeds were paid in respect
of physical loss or damage thereto). After
applying such amount, any excess Insurance
Proceeds shall be delivered to the Trustee
for deposit in the Revenue Sub-Account.
(B) If there does not exist an
Event of Default and if there shall occur
damage, destruction or casualty with respect
to which Insurance Proceeds in excess of
seven hundred fifty thousand Dollars
($750,000) but less than five million Dollars
($5,000,000) are payable, and if (I) the
Company promptly (and, in any event, within
30 days after the occurrence of such damage,
destruction or casualty) gives written notice
to each of the Lenders that the Company
wishes to repair, restore or replace the
Project to the condition that it was in
immediately prior to such damage, destruction
or casualty, (II) the Insurance Proceeds
received by the Company or the Trustee
together with funds otherwise available to
the Company, will be sufficient to cover all
costs and expenses necessary to repair,
restore or replace the Project and to cover
the Operating and Maintenance Costs and the
Debt Service payable by the Company during
the period necessary to repair, restore or
replace the Project, (III) the repair,
restoration or replacement of the Project is
technically and economically feasible, (IV)
after giving effect to any proposed repair,
restoration or replacement, no Default or
Event of Default or a default under any
Principal Document shall exist, (V) each of
the Lenders shall receive an opinion of
counsel in form and substance reasonably
satisfactory to the Lenders or other evidence
satisfactory to the Lenders that neither any
applicable Governmental Approval nor any
Principal Document will terminate during the
period necessary to repair, restore or
replace the Project and no applicable
Governmental Approval, or amendment to this
Agreement or the Security Documents or any
other instrument, is necessary for the
purpose of subjecting the repair, restoration
or replacement to the Liens of the Security
Documents except such, if any, as shall have
been delivered to the Lenders, and (VI) each
of the Lenders shall have received from the
Company and the Independent Engineer such
certificates or other evidence as the Lenders
may reasonably require regarding the
foregoing matters, then the Lenders shall
direct the Trustee in a written notice to
deliver the Insurance Proceeds received in
connection with the damage, destruction or
casualty to the Project to the Company and
the Company shall apply such Insurance
Proceeds to pay for the necessary costs of
repair, restoration or replacement of the
Project and to pay for Operating and
Maintenance Costs and Debt Service when due.
After making such payments to the Company,
any excess Insurance Proceeds shall be
deposited in the Revenue Sub-Account.
(ii) If there shall occur damage, destruction
or casualty with respect to which Insurance
Proceeds in excess of five million Dollars
($5,000,000) are payable, the Lenders may, after
consulting with the Company during the 30-day
period following such damage, destruction or
casualty, choose to apply the Insurance Proceeds
to prepay a principal amount of the Loans at the
time outstanding, such prepayment to be made pro
rata between the IFC Loans and the DEG Loan,
together with interest accrued thereon or fees
accrued in connection therewith to the prepayment
date. In addition, if Insurance Proceeds have
been paid pursuant to Section 5.3(b)(i)(B) above,
and the Company (I) has not notified the Lenders
promptly that it wishes to repair, restore or
replace the Project or (II) has not otherwise
complied with the provisions of Section 5.3(b)(i)
above relative to the repair, restoration or
replacement of the Project, the Lenders may choose
to apply the Insurance Proceeds to prepay the
Loans, pro rata between the IFC Loans and the DEG
Loan, together with accrued interest.
(c) On or before the date of the first Disbursement under
this Agreement and thereafter at intervals of not more than
twelve (12) calendar months (or fewer at the request of the
Lenders) until all obligations of the Company under the Loan
Documents shall have been indefeasibly paid in full, the Company
shall furnish to each of the Lenders a certificate signed by a
duly authorized representative of each insurer, showing the
insurance then maintained by the Company pursuant to this
Section 5.3 and stating that such insurance complies with the
terms hereof. The Company shall cause the insurers with whom it
maintains such insurance to agree to advise the Company and each
of the Lenders in writing promptly of any default in the payment
of any premiums or any other act or omission on the part of the
Company of which they have knowledge and which might invalidate
or render unenforceable, in whole or in part, any such insurance.
(d) The Company shall manage and administer all insurance
policies set forth in Article 9 of the EPC Contract (other than
those insurances required of the EPC Contractor under Article 9.2
of the EPC Contract) and including the filing of all claims and
the taking of all necessary or appropriate steps to collect any
proceeds on behalf of the relevant insured party.
(e) In the event that the Lenders shall determine that it
would be customary or reasonable for a project with
characteristics such as the Project to have additional or
supplemental insurance coverage, in respect of rights or
liabilities not covered by the insurance requirements set forth
in Schedule 3.1(f)(i) to the General Conditions, then upon the
request of the Lenders, the Company shall obtain and maintain
such coverage to the extent such coverage is available on
commercially reasonable terms.
Section 5.4. Corporate Franchises; Enforcement of
Principal Documents. The Company:
(a) will take, and will cause to be taken, all actions
necessary or desirable, or as reasonably requested by the
Lenders, to obtain in a timely manner all consents, approvals
(including, without limitation, Governmental Approvals) or
waivers of, and will promptly make, or will promptly cause to be
made, all required filings with Governmental Authorities
applicable to the Company or the Project or similar authorities
or agencies or financial institutions in Nepal, to preserve,
renew and keep in full force and effect its existence and its
material rights, franchises, licenses and patents;
(b) will obtain and maintain in full force and effect all
rights, franchises, licenses, consents or approvals (including,
without limitation, Governmental Approvals applicable to the
Company or the Project and Remittance and Repatriation Approvals)
necessary or desirable for the carrying out of the Project or in
connection with any Loan Document or the transactions
contemplated thereby or the issuance of Shares;
(c) will, with due diligence and in a reasonable and
prudent manner, enforce (including, as necessary, through
negotiation, litigation or other reasonable means) the rights
granted to it under or in connection with the Project Agreement,
the PPA and the other Principal Documents.
Section 5.5. Hedging Transactions. The Company shall
enter into interest rate swaps with respect to the B Loan
pursuant to the Hedging Documents, which swaps shall be executed
on or before full Disbursement of the B Loan. If at any time
prior to the repayment in full of the DEG Loan, the equivalent of
Deutsche Mark 21,000,000 or the respective Euro amount exceeds
$14,300,000 (which amount represents on the date hereof a twenty
percent (20%) appreciation of the Deutsche Mark against the U.S.
Dollar), the Company, in order to manage its currency exposure,
shall enter into currency swaps with IFC (provided IFC, in its
sole discretion, is agreeable to entering into such swaps) which
swaps shall be governed by the terms and conditions of the
Hedging Documents, and if IFC elects not to enter into such swaps
with the Company, the Company shall enter into currency swaps
with another counterparty on terms and conditions acceptable to
each of the Lenders.
Section 5.6. Compliance with Laws. The Company will
comply with all applicable laws, statutes, regulations,
authorizations and orders of, and all applicable restrictions
imposed by, all Governmental Authorities, domestic or foreign, in
respect of the conduct of its business and the ownership of its
property (including all Environmental Laws) and with the EMMP and
the HSE Plan.
Section 5.7. Project Implementation; Use of Project Funds.
The Company shall:
(a) cause the proceeds of all funds referred to in the
Financing Plan to be applied exclusively to pay or reimburse
Project Costs;
(b) cause the Project to be completed in accordance with
the plans and specifications set forth in the EPC Contract (other
than change orders made pursuant to Section 6.10(b) of the
General Conditions) and with all requirements of the PPA and the
Project Agreement;
(c) use its best efforts (but without increasing the
financial obligations of the Company under the EPC Contract) to
cause the Commercial Operation Date to occur by December 31, 1999
(and promptly notify each of the Lenders if the Company becomes
unable to achieve the Commercial Operation Date on or before such
date);
(d) promptly arrange subordinated financing from, or sales
of Shares to, the Sponsors in accordance with the Share Retention
and Project Funds Agreement in the event of a Project Funds
Shortfall, so that all work required to achieve the Commercial
Operation Date and the Project Completion Date can proceed
without delay;
(e) carry out the Project and conduct its business in
accordance with sound financial practices and Prudent Utility
Practices, and limit expenditures in any year (including, without
limitation, expenditures for fixed and other non-current assets)
to amounts in the applicable Annual Budget, except that
expenditures for Operation and Maintenance Costs in any Quarter
may exceed by 15% the amount budgeted for any item of expenditure
or by 10% the amount budgeted for total expenditures in the
applicable Annual Budget;
(f) prepare the Operations and Maintenance Plan, reasonably
satisfactory in form and substance to the Lenders and the
Independent Engineer, at least six (6) months prior to
synchronization of the First Unit of the Facility, and cause the
O&M Operator to operate the Project in accordance with the
Operations and Maintenance Agreement, the Operations and
Maintenance Plan, the standards described in the PPA, and,
subject to Prudent Utility Practices, generally in a manner
reasonably designed to maximize the Plant's electricity output
and the Project's revenues and consistent with the long-term plan
for utilization of the Project;
(g) install and maintain a GLOF early warning system,
satisfactory in form and substance to the Lenders and the
Independent Engineer;
(h) implement and enforce the procedures set forth in the
approved Facility Procedures Manual approved by the Lenders;
(i) maintain a projected Debt Service Coverage
Ratio (calculated on the basis of assumptions developed by the
Company and approved by the Lenders) for each 12-month period (or
portion thereof) remaining prior to the last scheduled Payment
Date of at least 1.0:1.0; and
(j) acquire, and deliver to the Trustee, land certificates
in respect of all necessary rights for each portion of the Site
prior to the Financial Closing Date (each portion of the Site
being listed in Schedule 3.1(e) of the General Conditions);
provided, however, that title to those portions of the Site
listed on Part II of Schedule 3.1(e) are not required to be
obtained by the Financial Closing Date but must be acquired and
delivered to the Trustee no later than the date specified on Part
II of Schedule 3.1(e).
Section 5.8. Repair of Roads. In the event of the
destruction of, or damage to, roadways and bridges necessary for
the development, construction and operation of the Project, the
Company shall notify each of the Lenders as soon as practicable
of the occurrence of such destruction or damage and shall in
accordance with the PPA repair or cause to be repaired all
roadways and bridges damaged in connection with the construction
of the Project.
Section 5.9. Taxes; Duties; Proper Legal Form.
(a) The Company shall pay or cause to be paid, or upon
notice from either of the Lenders, reimburse such Lender or its
assigns for all Taxes (including stamp Taxes and any withholding
Tax which may be imposed in the future on the Loans), duties,
fees, or other charges payable on or in connection with the
execution, issue, delivery, registration or notarization, or for
the legality, validity or enforceability, or the enforcement, of
this Agreement, the Loan Documents and the other Principal
Documents and any other documents related to this Agreement or
the issuance or sale of any Shares, and shall, upon notice from
either of the Lenders, reimburse such Lender or its assigns for
any such Taxes, duties, fees or other charges paid by such Lender
or its assigns thereon.
(b) All sums payable by the Company to each of the Lenders
under any Principal Document, whether principal, interest, fees,
expenses, or otherwise, shall be indefeasibly paid in full, free
of any deductions or withholdings for any and all present and
future Taxes.
(c) In the event that the Company is prohibited by law from
making payments to either of the Lenders under any Principal
Document free of such deductions or withholdings, then the
Company shall pay such additional amount as may be necessary in
order that the actual amount received after such deduction or
withholding shall equal the full amount stated to be payable
under such Principal Document and, upon request from either
Lender, the Company shall deliver to such Lender official tax
receipts evidencing payment (or certified copies of such receipts
or other documentation in form and substance satisfactory to such
Lender) within thirty (30) days of the date of payment of such
Taxes. If any amount due in respect of the Loans under this
Agreement is increased pursuant to this Section 5.9(c), the
Company may, upon thirty (30) days' prior written notice to each
of the Lenders and subject to any necessary governmental
(including Nepal Rastra Bank) or other approval having been
obtained, prepay the portion of the outstanding principal amount
of the Loans, with respect to which such increased payment is
attributable, together with accrued interest thereon and all
other amounts then due hereunder.
(d) The Company shall take all action within its control
required or in the reasonable opinion of either of the Lenders
advisable to ensure that each of the Principal Documents is in
proper legal form under the laws of Nepal or under the respective
governing laws selected in such Principal Documents, for the
enforcement thereof in such jurisdictions without any further
action on the part of either Lender.
(e) Subsections (a) and (b) above do not apply to Taxes,
duties, fees and other charges which directly result from a
Participant having its principal office in Nepal or having or
maintaining a permanent office or establishment in Nepal, if and
to the extent that such permanent office or establishment
acquires the relevant Participation.
Section 5.10. Performance of Obligations. The Company
shall perform all of its obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform all of its obligations
under the terms of the Loan Documents and the other Principal
Documents.
Section 5.11. Further Assurances. The Company shall do all
things necessary in the reasonable judgment of the Lenders or the
Trustee to (i) create and (except as otherwise specifically
approved in writing by the Lenders) perfect the Security with
respect to future assets covered or purported to be covered by
the Security Documents (including, without limitation, any
further registration of the Mortgage (including any registration
in respect of supplements to the Mortgage) in accordance with the
requirements of Nepalese law), (ii) maintain the Security in full
force and effect at all times (including the priority thereof),
and (iii) preserve and protect the Collateral and protect and
enforce its rights and title, and the rights and title of the
Lenders and the Trustee, in and to the Collateral.
Section 5.12. Deposit of Revenues and Funding of Accounts.
The Company shall deposit, or cause to be deposited, revenues and
other amounts owed to the Company, fund the Debt Service Reserve
Sub-Account with an amount equal to the Debt Service Reserve
Requirement, and fund the Debt Payment Sub-Account, the
Maintenance Reserve Sub-Account and the Operations and
Maintenance Sub-Account in accordance with, and otherwise comply
with, the provisions of the Trust and Retention Agreement and the
Nepal Agency and Retention Agreement. The Company shall deposit
in the Revenue Sub-Account $1,500,000 in working capital on or
before the Commercial Operation Date. Without limiting the
foregoing, the Company shall instruct the Trustee to direct its
agent to exchange all Rupees received under the PPA (other than
amounts required from time to time to satisfy the Company's Rupee-
denominated obligations determined according to the applicable
Annual Budget) to US Dollars promptly and to transfer such US
Dollars to be deposited forthwith upon such conversion in the
Offshore Retention Account, as contemplated in the Nepal Agency
and Retention Agreement.
Section 5.13. Security of the Site. The Company shall take
all actions reasonably necessary to ensure the security of the
Site and the safety of persons working or living at the Site,
including, without limitation, proper fencing, lighting, guarding
and surveillance of the Project and the Site.
Section 5.14. Environmental Compliance.
(a) The Company shall design, construct, operate and
maintain the Plant in compliance with requirements relating to
environmental matters set forth in the EPC Contract, the
Operations and Maintenance Agreement, the HMGN Project License,
the HSE Plan, the EMMP, and all Environmental Laws, and within
ninety (90) days after the end of each Fiscal Year, deliver to
each of the Lenders an annual monitoring report, signed by an
Authorized Officer of the Company, based on the requirements
outlined in the EMMP, confirming compliance with such
requirements of the EPC Contract, the Operations and Maintenance
Agreement, the EMMP, the HMGN Project License, the HSE Plan, and
applicable Environmental Laws or, as the case may be, detailing
any non-compliance, or any complaint with respect to any of the
foregoing matters, together with the action being taken to remedy
such failure, or address such complaint, and ensure future
compliance. To the extent required by the Lenders, the Company
shall implement remedial action plans acceptable to the Lenders
in connection with any aforesaid failure or complaint, or any non-
compliance identified by the Lenders or the Independent Engineer.
The aforesaid report shall be satisfactory in form and substance
to the Lenders and shall provide sufficient information to
monitor the performance of the Project over the preceding year
with respect to environmental protection and, at a minimum, shall
include narrative summaries of (i) the results of environmental
monitoring or sampling activity (as detailed in the EMMP); (ii)
Project-related accidents materially adversely impacting the
environment or resulting in the loss of life; (iii) environmental
deficiencies identified by Governmental Authorities and any
remedial actions taken in respect thereof; and (iv) any event,
condition or circumstance which could reasonably be expected to
lead to a violation of the Environmental Laws. For the purposes
of this Section 5.14(a), the Company may submit to the Lenders a
report prepared to fulfill Nepalese regulatory requirements,
provided such report satisfies the minimum requirements listed in
this Section 5.14(a).
(b) The HSE Plan relating to the operating period of the
Project shall be prepared and submitted to each of the Lenders
and the Independent Engineer for their approval at least one
hundred twenty (120) days prior to First Unit Delivery, and the
HSE Plan relating to the construction period of the Project shall
be finalized, in a form acceptable to the Lenders and the
Independent Engineer, prior to the Financial Closing Date.
Section 5.15. Additional Sponsor Contributions. Promptly,
but in all events within five (5) Business Days after becoming
aware of a Deficiency, the Company shall direct each Sponsor to
fund such Deficiency in accordance with the Share Retention and
Project Funds Agreement.
Section 5.16. Equity Letters of Credit. If a Sponsor
Shareholder fails to make any Subscription Amount Payment as and
when required under the Sponsor Shareholder's Subscription
Agreement, the Company shall (in writing) instruct the Trustee to
demand payment under the Equity Letter of Credit provided by such
Sponsor Shareholder (other than Himal International Power
Corporation Pvt. Ltd.) of an amount equal to such Subscription
Amount Payment and deposit, or direct the letter of credit bank
to deposit, such amount in the appropriate sub-account under the
Trust and Retention Agreement.
Section 5.17. Default under EPC Contract. If the EPC
Contractor fails to make any payment to the Company due under the
EPC Contract, including Performance Liquidated Damages or
Schedule Liquidated Damages, the Company shall promptly, but in
all events within five (5) Business Days, notify the Trustee and
each of the Lenders.
Section 5.18. Spare Parts. The Company shall order and
obtain, prior to the First Unit Delivery, those spare parts
necessary for the operation of the First Unit, and prior to
Second Unit Delivery, those parts necessary for the operation of
the Facility, in each case, as approved in writing by the
Independent Engineer.
Section 5.19. Panda of Nepal; Harza Engineering Company
International L.P.
(a) The Company shall cause Panda of Nepal to execute the
Panda of Nepal Consent, the Assignment Agreement and any
financing statements in connection with such Assignment
Agreement.
(b) The Company shall cause Panda of Nepal and Harza
Engineering Company International L.P. to provide prior written
notice to the Lenders of any substitution of the services of K.
Candee, P. Hartel or N. Corcoran pursuant to the Amended and
Restated Services Agreement dated July 11, 1997, between Panda of
Nepal and Harza Engineering Company International L.P.
ARTICLE 6.
NEGATIVE COVENANTS
The Company covenants and agrees that until all of the
Obligations are paid in full and the obligations of each of the
Lenders under the Loan Documents have terminated, and unless
otherwise permanently waived in writing by the Lenders:
Section 6.1. Liens. The Company will not, and will not
agree to, create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real, personal or
mixed, tangible or intangible) of the Company, whether now owned
or hereafter acquired, other than Permitted Liens.
Section 6.2. Consolidation, Merger, Sale of Assets, Etc.
The Company will not:
(a) wind up, liquidate or dissolve its affairs or enter
into any transaction of merger or consolidation;
(b) convey, sell, lease or otherwise dispose of (or agree
to do any of the foregoing at any future time) all or any part of
its property or assets (other than electricity produced by the
Project) except in the ordinary course of business; or
(c) purchase or otherwise acquire (in one or a series of
related transactions) any part of the property or assets of any
Person (other than purchases or other acquisitions of inventory
or materials or capital expenditures, each in accordance with the
applicable Annual Budget).
Section 6.3. Dividends; Restricted Payments. The Company
will not declare or pay any dividends, or return any capital, to
its shareholders or authorize or make any other distribution,
payment or delivery of property or cash to its shareholders as
such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for consideration, any Shares (or any options or
warrants issued by the Company with respect to its share
capital), or set aside any funds for any of the foregoing
purposes, until after the Project Completion Date (subject to the
following sentence) and then only as permitted by applicable law
and this Section 6.3. For purposes of this Section 6.3 only, the
failure to achieve the following components of the Project
Completion Date shall not, in and of themselves (and provided
that all the other conditions set forth herein are satisfied),
preclude the declaration or payment of dividends to the Company's
shareholders: (i) the achievement of the Punch List (as such term
is defined in the EPC Contract) required for Final Acceptance to
the extent the cost to complete such Punch List has been reserved
by the Company in a manner and an amount satisfactory to the
Lenders and milestones acceptable to the Lenders have been
established for the purpose of completing such Punch List; it
being understood and agreed that if at the end of any such
milestone, the applicable Punch List has not been completed to
the satisfaction of the Lenders, the Company shall thereafter be
prohibited from declaring or paying dividends to its shareholders
unless and until, among other things, Final Acceptance has been
achieved (including completion of the aforesaid Punch List),
(ii) the existence of any immaterial actions, suits, or
proceedings with respect to the Company, the O&M Operator, the
EPC Contractor, the Owner's Engineer or the Project, provided
that the Company has established reserves with respect thereto in
a manner and an amount satisfactory to the Lenders, (iii) the
issuance of the EPC Warranty Performance Guarantee if the Company
has established reserves with respect thereto in a manner and an
amount satisfactory to the Lenders, (iv) the nonpayment of the
amounts specified in the definition of "Company Completion
Certificate" contained in Schedule A to the extent such amounts
are immaterial, provided the Company has established reserves
with respect thereto in a manner and an amount satisfactory to
the Lenders, and (v) to the extent a Final Acceptance
Certificate, a Company Completion Certificate or an Independent
Engineer's Certificate would otherwise be required to be
delivered and the Lenders, in the exercise of their good faith
judgment, determine that the sole reason that such certificates
are not delivered is due to an exclusion from the requirements
of Project Completion Date specified in subsections (i)-(iv),
then provided the conditions set forth in said subsections (i)-
(iv) have been satisfied, the failure to deliver any such
certificates in and of itself shall not preclude the declaration
or payment of dividends to the Company's shareholders. The
Company will not request that the Trustee transfer funds to the
Holding Account unless:
(a) no Default or Event of Default shall have occurred and
be continuing, no Force Majeure Event shall have occurred and be
continuing, and no event of default or default under any other
Indebtedness of the Company shall occur as a result of such
transfer;
(b) the Debt Service Reserve Sub-Account is funded with an
amount equal to the Debt Service Reserve Requirement, and the
Debt Payment Sub-Account, the Maintenance Reserve Sub-Account,
the Operations and Maintenance Sub-Account, the Nepal Operations
and Maintenance Sub-Account, the Nepal Reserve Sub-Account, the
Deficiency Sub-Account, the Cash Sub-Account, the Nepal Dollar
Sub-Account and all other Sub-Accounts under the Trust and
Retention Agreement and the Nepal Agency and Retention Agreement
are funded to the extent then required under the Trust and
Retention Agreement and the Nepal Agency and Retention Agreement;
(c) the Debt Service Coverage Ratio for the preceding 12-
month period equaled or exceeded 1.20:1, and, based on the
Company's projections (calculated on the basis of assumptions
developed by the Company and approved by the Lenders), the Debt
Service Coverage Ratio for the following 12-month period will
remain above 1.20:1; and
(d) if IFC shall then be a shareholder of the Company, the
Person nominated by IFC in accordance with the Shareholders'
Agreement shall be a member of the board of directors of the
Company unless such Person has resigned from the Board of
Directors of the Company and IFC has not nominated a replacement
therefor.
Section 6.4. Leases. The Company will not enter into any
lease (other than the Leases) of, or agreement or arrangement to
acquire by lease, the use of any real or personal property or
equipment of any kind, except leases of operating equipment,
office equipment, computers and similar equipment, under which
the aggregate rental payments during the entire terms of all such
leases in effect at any one time do not exceed $200,000 (which
aggregate amount shall be increased each year in accordance with
increases in the U.S. Consumer Price Index).
Section 6.5. Indebtedness. The Company will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
Permitted Indebtedness.
Section 6.6. Contingent Obligations; Guarantees. Without
limitation to the restrictions of Section 6.5 above, the Company
will not enter into any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any
way or under any condition, become obligated for all or any part
of any Indebtedness or other obligations of another Person other
than the Operations and Maintenance Agreement and the Services
Agreements.
Section 6.7. Investments; Subsidiaries. The Company will
not form or have any subsidiaries, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any other Person other than
Permitted Investments.
Section 6.8. Arm's-Length Transactions. The Company will
not enter into any transaction or series of related transactions
with any Person other than in the ordinary course of business and
on an arm's-length basis.
Section 6.9. Other Transactions. The Company will not
enter into any partnership, profit-sharing or royalty agreement
or other similar arrangement whereby the Company's income or
profits are, or might be, shared with any other Person, or enter
into any management contract or similar arrangement whereby its
business or operations are managed by any Person, or make any
investments except in accordance with the Trust and Retention
Agreement.
Section 6.10. No Modifications. The Company will not:
(a) amend or modify its Memorandum of Association or
Articles of Association (other than to increase its authorized
share capital or as may be required by law, provided that in
either such case prior notice shall be given to each of the
Lenders), change its Fiscal Year, or materially change or consent
to change the nature or scope of the Project, or issue Shares
prior to the Project Completion Date to any Person other than a
Sponsor or IFC;
(b) assign or otherwise transfer, terminate or amend, or
consent to any amendment of, any Principal Document, or grant or
consent to any grant of any waiver or forbearance, or exercise
any election in respect of any material provision of any
Principal Document, provided that the Company may enter into
change orders relating to the EPC Contract as follows:
(i) without the prior review and consent of
the Lenders or the Independent Engineer, any
single change order having a price or value of
fifty thousand Dollars ($50,000) or less, provided
that the aggregate of all change orders entered
into pursuant to this Section 6.10(b)(i) may not
exceed two hundred fifty thousand Dollars
($250,000); provided further that where any such
change orders would increase the price of the EPC
Contract, the certificate required under Paragraph
2 of the EPC Performance Guarantee shall have been
delivered by the Company to the issuer of such
Performance Guarantee; provided further that such
change order shall not materially adversely affect
the performance, design, or reliability of the
Project or the schedule for First Unit Delivery,
Second Unit Delivery or Final Acceptance (any
delay in any such scheduling in excess of fourteen
(14) days in the aggregate, whether consecutive or
otherwise, on account of all change orders entered
into pursuant to this Section 6.10(b)(i) in all
events being deemed to be materially adverse for
purposes of this Section 6.10(b)(i)); and provided
further that this Section 6.10(b)(i) shall not
apply to any change order entered into pursuant to
Section 3.33.3(e) of the EPC Contract;
(ii) with the prior review and consent of the
Independent Engineer (which consent shall be
deemed given if the Independent Engineer does not
object to the terms of the proposed change order
within fifteen (15) days following receipt of the
proposed change order by the Independent
Engineer), any single change order having a price
or value in excess of fifty thousand Dollars
($50,000) but less than two hundred thousand
Dollars ($200,000), provided that the aggregate of
all change orders entered into pursuant to clause
(i) above and this clause (ii) may not exceed two
million Dollars ($2,000,000); and provided further
that where any such change orders would increase
the price of the EPC Contract, the certificate
required under Paragraph 2 of the EPC Performance
Guarantee shall have been delivered by the Company
to the issuer of such Performance Guarantee;
(iii) with the prior review and consent
of the Lenders and the Independent Engineer, any
change order not expressly contemplated by the
preceding clause (i) or (ii); provided further
that where any such change orders would increase
the price of the EPC Contract, the certificate
required under Paragraph 2 of the EPC Performance
Guarantee shall have been delivered by the Company
to the issuer of such Performance Guarantee; or
(c) enter into any material agreement other than the
Principal Documents, except (i) as permitted under Section 6.4 or
6.9 of the General Conditions, or (ii) if the aggregate amount
payable under such agreement is less than $50,000 per year, or
(iii) if the amount payable under such agreement, together with
the amounts payable under all other Third Party Agreements (other
than the Project Agreement, the PPA, the EPC Contract and the
Services Agreements) is less than $200,000; or (iv) the amounts
payable under the agreement have been included in the applicable
Annual Budget approved by the Lenders; or (v) such agreement is
required in connection with extraordinary circumstances and is
approved by the Lenders; or
(d) suspend performance by the EPC Contractor, the O&M
Operator or the Owner's Engineer for a period of more than 30
days except with the prior approval of the Lenders; or
(e) approve any Substantial Subcontractors or Substantial
Vendors in addition to or in replacement of those Substantial
Subcontractors and Substantial Vendors set forth on
Schedule 6.10(e) hereof pursuant to the EPC Contract, or any
single subcontract exceeding $200,000, or subcontracts exceeding
$500,000 in the aggregate pursuant to the Amended and Restated
Services Agreement dated July 11, 1997, between the Company and
Harza Engineering Company International L.P., and the Company
shall cause Panda of Nepal not to approve any single subcontract
exceeding $200,000 or subcontracts exceeding $500,000 in the
aggregate pursuant to the Amended and Restated Services Agreement
dated July 11, 1997 between Panda of Nepal and Harza Engineering
Company International L.P. unless, with respect to any such
proposed additional or replacement Substantial Subcontractor or
Substantial Vendor or proposed subcontract, as the case may be,
the Lenders do not object to such proposed Substantial
Subcontractor or Substantial Vendor or proposed subcontract, as
the case may be, within fifteen (15) days following receipt by
each of the Lenders of the written proposal pertaining thereto.
It is expressly understood and agreed that the Lenders shall have
the right to reject the proposed Substantial Subcontractor or
Substantial Vendor or proposed subcontract, as the case may be,
if the Lenders determine in good faith that they do not have
sufficient information to make a decision and explain in writing
what additional information is required; or
(f) approve the date of First Unit Delivery, Second Unit
Delivery, or Final Acceptance, in each case pursuant to the EPC
Contract; or
(g) exercise its right to operate unsatisfactory Equipment
(as such term is defined in the EPC Contract) pursuant to
Section 11.19 of the EPC Contract, unless the Lenders do not
object to the Company's proposed operation of unsatisfactory
Equipment within fifteen (15) days following the Lenders' receipt
of notice from the Company that it intends to operate
unsatisfactory Equipment.
Section 6.11. No Other Business. The Company will not
carry on any business other than in connection with the
completion and operation of the Project and will take no action
whether by acquisition or otherwise which would constitute or
result in any material alteration to the nature of that business.
Section 6.12. Abandonment. The Company will not abandon or
agree to abandon the Project or place the Project or agree to
place the Project on a "care and maintenance" basis for more than
thirty (30) consecutive days in any calendar year; provided,
however, that (a) nothing in this Section 6.12 shall prevent the
Company from shutdowns necessary for repairs and maintenance of
the Project or from putting the Project on a "care and
maintenance basis" to the extent necessitated by a Force Majeure
Event or from putting the Project on a "care and maintenance
basis" during any period of delay on the part of NEA in building
the NEA Interconnection Facilities, and (b) nothing in this
Section 6.12 shall be deemed to waive or limit in any way the
right of the Lenders to declare an Event of Default as provided
in Article 7 of the General Conditions, including without
limitation Sections 7.1(f) and 7.1(g) of the General Conditions.
"Care and maintenance basis" means maintaining the Plant on the
basis that it will not generate electricity and will be or remain
decommissioned on a long-term basis all in accordance with
prudent operating and maintenance practices and methods and
standards generally followed from time to time by the electrical
utility industry in connection with maintaining electric
generating and transmission equipment of the type applicable to
the Project.
Section 6.13. Improper Use. The Company will not use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any portion of the Site or the Project
for any purpose which:
(a) may be dangerous, unless safeguarded as required by law
(provided, however, that this clause (a) shall not be deemed to
prohibit the Company from carrying out the Project in accordance
with the terms of the Project Agreement, the PPA, the EPC
Contract and the Services Agreements in a reasonable and prudent
manner);
(b) violates any applicable law, Environmental Law or any
applicable Governmental Approval in any material respect;
(c) may constitute a public or private nuisance resulting
in a Material Adverse Change; or
(d) may (i) make voidable or cancelable any warranties
given by the EPC Contractor under Section 11.1 of the EPC
Contract, or (ii) make void, voidable or cancelable, or increase
the premium of, any insurance then in force with respect to the
Site or Project or any part thereof unless, in the case of an
increase in premium, the Company gives proof of payment of such
increase.
Section 6.14. Expenditures. The Company will not make
expenditures for fixed and other non-current assets in excess of
the amounts budgeted therefor in the applicable Annual Budget.
The Company will not make expenditures for Operation and
Maintenance Costs in any Quarter which exceed by 15% the amount
budgeted for any item of expenditure in the Annual Budget or by
10% the amount budgeted for total expenditures in the Annual
Budget.
Section 6.15. Approvals. The Company will not permit any
commissioning, performance, or acceptance tests or final
inspection (as such final inspection is referred to in
Section 10.10 of the EPC Contract) to be conducted except after
twenty-one (21) days prior notice thereof to the Independent
Engineer and the Lenders (with an additional seven (7) days
notice of the actual day of the test) and provided such test
occurs in the fourth or fifth week following the first notice to
the Independent Engineer and the Lenders, and will not approve or
adopt the Facility Procedures Manual, Performance Testing
Procedures, Performance Test Guidelines, the HSE Plan, the
Operations and Maintenance Plan or the detailed operating manuals
for the Project unless and until the Independent Engineer shall
have recommended approval thereof to the Lenders, and the Lenders
have given approval of such document. The Company will not
issue, or permit any party to issue, the Final Acceptance
Certificate under the EPC Contract except with the prior approval
of the Independent Engineer and the Lenders. Within ten (10)
days following a final inspection of the Facility (as such final
inspection is referred to in Section 10.10 of the EPC Contract
and which final inspection shall be attended by the Independent
Engineer and by the Lenders if the Lenders so wish), the Lenders
and the Independent Engineer shall notify the Company in writing
whether the Final Acceptance Certificate should be issued to the
EPC Contractor. If at the end of the 10-day period: (i) the
Lenders and the Independent Engineer do not notify the Company as
to whether the Final Acceptance Certificate should be issued, or
(ii) either the Lenders or the Independent Engineer do not notify
the Company as to whether the Final Acceptance Certificate should
be issued and the other party (i.e., the Independent Engineer or
the Lenders, as the case may be) has accepted in writing the
issuance of the Final Acceptance Certificate, then the Lenders
and/or the Independent Engineer shall be deemed to have approved
the issuance of such Final Acceptance Certificate. It is
expressly understood and agreed that by the end of the aforesaid
ten (10) day period the Lenders and the Independent Engineer
shall have the right to reject the issuance of the Final
Acceptance Certificate if the Lenders or the Independent Engineer
(as the case may be) determine in good faith that it does not
have sufficient information to make a decision and explains in
writing what additional information is required.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1. Events of Default. It is an Event of Default
if:
(a) Payments. The Company shall (i) default in the payment
when due of any principal of any of the Loans or (ii) default in
the payment when due of any interest, fees or other amounts in
respect of any of the Loans or under any Loan Document and such
default shall continue for at least five (5) days or (iii)
default in the payment required under the Hedging Documents and
such default shall continue after any grace period provided
therein; or
(b) Representations, Etc. Any representation, warranty or
certification confirmed or made in any Principal Document (other
than any Non-Material Agreement) or the Letter of Information by
the Company, the Sponsors or any Affiliate of any of them, or in
any writing provided by any of them in connection with the
execution, delivery or performance of, or in connection with any
request for a Disbursement under, the Loan Documents or any other
Principal Documents (other than Non-Material Agreements) or for a
payment of monies from any account created under the Trust and
Retention Agreement or the Nepal Agency and Retention Account
(including, without limitation, any certification of an
Authorized Officer of the Company set forth in a Payment
Requisition, Insurance Proceeds Request, Debt Service and Reserve
Deposit Certificate), shall be found to have been incorrect in
any material respect when made or deemed to be made and the fact,
circumstance or condition that is the subject matter of such
representation or warranty is not corrected to conform to such
representation or warranty within thirty (30) days after the
Company becomes aware thereof; or
(c) Loan Document Covenants. The Company shall (i) default
in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in Section 7.1(a) and
(b) above and other than the covenants set forth in Sections 5.3
, 5.6 and 5.7(j) of the General Conditions) contained in this
Agreement or in any other Loan Document and such default shall
remain unremedied for a period of thirty (30) days (or for such
shorter period as may be specified in such agreement) or, in the
case of a default occurring as a result of the Company's failure
to perform or observe any term, covenant or agreement which
expressly requires that the Lenders be satisfied with such
performance or observance or otherwise exercise their discretion,
for a period of thirty (30) days (or for such shorter period as
may be specified in such agreement) after notice by the Lenders
of any failure by the Company to so perform or observe; or (ii)
default in the due performance or observance by it of the
covenants set forth in Sections 5.3 and 5.7(j) of the General
Conditions; or (iii) default in the due performance or observance
by it of the covenants set forth in Section 5.6 hereof and with
respect to compliance with inconsequential laws, other than
Environmental Laws, such default shall continue for a period of
thirty (30) days; or
(d) Principal Document Covenants. Except with respect to
those matters referred to in any other Section of this Article 7,
any party (other than the Lenders or their advisors or
consultants or the Trustee) shall default in the due performance
or observance by it of any covenant or agreement under a
Principal Document (other than a Third Party Agreement and other
than a Non-Material Agreement) and such default shall remain
unremedied for a period of thirty (30) days after the Company
becomes aware thereof (or for such shorter period of cure as may
be specified in such Principal Document); or
(e) Third Party Agreement Covenants. Except with respect
to those matters referred to in Sections 7.1(f), (g) and (h) of
the General Conditions, any party shall default in the due
performance or observance by it of any material term, covenant or
agreement under a Third Party Agreement (other than Non-Material
Agreements) and such default shall remain unremedied for a period
of thirty (30) days after the Company becomes aware thereof (or
for such shorter period of cure as may be allowed in such Third
Party Agreement); provided, however, that if the Company is
diligently pursuing a cure of such default, the Company shall
have an additional thirty (30) days to obtain a cure of such
default if such additional period is reasonably required to
obtain a cure of such default and such additional thirty (30)
days would not extend the cure period for a longer period than is
allowed in such Third Party Agreement; or
(f) NEA Default.
(i) NEA shall default in any payment
obligation under the PPA (and HMGN shall not have
honored a demand under the Project Agreement in
respect thereof within the period specified in the
Project Agreement) beyond any period of grace
provided therein; or
(ii) NEA shall default in any material
respect in the due performance or observance by it
of any other term, covenant or agreement contained
in the PPA (and HMGN shall not have honored a
demand under the Project Agreement in respect
thereof within the period specified in the Project
Agreement), and such default shall remain
unremedied for a period of thirty (30) days (or
for such shorter period of cure as may be
specified in the PPA); or
(iii) The Lenders shall not have received
the NEA Letter of Credit from a bank satisfactory
to the Lenders on the first Unit Delivery Date (as
such term is defined in the PPA) or, in the event
the financial condition of the bank issuing the
NEA Letter of Credit falls below a level
satisfactory to the Lenders, the Company shall not
have delivered within thirty (30) days thereafter
a replacement letter of credit from a bank
reasonably satisfactory to the Lenders and in form
and substance satisfactory to the Lenders; or
(iv) At any time prior to the payment in full
of all Obligations of the Company under this
Agreement, the NEA Letter of Credit shall not be
renewed or reinstated in the required amount
before the expiration date thereof.
(g) HMGN Default; Exercise of Obligations.
(i) HMGN shall default in the due
performance or observance of its obligations under
Article 5 of the Project Agreement; or
(ii) HMGN shall fail to perform any of its
material obligations under the Project Agreement,
and such default shall remain uncured or
unremedied for a period of ninety (90) days; or
(iii) HMGN shall fail to meet its
obligation under Article 6 of the Project
Agreement to purchase the assets of the Company.
(h) EPC Contract, Operations and Maintenance Agreement and
Services Agreements Covenants. Any party to the EPC Contract,
the Operations and Maintenance Agreement or the Services
Agreements shall default in the due performance or observance of
any material term, covenant or agreement contained in such
agreements, and such default remains unremedied for a period of
thirty (30) days after notice thereof is delivered to the
defaulting party (or for such shorter period of cure as may be
allowed in the EPC Contract, the Operation and Maintenance
Agreement or the Services Agreements, as the case may be);
provided, however, that if the Company is diligently pursuing a
cure of any such default, the Company shall have an additional
thirty (30) days to obtain a cure of such default if such
additional period is reasonably required to obtain a cure of such
default and such additional thirty (30) days would not extend the
cure period for a longer period than is allowed in such Third
Party Agreement; or
(i) Sponsors. (A) Any Sponsor shall fail to deliver, or
cause the Company to deliver, to the Trustee stock certificates
representing Pledged Shares (marked by the Company to acknowledge
the pledge thereof to the Trustee for the benefit of the
Lenders), with stock powers executed in blank, within ten (10)
Business Days following the acquisition by such Sponsor of such
Pledged Shares under the Share Retention and Project Funds
Agreement or the Subscription Agreement to which it is a party;
or (B) any Sponsor shall default in the due performance or
observance of any term, covenant or agreement (except as
otherwise provided in clause (i)(A) above) contained in the Share
Retention and Project Funds Agreement or the Subscription
Agreement to which it is a party, and such failure shall continue
for a period of thirty (30) days; or (C) any Equity Letter of
Credit shall expire prior to the occurrence of the Project
Completion Date under this Agreement and any remaining
obligations of the Sponsor Shareholder which has provided such
Equity Letter of Credit under its Subscription Agreement shall
not be fully secured by cash collateral in favor of the Trustee
for the benefit of the Lenders, in form and substance
satisfactory to the Lenders; or
(j) Indebtedness.
(i) The Company shall (A) default in any
payment of any Indebtedness (other than the Loans)
with an aggregate principal amount of US$250,000
or more, and such default shall continue for a
period of thirty (30) days or such shorter period
of grace (and any extension of the period of grace
granted by the holder of such Indebtedness), if
any, provided in the instrument or agreement under
which such Indebtedness was created or (B) default
(other than in the manner referred to in clause
(A)) in the observance or performance of any
agreement or condition relating to any
Indebtedness with an aggregate principal amount of
US$250,000 (other than the Loans) or contained in
any instrument or agreement evidencing, securing
or relating thereto, and such default shall
continue for a period of thirty (30) days or such
shorter period of grace provided, if any, in the
instrument or agreement under which such
Indebtedness was created, or any other event shall
occur or condition exist the effect of which is to
cause any such Indebtedness to be declared or to
become due prior to its stated maturity; or
(ii) Any Indebtedness of the Company shall be
declared to be due and payable, or required to be
prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity
thereof; or
(k) Bankruptcy, Etc.
(i) There shall have been entered against
the Company, any Sponsor, the O&M Operator, or,
prior to the later of the date of expiration of
the Defects Liability Period or the Project
Completion Date, the EPC Contractor or the Owner's
Engineer, a decree or order by a court adjudging
the Company, any Sponsor, the O&M Operator, or,
prior to the later of the date of expiration of
the Defects Liability Period or the Project
Completion Date, the EPC Contractor or the Owner's
Engineer, bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in
respect of the Company, any Sponsor, the O&M
Operator, or, prior to the later of the date of
expiration of the Defects Liability Period or the
Project Completion Date, the EPC Contractor or the
Owner's Engineer, under any applicable law; or
appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official)
of the Company, any Sponsor, the O&M Operator, or,
prior to the later of the date of expiration of
the Defects Liability Period or the Project
Completion Date, the EPC Contractor or the Owner's
Engineer, or of any substantial part of its
property or other assets, or ordering the winding
up or liquidation of its affairs; or any other
event shall have occurred which under any
applicable law would have an effect analogous to
any of those events listed above in this Section
with respect to the Company, any Sponsor, the O&M
Operator, or, prior to the later of the date of
expiration of the Defects Liability Period or the
Project Completion Date, the EPC Contractor or the
Owner's Engineer (all such actions being defined
in this Agreement as an "Involuntary Bankruptcy"),
and such Involuntary Bankruptcy shall not have
been discharged within thirty (30) days of
institution; or
(ii) There shall have been instituted by the
Company, any Sponsor, the O&M Operator, or, prior
to the later of the date of expiration of the
Defects Liability Period or the Project Completion
Date, the EPC Contractor or the Owner's Engineer,
proceedings to be adjudicated bankrupt or
insolvent, or the consent by it to the institution
of bankruptcy or insolvency proceedings against
it; or the filing by it of a petition or answer or
consent seeking reorganization or debt relief
under any applicable law; or the consent by it to
the filing of such a petition or to the
appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official)
of the Company, any Sponsor, the O&M Operator, or,
prior to the later of the date of expiration of
the Defects Liability Period or the Project
Completion Date, the EPC Contractor or the Owner's
Engineer, or of any substantial part of its
property; or the making by it of an assignment for
the benefit of creditors; or the admission by it
in writing of its inability to pay its debts
generally as they become due; or any other event
shall have occurred which under any applicable law
would have an effect analogous to any of those
events listed above in this Section with respect
to the Company, any Sponsor, the O&M Operator, or,
prior to the later of the date of expiration of
the Defects Liability Period or the Project
Completion Date, the EPC Contractor or the Owner's
Engineer; or any corporate or other action is
taken by the Company, any Sponsor, the O&M
Operator, or, prior to the later of the date of
expiration of the Defects Liability Period or the
Project Completion Date, the EPC Contractor or the
Owner's Engineer, for the purpose of effecting any
of the foregoing.
(l) Security Documents, Project Events.
(i) Any Security Document which creates, or
purports to create, a Lien on the Collateral or
any portion thereof shall fail to provide, or
cease to be effective to grant, to the Lenders or
the Trustee, as applicable, a Lien on such
Collateral superior to all other Liens, any such
Lien shall cease to be perfected (except as
otherwise specifically approved in writing by the
Lenders), or any Security Document shall cease to
be in full force and effect or shall not be
reinstated or renewed as required hereunder or
under any other applicable Principal Document, or
the validity thereof or the applicability thereof
to the Loans or the other Obligations or any part
thereof shall be disaffirmed by or on behalf of
the Company or a party thereto, or any party to a
Security Document (other than the Lenders or the
Trustee) shall fail to perform or observe, or
cause to be performed or observed, any covenant,
term or agreement contained in any Security
Document; or
(ii) Without limiting the other provisions of
this Article 7, any Principal Document (other than
any Non-Material Agreement) shall cease to be
valid and binding or in full force and effect
(except upon expiration of its stated term if not
required to be reinstated or renewed under any
other applicable Principal Documents) or shall be
declared to be null and void and such Principal
Document shall not have been replaced (with a
document containing only the same parties and only
the same terms, conditions and other provisions of
the document being replaced) or reinstated or
novated to the satisfaction of the Lenders within
thirty (30) days from the date such Principal
Document ceased to be valid or binding or in full
force and effect or declared null and void; or
(iii) Any Principal Document shall be
assigned or amended, except to the extent
expressly permitted under this Agreement, without
the written consent of the Lenders; or
(iv) Without limiting the other provisions of
this Article 7, any material Governmental Approval
other than the Project Licenses (including,
without limitation any Remittance and Repatriation
Approval) required in connection with the Loans,
this Agreement, any other Principal Document or
the Project shall not be obtained or shall be
rejected or denied or shall expire without being
renewed in a timely manner or shall be revoked,
suspended, held invalid or limited in effect and
such Governmental Approval shall not be obtained
or renewed within thirty (30) days from the date
it was necessary or expired, as the case may be,
or any Project License shall be rejected, or
revoked, suspended, held invalid or limited in
effect, except (as to any event described in this
clause (d)) to the extent constituting a Special
Buyout Event; or
(v) The Company shall cease to have the
right to possess and use the Site (other than an
immaterial portion thereof); or
(vi) Without limiting the other provisions of
this Article 7, a Special Buyout Event shall occur
and the Company shall fail to pay in full all of
the Obligations on or before the Purchase Date;
or, except to the extent any such action
constitutes a Special Buyout Event, HMGN or any
other Governmental Authority shall take any action
to dissolve or disestablish the Company, or shall
take any action that prevents the Company from
operating the Project or prevents the Company or
any other party from performing its obligations
under any of the Principal Documents (provided
that, if any such action of HMGN or any other
Governmental Authority was not taken in response
to an act or omission of the Company, such action
shall not constitute an Event of Default until
such action or the effects thereof on the Company
or other party shall continue for thirty (30)
days); or
(vii) the Company or the Sponsors (in
their capacities as Sponsors) shall abandon the
Project or shall fail to construct, operate or
maintain the Project in accordance with the
Principal Documents; or
(viii) the Company shall fail to maintain
any insurance policies required under Section 5.3
of, or Schedule 3.1(f)(i) to, the General
Conditions; or
(ix) the Commercial Operation Date shall not
have occurred by the date which is six months
after the Required Commercial Operation Date (as
defined in, and as extended in accordance with the
terms of, the PPA), or the Project Completion Date
shall not have occurred by the date which is
twelve (12) months after the Commercial Operation
Date; or the Project shall not have achieved at
least 36MW nominal net capacity by the Commercial
Operation Date; or
(m) Material Adverse Change. One or more events,
conditions or circumstances shall exist or shall have occurred
which, alone or taken together, constitutes a Material Adverse
Change and such Material Adverse Change is not cured within
thirty (30) days after its occurrence; or
(n) Debt Service Coverage Ratio. The Company shall fail to
maintain a projected Debt Service Coverage Ratio (calculated on
the basis of assumptions developed by the Company and approved by
the Lenders) of at least 1.0:1.0 for each 12-month period (or
portion thereof) prior to the last scheduled Payment Date, and
within the first thirty (30) day period following such failure
the Company shall fail to deliver a plan reasonably satisfactory
to the Lenders designed to achieve a projected Debt Service
Coverage Ratio (calculated on such basis) of at least 1.0:1.0 or
within the second thirty (30) day period following such failure
the Company shall fail to implement such plan and achieve a
projected Debt Service Coverage Ratio of at least 1.0:1.0; or
(o) Share Retention. The Sponsors cease to hold the legal
and beneficial title to Shares in the percentages required by
Article 2 of the Share Retention and Project Funds Agreement; or
(p) Judgments. Any final judgment or judgments for the
payment of money in an aggregate amount in excess of one hundred
thousand Dollars ($100,000) or its equivalent in another currency
are rendered against the Company, and such judgment or judgments
are not satisfied or discharged within thirty (30) days of entry
or, provided that the Company has posted such bonds and other
security as are satisfactory to the Lenders, after all appeal
rights with respect to such judgment or judgments have been
exhausted.
Section 7.2. Acceleration on Default. Upon the occurrence
of an Event of Default, and at any time thereafter, if such Event
of Default is continuing, (i) either Lender shall have the right,
by notice to the Company and independent of any action by the
other Lender or any other Person, to (x) declare all outstanding
principal of, and all accrued interest and other fees and charges
on, its Loans, together with all other Obligations, to be
immediately due and payable, whereupon the same shall become due
and payable forthwith and (y) terminate its Commitment to make
its Loans to the Company, and (ii) each of the Lenders and the
Trustee shall have such other rights with respect to the
occurrence of an Event of Default as are provided in the Loan
Documents or as are available to them at law or in equity. If an
Event of Default specified in Section 7.1(k)(ii) of the General
Conditions shall have occurred with respect to the Company,
(i) the outstanding principal of, and all accrued interest and
other fees and charges on the Loans (together with all other
Obligations) shall thereupon become immediately due and payable
(anything in this Agreement to the contrary notwithstanding)
without any presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by the Company, and (ii)
the Commitment of the Lenders to make the Loans to the Company
shall terminate immediately (anything in this Agreement to the
contrary notwithstanding) without any presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by the Company, and (iii) each of the Lenders and the
Trustee shall have such other rights with respect to the
occurrence of such Event of Default as are provided in the Loan
Documents or as are available to them at law or in equity.
Section 7.3. Right to Cure. Notwithstanding anything in
Article 7 of the General Conditions, each of the Lenders reserves
the right to cure any default by the Company under any of the
Principal Documents.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. Payment of Fees and Expenses.
(a) The Company shall, whether or not the transactions
herein contemplated are consummated, pay (i) the fees and
expenses of each of the Lenders' counsel (as evidenced by
invoices) in connection with (A) the preparation, review,
execution, and, where appropriate, registration, delivery and
translation of this Agreement, the Security (and any renewal or
extension thereof), each Principal Document and any other
documents related to this Agreement, (B) the administration by
the Lenders of the Loans and by IFC of the IFC Subscription
provided for in this Agreement, (C) the giving of any legal
opinion required by the Lenders under this Agreement and/or any
Principal Document, (D) any amendment or modification to,
preservation of rights under, or waiver in connection with, or
waiver under, this Agreement, the Security or any Principal
Document, (E) the registration (where appropriate) and the
delivery of the evidences of indebtedness and other obligations
relating to the Loans, the IFC Subscription and the disbursements
thereof, (F) the exercise by either of the Lenders of its rights
or powers consequent upon or arising out of the occurrence of any
Event of Default or Default, and (G) matters pertaining to the
Lenders' rights under any Principal Document; (ii) the fees and
expenses of any consultant or advisor to the Lenders or the
Trustee, including, without limitation, the Independent Engineer
and the Insurance Consultant, provided that all such fees and
expenses shall be evidenced by invoices and other supporting
documentation; and (iii) any costs or expenses incurred by the
Lenders in enforcing any provision of this Agreement or any other
Principal Document.
(b) The Company shall, whether or not the transactions
herein contemplated are consummated, (i) pay and hold each of the
Lenders and the Trustee harmless from and against any and all
present and future stamp and other similar Taxes with respect to
the transactions contemplated hereby and save the Lenders and the
Trustee harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such
Taxes; and (ii) indemnify the Trustee and each of the Lenders and
each of their respective officers, directors, employees,
representatives, attorneys and agents from and hold each of them
harmless against any and all liabilities (including removal and
remedial actions), obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and
disbursements (including attorneys' and consultants' fees and
disbursements) (each a "Loss") incurred by any of them as a
result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding
(whether or not the Trustee or either of the Lenders is a party
thereto) related to the entering into and/or performance of this
Agreement or any other Principal Document or the use of the
proceeds of the Loans or the consummation of any transactions
contemplated herein or in any other Principal Document,
including, without limitation, the fees and disbursements of
counsel selected by such indemnified party incurred in connection
with any such investigation, litigation or other proceeding, or
in connection with enforcing the provisions of this Section 8.1
(but excluding any such Losses to the extent that a court or
arbitral tribunal with jurisdiction over the subject matter of
the Loss renders a final determination that such Loss was based
solely on the gross negligence or willful misconduct of the
Person to be indemnified or of its officers, directors,
employees, representatives, attorneys or agents, as the case may
be, as determined by a court of competent jurisdiction).
(c) Without limitation to the provisions of paragraph (b)
above, the Company agrees to defend, protect, indemnify and hold
harmless each of the Lenders and the Trustee and each of their
respective officers, directors, employees, representatives,
attorneys and agents from and hold each of them harmless against
any and all Losses imposed on or asserted against any such
Persons directly or indirectly based on, or arising or resulting
from, (i) the actual or alleged presence of Hazardous Materials
on, under or at the Project or the Site, (ii) any environmental
claim relating to the Company or the Project or arising out of
the use of the Project or the Site, or (iii) the exercise of the
Trustee's or the Lenders' rights under any of the provisions of
this Agreement or the other Loan Documents, regardless of when
any such matters arise, but excluding any matter to the extent
that a court or arbitral tribunal with jurisdiction over the
subject matter of the Loss renders a final determination that
such Loss was based solely on the gross negligence or willful
misconduct of the Trustee or either of the Lenders or of their
respective officers, directors, employees, representatives,
attorneys or agents, as the case may be.
(d) All sums paid and costs incurred by either of the
Lenders with respect to any matter indemnified hereunder shall
bear interest at the default rate applicable to the Loans from
the date which is fifteen (15) days after such Lender requests
reimbursement thereof from the Company, and all such sums and
costs shall be Obligations secured by the Security Documents
until so reimbursed.
(e) Nothing contained in Sections 8.1(b) or (c) above shall
vest in the Company any right or power to control the defense of
any Person indemnified by the Company thereunder. The Company
also agrees not to assert, on any theory of liability, any claim
against any Person indemnified by the Company under
Sections 8.1(b) or (c) above for special, indirect,
consequential, or punitive damages arising out of or otherwise
relating to this Agreement, or to any of the transactions
contemplated in this Agreement or the actual or proposed use of
proceeds of the Loans.
Section 8.2. Right of Setoff. In addition to any rights
now or hereafter granted under applicable law or otherwise, and
not by way of limitation of any such rights, upon the occurrence
of an Event of Default, each of the Trustee and each of the
Lenders is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind
to the Company or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply
any and all deposits (general or special) and any other
Indebtedness at any time held or owing by each of the Lenders
(including without limitation by any branches and agencies of the
Lenders wherever located) to or for the credit or the account of
the Company against and on account of the Obligations and the
liabilities of the Company to each of the Lenders or the Trustee
under this Agreement or under any other Loan Document, and all
other claims of any nature or description arising out of or
connected with this Agreement or any other Loan Document,
irrespective of whether either of the Lenders or the Trustee
shall have made any demand with respect thereto.
Section 8.3. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
For Bhote Koshi Power Company Private Limited:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For IFC:
Address: International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Power Department
Facsimile: (202) 974-4307
For DEG:
Address: DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49 221 4986 107
For the Trustee:
Address: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
For the Insurance Consultant:
Address: INDECS, Ltd.
Paxton House
30 Artillery Lane
London E1 7L5
England
Attention: Mike Peachey
Facsimile: (44) 171 247 8223
For the Independent Engineer:
Address: Stone & Webster Engineering Corporation
7677 East Berry Avenue
Englewood, Colorado 80111-2137
Attention: Jonathan S. Field
Facsimile: (303) 741-7599
Section 8.4. Successors or Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that the Company may not assign or transfer
any of its rights or obligations hereunder without the prior
written consent of the Lenders. Each of the Lenders may
transfer, assign or grant its rights hereunder in connection with
an assignment or transfer of all or any part of its interest in
its Commitment or the IFC Loans or the DEG Loan, as the case may
be. IFC and/or DEG, as the case may be, will give the Company
prompt notice after the occurrence of any such transfer,
assignment or grant.
Section 8.5. Remedies Cumulative. The rights, powers and
remedies herein or provided in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Trustee or either of the Lenders would otherwise have.
No notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of
the Trustee or either of the Lenders to any other or further
action in any circumstances without notice or demand.
Section 8.6. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 8.7. Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company, which translation shall be the
governing version between the Company and the Lenders and the
Trustee.
Section 8.8. Calculations, Computations. All financial
calculations to be made under, or for the purpose of, the
Investment Agreement shall be determined in accordance with U.S.
GAAP, applied on a consistent basis and, except as otherwise
required to conform to the definitions contained in Schedule A to
the General Conditions or any other provision of the Investment
Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Company is obligated to
furnish to the Lenders from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial
statements should be in respect of the last quarter of a Fiscal
Year then, at the option of the Lenders, such calculations may
instead be made from the audited financial statements for the
relevant Fiscal Year, and (b) if there should occur any material
adverse change in the financial condition or results of
operations of the Company after the end of the period covered by
the relevant financial statements, then such material adverse
change shall also be taken into account in calculating the
relevant figures.
Section 8.9. Governing Law; Submission to Jurisdiction; Venue.
(a) This Agreement is a contract made under the laws of the
State of New York of the United States and shall for all purposes
be governed by and construed in accordance with the laws of such
State without regard to the conflicts of laws provisions thereof
(other than Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York). Any legal action or proceeding
against the Company with respect to this Agreement or any other
Loan Document may be brought in the courts of the State of New
York in the County of New York or of the United States for the
Southern District of New York and, by execution and delivery of
this Agreement, the Company hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. The Company agrees
that a judgment in any such action or proceeding shall be
conclusive and binding upon the Company, and may be enforced in
any other jurisdiction, including without limitation Nepal, by a
suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. The Company hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Company
agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Lenders. The Company further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to the Company, at its address set forth in
Section 8.3 of the General Conditions, such service to become
effective ten (10) days after such mailing. Nothing herein shall
affect the right of the Trustee or the Lenders to serve process
in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in Nepal or
in any other jurisdiction.
(b) The Company hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Loan Document brought
in the courts referred to in clause (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 8.10. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 8.11. Headings. The headings of the several
Articles, Sections and sub-sections of this Agreement are
inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
Section 8.12. Amendments. Neither this Agreement nor any
of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing and signed by all of the parties hereto, and to the
extent any amendments to any of the financial terms contained
herein would have a material adverse impact on the Ministry of
Industries, approved by the Ministry of Industries.
Section 8.13. Survival. All indemnities set forth herein
including, without limitation, in Sections 5.9 and 8.1 of the
General Conditions, shall survive the making and repayment of the
Loans.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed in their respective names as of the date first
written above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Authorized Representative1
INTERNATIONAL FINANCE CORPORATION
By:
Authorized Representative
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH,
By:
Authorized Representative
SCHEDULE 3.1(c)
"IN-PRINCIPLE" COMMITMENT LETTERS
See Attached.
SCHEDULE 3.1(e)
TITLE TO THE SITE
Part I
Details of Land owned by Bhote Koshi Power Company Private Limited
Location of Land:
Zone: Bagmati, District: Sindhupalchowk, V.D.C.: Phulphingkatti
<TABLE>
<CAPTION>
Land S.No. Ward Plot Area Date of issue of
Ownership No. No. Ropani Land Ownership
Certificate Certificate
<C> <C> <C> <C> <C> <C> <C>
Nepali Date
Gregorian Date
1 1 1 411 2-3-2-1 2053-6-11 1996-09-27
" 2 1 413 1-14-3-1 2053-6-11 1996-09-27
" 3 1 499 4-1-1-0 2053-6-11 1996-09-27
" 4 1 500 20-0-0-0 2053-6-11 1996-09-27
" 5 1 462 3-9-1-1 2053-6-28 1996-10-14
" 6 1 465 0-5-0-3 2053-6-28 1996-10-14
" 7 1 433 1-5-1-0 2053-9-04 1997-12-19
" 8 2 217 1-9-3-1 2053-10-17 1997-01-30
" 9 2 215 3-5-1-3 2053-10-17 1997-01-30
" 10 2 11 12-8-2-2 2053-10-17 1997-01-30
" 11 2 4 7-7-0-3 2053-10-17 1997-01-30
" 12 2 13 13-4-0-0 2053-10-17 1997-01-30
" 13 2 1 4-8-2-2 2053-10-17 1997-01-30
" 14 1 490 0-12-2-3 2053-10-17 1997-01-30
" 15 1 489 0-12-2-1 2053-10-17 1997-01-30
" 16 1 263 3-0-1-3 2053-10-17 1997-01-30
" 17 1 262 3-8-2-2 2053-11-9 1997-02-20
" 18 1 468 6-0-0-0 2053-11-9 1997-02-20
" 19 2 6 1-6-1-1 2054-2-30 1997-06-12
" 20 2 5 1-9-2-0 2054-2-30 1997-06-12
" 21 2 216 1-4-3-1 2054-2-30 1997-06-12
2 1 1 443 0-8-0-0 2053-6-11 1996-09-27
" 2 1 474 0-2-1-3 2053-6-11 1996-09-27
" 3 1 428 1-9-0-3 2053-6-11 1996-09-27
" 4 1 429 0-9-3-3 2053-6-11 1996-09-27
" 5 1 444 9-12-0-2 2053-6-11 1996-09-27
" 6 1 438 0-3-1-1 2053-6-11 1996-09-27
" 7 1 459 0-2-0-0 2053-6-11 1996-09-27
" 8 1 423 0-8-0-3 2053-6-11 1996-09-27
" 9 1 432 0-13-2-0 2053-6-11 1996-09-27
" 10 1 441 2-6-1-2 2053-6-11 1996-09-27
" 11 1 426 0-3-0-0 2053-6-11 1996-09-27
" 12 1 412 12-3-1-1 2053-6-11 1996-09-27
" 13 1 415 3-0-1-3 2053-6-11 1996-09-27
" 14 1 417 2-6-1-2 2053-6-11 1996-09-27
" 15 1 430 0-6-2-2 2053-6-11 1996-09-27
" 16 1 448 0-1-2-1 2053-6-11 1996-09-27
" 17 1 461 0-1-2-0 2053-6-11 1996-09-27
" 18 1 447 0-1-2-1 2053-6-11 1996-09-27
" 19 1 427 0-9-3-3 2053-6-11 1996-09-27
" 20 1 425 0-3-0-0 2053-6-11 1996-09-27
" 21 4 357 1-3-2-3 2053-6-11 1996-09-27
22 1 422 1-6-2-2 2053-6-11 1996-09-27
3 1 1 419 1-2-2-3 2054-3-18 1997-07-02
" 2 1 418 1-10-3-0 2054-3-18 1997-07-02
" 2 4 358 0-9-1-3 2054-8-20 1997-12-05
" 3 1 420 4-12-0-2 2054-3-18 1997-07-02
" 4 1 502 18-2-3-3 2054-3-18 1997-07-02
" 5 1 504 9-5-3-3 2054-3-18 1997-07-02
" 6 1 463 0-1-0-0 2054-7-26 1997-11-11
4 1 1 464 0-3-0-0 2054-2-30 1997-06-12
" 2 1 501 1-0-0-0 2054-2-30 1997-06-12
" 3 1 503 4-14-0-0 2054-2-30 1997-06-12
</TABLE>
Total - 53 175-2-2-1
Description of Leasehold Interests of Bhote Koshi Power Company Private Limited
A. Leasehold interests pursuant to HMGN Lease
<TABLE>
<CAPTION>
Serial Location of land Government Plot Area in Purpose Term of
No. to be Leased Measurement No. Ropani Lease
Map Nos. (Hectare)*
<C> <S> <C> <C> <C> <S> <C>
1 Surge Tank and 157-0396 1 105-0-0- Surge Shaft 40 yrs.
Powerhouse Area 0 Peknstock
Sindhupalchowk (5.25) Construction
district,
Phulpingkatti
VDC Ward No. 1,
Forest land with
bushes and
grass.
2 Surge Tank and 157-0396 410 2-2-3-0 Slope 40 yrs.
Powerhouse Area (0.13) Protection
Sindhupalchowk
district,
Phulpingkatti
VDC Ward No. 1,
Forest land with
bushes and
grass.
3 Surge Tank and 157-0396 "A" in 16-0-0- Powerhouse 40 yrs.
Powerhouse Area Project 0 slope
Sindhupalchowk map, no (0.80) protection
district, num. on
Phulpingkatti govt
VDC Ward No. 1, map
HMGN, riverbed
4 Surge Tank and 157-0396 359 11-0-0- Powerhouse 40 yrs.
Powerhouse Area 0 access &
Sindhupalchowk (0.55) construction
district, use
Phulpingkatti
VDC Ward No. 1,
HMGN, barren
land
5 Surge Tank and 157-0396 421 0-9-1-3 Operators 40 yrs.
Powerhouse Area (0.03) village &
Sindhupalchowk construction
district,
Phulpingkatti
VDC Ward No. 1,
HMGN, gully
6 Khokundol Area Government 272 71-0-0- Spoil and 3 yrs.
Sindhupalchowk map number 0 borrow area,
district, yet to be (3.55) construction
Phulpingkatti identified material
VDC Ward No. 1, . storage
HMGN, riverbed &
barren land
7 Headworks Area 157-0317 14 56-0-0- Dam, 40 yrs.
Sindhupalchowk 0 spillway,
district, (2.80) desander, &
Phulpingkatti construction
VDC Ward No. 2,
Forest land,
with grass &
bushes
8 Headworks Area 157-0317 14 10-0-0- Access to 3 yrs.
Sindhupalchowk 0 (0.5) head works &
district, spoils area
Phulpingkatti
VDC Ward No. 2,
Forest land
along riverbed
with bushes
9 Headworks Area 157-0317 12 3-13-3- Access & 3 yrs.
Sindhupalchowk 3 spoils area
district, (0.2)
Phulpingkatti
VDC Ward No. 2,
HMGN land
10 Headworks Area 157-0278 113 23-0-0- Dam 40 yrs.
Sindhupalchowk 0 construction
district, (1.15)
Tatopani VDC
Ward No. 4,
HMGN, barren
land
11 Headworks Area 157-0278 113 37-0-0- Construction 3 yrs.
Sindhupalchowk 0 Camp Site
district, (1.85)
Tatopani VDC
Ward No. 4,
HMGN, barren
land
</TABLE>
*Area in hectares is approximate
Total Land Required
a) HMGN land for 40 years = 50-9-1-3 Ropani (2.53 Hectares)
b) HMGN land for 40 years = 163-2-3-0 Ropani (8.16 Hectares)
SubTotal = 213-12-0-3 Ropani (10.69 Hecatres)
c) HMGN land for 3 years = 111-13-3-3 Ropani (5.59 Hectares)
d) Forest land for 3 years = 10-0-0-0 Ropani (0.50 Hectares)
SubTotal = 121-13-3-3 Ropani (6.09 Hecatres)
TOTAL land to be leased = 335-10-0-2 Ropani (16.78 Hectares)
B. Leasehold interests pursuant to Land Leases other than the HMGN Leases
See Attached.
SCHEDULE 3.1(e)
TITLE TO THE SITE
Part II
1. Property at the cutoff wall, right bank to be purchased or
leased by January 30, 1998. Such property to include any or all
of plots No. 107, part of No. 111 and/or part of No. 112 as shown
on the Land Inventory Map dated July 1997.
2. Right-of-way and tower pad locations at the end of the
transmission line at the point where the Company line will tie in
with the NEA substation. To be determined and purchased by March
30, 1998.
SCHEDULE 3.1(f)(i)
MINIMUM INSURANCE REQUIREMENTS
The Company shall effect and maintain (or procure that the
EPC Contractor and the O&M Operator, as applicable, shall effect
and maintain) the following insurance covers at all applicable
times under forms and policies and with insurers and reinsurers
acceptable to the Lenders in the following terms:
A. COMPANY'S INSURANCE DURING THE CONSTRUCTION PERIOD
1. MARINE AND TRANSIT INSURANCE:
Cover: All materials, equipment, machinery,
spares and other items for incorporation in the
Facility against all risks of physical loss or
damage while in transit by sea, air or land
portion of the journey from country of origin
anywhere in the world to the Site in Nepal,
or vice versa, from the time of the insured
items leaving warehouse or factory for
shipment to the Site in Nepal,
"Subject to;-
Institute Cargo Clauses (A) 1.1.82
Institute War Clauses (Cargo) 1.1.82
Institute Strikes Clauses (Cargo) 1.1.82
Institute War Clauses (sendings by Post) 1.1.82
Institute Cargo Clause (Air) (excl. sendings by Post) 1.1.82
Institute War Clauses (air Cargo) (excl. sendings by Post) 1.1.82)
Institute Strikes Clauses (Air Cargo) 1.1.82 or equivalent.
The MAR Form is deemed incorporated to the
extent that any of the above clauses apply.
Sum
Insured : An amount
equal to the replacement value of any
property being shipped.
Deductible : Generally
nil (but some property may attract a small
deductible).
Insured : The
Company, the EPC Contractors and suppliers to
the Company and suppliers to the EPC
Contractors, each of the Lenders and the
Trustee.
2. MARINE DELAY IN START-UP:
Cover :
Standing charges following delay in start of
commercial operation of the Facility as a
direct result of physical loss or damage
covered under the Marine and Transit
insurance (see Clause I above), application
of any deductible thereunder notwithstanding.
Sum
Insured : As a
minimum an amount equal to the estimated Debt
Service and fixed expenses during the
Indemnity Period.
Indemnity
Period : 24
months from the anticipated delivery date of
each Unit or the Project Completion Date, as
applicable.
Deductible : Not more
than 30 days, or such other period as may be
agreed by the Lenders and the Insurance
Consultant.
Insured : The
Company, each of the Lenders and the Trustee.
3. CONSTRUCTION "ALL RISKS":
Cover : The
contract works executed and in the course of
execution, materials and temporary works,
while on the Site in Nepal, against "all
risks" of physical loss or damage, except as
may be excluded in the policy.
Sum
Insured : An amount
sufficient to pay claims on a reinstatement
basis and not less than US$66,525,000 million
or as may be sub-limited therein.
Deductibles: In respect of
any one occurrence, arising during the
Construction and Testing Period;
(i) from Storm, Tempest, Flood, Not more than US$100,000
Water Damage, Tsunami,
Subsidence and Collapse
(ii) from testing/commissioning Not more than and claims arising during
the Defects Liability Period
US$100,000
(iii) 10% for each and every loss in respect of GLOF, minimum $100,000 and
maximum $500,000
(iv) from any other cause Not more than $50,000
Period of
Cover : From
the Notice to Proceed as defined in the EPC
Contract and during the design, engineering,
procurement, site preparation, construction,
testing and commissioning and start-up and
until entry into Commercial Service, plus 24
months warranty period of the EPC Contractor.
Insured : The
Company, the EPC Contractors and Suppliers to
the Company and to the EPC Contractors, each
of the Lenders and the Trustee.
General : Cover
shall include transit within Nepal of locally
procured goods and materials.
Claims will be paid in the currency in which
the cost is incurred, i.e. pound, US$ or local
currency.
The insurers and reinsurers to waive all
rights of subrogation against each insured
party hereunder.
Main
Exclusions : War and
kindred risks, nuclear risks, unexplained
shortage, cost of replacing or repairing
items which are defective in workmanship,
material or design; contractual penalties and
consequential losses; cash; vehicles;
vessels; aircraft.
4. ADVANCE LOSS OF PROFITS:
Cover :
Standing charges following delay in start of
commercial operations as a direct result of
physical loss or damage covered under the
Construction "All Risks" policy.
Sum
Insured : As a
minimum, an amount equal to the estimated
Debt Service and fixed expenses.
Indemnity
Period : 24
months from the anticipated delivery date of
each Unit, the Project Completion date, as
applicable.
Insured : The
Company, each of the Lenders and the Trustee.
Deductible : Not more
than 60 days.
General : Cover to
include denial of access; customers and
suppliers extensions as applicable.
5. THIRD PARTY LIABILITY:
Cover : Legal
liability to third parties for death or
bodily injury or loss or damage to their
property arising out of all activities of the
insured parties in Nepal, arising in
connection with the construction, testing and
commissioning and start-up of the Facilities.
Limit of
Indemnity : US$30,000,000
any one occurrence (in the aggregate in
respect of Products Liability and Pollution
Risks).
Deductibles : Not to exceed
US$10,000 for each claim for loss or damage
to property. None for injury to persons.
Insured : The
Company, the EPC Contractors and Suppliers to
the Company and to the EPC Contractors, each
of the Lenders and the Trustee.
Period of
Cover : From
the Notice to Proceed as defined in the EPC
Contract and during the design, engineering,
procurement, site preparation, construction,
testing and commissioning and start-up and
until the Commercial Operation date plus 24
months warranty period of the EPC Contractor.
Cover : To
include a waiver of the rights of subrogation
against each party insured hereunder by the
insurers and reinsurers;
worldwide jurisdiction clause;
cross liability clause;
sudden and accidental seepage, pollution and
contamination and the costs incurred of
cleaning up; non-owned aviation liability.
6. MISCELLANEOUS:
Other insurance as is customary, desirable or necessary to
comply with local or other requirements, such as contractual
insuring responsibility, workmen compensation and employers'
liability insurance in relation to all workmen employed in
the construction of the Project and motor vehicle liability
insurance for all vehicles owned, hired, leased, used or
borrowed for use in Nepal in connection with the Facilities.
B. CONTRACTORS' INSURANCE DURING THE CONSTRUCTION PERIOD:
1. CONTRACTORS' INSURANCE
Without limiting the contractor's obligations,
responsibilities and liabilities under Article 4 of the
EPC Contract the contractor shall effect and maintain at
its own expense for the benefit of and in the joint names
of the Company, the contractor and sub-contractor and such
other persons as the employer may elect, the following
insurances (as defined in Article 9 of the EPC Contract);-
a) Construction Equipment
Insurance against all loss or damage from
whatsoever cause arising in respect of Construction
Equipment brought onto or destined for the Site for use
in the execution of the Works to the full replacement
value of such equipment.
b) Insurance against Accidents to Work Site
Insurance in respect of its liability as
defined in the EPC Contract during the whole time that
any persons are employed by it on Site in connection
with the Works.
c) Motor and Marine Insurances
The Contractor shall at all material times
keep in force the following additional insurances in as
far as they may be applicable:-
i) Policies of motor
insurance in respect of all mechanically propelled
vehicles used on public highways or in any
circumstances such as to be liable for compulsory
motor insurance in accordance with the laws of
Nepal.
ii) Marine Policies in respect
of all floating craft and plant or marine platforms
covering loss of or to such items and liability
arising out of their use to include not only the
hull value thereof but also the cost of removing
the same in the event of sinking whether or not the
same is declared a total loss and including
protection and indemnity and third party liability
cover to an amount equal to the hull value and
estimated cost of removal in the event of sinking
or US$5,000,000 whichever be the greater.
d) Indemnity to Company
All insurances referred to in this clause as
being kept in force by the Contractor shall be endorsed
to the effect that the Employer, Company, the Lenders
and the Trustee and such other persons as the Company
may specify in writing shall be included as named
insureds thereon and fully indemnify them in respect of
claims that may be made against them arising out of the
execution of the works or in connection with the EPC
Contract.
e) Sub-Contractors Insurance
In respect of any Sub-Contractor or in
respect of the use by a Sub-contractor of Construction
Equipment, the Contractor's obligation to insure itself
shall be satisfied by the Sub-Contractor having
effected such insurance endorsed as required by Article
9 of the EPC Contract but the Contractor shall require
such Sub-Contractor to provide to the Company or the
Company's representative when required all such
policies and receipts for payment of the premium or
satisfactory evidence of insurance cover.
C. OPERATIONAL INSURANCE
1. "ALL RISKS" INSURANCE:
Cover : All
assets comprising the Facilities, including
but not limited to, buildings and their
contents, machinery, stock, fixtures,
fittings and all other personal property,
against "all risks" of physical loss or
damage.
Sum
Insured : An amount
sufficient to reinstate the property [to be
determined nearer the time].
Deductibles: To be agreed
with the Lenders nearer the time.
Insured : The
Company, each of the Lenders and the Trustee.
General : To include
a waiver of subrogation in favor of each
party insured hereunder from the insurers and
the reinsurers.
2. BUSINESS INTERRUPTION:
Cover : Loss
of revenue as a direct consequence of loss of
or damage to the Facilities insured under
Clause 1 above.
Sum
Insured : As a
minimum, an amount equal to the estimated
Debt Services due and fixed expenses incurred
during the Indemnity Period.
Indemnity
Period : 24 months.
Deductibles : Not more than
30 days, or such other period as may be
agreed by the Lenders and the Insurance
Consultant.
Insured : The
Company, each of the Lenders and the Trustee.
General : To include
a waiver of subrogation in favor of each
party insured hereunder from the insurers and
the reinsurers.
Supplier and customer extensions, as
appropriate.
3. MACHINERY BREAKDOWN:
Cover : All
machinery, plant, boilers and auxiliary
equipment forming part of the Facilities
against sudden and unforeseen physical loss
or damage resulting from mechanical and
electrical breakdown or derangement,
explosion or collapse of boilers and pressure
vessels, electrical short circuits,
vibration, misalignment, excessive current or
voltage, abnormal stresses, centrifugal
forces, failure of protective or regulating
devices, overheating, entry of foreign
bodies, and other similar causes.
Sum Insured: To be determined
nearer the time but not less than the
replacement value of item(s) to be insured.
Deductibles : To be agreed
with the Lenders nearer the time.
Insured : The
Company, each of the Lenders and the Trustee.
General : To include
a waiver of subrogation in favor of each
party insured hereunder from the insurers and
the reinsurers.
4. CONSEQUENTIAL LOSS FOLLOWING MACHINERY BREAKDOWN:
Cover : Loss
of revenue as a direct consequence of loss or
damage to the Complex insured under Clause 3
above.
Sum Insured : To be determined
nearer the time, but as a minimum, an amount
equal to the estimated Debt Service and fixed
expenses which will be due during the
Indemnity Period.
Indemnity
Period : 15 months.
Deductibles : Not more than
30 days, or such other period as may be
agreed by the Lenders and the Insurance
Consultant.
Insured : The
Company, each of the Lenders and the Trustee.
General : To include
a waiver of subrogation in favor of each
party insured hereunder from the insurers and
the reinsurers.
5. THIRD PARTY/PUBLIC LIABILITY:
Cover : Legal
liability of the Insured parties for death or
bodily injury to third parties or loss or
damage to their property arising out of the
ownership, operation, use or maintenance of
the Facilities.
Limit of
Indemnity : To be agreed
with the Lenders nearer the time but not less
than US$30,000,000 each occurrence (in the
aggregate in respect of Products Liability
and Pollution Risks).
Deductibles : To be agreed
with the Lenders nearer the time.
Insured : The
Company, each of the Lenders and the Trustee.
Cover : To
include:
a waiver of subrogation in favor of each
party insured hereunder from the insurers and
the reinsurers;
a cross liability clause;
worldwide jurisdiction clause;
sudden and accidental seepage, pollution and
contamination, and the costs incurred of
cleaning up.
6. MISCELLANEOUS:
Other insurance which,
a) is customary or necessary to comply with local or
other requirements, such as contractual insuring
responsibility, workmen compensation and employers'
liability insurances in relation to all workmen employed
in the Facilities or in connection with its operation;
motor vehicle liability insurance for all vehicles
owned, hired, leased, used or borrowed for use in Nepal
in connection with the Facilities, and
b) is considered by the Company to be desirable or
prudent, or required by the Lenders after consultation
with the Company, such as Directors' and Officers'
insurance.
7. GENERAL:
a) The Company shall notify each of the Lenders of any
insurances affected by it in accordance with Clause 6
above.
b) The Company shall procure that each policy effected by
the Company pursuant to this Schedule shall provide;-
i) notice of assignment of the policies to
each of the Lenders and/or Trustee;
ii) cut-through clauses where required;
iii) that policies are not to be canceled, lapsed,
suspended or changed in any material respect without
prior written notice (at least 30 days) to each of the
Lenders and their agreement obtained, or such lesser
period as may be specified from time to time in respect
of war and kindred perils;
iv) that the protection which is granted to the
Lenders under the policies is not to be invalidated by
any act or failure to act on the part of the Company or
it's Construction Contractors or subcontractors to the
extent that such protection is agreed by the Insurance
Consultant as being reasonably available;
v) that the Lenders are not responsible to the
insurers or reinsurers for the payment of insurance
premiums or any other obligations of the Company;
vi) that the Trustee be named sole loss payees in
respect of all losses in excess of US$500,000 per
occurrence.
c) Each policy affected pursuant to this Schedule;-
i) shall be maintained with such reputable
insurers and reinsurers as may be approved by the
Lenders;
ii) shall be in such form and substance as is
consistent with the obligations of the Company under
this Schedule, as may be approved by the Lenders; and
iii) shall not include any provision for self-
insurance, or any self-insurance retention except to
the extent of the deductible as are specified in this
Schedule.
d) The Company shall provide to each of the Lenders letters
of undertaking from the insurers and their reinsurance
brokers which addresses such things as notifying the Lenders
in the event that the insurers become aware of any fact
which may affect the coverage under the policy and such
other undertaking as the Lenders may reasonably require.
e) This Company shall provide to each of the Lenders such
information (including without limitation original policy
documents and evidence of premium payment) as may be
reasonably required.
f) If at any time and for any reason any insurance required
to be maintained under this Schedule is not in full force
and effect then, without prejudice to the rights of the
Lenders, the Lenders shall be entitled thereupon, or at any
time whilst the same is continuing, to procure such
insurance at the expense of the Company.
g) If the Lenders reasonably consider that, as a result of a
material change in the identified risk exposure, any of the
terms, conditions, amounts and deductibles of insurances
procured pursuant to this Schedule are inadequate or
inappropriate, the Lenders may require that the Company
procure such amended and/or additional insurances as may be
reasonably required to cover such material change.
SCHEDULE 3.1(i)
CERTIFICATE OF AUTHORIZED OFFICER
OF COMPANY, SPONSOR, O&M OPERATOR,
OR OWNER'S ENGINEER
The undersigned, [________________], HEREBY CERTIFIES that
(s)he is the [______________] of [Company], a [_______________]
company (the "Company"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Schedule A to
that certain Investment Agreement General Conditions, dated as of
the Closing Date among BHOTE KOSHI POWER COMPANY PRIVATE LIMITED,
a private limited liability company organized and existing under
the laws of the Kingdom of Nepal, INTERNATIONAL FINANCE
CORPORATION, an international organization established by
Articles of Agreement among its member countries ("IFC"), and DEG-
DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH, a company
organized and existing under the laws of the Federal Republic of
Germany ("DEG"). The undersigned HEREBY CERTIFIES FURTHER as
follows:
1. Attached hereto as Exhibit A is a true and complete
copy of the Charter Documents of the Company. Such Charter
Documents have not been modified or amended in any respect and
are in full force and effect on the date hereof.
2. The Company is a duly constituted and validly
existing company in good standing under the laws of its
jurisdiction of organization and of each jurisdiction where
failure to so qualify would constitute a Material Adverse Change.
Attached hereto as Exhibit B are the good standing certificates
or equivalent issued by such jurisdictions. The Company is duly
authorized and qualified to conduct business in Nepal [with
respect to a Sponsor only, to the extent required by law; with
respect to the O&M Operator only, by the date which is 180 days
prior to the Scheduled First Unit Delivery Date for the First
Unit].
3. Attached hereto as Exhibit C are true and complete
copies of the resolutions duly adopted by the Board of Directors
of the Company authorizing execution, delivery and performance of
the Principal Documents. Such resolutions have not been modified
or amended in any respect and are in full force and effect on the
date hereof.
4. Each of the following persons is a duly elected,
qualified and acting officer of the Company, holds the office or
offices in the Company indicated opposite his or her name, and
has held such office or offices continuously since __________,
19___, and the signature appearing opposite his or her name is
his or her genuine signature.
Name Office Signature
5. There is no proceeding seeking the dissolution or
liquidation of the Company or threatening the existence of the
Company.
6. On the date hereof, there exists no default or event
of default on the part of the Company, or, to the actual
knowledge of the Company's officers, on the part of any other
party, which has not been cured or waived under any of the
Principal Documents to which the Company is a party (the
foregoing described Principal Documents being collectively
referred to as the "Agreements"). All conditions to the
Company's obligations under the Agreements have been fulfilled or
satisfied on or prior to the date hereof.
7. On the date hereof, all of the representations and
warranties of the Company contained in any of the Agreements or
in the Letter of Information are true and correct in all material
respects with the same force and effect as though such
representations or warranties had been made on and as of the date
hereof, except to the extent that such representations and
warranties related only to a specific date (it being confirmed
that such representations and warranties were true and correct as
of such specific date).
WITNESS my hand this _____ day of ____________, 199___.
By:
Title:
The undersigned, the duly elected Secretary of the Company,
certifies that the above referenced signature is the true,
correct and genuine signature of _____________, the duly elected
____________ of the Company.
By:
[Title]
SCHEDULE 3.1(i)
CERTIFICATE OF AUTHORIZED OFFICER
OF EPC CONTRACTOR
The undersigned, [________________], HEREBY CERTIFIES that
(s)he is the [______________] of China Gezhouba Construction
Group Corporation for Water Resources and Hydropower, a
[corporation owned and controlled by the People's Republic of
China] organized and existing under the laws of the People's
Republic of China (the "EPC Contractor"). For all purposes of
this certificate, (a) capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Schedule 1 to
the EPC Contractor's and Financing Parties' Acknowledgement and
Consent (the "Acknowledgement and Consent") dated as of the
Closing Date by and among the EPC Contractor, International
Finance Corporation, and Wilmington Trust Company, as Trustee,
and (b) capitalized terms not otherwise defined in Schedule 1 to
the Acknowledgement and Consent shall have the meanings ascribed
to them in the Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric Project (the "EPC Contract") dated as of December
19, 1996, by and between the EPC Contractor and Bhote Koshi Power
Company Private Limited. The undersigned HEREBY CERTIFIES
FURTHER as follows:
1. Attached hereto as Exhibit A is a true and complete
copy of the Charter Documents of the EPC Contractor. Such
Charter Documents have not been modified or amended in any
respect and are in full force and effect on the date hereof.
2. The EPC Contractor is a [corporation owned and
controlled by the People's Republic of China] duly incorporated
and registered under the laws of its jurisdiction of
incorporation and registration. The EPC Contractor is duly
authorized to do business in each jurisdiction in which the EPC
Contractor is party to construction contracts. Attached hereto
as Exhibit B are the good standing certificates or equivalent
issued by such jurisdictions. The EPC Contractor is duly
authorized and qualified to conduct business in Nepal.
3. Attached hereto as Exhibit C are true and complete
copies of the resolutions duly adopted by the [board of
directors] of the EPC Contractor authorizing execution, delivery
and performance of the EPC Documents. Such resolutions have not
been modified or amended in any respect and are in full force and
effect on the date hereof.
4. Each of the following persons is a duly elected,
qualified and acting officer of the EPC Contractor, holds the
office or offices in the EPC Contractor indicated opposite his or
her name, and has held such office or offices continuously since
__________, 19___, and the signature appearing opposite his or
her name is his or her genuine signature.
Name Office Signature
5. There is no proceeding seeking the dissolution or
liquidation of the EPC Contractor or threatening the existence of
the EPC Contractor.
6. On the date hereof, there exists no default or event
of default on the part of the EPC Contractor, or, to the actual
knowledge of the EPC Contractor's officers, on the part of any
other party, which has not been cured or waived under any of the
EPC Documents. All conditions to the EPC Contractor's
obligations under the EPC Documents have been fulfilled or
satisfied on or prior to the date hereof.
7. On the date hereof, all of the representations and
warranties of the EPC Contractor contained in any of the EPC
Documents are true and correct in all material respects with the
same force and effect as though such representations or
warranties had been made on and as of the date hereof, except to
the extent that such representations and warranties related only
to a specific date (it being confirmed that such representations
and warranties were true and correct as of such specific date).
WITNESS my hand this _____ day of ____________, 199___.
By:
Title:
The undersigned, the duly elected [Secretary] of the EPC
Contractor, certifies that the above referenced signature is the
true, correct and genuine signature of _____________, the duly
elected ____________ of the EPC Contractor.
By:
[Title]
SCHEDULE 3.1(j)
CERTIFICATE OF INDEPENDENT ENGINEER
THIS CERTIFICATE is delivered pursuant to Section 3.1(j)
of that certain Investment Agreement General Conditions (the
"General Conditions"), dated as of the Closing Date by and among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED, a private limited
liability company organized and existing under the laws of the
Kingdom of Nepal (the "Company"), INTERNATIONAL FINANCE
CORPORATION, an international organization organized and existing
by virtue of the Articles of Agreement among its member countries
("IFC"), and DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH, a company organized and existing
under the laws of the Federal Republic of Germany ("DEG").
Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in Schedule A of the General Conditions
and the principles of interpretation set forth in such Schedule A
shall apply to this Certificate.
On the date hereof, the undersigned, a duly authorized
representative of Stone & Webster Engineering Corporation (the
"Independent Engineer"), HEREBY CERTIFIES that:
1. The Independent Engineer has reviewed and finds
acceptable the Disbursement Schedule attached as Schedule
3.1(j)(ii) to the General Conditions.
2. The Independent Engineer has reviewed and finds
reasonable and acceptable the HSE Plan for the construction
period, and has reviewed and finds reasonable and acceptable the
outline of the HSE Plan for the operations phase of the Project,
the detailed outline of the Facility Procedures Manual, the
outline of the Operations and Maintenance Plan and the Company's
arrangements for the Company and the Project (i) to comply with,
and for the implementation of, the EMMP, the Resettlement Plan
and the HSE Plan for the construction period, and (ii) to comply
with all applicable Nepalese environmental laws, statutes, rules
and regulations and all other Environmental Laws.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this ________ day of ______________, 1997.
Stone & Webster Overseas
Consultants, Inc.
By: ___________________________
Name:
SCHEDULE 3.1(j)(ii)
DISBURSEMENT SCHEDULE
<TABLE>
<CAPTION> Total
Total Cumula- Current Cumulative Remaining
Budget tive Prior Disbursement Disbursements Budget
Disburse-
ments
<S> <C> <C> <C> <C> <C>
EPC Plant and T-Line $46,340,000 $ $9,379,678 $9,379,678 $36,960,322
-
EPC Miscellaneous Change 600,000 - 600,000 600,000 -
Orders
Taxes and Duties 411,000 - 40,687 40,687 370,313
Land and Access Roady 650,000 - 650,000 650,000 -
Preliminary Investigation 2,438,000 - 2,438,000 2,438,000 -
Engineering - Harza 5,290,000 - 2,478,313 2,478,313 2,811,687
Spare Parts and Start-up 1,000,000 - - - 1,000,000
Testing
Development Costs 2,963,000 - 2,963,000 2,963,000 -
Construction Mgmt. & 2,653,000 - 404,417 404,417 2,248,583
Supervision Costs
Legal Fees 3,026,800 - 2,738,800 2,738,800 288,000
Insurance Premiums 1,558,000 - 541,000 541,000 1,017,000
GLOF Survey/Warning System 600,000 - 72,000 72,000 528,000
Environ. Mitigation & 550,000 - 66,000 66,000 484,000
Community Development
Engineering/Consulting 545,000 - 234,841 234,841 310,159
(Lenders)
O&M/Training Costs during 450,000 - - - 450,000
Construction
Contingency 12,228,476 - - - 12,228,476
Working Capital 1,500,000 - - - 1,500,000
Commitment Fee 671,478 - 117,024 117,024 554,454
Financing Fees 2,437,000 - 2,388,197 2,388,197 48,803
Interest During 7,033,246 - 424,636 424,636 6,608,610
Construction, net
Debt Service Reserve 5,300,000 - - 5,300,000
-
TOTAL $98,245,000 $ $25,536,594 $25,536,594 $72,708,406
</TABLE>
-
SCHEDULE 3.1(u)
CERTIFICATE OF THE COMPANY
REGARDING THE PROTECTION DEVICES
REQUIRED BY THE PPA
THIS CERTIFICATE is delivered pursuant to Section 3.1(u)
of that certain Investment Agreement General Conditions (the
"General Conditions"), dated as of the Closing Date by and among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED, a private limited
liability company organized and existing under the laws of the
Kingdom of Nepal (the "Company"), INTERNATIONAL FINANCE
CORPORATION, an international organization organized and existing
by virtue of the Articles of Agreement among its member countries
("IFC"), and DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH, a company organized and existing
under the laws of the Federal Republic of Germany ("DEG").
Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in Schedule A to the General Conditions,
and the principles of interpretation set forth in such Schedule A
shall apply to this Certificate.
The undersigned, [___________________], HEREBY CERTIFIES
that (s)he is the [___________________] of the Company and as
such (s)he is authorized to execute and deliver this Certificate
on behalf of the Company and the undersigned HEREBY CERTIFIES
FURTHER as follows:
All protection devices required under Section 7.4 of the
PPA have been approved by NEA in accordance with such Section
7.4.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this ________ day of ______________, 1997.
By:__________________________________
Title:
The undersigned, the duly elected Secretary of the Company,
certifies that the above-referenced signature is the true,
correct and genuine signature of ____________________________,
the duly elected ________________________________ of the Company.
By:_________________________________
Secretary
SCHEDULE 3.1(x)
CERTIFICATE OF AUTHORIZED OFFICER OF COMPANY CONCERNING
CONDITIONS PRECEDENT TO EACH DISBURSEMENT
THIS CERTIFICATE is delivered pursuant to Section [3.1(x)]
[3.5(q)] of that certain Investment Agreement General Conditions
(the "General Conditions") dated as of the Closing Date among
Bhote Koshi Power Company Private Limited, a private limited
liability company organized and existing under the laws of the
Kingdom of Nepal (the "Company"), International Finance
Corporation, an international organization established by
Articles of Agreement among its member countries ("IFC"), and DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH, a company
organized and existing under the laws of the Federal Republic of
Germany ("DEG"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in Schedule A to the
General Conditions.
The undersigned HEREBY CERTIFIES that (s)he is an
Authorized Officer of the Company, and as such (s)he is
authorized to execute and deliver this Certificate on behalf of
the Company, and the undersigned FURTHER CERTIFIES, as follows:
1. [Conditions Precedent to Initial Disbursement. All
of the conditions set forth in Article 3, Section 3.1 of the
General Conditions which are required to be satisfied on or
before the date hereof have been satisfied or complied with on or
prior to this date.
(a) Assigned Contracts and Closing Documents.
Attached hereto as Attachments 1-1 through 2-[ ] are true,
complete and correct copies of each of the following Principal
Documents, which comprise all of the Principal Documents existing
on the Financial Closing Date:
[List all contracts to be assigned to the Lenders and
to be provided pursuant to Section 3.1 of the General
Conditions.]
(b) Each of the above-referenced documents has been
duly authorized, executed and delivered by the parties thereto
(such certification as to parties other than the Company[, the
O&M Operator, the Company Engineer, or any Sponsor] [or any of
its Affiliates] is to the best of the Company's knowledge [after
due inquiry]) and is in full force and effect.
(c) All of the conditions precedent under the
Project Agreement and PPA (other than the occurrence of the Loan
Signing Date referred to in Section 3.1 of the PPA) have been
satisfied or waived.
(d) Authorizations. Attached hereto as Attachment 2
are true, complete and correct copies of each Governmental
Approval referenced in Section 3.1(k)(ii) of the General
Conditions.]
2. [Conditions Precedent to Certain Disbursements. All
of the conditions set forth in Article 3, Section 3.2 of the
General Conditions which are required to be satisfied on or
before the date hereof have been satisfied or complied with on or
prior to this date.]
3. [Conditions Precedent to All Disbursements On or
After May 31, 1998. All of the conditions set forth in Article
3, Section 3.3 of the General Conditions which are required to be
satisfied on or before the date hereof have been satisfied or
complied with on or prior to this date.]
4. [Conditions Precedent to Disbursements On or After
the Date Which is 180 Days Prior to the Scheduled First Unit
Delivery Date for the First Unit and to Disbursements On or After
the First Unit Delivery Date. All of the conditions set forth in
Article 3, Section 3.4 of the General Conditions which are
required to be satisfied on or before the date hereof have been
satisfied or complied with on or prior to this date.]
5. Conditions Precedent to All Disbursements. All of
the conditions set forth in Article 3, Section 3.5 of the General
Conditions which are required to be satisfied on or before the
date hereof have been satisfied or complied with on or prior to
this date. The receipt of the Disbursement by the Company will
not result in the violation of any agreement, instrument, note or
contract to which the Company is a party or by which it is bound
or of any law, statute, ordinance, rule, regulation or judgment
to which it is subject, or any Governmental Approval relating to
the Company or the Project.
6. Governmental Approvals.
(a) Attached hereto as Attachment [___] are true,
correct and complete copies of all Governmental Approvals, and
each shareholder's and creditor's permit, license and consent,
including, without limitation, all Repatriation and Remittance
Approvals, and any other consents and approvals, obtained by the
Company, and there are no other Governmental Approvals necessary
for the current stage of implementation of the Project.
(b) All such Governmental Approvals and other
permits, licenses, consents and approvals (i) are in full force
and effect, (ii) have been validly issued in compliance with all
requirements of law and (iii) are not the object of a currently
pending action or appeal.
7. Representations and Warranties. On the date hereof,
all of the representations and warranties of the Company
contained in any of the Principal Documents or in any writing
delivered to the Lenders by the Company are true and correct in
all material respects with the same force and effect as though
such representations or warranties have been made on the date
hereof, except to the extent that such representations and
warranties related only to a specific date.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this _____ day of _________________ 1997
BHOTE KOSHI POWER COMPANY
PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE 4.1(d)
GOVERNMENTAL OR OTHER APPROVALS
REQUIRED PRIOR TO FINANCIAL CLOSING
LICENSE/PERMIT/ REFERENCE
APPROVAL
1. Company Company Act 2050
Registration
2. Production License Section 4 of the Electricity Act,
2049 issued by the Ministry of
Water Resources.
3. Transmission License Section 4 of the Electricity Act,
2049 issued by the Ministry of
Water Resources.
4. Approval to Borrow Sec. 3.1 of the Foreign Investment
from Foreign Lenders and Technology Transfer Act, 2049
and to Invest in issued by the Department of
Share Capital of Industry. Documents to be
Company by Foreign approved: IFC Investment Agreement,
Investors DEG Investment Agreement, All
Equity Subscription Agreements,
Trust and Retention Agreement,
Nepal Agency and Retention
Agreement, Share Retention and
Project Funds Agreement,
Shareholders Agreement, Amended and
Restated Joint Venture Agreement,
O&M Agreement, Share Pledge
Agreement of each Sponsor
Shareholder, Share Pledge Agreement
of each of Soaltee Enterprises
Private Ltd., Soaltee Hotel Ltd.
and Surya Enterprises Private Ltd.
5. Company Income Tax Section 5(a) of the Income Tax Act,
Registration 2031 issued by Kathmandu Tax Office
Certificate
6. Permit to Mortgage Muluki Ain (Civil Code), 2020
Assets of a Nepali issued by the Ministry of Finance.
Company in favor of EDC letter dated November 24, 1997
Foreign Lenders to the Land Revenue Office,
Sindhupalchowk
7. Permit to Open and Sec. 16 of the Foreign Exchange
Maintain Bank (Regulation) Act, 2019 issued by
Accounts in a Foreign the Nepal Rastra Bank.
Country in Foreign
Currency
8. Permit to Open and Sec. 4(a) of the Foreign Exchange
Maintain Bank (Regulation) Act, 2019 issued by
Accounts in Nepal in Nepal Rastra Bank.
Foreign Currency
9. Permit to Pledge Sec. 10 of the Foreign Exchange
Shares of a Nepali (Regulation) Act, 2019 issued by
Company to Foreigners the Nepal Rastra Bank.
10. Permit for a Nepali Foreign Exchange (Regulation) Act,
Shareholder to Invest 2019 issued by Nepal Rastra Bank.
Foreign Currency in a
Nepali Company
11. Exemption from Sec. 11.6 of the Finance Act,
Registration Fee Issued by the Ministry of Finance.
(including Mortgage Nepal Gazette Publication.
Fees)
12. Income Tax For each Contractor as per Section
Registration 5(a) of the Income Tax Act, 2031
Certificate issued by Kathmandu Tax Office.
13. Approval for Change
in Ownership of the
Company (re IFC's
acquisition of shares
in the Company)
14. Permit for HIPC to
open Onshore Dollar
Account
REQUIRED AFTER FINANCIAL CLOSING BY THE EPC CONTRACTOR
LICENSE/PERMIT REFERENCE
APPROVAL
1. Permit to Fell Sec. 22 of the
Trees and Forest Act, 2049
Permits issued by the
regarding District Forest
Timber Office/Department
Excavation of Forest.
2. Permit to Sec. 4 of the
Import, Explosives Act,
Transport and 2012 issued by the
Store Home Ministry.
Explosives
3. Permit to Use Sec. 16(a) of
Roads for Public Roads Act,
Transport of 2031 issued by the
Heavy Loads respective
district units of
the Road
Department.
4. Permit to Issued by the
Import, Ministry of
Install and Communications and
Use the Nepal
Communications Telecommunications
Equipment at Corporation.
the Site
5. Permit to Rule 6 of the
Employ Labor regulation,
Foreigners by 2050 issued by the
the Contractor Department of
Labor.
6. Visas for Rule 8(e) of the
Project Staff Immigration Rules,
2051 issued by the
Immigration
Office.
7. Approvals for
Hedging
Transactions
and Hedging
Documents
SCHEDULE 5.2(c)
CERTIFICATE OF AUTHORIZED OFFICER OF
COMPANY REGARDING AUTHORIZATION TO AUDITORS
[On Bhote Koshi Power Company Private Limited Letterhead]
[Date]
____________________
____________________
____________________
____________________
Re: Upper Bhote Koshi Hydroelectric Project
Gentlemen:
We hereby authorize and request you to give to International
Finance Corporation of 2121 Pennsylvania Avenue, N.W. Washington,
D.C. 20433, United States of America ("IFC") and DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH, Belvederestrasse
40, D-50933, Koeln (Mungersdorf), Federal Republic of Germany
("DEG") (IFC and DEG hereinafter collectively referred to as the
"Lenders"), all such information as the Lenders may reasonably
request with regard to the financial statements of the
undersigned Company. We have agreed to supply that information
and those statements under the terms of that certain IFC
Investment Agreement between the undersigned Company and IFC
dated as of the Closing Date (the "IFC Investment Agreement") and
under the terms of that certain DEG Investment Agreement between
the undersigned Company and DEG dated as of the Closing Date (the
"DEG Investment Agreement") (the IFC Investment Agreement and the
DEG Investment Agreement are collectively referred to herein as
the "Investment Agreement"). For your information, we enclose a
copy of the Investment Agreement.
We authorize and request you to send two copies of the
audited financial statements of this Company to each of the
Lenders to enable us to satisfy our obligations to each of the
Lenders under Section 5.1 of that certain Investment Agreement
General Conditions dated as of the Closing Date among the
undersigned Company, IFC and DEG. When submitting the same to
the Lenders, please also send at the same time a copy of your
full report on such financial statements.
Please note that under the Investment Agreement, we are
obliged to provide each of the Lenders, among other information,
with a copy of the final version of each management letter sent
by you to the Company or its management commenting on, among
other things, the adequacy of the Company's financial control
procedures and accounting and management information systems. In
addition, we are obliged to provide each of the Lenders with a
report by you certifying that, based upon its audited financial
statements, the Company is in compliance with the financial
covenants contained in the Investment Agreement as at the end of
the relevant Fiscal Year or, as the case may be, detailing any
non-compliance. Please also submit each such communication and
report to each of the Lenders with the audited financial
statements.
Yours truly,
Bhote Koshi Power Company Private Limited
_______________________________
We have read this letter and we agree to abide by the
conditions stated therein.
Certified Accountants
SCHEDULE 6.10(e)
SUBSTANTIAL SUBCONTRACTORS AND SUBSTANTIAL VENDORS
1. Supplied Equipment: Hydraulic Turbine, Inlet Valve,
Generator, Governing System and Excitation System
The name of the Manufacturer: Harbin Electric Machinery
Company Ltd.
Address of the Manufacturer: No. 71, Daqing Road, Harbin
City, Helongjiang Province
2. Supplied Equipment: Main Power Transformer
The name of the Manufacturer: Xi'an Electric Manufacturing
Corp., Xi'an Electric Group
Address of the Manufacturer: No. 27, Daqing Road, Xi'an
City, Shanxi Province
3. Supplied Equipment: Gate Equipment
The name of the Manufacturer: Mechanical-Electrical
Installation Company, China Gezhouba Group Corporation
Address of the Manufacturer: No. 20, No. 1 Donghu Road,
Yichang City, Hubei Province
4. Supplied Equipment: Powerhouse and Draft Tube Crane
The name of the Manufacturer: Taiyuan Heavy Machinery Plant
Address of the Manufacturer: No. 53, Yuhe Street, Hexi
District, Taiyuan City, Shanxi Province
5. Supplied Equipment: Mobile Crane
The name of the Manufacturer: Xuzhou Heavy Machine Works
Address of the Manufacturer: No. 165, Tongshun East Road,
Shuzhou City, Jiangshu Province
_______________________________
1 As named in the Company's Certificate of Incumbency and
Authority (see Schedule 3.1(i) of the General Conditions).
EXHIBIT NO. 10.143.01
SPECIAL CONDITIONS
between
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
Dated as of the Closing Date
TABLE OF CONTENTS
PAGE NOS.
ARTICLE 1
Special Conditions and General Conditions; Definitions
Section 1.1 Special Conditions and General Conditions 1
Section 1.3 General Definitions 1
ARTICLE 2
The Project and Financial Plan
Section 2.1 The Project 2
Section 2.2 Financial Plan - Estimated Project Cost. 2
ARTICLE 3
Agreement for the DEG Loan
Section 3.1 The DEG Loan. 3
Section 3.2 Disbursement Procedure. 3
Section 3.3 Interest 3
Section 3.4 Fees. 3
Section 3.5 Repayment. 4
Section 3.6 Voluntary Prepayment. 5
Section 3.7 Mandatory Prepayment. 6
Section 3.8 Prepayment Premium. 9
Section 3.9 Additional Interest. 9
Section 3.10 Payments in Deutsche Marks. 10
Section 3.11 Allocation of Partial Payments 11
Section 3.12 Suspension or Cancellation of Disbursements
by DEG 11
Section 3.13 Termination of Commitment. 12
Section 3.14 Cancellation by the Company 12
Section 3.15 Funding Costs 12
Section 3.16 Maintenance Amount 12
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties Contained
in General Conditions. 13
Section 4.2 Rights and Remedies not Limited 13
ARTICLE 5
Conditions of Disbursement
Section 5.1 Conditions of Initial Disbursement 13
Section 5.2 Conditions of All Disbursements 13
Section 5.3 No Waivers 14
ARTICLE 6
Particular Covenants
Section 6.1 Particular Covenants. 14
ARTICLE 7
Events of Default
Section 7.1 Events of Default 14
ARTICLE 8
Miscellaneous
Section 8.1 Notices 14
Section 8.2 English Language 14
Section 8.3 Expenses 15
Section 8.4 Jury Trial 15
Section 8.5 Confidential Information 15
SCHEDULE 2.2(a)
FINANCING PLAN 17
SCHEDULE 2.2(b)
PROJECT COSTS 18
SCHEDULE 3.2(a)(i)
FORM OF DEG DISBURSEMENT REQUEST 20
SCHEDULE 3.2(a)(ii)
FORM OF DEG LOAN DISBURSEMENT RECEIPT 23
SPECIAL CONDITIONS
AGREEMENT, dated as of the Closing Date, between BHOTE KOSHI
POWER COMPANY PRIVATE LIMITED, a private limited liability
company organized and existing under the laws of the Kingdom of
Nepal (the "Company") and DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH, a company organized and existing
under the laws of the Federal Republic of Germany ("DEG").
(Capitalized terms used herein shall be defined as provided in
Section 1.3 hereof).
WHEREAS, the Company has requested DEG to make a term loan
to it on the terms and subject to the conditions set forth in
this Agreement, for the purpose of financing a portion of the
costs of construction of the Company's proposed run of the river
hydroelectric power facility with a rated capacity of 36 MW
(nominal net) and a 25 km transmission line, the Upper Bhote
Koshi electric power project, in the Sindhupalchok District of
Nepal;
WHEREAS, DEG is willing to make such a term loan to the
Company on the terms and subject to the conditions set forth in
this Agreement, for the purpose described above;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Special Conditions and General Conditions; Definitions
Section 1.1 Special Conditions and General Conditions.
This document is entitled "DEG Special Conditions." A document
entitled "Investment Agreement General Conditions" (the "General
Conditions") is appended hereto. Such two documents together
constitute the DEG Investment Agreement, dated the date of the
Special Conditions between DEG and the Company (collectively,
this "Agreement"). If any provision of the General Conditions is
inconsistent with a provision of the DEG Special Conditions, the
provision of the DEG Special Conditions shall prevail.
Section 1.2 Principles of Construction. For all purposes
of this Agreement, (i) capitalized terms used but not otherwise
defined herein shall have the meanings set forth in Schedule A to
the General Conditions (as amended or supplemented from time to
time) and (ii) the principles of construction set forth in
Schedule A to the General Conditions shall apply.
Section 1.3 General Definitions.
"DEG Loan" shall have the meaning ascribed to it in Section
3.1 hereof.
"DEG Loan Interest Rate" shall mean 9.60% per annum;
provided, however, that in the event any part of the DEG Loan has
been undisbursed and (i) if in accordance with Section 3.5(c)
such undisbursed amount reduces the loan repayment schedule by
one full payment of principal, the DEG Loan Interest Rate shall
at such time be reduced by .05% or (ii) if in accordance with
Section 3.5(c) such undisbursed amount reduces the loan repayment
schedule by two or more full payments of principal, the DEG Loan
Interest Rate shall at such time be reduced by .1%.
"Disbursement Request" shall mean, for purposes of this
Agreement, a request for a Loan Disbursement, submitted by the
Company to DEG, in accordance with the provisions of Section 3.2
hereof.
"DM" or "Deutsche Marks" shall mean the freely transferable
lawful currency of the Federal Republic of Germany, provided that
to the extent so required and pursuant to the general principles
of currency law, where any amount is outstanding or expressed in
Deutsche Marks under this Agreement or the other Loan Documents,
such amount so outstanding or so expressed shall be deemed to be
so outstanding or so expressed, as the case may be, in units of
the Euro at the time when Deutsche Marks are replaced by the Euro
pursuant to the applicable regulations of the European Union
and/or of the Federal Republic of Germany and DEG has notified
the Company at least sixty (60) days in advance that payments
shall thereafter be made in units of the Euro.
"Euro" shall mean the common European currency, as and when
such currency is introduced and reorganized by applicable law of
the European Union and/or the Federal Republic of Germany as the
new European currency.
"Loan Disbursement" shall mean, for purposes of this
Agreement, any disbursement of any portion of the DEG Loan.
ARTICLE 2
The Project and Financial Plan
Section 2.1 The Project. The project to be financed is
the Facility, the Site, all auxiliary facilities, utilities and
the sites thereof, the construction, equipping, placing into
operation, and operation of the Facility, and as otherwise
described in the Letter of Information.
Section 2.2 Financial Plan - Estimated Project Cost.
(a) The proposed sources of financing for the Project are
set forth on Schedule 2.2(a) hereof.
(b) As of the date hereof, the total estimated cost of the
Project is set forth on Schedule 2.2(b) hereof.
ARTICLE 3
Agreement for the DEG Loan
Section 3.1 The DEG Loan.
(a) On the terms and subject to the conditions of this
Agreement, DEG agrees to lend to the Company the amount of up to
Twenty One Million Deutsche Marks (DM21,000,000) (the "DEG
Loan").
(b) The DEG Loan is not revolving in nature, and any
amounts repaid, prepaid or canceled pursuant to the terms of this
Agreement may not be re-borrowed.
Section 3.2 Disbursement Procedure.
(a) The Company may request Disbursements of the DEG Loan
by delivering to DEG, at least ten (10) Business Days prior to
the proposed date of Disbursement, a DEG Disbursement Request
substantially in the form of Schedule 3.2(a)(i) hereof, and a
receipt substantially in the form of Schedule 3.2(a)(ii) hereof.
(b) DEG shall make Disbursements of the DEG Loan to the
credit of the Company into the Offshore Retention Account in
accordance with the provisions of the Trust and Retention
Agreement.
(c) Each Disbursement of the DEG Loan shall be made in an
aggregate amount of not less than One Million Deutsche Marks
(DM1,000,000), and there shall be no more than eight (8)
Disbursements of the DEG Loan.
(d) Each Disbursement of the DEG Loan will be made on a pro
rata basis with a corresponding Disbursement of the IFC Loans,
such that the ratio of the amount of each Disbursement of the DEG
Loan to the total amount of the DEG Loan shall be equal to the
ratio of the amount of each Disbursement of the IFC Loans to the
total amount of the IFC Loans.
Section 3.3 Interest. Subject to Section 3.9 hereof, the
Company shall pay interest on the DEG Loan from time to time
outstanding in accordance with this Section 3.3. Interest shall
accrue from day to day and shall be payable in arrears on the
Interest Payment Dates. The Company shall pay interest at the
DEG Loan Interest Rate on the full amount of the DEG Loan
outstanding from time to time. The interest payable on any
Interest Payment Date shall include interest accruing from and
including the last Interest Payment Date through the day just
preceding the current Interest Payment Date. Interest shall be
pro-rated on the basis of a 360-day year and 30 day months in the
relevant interest period.
Section 3.4 Fees.
(a) The Company shall pay to DEG in Deutsche Marks:
(i) a commitment fee at the rate of two
percent (2.0%) per annum on that part of the DEG
Loan as shall not, from time to time, have been
canceled by DEG or disbursed to the Company, and
in accordance with subsection (b) below;
(ii) a front-end fee for the DEG Loan of an
amount of one percent (1.0%) of the total amount
of the DEG Loan, to be paid within thirty (30)
days after the date of this Agreement, but in any
event prior to the date of the first DEG Loan
Disbursement; and
(iii) an annual loan fee of Thirteen
Thousand One Hundred Twenty-Five Deutsche Marks
(DM13,125), to be paid on the first Interest
Payment Date and every second Interest Payment
Date thereafter.
(b) The commitment fee specified in subsection (a) (i)
above in respect of the DEG Loan commences to accrue on the date
this Agreement is executed; and
(i) is pro-rated on the basis of a 360-day
year for the actual number of days elapsed; and
(ii) is payable by the Company with respect
to the DEG Loan, semi-annually in arrears, on
March 15 and September 15 in each year; the first
such payment to be made on March 15, 1998.
Section 3.5 Repayment.
(a) The Company shall repay the DEG Loan on each Principal
Payment Date in accordance with the following loan repayment
schedule:
Date Payment Due Installment (DM)
1. March 15, 2001 562,900.00
2. September 15, 2001 562,819.84
3. March 15, 2002 627,834.36
4. September 15, 2002 627,008.67
5. March 15, 2003 672,836.65
6. September 15, 2003 705,491.66
7. March 15, 2004 739,731.52
8. September 15, 2004 766,832.42
9. March 15, 2005 817,045.97
10. September 15, 2005 844,548.05
11. March 15, 2006 897,245.57
12. September 15, 2006 930,012.06
13. March 15, 2007 985,441.21
14. September 15, 2007 1,017,991.50
15. March 15, 2008 1,079,408.96
16. September 15, 2008 1,131,796.27
17. March 15, 2009 1,186,726.12
18. September 15, 2009 1,242,496.74
19. March 15, 2010 1,306,118.22
20. September 15, 2010 1,365,723.62
21. March 15, 2011 1,435,079.12
22. September 15, 2011 1,494,911.47
TOTAL 21,000,000.00
(b) The dates for payment of principal of the DEG Loan are
intended to coincide with the relevant Interest Payment Dates.
(c) If any part of the DEG Loan has been undisbursed on
September 30, 2000 or any part of the DEG Loan has been prepaid,
such undisbursed or prepaid parts of the DEG Loan shall be set-
off against the repayment installments in inverse order of
maturity to reduce the term of the DEG Loan. DEG shall (i)
recalculate the amortization schedules set out in subsection (a)
above accordingly and deliver the same to the Company, and (ii)
upon delivery to the Company of the properly recalculated
amortization schedules, this Agreement will be deemed to have
been amended to substitute such recalculated amortization
schedules for subsection (a) above.
Section 3.6 Voluntary Prepayment.
(a) The Company may, on any Interest Payment Date, prepay
all or any part of the DEG Loan then outstanding, on not less
than thirty (30) days' written notice to DEG, but only if:
(i) the Company simultaneously pays the
prepayment premium specified in Section 3.8 hereof
in respect of any outstanding balance of the DEG
Loan, with respect to the portion of the DEG Loan
so prepaid;
(ii) the Company simultaneously pays (x) all
accrued interest on the amount of the DEG Loan to
be prepaid, and (y) all other amounts then payable
under this Agreement;
(iii) for a partial prepayment, such
prepayment is in an aggregate amount of not less
than One Million Deutsche Marks (DM1,000,000);
(iv) the Company simultaneously prepays, pro
rata, the outstanding principal amount of the IFC
Loans (or portion thereof, as applicable),
together with all accrued interest on the
principal amounts of the Loans (or portions
thereof, as applicable), the Maintenance Amount
(if any) on the Loans (or portions thereof, as
applicable) and all other amounts then due
hereunder or under any of the other Loan
Documents; and
(v) if DEG so requires, the Company delivers
to DEG, prior to the date of prepayment, evidence
satisfactory to DEG that all Governmental
Approvals necessary in respect of the prepayment
have been obtained or an opinion of counsel, in
form and substance reasonably satisfactory to DEG,
that none are required.
(b) Amounts prepaid under this Section and Section 3.7
shall be applied by DEG to all respective outstanding repayment
installments of the DEG Loan in inverse order of maturity.
(c) Upon delivery of a notice in accordance with subsection
(a) above, the Company shall make the prepayment in accordance
with the terms of that notice.
(d) The Company may not request Disbursement of amounts
prepaid under this Agreement.
Section 3.7 Mandatory Prepayment.
(a) On the Purchase Date, all Obligations owing to DEG
relating to the DEG Loan hereunder and under the Loan Documents
shall become immediately due and payable without any action on
the part of DEG, and the Company shall pay to DEG an amount equal
to all such Obligations due and owing to DEG, including, without
duplication, all accrued interest on the principal amount of the
DEG Loan to be prepaid and all other amounts then due to DEG
hereunder.
(b) The Company shall prepay, pro rata, the outstanding
principal amount of the DEG Loan (or portion thereof, as
applicable) upon the prepayment by the Company of any of the
other Loans (or portions thereof, as applicable), together with
all accrued interest on the principal amount of the DEG Loan (or
portion thereof, as applicable), the Maintenance Amount (if any)
on the DEG Loan (or portion thereof, as applicable) and all other
amounts then due hereunder or under any of the other Loan
Documents.
(c) Insurance Proceeds shall be applied as follows:
(i) All Insurance Proceeds relative to any
single loss in excess of seven hundred fifty
thousand Dollars ($750,000) shall be paid by the
respective insurers directly to the Trustee. All
Insurance Proceeds relative to a single recovery
of seven hundred fifty thousand Dollars ($750,000)
or less shall be paid directly to the Company. If
any Insurance Proceeds relative to any single loss
in excess of seven hundred fifty thousand Dollars
($750,000), or, during the occurrence and
continuation of an Event of Default, relative to
any loss are paid to the Company, such Insurance
Proceeds shall be received only in trust for the
Lenders, shall be segregated from other funds of
the Company, and shall be promptly paid over to
the Trustee in the same form as received (with any
necessary endorsement) for deposit in the
Insurance Proceeds Sub-Account. If any Insurance
Proceeds are paid to DEG, DEG shall promptly pay
over such Insurance Proceeds to the Trustee for
deposit in the Insurance Proceeds Sub-Account.
(A) If there does not exist an
Event of Default, Insurance Proceeds relative
to a single loss of seven hundred fifty
thousand Dollars ($750,000) or less shall be
applied by the Company to pay the necessary
costs of repair, restoration or replacement
of the Project (in each case, to the extent
such Insurance Proceeds were paid in respect
of physical loss or damage thereto). After
applying such amount, any excess Insurance
Proceeds shall be delivered to the Trustee
for deposit in the Revenue Sub-Account.
(B) If there does not exist an
Event of Default and if there shall occur
damage, destruction or casualty with respect
to which Insurance Proceeds in excess of
seven hundred fifty thousand Dollars
($750,000) but less than five million Dollars
($5,000,000) are payable, and if (I) the
Company promptly (and, in any event, within
30 days after the occurrence of such damage,
destruction or casualty) gives written notice
to DEG that the Company wishes to repair,
restore or replace the Project to the
condition that it was in immediately prior to
such damage, destruction or casualty, (II)
the Insurance Proceeds received by the
Company or the Trustee together with funds
otherwise available to the Company, will be
sufficient to cover all costs and expenses
necessary to repair, restore or replace the
Project and to cover the Operating and
Maintenance Costs and the Debt Service
payable by the Company during the period
necessary to repair, restore or replace the
Project, (III) the repair, restoration or
replacement of the Project is technically and
economically feasible, (IV) after giving
effect to any proposed repair, restoration or
replacement, no Default or Event of Default
or a default under any Principal Document
shall exist, (V) DEG shall receive an opinion
of counsel in form and substance reasonably
satisfactory to DEG or other evidence
satisfactory to DEG that neither any
applicable Governmental Approval nor any
Principal Document (other than Non-Material
Agreements) will terminate during the period
necessary to repair, restore or replace the
Project and no applicable Governmental
Approval, or amendment to this Agreement or
the Security Documents or any other
instrument, is necessary for the purpose of
subjecting the repair, restoration or
replacement to the Liens of the Security
Documents except such, if any, as shall have
been delivered to DEG, and (VI) DEG shall
have received from the Company and the
Independent Engineer such certificates or
other evidence as DEG may reasonably require
regarding the foregoing matters, then DEG
shall direct the Trustee in a written notice
to deliver the Insurance Proceeds received in
connection with the damage, destruction or
casualty to the Project to the Company and
the Company shall apply such Insurance
Proceeds to pay for the necessary costs of
repair, restoration or replacement of the
Project and to pay for Operating and
Maintenance Costs and Debt Service when due.
After making such payments to the Company,
any excess Insurance Proceeds shall be
deposited in the Revenue Sub-Account.
(ii) If there shall occur damage, destruction
or casualty with respect to which Insurance
Proceeds in excess of five million Dollars
($5,000,000) are payable, DEG may, after
consulting with the Company during the 30-day
period following such damage, destruction or
casualty, choose to apply the Insurance Proceeds
to prepay a principal amount of the DEG Loan at
the time outstanding, pro rata with prepayment of
the IFC Loans, together with interest accrued
thereon or fees accrued in connection therewith to
the prepayment date. In addition, if Insurance
Proceeds have been paid pursuant to clause
(b)(i)(B) above and the Company (I) has not
notified DEG promptly that it wishes to repair,
restore or replace the Project or (II) has not
otherwise complied with the provisions of
clause (b)(i) above relative to the repair,
restoration or replacement of the Project, DEG may
choose to apply the Insurance Proceeds to prepay
the DEG Loan, pro rata with prepayment of the IFC
Loans, together with accrued interest.
(iii) Amounts paid under this
subsection (c) shall be applied by DEG to all
respective outstanding repayment installments of
the DEG Loan in inverse order of maturity.
(d) Upon the occurrence of a Capacity Shortfall, the
Company shall pay, or cause to be paid, to DEG the Performance
Liquidated Damages paid by the EPC Contractor under the EPC
Contract with respect to such Capacity Shortfall to prepay a
principal amount of the DEG Loan equal to (i) the principal
amount outstanding under the DEG Loan, multiplied by (ii) the
Capacity Shortfall Percentage and shall pay, or cause to be paid,
to IFC the Performance Liquidated Damages paid by the EPC
Contractor under the EPC Contract with respect to such Capacity
Shortfall to prepay a principal amount of the IFC Loans equal to
(i) the principal amount outstanding under the IFC Loans,
multiplied by (ii) the Capacity Shortfall Percentage. Such
prepayment of the DEG Loan shall be applied as provided in
Section 3.6(b) hereof. To the extent there are excess
Performance Liquidated Damages which have been paid by the EPC
Contractor and are remaining after the above-referenced
prepayment to DEG and IFC, such excess shall be applied to repay
equity in an amount equal to (x) the Dollar amount which has then
been paid in to the Company for the purchase of Shares,
multiplied by (y) the Capacity Shortfall Percentage. Such amount
shall be divided pro rata among all shareholders of the Company.
After such application, any remaining Performance Liquidated
Damages shall be transferred to the Revenue Sub-Account and
applied in accordance with the Trust and Retention Agreement.
(e) The Company shall prepay the outstanding principal
amount of the DEG Loan upon the occurrence of the Event of
Default described in Section 7.1(k) of the General Conditions,
together with accrued interest on the principal amount of the DEG
Loan to be prepaid and all other amounts then due to DEG
hereunder.
(f) The Company shall pay the prepayment premium as
specified in Section 3.8 hereof in connection with any mandatory
prepayments pursuant to Sections 3.7(a) (but only if and to the
extent that there remains any proceeds of the Purchase Price paid
by HMGN and received by the Company after (i) the aggregate
amount of all Obligations owing to DEG have been paid in full and
(ii) the shareholders of the Company at such time have recovered
the aggregate amount of their total paid in equity of the Company
to the extent provided in Section 6.3 of the Project Agreement),
and Section 3.7(e) hereof.
Section 3.8 Prepayment Premium. On the date of any
prepayment of the DEG Loan in accordance with Section 3.6,
3.7(a), 3.7(b) or 3.7(e) hereof, the Company shall pay a premium
of an amount in Deutsche Marks equal to the difference between
the Net Present Value of the Anticipated Income Stream and the
Net Present Value of the Available Income Stream or in the case
of a partial prepayment, the same proportion of such difference
as the proportion which the amount of the DEG Loan to be prepaid
bears to the amount of the DEG Loan then outstanding, all as more
particularly described below.
For the purposes of this subsection (a), "Anticipated Income
Stream" means the aggregate interest payments which would have
been due on the DEG Loan at the DEG Loan Interest Rate for the
period from the prepayment date until the final scheduled
maturity date assuming that no prepayment had taken place and
further assuming that the DEG Loan repayment schedule set forth
in Section 3.5 hereof had been adhered to and that all payments
had been made on their due dates.
For the purposes of this subsection (a), "Available Income
Stream" means the interest payments which would have been due on
the DEG Loan at a rate per annum equal to the Fixed Rate Swap
Equivalent for the period from the prepayment date until the
final scheduled maturity date assuming that no prepayment had
taken place and further assuming that the DEG Loan repayment
schedule set forth in Section 3.5 hereof had been adhered to and
that all payments had been made on their due dates.
For the purposes of this subsection (a), the "Net Present
Value" means the value of the relevant Income Stream discounted
(with stops on the same dates as would have been Interest Payment
Dates) back to the prepayment date from each of the relevant
Interest Payment Dates at a discount rate equal to the Fixed Rate
Swap Equivalent.
The determination by DEG of the prepayment premium under
this Section 3.8 shall be final and conclusive unless the Company
shows, to the satisfaction of DEG, that such determination
involved clerical error.
Section 3.9 Additional Interest.
(a) Without limiting the remedies available to DEG under
this Agreement or otherwise and to the maximum extent permitted
by applicable law, if the Company fails to make any payment of
principal or interest (including interest payable pursuant to
this Section) or any other payment on or before its due date as
specified in this Agreement (whether at stated maturity or upon
prematuring by acceleration or otherwise) or, if not so
specified, as notified by DEG to the Company, the Company shall
pay in Deutsche Marks, by way of liquidated damages, in respect
of the amount of any DEG Loan payment due and unpaid, interest at
the DEG Loan Interest Rate plus two percent (2.0%) per annum from
the date any such payment became due. Such interest is payable
on demand, or if not demanded, on each Interest Payment Date
after such failure.
(b) The obligation of the Company to pay liquidated damages
as provided in paragraph (a) above shall be without prejudice to
its obligation to pay principal and interest in accordance with
Sections 3.5 and 3.3 hereof and any other amounts payable under
this Agreement.
Section 3.10 Payments in Deutsche Marks.
(a) The Company shall make all payments of principal,
interest, fees, and any other payment due to DEG under this
Agreement in Deutsche Marks, no later than 9:00 a.m., Central
European Time, on the date when due, in immediately available
funds, at Westdeutsche Landesbank Koeln, account number 40 60 66,
bank code 370 500 00, or at such other bank as DEG from time to
time designates to the Company and the Trustee.
(b) If any date for payment under this Agreement shall not
be a Business Day, then such payment shall be made on or by the
next succeeding Business Day unless, in the case of payments of
principal or interest, that next succeeding Business Day falls in
a different calendar month, in which case that payment shall be
made on the immediately preceding Business Day. Interest, fees,
including, without limitation, commitment fees, and charges (if
any) shall continue to accrue for the period from the due date
which is not a Business Day to that next succeeding Business Day,
unless that next succeeding Business Day falls in a different
calendar month, in which case such amounts shall accrue to and be
payable on the immediately preceding Business Day.
(c) The tender or payment of any amount payable under this
Agreement (whether or not by recovery under a judgment) in any
currency other than Deutsche Marks does not novate, discharge or
satisfy the obligation of the Company to pay in Deutsche Marks
all amounts payable under this Agreement except to the extent DEG
actually receives Deutsche Marks in its account at Westdeutsche
Landesbank Koeln, account number 40 60 66, bank code 370 500 00,
or at such other bank as DEG from time to time designates to the
Company and the Trustee.
(d) If a currency other than Deutsche Marks is tendered or
paid (or recovered under any judgment) and the amount DEG
receives at its account at Westdeutsche Landesbank Koeln, account
number 40 60 66, bank code 370 500 00, or at such other bank as
DEG from time to time designates to the Company and the Trustee,
upon conversion at the then-market rate of exchange, falls short
of the full amount of Deutsche Marks owed to DEG, then the
Company shall continue to owe DEG, as a separate obligation, the
amount of the shortfall (regardless of any judgment for any other
amounts due under this Agreement).
(e) Notwithstanding subsections (a) through (d) above, DEG
may require the Company to pay (or reimburse DEG) in any currency
other than Deutsche Marks for:
(i) any taxes and other amounts payable
under the provisions of this Agreement; and
(ii) any fees, costs and expenses payable
under Section 8.3 hereof and Section 8.1 of the
General Conditions;
to the extent those taxes, amounts, fees, costs, and expenses are
payable in that other currency.
Section 3.11 Allocation of Partial Payments. If DEG at
any time receives less than the full amount then due and payable
to it under this Agreement, DEG may allocate and apply such
payment in any way or manner and for such purpose or purposes
under this Agreement as DEG in its sole discretion determines,
notwithstanding any instruction that the Company may give to the
contrary.
Section 3.12 Suspension or Cancellation of Disbursements
by DEG.
(a) DEG may, by notice to the Company, suspend or cancel
the right of the Company to Disbursements of the DEG Loan, in
whole or in part:
(i) if the first Disbursement has not been
made by June 1, 1998, or such other date as the
parties agree;
(ii) if any Event of Default or Default shall
have occurred and be continuing, or if an
expropriation, condemnation, requisition,
confiscation, seizure or nationalization of all or
any substantial part of the Project or other
assets of the Company or of its share capital or
the dissolution or disestablishment of the Company
or other action that would prevent the Company or
its officers from carrying on all or a substantial
part of the Company's business or operations
shall, in the reasonable opinion of DEG, be
imminent;
(iii) if, at any time in the reasonable
opinion of DEG, there shall exist any situation
which indicates that performance by the Company of
any of its obligations under this Agreement cannot
be expected;
(iv) if the IFC Loans have been suspended or
cancelled; or
(v) on or after September 30, 2000;
and in the event of any such cancellation, the Company shall pay
to DEG the prepayment premium specified in Section 3.8 hereof in
respect of any undisbursed portion of the DEG Loan, all fees
payable under Section 3.4 hereof, all breakage or similar costs,
expenses, or losses arising out of such cancellation, and all
other amounts then due and payable under this Agreement.
(b) Upon the giving of any such notice, the right of the
Company to receive, and the obligation of DEG to disburse, the
undisbursed part of the DEG Loan shall be suspended or canceled,
as the case may be. The exercise by DEG of its right of
suspension does not preclude DEG from exercising its right of
cancellation, either for the same or any other reason. A
suspension does not limit any other provision of this Agreement.
Section 3.13 Termination of Commitment. The commitment of
DEG to make any Disbursement of the DEG Loan hereunder shall
automatically terminate in accordance with the provisions of
Article 7 of the General Conditions.
Section 3.14 Cancellation by the Company. The Company
may, by notice to DEG, irrevocably request DEG to cancel the
undisbursed portion of the DEG Loan on the date specified in such
request (which shall be an Interest Payment Date no earlier than
thirty (30) Business Days after the date of the request). If DEG
is reasonably satisfied that the Company has sufficient long-term
funding available, on terms satisfactory to DEG, to satisfy the
Financial Plan, and provided that DEG receives the prepayment
premium specified in Section 3.8 hereof in respect of any
undisbursed portion of the DEG Loan, all fees payable under
Section 3.4 hereof, all breakage or similar costs, expenses or
losses arising out of such cancellation, and all other amounts
then due and payable under this Agreement, then DEG shall cancel
the entire undisbursed portion of the DEG Loan effective as of
that Interest Payment Date.
Section 3.15 Funding Costs.
(a) If the Company:
(i) fails to pay any amount due under this
Agreement on its due date, or to borrow in
accordance with a DEG Disbursement Request or to
prepay in accordance with a notice of prepayment;
or
(ii) prepays all or any portion of the DEG
Loan on a date other than an Interest Payment
Date;
and as a result DEG incurs any cost, expense or loss, then the
Company shall immediately pay to DEG the amount which DEG from
time to time notifies to the Company as being the aggregate of
those costs, expenses and losses incurred.
(b) For the purposes of this Section 3.15 and Section 3.14
hereof, "cost, expense or loss" include any interest paid or
payable to carry any unpaid amount and any premium, penalty or
expense incurred to liquidate or obtain third party deposits or
borrowings in order to make, maintain or fund all or any part of
the DEG Loan (but in the case of a late payment, after taking
into account any additional interest received under Section 3.9
hereof).
Section 3.16 Maintenance Amount. On each Interest Payment
Date, the Company shall pay, in addition to interest, the amount
which DEG from time to time notifies to the Company in a
Maintenance Amount Certification as being the aggregate
Maintenance Amount of DEG accrued and unpaid prior to that
Interest Payment Date.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties Contained in
General Conditions.
(a) The Company confirms the representations and warranties
set forth in Article 4 of the General Conditions as if made as of
the date hereof, which representations and warranties are
incorporated by reference herein as if fully set forth herein.
(b) The Company warrants to DEG that each of such
representations is true and correct in all material respects as
of the date of this Agreement and that none of them omits any
matter the omission of which makes any of such representations
misleading in any material respect. The representations referred
to in Section 4.1 hereof shall survive the execution and delivery
of this Agreement and any Disbursement of the DEG Loan.
Section 4.2 Rights and Remedies not Limited. DEG's
rights and remedies in relation to any misrepresentation or
breach of warranty on the part of the Company are not prejudiced:
(a) by any investigation by or on behalf of DEG into the
affairs of the Company;
(b) by the execution or the performance of this Agreement
or any other Principal Document; or
(c) by any other act or thing which may be done by or on
behalf of DEG in connection with this Agreement or any other
Principal Document and which might, apart from this Section,
prejudice such rights or remedies.
ARTICLE 5
Conditions of Disbursement
Section 5.1 Conditions of Initial Disbursement. The
obligation of DEG to make the initial Disbursement of the DEG
Loan shall be subject to the fulfillment, in a manner
satisfactory to DEG, prior to or concurrently with the making of
such initial Disbursement of the DEG Loan, of the conditions set
forth in Section 3.1 of the General Conditions.
Section 5.2 Conditions of All Disbursements. The
obligation of DEG to make any Disbursement hereunder shall also
be subject to the fulfillment, in a manner satisfactory to DEG,
prior to or concurrently with the making of such Disbursement of
the conditions set forth in Sections 3.2, 3.3, 3.4 and 3.5 of the
General Conditions. The obligation of DEG to make any Disburse
ments of the DEG Loan shall also be subject to (i) compliance by
the Sponsor Shareholders with their obligations described in
Section 2.1 of the Subscription Agreements, and (ii) the
subscription and payment (in an amount which is pro rata to the
corresponding Disbursement of the DEG Loan) by IFC for the IFC
Shares as provided for under Article 4 of the IFC Special
Conditions.
Section 5.3 No Waivers.
(a) The rights and remedies of DEG in relation to any
misrepresentations or breach of warranty on the part of the
Company shall not be prejudiced by any investigation by or on
behalf of DEG into the affairs of the Company, by the execution
or the performance of this Agreement or by any other act or thing
which may be done by or on behalf of DEG in connection with this
Agreement and which might, apart from this Section 5.3(a),
prejudice such rights or remedies.
(b) No course of dealing or waiver by DEG in connection
with any condition of Disbursement under this Agreement shall
impair any right, power or remedy of DEG with respect to any
other condition of Disbursement, or be construed to be a waiver
thereof; nor shall the action of DEG in respect of any
Disbursement affect or impair any right, power or remedy of DEG
in respect of any other Disbursement.
(c) Unless otherwise notified to the Company by DEG and
without prejudice to the generality of paragraph (a) above, the
right of DEG to require compliance with any condition under this
Agreement which may be waived by DEG in respect of any
Disbursement is expressly preserved for the purposes of any subse
quent Disbursement.
ARTICLE 6
Particular Covenants
Section 6.1 Particular Covenants. The Company shall
observe and perform the covenants set forth in Articles 5 and 6
of the General Conditions hereof.
ARTICLE 7
Events of Default
Section 7.1 Events of Default. If one or more of the
Events of Default specified in Article 7 of the General
Conditions hereof shall have occurred and be continuing, DEG
shall have the rights and remedies set forth in said Article 7
and the other Principal Documents, all of which rights and
remedies are incorporated by reference herein, and all other
rights and remedies which may be available at law or in equity.
ARTICLE 8
Miscellaneous
Section 8.1 Notices. Any notice, request or other
communication to be given or made under this Agreement shall be
in writing and shall be given or made in the manner set forth in
the General Conditions hereof.
Section 8.2 English Language. All documents to be
furnished or communications to be given or made under this
Agreement shall be in the English language or, if in another
language, shall be accompanied by a translation into English
satisfactory to DEG certified by an authorized representative of
the Company, which translation shall be the governing version
between the Company and DEG.
Section 8.3 Expenses. If any amount owing to DEG under
this Agreement shall be collected through any process of law or
shall be placed in the hands of attorneys for collection, the
Company shall pay (in addition to all monies then due in respect
of the DEG Loan or otherwise payable under this Agreement),
professional consultant and attorneys' and other fees and
expenses incurred in respect of such collection.
Section 8.4 Jury Trial. The Company hereby waives any
and all rights to demand a trial by jury in any action, suit or
proceeding arising out of or relating to this Agreement or any
Principal Document or the transactions contemplated hereby or
thereby, brought against DEG in any forum in which DEG is not
entitled to immunity from a trial by jury.
Section 8.5 Confidential Information.
(a) DEG may disclose to any person for the purpose of
exercising any power, remedy, right, authority, or discretion
under this Agreement or any other Principal Document in
connection with a Default or Event of Default, any documents or
records of, or information about, any Principal Document, or the
assets, business or affairs of the Company.
(b) The Company acknowledges and agrees that,
notwithstanding the terms of any other agreement between the
Company and DEG, a disclosure of information by DEG in the
circumstances contemplated by this subsection does not violate
any duty owed to the Company or agreement between DEG and the
Company.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed in their respective names as of the date first above
written.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: ____________________________________
Authorized Representative
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
By: ______________________________________
Authorized Representative
SCHEDULE 2.2(a)
FINANCING PLAN
Equity US$$
IFC $ 2,949,500
Sponsors' Equity $26,545,500
Total Equity $29,495,000
Loans US$$ DM
IFC A Loan $21,000,000
IFC B Loan $36,000,000
DEG Loan DM21,000,000
Total Loans $57,000,000 DM21,000,000
Total Financing $98,245,000 1/
SCHEDULE 2.2(b)
PROJECT COSTS*
Amount (US$)
EPC Plant and T-Line $46,340,000
EPC Miscellaneous Change Orders 600,000
Taxes & Duties 411,000
Land and Access Road 650,000
Preliminary Investigation 2,438,000
Engineering - Harza 5,290,000
Spare Parts and Start-up Testing 1,000,000
Development Costs 2,963,000
Construction Management & Supervision Costs 2,653,000
Legal Fees 3,026,800
Insurance Premiums 1,558,000
GLOF Survey/Warning System 600,000
Environ. Mitigation and Community 550,000
Development
Engineering/Consulting (Lenders) 545,000
O&M/Training Costs during Construction 450,000
Contingency 12,228,476
Working Capital 1,500,000
Commitment Fee 671,478
Financing Fees 2,437,000
Interest During Construction, net 7,033,246
Debt Service Reserve 5,300,000
TOTAL PROJECT COSTS $98,245,000
* Project costs shall not include any termination or similar
fees in connection with any financing or contemplated financing
for the Project from sources other than the Lenders.
SCHEDULE 3.2(a)(i)
FORM OF DEG DISBURSEMENT REQUEST
[COMPANY LETTERHEAD]
[Date]
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Ladies and Gentlemen:
Investment No.
Request for Loan Disbursement No. [ ]*
1. Please refer to the Special Conditions (the "DEG Special
Conditions") between Bhote Koshi Power Company Private Limited
(the "Company") and DEG - Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG") and General Conditions dated
as of the Closing Date among the Company,
DEG and International Finance Corporation. Terms defined in the
DEG Investment Agreement and in the General Conditions have their
defined meanings whenever used in this request.
2. The Company irrevocably requests the disbursement on
________, 19 (or as soon as practicable thereafter) of the
amount of _______________________________ (DM__________) under
the DEG Loan. You are requested to pay such amount to the credit
of the Offshore Retention Account in accordance with the Trust
and Retention Agreement.
3. DEG has heretofore disbursed the sum of __________________
Deutsche Marks (DM__________) under the DEG Loan pursuant to the
DEG Special Conditions. Following the Disbursement of the amount
requested hereby, there will remain undisbursed _________________
Deutsche Marks (DM__________) under the DEG Loan.
4. Attached hereto are (i) a signed but undated receipt** for
the amount hereby requested to be disbursed and the Company
hereby authorizes DEG to date such receipt as of the date of
actual disbursement by DEG of the funds hereby requested to be
disbursed and (ii) a copy of the report referred to in
Section 3.5(b) of the General Conditions and the certification
referred to in Section 3.1(x) of the General Conditions.
5. For the purpose of Article 6 of the DEG Special Conditions
and Article 3 of the General Conditions, the Company hereby
certifies the following:
(a) on the date hereof, (1) all representations and
warranties contained in the General Conditions (other
than the representations made pursuant to
Section 4.1(e)(ii) of the General Conditions) and in
the other Loan Documents to which the Company is a
party are true and correct in all material respects
with the same effect as though such representations and
warranties had been made on and as of the date hereof
except where expressed to be made on a specified date,
(2) the representations and warranties referred to in
Section 4.1(e)(ii) of the General Conditions are true
and correct in all material respects in the manner and
on the basis as contemplated by the said
Section 4.1(e)(ii), in each case, both immediately
before and after giving effect to the disbursement
requested hereby, and (3) except as fully reflected in
the financial statements delivered to date pursuant to
Sections 5.1(a) and (b) of the General Conditions,
there are as of the date of such financial statements,
no liabilities or obligations with respect to the
Company of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not
due) which, either individually or in the aggregate,
could constitute a Material Adverse Change;
(b) no Event of Default or Default has occurred and is
continuing;
(c) since the date of the DEG Special Conditions
nothing has occurred which is reasonably likely to
materially and adversely affect the carrying out of the
Project or the Company's ability to fulfill any
material obligation under the DEG Investment Agreement;
(d) no Force Majeure Event has occurred and is
continuing;
(e) the proceeds of the requested disbursement are
promptly needed by the Company to pay Project Costs;
(f) since the date of the DEG Special Conditions, the
Company has not incurred any material loss or liability
(except such liabilities as may be incurred by the
Company in accordance with Section 6.5 of the General
Conditions of the DEG Investment Agreement); and
(g) the Company has the authority to request the
amount requested to be disbursed and the amount
requested to be disbursed is within the Company's
available borrowing power. The Company shall not be in
violation of (A) its Charter Documents, (B) any
covenant or agreement contained in any document to
which the Company is a party, or (C) any law, rule or
regulation, directly or indirectly, limiting or
otherwise restricting the Company's borrowing power or
authority or its ability to borrow.
The above certifications are effective as of the date of
this DEG Special Conditions and will continue to be effective as
of the date of the disbursement hereby requested. If any of these
certifications is no longer valid as of or prior to the date of
disbursement hereby requested, the Company will immediately
notify DEG and will repay the amount disbursed upon demand by DEG
if disbursement is made prior to the receipt of such notice.
Yours truly,
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: ___________________________________
Authorized Representative
SCHEDULE 3.2(a)(ii)
FORM OF DEG LOAN DISBURSEMENT RECEIPT
[COMPANY LETTERHEAD]
[Date]
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention:
Ladies and Gentlemen:
Investment No.
Disbursement Receipt No. [ ]* (Loan)
We, Bhote Koshi Power Company Private Limited (the
"Company"), hereby acknowledge receipt on the date hereof, of the
sum of , disbursed to us by DEG - Deutsche
Investitions-und Entwicklungsgesellschaft mbH ("DEG") under the
DEG Loan, consisting of the sum of ______________________
Deutsche Marks (DM________________) under the DEG Loan, provided
for in the DEG Investment Agreement dated , 1997
between the Company and DEG.
Yours truly,
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: ______________________________
Authorized Representative**
_______________________________
1/ For purposes of this Schedule 2.2(a), an exchange rate of DM
1.7872 = $1 has been assumed.
* Each to be numbered in series.
** See Schedule 3.2(a)(ii) for form of receipt.
* Each to be numbered in series.
** As named in the Company's Certificate of Incumbency and
Authority (see Schedule 3.1(i) to the General Conditions of the
Investment Agreement).
EXHIBIT NO. 10.143.02
INVESTMENT NUMBER 7365
Special Conditions
between
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
TABLE OF CONTENTS
PAGE NOS.
ARTICLE 1
Special Conditions and General Conditions; Definitions
Section 1.1Special Conditions and General Conditions 1
Section 1.2 General Definitions. 1
ARTICLE 2
The Project and Financial Plan
Section 2.1 The Project. 1
Section 2.2 Financial Plan - Estimated Project Cost. 2
ARTICLE 3
Agreement for the IFC Loans
Section 3.1 The IFC Loans. 2
Section 3.2 Disbursement Procedure. 2
Section 3.3 Interest. 3
Section 3.4 Fees. 4
Section 3.5 Repayment. 6
Section 3.6 Voluntary Prepayment. 8
Section 3.7 Mandatory Prepayment. 9
Section 3.8 Prepayment Premium. 13
Section 3.9 Additional Interest. 14
Section 3.10 Payments in Dollars. 14
Section 3.11 Allocation of Partial Payments 15
Section 3.12 Suspension or Cancellation of Disbursements by IFC 15
Section 3.13 Termination of Commitment. 16
Section 3.14 Cancellation by the Company 16
Section 3.15 Illegality of Participation 16
Section 3.16 Funding Costs 17
Section 3.17 Maintenance Amount 17
ARTICLE 4
IFC Subscription
Section 4.1 Subscription and Disbursement 17
Section 4.2 Actions Prohibited until IFC Shares Issued 18
Section 4.3 Suspension and Cancellation of IFC Subscription 19
Section 4.4 Agreement to Cooperate. 20
Section 4.5 IFC Board Seat 20
ARTICLE 5
Representations and Warranties
Section 5.1 Representations and Warranties Contained in
General Conditions. 20
Section 5.2 Rights and Remedies not Limited 21
ARTICLE 6
Conditions of Disbursement
Section 6.1 Conditions of Initial Disbursement 21
Section 6.2 Conditions of All Disbursements and Subscriptions
and Disbursements under the IFC Subscription 21
Section 6.3 Disbursement Relationship Among IFC Loans and the
IFC Subscription 22
Section 6.4 No Waivers 22
ARTICLE 7
Particular Covenants
Section 7.1 Particular Covenants. 23
ARTICLE 8
Events of Default
Section 8.1 Events of Default 23
ARTICLE 9
Miscellaneous
Section 9.1 Notices 23
Section 9.2 English Language 23
Section 9.3 Expenses 24
Section 9.4 Jury Trial 24
Section 9.5 Confidential Information 24
SCHEDULE 2.2(a)
FINANCING PLAN 26
SCHEDULE 2.2(b)
PROJECT COSTS 27
SCHEDULE 3.2(a)(i)
FORM OF IFC DISBURSEMENT REQUEST 28
SCHEDULE 3.2(a)(ii)
FORM OF IFC LOANS DISBURSEMENT RECEIPT 31
SCHEDULE 4.1(b)
FORM OF SUBSCRIPTION REQUEST 32
ANNEX A
METHODOLOGY FOR TRANCHE RATE PRICING CALCULATION 35
AGREEMENT, dated as of the Closing Date, between BHOTE KOSHI
POWER COMPANY PRIVATE LIMITED, a private limited liability
company organized and existing under the laws of the Kingdom of
Nepal (the "Company") and INTERNATIONAL FINANCE CORPORATION, an
international organization established by Articles of Agreement
among its member countries ("IFC"). (Capitalized terms used
herein shall be defined as provided in Section 1.2 hereof).
WHEREAS, the Company has requested IFC to make term loans to
it, in each case on the terms and subject to the conditions set
forth in this Agreement, for the purpose of financing a portion
of the costs of construction of the Company's proposed run of the
river hydroelectric power facility with a rated capacity of 36 MW
(nominal net) and a 25 km transmission line, the Upper Bhote
Koshi electric power project, in the Sindhupalchok District of
Nepal;
WHEREAS, IFC proposes to acquire shares of the Company
pursuant to Article 4 hereof;
WHEREAS, IFC is willing to make such term loans to the
Company and to subscribe for such shares of the Company on the
terms and subject to the conditions set forth in this Agreement,
for the purpose described above;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Special Conditions and General Conditions; Definitions
Section 1.1 Special Conditions and General Conditions.
This document is entitled "IFC Special Conditions". A document
entitled "Investment Agreement General Conditions" (the "General
Conditions") is appended hereto. Such two documents together
constitute the IFC Investment Agreement, dated the date of the
IFC Special Conditions between IFC and the Company (collectively,
this "Agreement"). If any provision of the General Conditions is
inconsistent with a provision of the IFC Special Conditions, the
provision of the IFC Special Conditions shall prevail.
Section 1.2 General Definitions. For all purposes of
this Agreement, (i) capitalized terms used but not otherwise
defined herein shall have the meanings set forth in Schedule A to
the General Conditions (as amended or supplemented from time to
time) and (ii) the principles of construction set forth in
Schedule A to the General Conditions shall apply.
ARTICLE 2
The Project and Financial Plan
Section 2.1 The Project. The project to be financed is
the Facility, the Site, all auxiliary facilities, utilities and
the sites thereof, the construction, equipping, placing into
operation, and operation of the Facility, and as otherwise
described in the Letter of Information.
Section 2.2 Financial Plan - Estimated Project Cost.
(a) The proposed sources of financing for the Project are
set forth on Schedule 2.2(a) hereof.
(b) As of the date hereof, the total estimated cost of the
Project is set forth on Schedule 2.2(b) hereof.
ARTICLE 3
Agreement for the IFC Loans
Section 3.1 The IFC Loans.
(a) On the terms and subject to the conditions of this
Agreement, IFC agrees to lend to the Company the amount of up to
fifty-seven million dollars ($57,000,000), consisting of:
(i) the A Loan in the principal amount of up
to twenty-one million Dollars ($21,000,000),
divided initially into Tranches with each
Disbursement constituting a separate Tranche; and
(ii) the B Loan in the principal amount of up
to thirty-six million Dollars ($36,000,000), which
consists of B Loan 1 ("B Loan 1") and B Loan 2 ("B
Loan 2"), each in the principal amount of up to
ten million Dollars ($10,000,000) and B Loan 3 ("B
Loan 3") in the principal amount of up to sixteen
million Dollars ($16,000,000).
(b) The IFC Loans are not revolving in nature, and any
amounts repaid, prepaid or canceled pursuant to the terms of this
Agreement may not be re-borrowed.
Section 3.2 Disbursement Procedure.
(a) The Company may request Disbursements of the IFC Loans
by delivering to IFC, at least ten (10) Business Days prior to
the proposed date of Disbursement, an IFC Disbursement Request
substantially in the form of Schedule 3.2(a)(i) hereof, and a
receipt substantially in the form of Schedule 3.2(a)(ii) hereof.
(b) In the IFC Disbursement Request, in respect of any A
Loan Disbursement, the Company shall also propose a date to be
the Rate Setting Date for the Tranche which corresponds to the
relevant Disbursement. Such date shall be the Rate Setting Date
unless the conditions of disbursement applicable to the relevant
Disbursement have not by then been fulfilled to IFC's
satisfaction or waived by IFC, in which case the Rate Setting
Date shall be that date which is two (2) Business Days after IFC
has notified the Company that the relevant conditions of
disbursement have been so fulfilled or waived. In no case,
however, shall the Rate Setting Date be less than five (5)
Business Days after IFC receives the IFC Disbursement Request nor
less than two (2) Business Days before the date of the relevant
Disbursement, unless IFC otherwise agrees.
(c) In preparation for an IFC Disbursement Request, in
respect of any A Loan Disbursement, the Company may at any time
(but not more often than once in any calendar month) ask IFC
which rate service (among those listed in the definition of Fixed
Rate Swap Equivalent) IFC intends to use to determine the Tranche
Interest Rate and an indication of what the Tranche Interest Rate
would be as of the date of such IFC Disbursement Request. As
promptly as practicable after such inquiry, IFC shall advise the
Company of the relevant rate service (and if such rate service
displays information which changes during the course of the day,
rather than staying fixed for the whole day, as of what time the
relevant information would be obtained) and the indicative
Tranche Interest Rate.
(d) IFC shall make Disbursements of the IFC Loans to the
credit of the Company into the Offshore Retention Account in
accordance with the provisions of the Trust and Retention
Agreement.
(e) Each Disbursement of the IFC Loans shall be made in an
aggregate amount (except with respect to the last Disbursement
thereof) of not less than four million Dollars ($4,000,000), and
there shall be no more than eight (8) Disbursements of the IFC
Loans. The disbursement ratio between the A Loan and the B Loan
shall be pro rata in accordance with the maximum amount of such A
Loan and B Loan set forth in Section 3.1(a) above.
Section 3.3 Interest.
(a) Subject to Section 3.9 hereof, the Company shall pay
interest on the A Loan from time to time outstanding in
accordance with this Section 3.3(a).
(i) Interest shall accrue from day to day
and shall be payable on the Interest Payment
Dates. Interest shall be pro-rated on the basis
of a 360-day year and 30 day months in the
relevant interest period.
(ii) Until and including the Consolidation
Date, the Company shall pay interest on the amount
of each Tranche outstanding from time to time at
the Tranche Interest Rate applicable to that
Tranche. IFC shall determine the Tranche Interest
Rate applicable to each Tranche on the relevant
Rate Setting Date and shall promptly notify the
Company of such rate.
(iii) With effect from the day after the
Consolidation Date, the Company shall pay interest
at the A Loan Interest Rate on the full amount of
the A Loan outstanding from time to time. IFC
shall determine the A Loan Interest Rate not less
than two (2) Business Days before the
Consolidation Date, and shall promptly notify the
Company of such rate.
(iv) The determination by IFC, from time to
time, of each Tranche Interest Rate or the A Loan
Interest Rate, as the case may be, shall be final
and conclusive and shall bind the Company (unless
the Company shows to IFC's satisfaction that any
such determination involved clerical error).
(b) Subject to Section 3.9 hereof, the Company shall pay
interest on the B Loan from time to time outstanding in
accordance with this Section 3.3(b).
(i) The Company shall pay interest on the
principal amount of the B Loan from time to time
outstanding during the relevant B Loan Interest
Period.
(ii) Interest shall accrue from day to day,
be pro-rated on the basis of a 360-day year for
the actual number of days in the relevant B Loan
Interest Period and be due and payable in Dollars
on the Interest Payment Date immediately following
the end of the relevant B Loan Interest Period.
(iii) The interest rate on each of B Loan
1 and B Loan 2 shall be three and one-half percent
(3.50%) per annum and the interest rate on B Loan
3 shall be three and one quarter percent (3.25%)
per annum, above the rate which appears on the Dow
Jones Market Screen Page the column headed "USD"
as of 11.00 a.m., London time, on the relevant B
Loan Interest Determination Date for one month,
two months, three months or six months, whichever
period is closest to the duration of the relevant
B Loan Interest Period (or, if two periods are
equally close to the duration of the relevant B
Loan Interest Period, the longer one) (the "B Loan
Floating Rate").
(iv) If, for any reason, the B Loan Floating
Rate cannot be determined by reference to the Dow
Jones Market Screen Page on any B Loan Interest
Determination Date, IFC shall so notify the
Company and the Participants forthwith and shall
determine the B Loan Floating Rate on that B Loan
Interest Determination Date in accordance with
subsection (iii) above mutatis mutandis, using
rates advised to IFC by any two (2) of the banks
(or by the bank if only one) whose rate(s) were
last quoted on the Dow Jones Market Screen Page.
If the services of the Dow Jones Market Screen
Page cease to be available as a result of
discontinuation of such service, IFC shall notify
the Company and the Participants forthwith and
shall determine the B Loan Floating Rate on any
relevant B Loan Interest Determination Date in
accordance with subsection (iii) above mutatis
mutandis, using rates advised to IFC by three (3)
major banks active in the eurodollar interbank
market in London selected by IFC after
consultation with the Company and the
Participants.
(v) The determination by IFC, from time to
time, of the B Loan Floating Rate shall be final
and conclusive and shall bind the Company (unless
the Company shows to IFC's satisfaction that any
such determination involved clerical error).
Section 3.4 Fees.
(a) The Company shall pay to IFC in Dollars:
(i) a commitment fee at the rate of:
(A) one percent (1.0%) per annum
on that part of the A Loan as shall not, from
time to time, have been canceled by IFC or
disbursed to the Company, and in accordance
with subsection (b) below; and
(B) one-half of one percent (.5%)
per annum on that part of the B Loan as shall
not, from time to time, have been cancelled
by IFC or disbursed to the Company, and in
accordance with subsection (b) below;
(ii) (A) a front-end fee for the A Loan
of an amount of one percent (1.0%) of the
total amount of the A Loan, to be paid within
thirty (30) days after the date of this
Agreement, but in any event prior to the date
of the first A Loan Disbursement; and
(B) a front-end fee for the B Loan
of an amount of one percent (1.0%) of the
total amount of the B Loan, to be paid within
thirty (30) days after the date of each
Participation Agreement, but in any event
prior to the date of the first B Loan
Disbursement;
(iii) an annual fee equal to twenty-five
thousand six hundred twenty-five Dollars
($25,625), to be paid on the first Interest
Payment Date and every second Interest Payment
Date thereafter;
(iv) a syndication fee of three hundred
thirty thousand Dollars ($330,000), to be paid
within thirty (30) days after the date of the
first Participation Agreement, but in any event
prior to the date of the first B Loan
Disbursement;
(v) a fee of fifty eight thousand seven
hundred fifty Dollars ($58,750) to be paid within
thirty (30) days after the execution of the DEG
Investment Agreement;
(vi) an annual loan administration fee of
five thousand Dollars ($5,000) for each
Participant, the first such payment being due
within thirty (30) days after the date of the
first Participation Agreement to be signed (but in
any event prior to the first B Loan Disbursement)
and subsequent payments being due on every second
Interest Payment Date thereafter until the B Loan
is repaid in full.
(b) The commitment fee specified in subsection (a)(i) above:
(i) (A) in respect of the A Loan,
commences to accrue on the date this
Agreement is executed; and
(B) in respect of the B Loan or
relevant part thereof, commences to accrue on
the date each Participation Agreement is
executed;
(ii) is pro-rated on the basis of a 360-day
year for the actual number of days elapsed; and
(iii) is payable by the Company with
respect to the IFC Loans, semi-annually in
arrears, on March 15 and September 15 in each
year; the first such payment to be made on
March 15, 1998.
Section 3.5 Repayment.
(a) The Company shall repay the A Loan on each Principal
Payment Date in accordance with the following loan repayment
schedule.
Date Payment Due Principal Amount Due
1. March 15, 2001 $ 550,955.35
2. September 15, 2001 $ 578,029.29
3. March 15, 2002 $ 606,433.65
4. September 15, 2002 $ 636,233.80
5. March 15, 2003 $ 667,498.33
6. September 15, 2003 $ 700,299.20
7. March 15, 2004 $ 734,711.90
8. September 15, 2004 $ 770,815.64
9. March 15, 2005 $ 808,693.53
10. September 15, 2005 $ 848,432.73
11. March 15, 2006 $ 890,124.71
12. September 15, 2006 $ 933,865.44
13. March 15, 2007 $ 979,755.59
14. September 15, 2007 $1,027,900.77
15. March 15, 2008 $1,078,411.82
16. September 15, 2008 $1,131,404.98
17. March 15, 2009 $1,187,002.22
18. September 15, 2009 $1,245,331.51
19. March 15, 2010 $1,306,527.10
20. September 15, 2010 $1,370,729.84
21. March 15, 2011 $1.438.087.50
22. September 15, 2011 $1,508,755.12
TOTAL $ 21,000,000
(b) (i) The Company shall repay B Loan 1 on each Principal
Payment Date in accordance with the following loan repayment
schedule.
Date Payment Due Principal Amount Due
1. March 15, 2001 $262,359.69
2. September 15, 2001 $275,252.04
3. March 15, 2002 $288,777.93
4. September 15, 2002 $302,968.48
5. March 15, 2003 $317,856.35
6. September 15, 2003 $333,475.81
7. March 15, 2004 $349,862.81
8. September 15, 2004 $367,055.07
9. March 15, 2005 $385,092.16
10. September 15, 2005 $404,015.58
11. March 15, 2006 $423,868.91
12. September 15, 2006 $444,697.83
13. March 15, 2007 $466,550.28
14. September 15, 2007 $489,476.56
15. March 15, 2008 $513,529.44
16. September 15, 2008 $538,764.27
17. March 15, 2009 $565,239.15
18. September 15, 2009 $593,015.00
19. March 15, 2010 $622,155.76
20. September 15, 2010 $652,728.49
21. March 15, 2011 $684,803.57
22. September 15, 2011 $718,454.82
TOTAL $ 10,000,000
(ii) The Company shall repay B Loan 2 on each
Principal Payment Date in accordance with the following loan
repayment schedule.
Date Payment Due Principal Amount Due
1. March 15, 2001 $262,359.69
2. September 15, 2001 $275,252.04
3. March 15, 2002 $288,777.93
4. September 15, 2002 $302,968.48
5. March 15, 2003 $317,856.35
6. September 15, 2003 $333,475.81
7. March 15, 2004 $349,862.81
8. September 15, 2004 $367,055.07
9. March 15, 2005 $385,092.16
10. September 15, 2005 $404,015.58
11. March 15, 2006 $423,868.91
12. September 15, 2006 $444,697.83
13. March 15, 2007 $466,550.28
14. September 15, 2007 $489,476.56
15. March 15, 2008 $513,529.44
16. September 15, 2008 $538,764.27
17. March 15, 2009 $565,239.15
18. September 15, 2009 $593,015.00
19. March 15, 2010 $622,155.76
20. September 15, 2010 $652,728.49
21. March 15, 2011 $684,803.57
22. September 15, 2011 $718,454.82
TOTAL $ 10,000,000
(iii) The Company shall repay B Loan 3 on each
Principal Payment Date in accordance with the following loan
repayment schedule.
Date Payment Due Principal Amount Due
1. March 15, 2001 $ 690,192.87
2. September 15, 2001 $ 722,973.58
3. March 15, 2002 $ 757,311.21
4. September 15, 2002 $ 793,279.71
5. March 15, 2003 $ 830,956.53
6. September 15, 2003 $ 870,422.81
7. March 15, 2004 $ 911,763.54
8. September 15, 2004 $ 955,067.75
9. March 15, 2005 $ 1,000,428.69
10. September 15, 2005 $ 1,047,944.05
11. March 15, 2006 $ 1,097,716.15
12. September 15, 2006 $ 1,149,852.18
13. March 15, 2007 $ 1,204,464.41
14. September 15, 2007 $ 1,261,670.45
15. March 15, 2008 $ 1,321,593.49
16. September 15, 2008 $ 1,384,362.58
TOTAL $16,000,000.00
(c) The dates for payment of principal of the IFC Loans
are intended to coincide with the relevant Interest Payment
Dates.
(d) From time to time while the IFC Loans are being
disbursed, any part of the IFC Loans which has been disbursed
shall be allocated for repayment on each of the dates set out in
subsections (a) and (b) above, in amounts which are pro rata to
the amounts of the respective repayment installments (with IFC
adjusting those allocations as necessary so as to achieve whole
numbers in each case).
(e) Notwithstanding the amortization schedules set out in
subsections (a) and (b) above, if the full amount of the IFC
Loans is not disbursed, (i) IFC shall recalculate the
amortization schedules in order to provide for repayment of the
IFC Loans on the same dates and on the basis of the amortization
set out above and shall deliver such amortization schedules to
the Company, and (ii) upon delivery to the Company of the
properly recalculated amortization schedules, this Agreement will
be deemed to have been amended to substitute such recalculated
amortization schedules for subsections (a) and (b) above.
Section 3.6 Voluntary Prepayment.
(a) The Company may, on any Interest Payment Date, prepay
all or any part of the IFC Loans then outstanding, on not less
than thirty (30) days' written notice to IFC, but only if:
(i) the Company simultaneously pays the
prepayment premium specified in Section 3.8
hereof (x) in respect of any outstanding balance
of the A Loan, with respect to the portion of the
A Loan so prepaid;
(ii) the Company simultaneously pays (x)
all accrued interest on the amount of the IFC
Loans to be prepaid, and (y) all other amounts
then payable under this Agreement;
(iii) for a partial prepayment, such
prepayment is in an aggregate amount of not less
than six million Dollars ($6,000,000);
(iv) the Company simultaneously prepays,
pro rata, the outstanding principal amount of the
DEG Loan (or portions thereof, as applicable),
together with all accrued interest on the
principal amounts of the Loans (or portions
thereof, as applicable), the Maintenance Amount
(if any) on the Loans (or portions thereof, as
applicable) and all other amounts then due
hereunder or under any of the Loan Documents; and
(v) if IFC so requires, the Company delivers
to IFC, prior to the date of prepayment, evidence
satisfactory to IFC that all Governmental
Approvals necessary in respect of the prepayment
have been obtained or an opinion of counsel, in
form and substance reasonably satisfactory to
IFC, that none are required.
(b) Amounts prepaid under this Section:
(i) shall be allocated by IFC pro rata
between the A Loan and the B Loan in proportion
to their respective principal amounts outstanding
on the date of any such prepayment; and
(ii) shall then be applied by IFC to the
respective outstanding repayment installments of
the A Loan and the B Loan on a pro rata basis.
(c) Upon delivery of a notice in accordance with
subsection (a) above, the Company shall make the prepayment in
accordance with the terms of that notice.
(d) The Company may not request Disbursement of amounts
prepaid under this Agreement.
Section 3.7 Mandatory Prepayment.
(a) On the Purchase Date, all Obligations owing to IFC
relating to the IFC Loans hereunder and under the Loan Documents
shall become immediately due and payable without any action on
the part of IFC, and the Company shall pay to IFC an amount equal
to all such Obligations due and owing to IFC, including, without
duplication, all accrued interest on the principal amount of the
IFC Loans to be prepaid and all other amounts then due to IFC
hereunder. Amounts prepaid under this subsection (a) shall be
allocated and applied as provided in Section 3.7(c)(iii).
(b) The Company shall prepay, pro rata, the outstanding
principal amount of the IFC Loans (or portions thereof, as
applicable), upon the prepayment by the Company of any of the
other Loans (or portions thereof, as applicable), together with
all accrued interest on the principal amount of the IFC Loans (or
portions thereof, as applicable), the Maintenance Amount (if any)
on the IFC Loans (or portions thereof, as applicable) and all
other amounts then due hereunder or under any of the other Loan
Documents. Amounts prepaid under this subsection (b) shall be
allocated and applied as provided in Section 3.7(c)(iii).
(c) Insurance Proceeds shall be applied as follows:
(i) All Insurance Proceeds relative to any
single loss in excess of seven hundred fifty
thousand Dollars ($750,000) shall be paid by the
respective insurers directly to the Trustee. All
Insurance Proceeds relative to a single recovery
of seven hundred fifty thousand Dollars
($750,000) or less shall be paid directly to the
Company. If any Insurance Proceeds relative to
any single loss in excess of seven hundred fifty
thousand Dollars ($750,000), or, during the
occurrence and continuation of an Event of
Default, relative to any loss are paid to the
Company, such Insurance Proceeds shall be
received only in trust for the Lenders, shall be
segregated from other funds of the Company, and
shall be promptly paid over to the Trustee in the
same form as received (with any necessary
endorsement) for deposit in the Insurance
Proceeds Sub-Account. If any Insurance Proceeds
are paid to IFC, IFC shall promptly pay over such
Insurance Proceeds to the Trustee for deposit in
the Insurance Proceeds Sub-Account.
(A) If there does not exist an Event
of Default, Insurance Proceeds relative to a
single loss of seven hundred fifty thousand
Dollars ($750,000) or less shall be applied
by the Company to pay the necessary costs of
repair, restoration or replacement of the
Project (in each case, to the extent such
Insurance Proceeds were paid in respect of
physical loss or damage thereto). After
applying such amount, any excess Insurance
Proceeds shall be delivered to the Trustee
for deposit in the Revenue Sub-Account.
(B) If there does not exist an Event
of Default and if there shall occur damage,
destruction or casualty with respect to which
Insurance Proceeds in excess of seven hundred
fifty thousand Dollars ($750,000) but less
than five million Dollars ($5,000,000) are
payable, and if (I) the Company promptly
(and, in any event, within 30 days after the
occurrence of such damage, destruction or
casualty) gives written notice to IFC that
the Company wishes to repair, restore or
replace the Project to the condition that it
was in immediately prior to such damage,
destruction or casualty, (II) the Insurance
Proceeds received by the Company or the
Trustee together with funds otherwise
available to the Company, will be sufficient
to cover all costs and expenses necessary to
repair, restore or replace the Project and to
cover the Operating and Maintenance Costs and
the Debt Service payable by the Company
during the period necessary to repair,
restore or replace the Project, (III) the
repair, restoration or replacement of the
Project is technically and economically
feasible, (IV) after giving effect to any
proposed repair, restoration or replacement,
no Default or Event of Default or a default
under any Principal Document shall exist, (V)
IFC shall receive an opinion of counsel in
form and substance reasonably satisfactory to
IFC or other evidence satisfactory to IFC
that neither any applicable Governmental
Approval nor any Principal Document (other
than Non-Material Agreements) will terminate
during the period necessary to repair,
restore or replace the Project and no
applicable Governmental Approval, or
amendment to this Agreement or the Security
Documents or any other instrument, is
necessary for the purpose of subjecting the
repair, restoration or replacement to the
Liens of the Security Documents except such,
if any, as shall have been delivered to IFC,
and (VI) IFC shall have received from the
Company and the Independent Engineer such
certificates or other evidence as IFC may
reasonably require regarding the foregoing
matters, then IFC shall direct the Trustee in
a written notice to deliver the Insurance
Proceeds received in connection with the
damage, destruction or casualty to the
Project to the Company and the Company shall
apply such Insurance Proceeds to pay for the
necessary costs of repair, restoration or
replacement of the Project and to pay for
Operating and Maintenance Costs and Debt
Service when due. After making such payments
to the Company, any excess Insurance Proceeds
shall be deposited in the Revenue Sub-
Account.
(ii) If there shall occur damage,
destruction or casualty with respect to which
Insurance Proceeds in excess of five million
Dollars ($5,000,000) are payable, IFC may, after
consulting with the Company during the 30-day
period following such damage, destruction or
casualty, choose to apply the Insurance Proceeds
to prepay a principal amount of the IFC Loans at
the time outstanding, pro rata with prepayment of
the DEG Loan, together with interest accrued
thereon or fees accrued in connection therewith
to the prepayment date. In addition, if
Insurance Proceeds have been paid pursuant to
clause (c)(i)(B) above and the Company (I) has
not notified IFC promptly that it wishes to
repair, restore or replace the Project or (II)
has not otherwise complied with the provisions of
clause (c)(i) above relative to the repair,
restoration or replacement of the Project, IFC
may choose to apply the Insurance Proceeds to
prepay the IFC Loans, pro rata with prepayment
of the DEG Loan, together with accrued interest.
(iii) Amounts prepaid under this
subsection (c) and under subsection (e):
(A) shall be allocated by IFC pro
rata between the A Loan and the B Loan in
proportion to their respective principal
amounts outstanding on the date of such
prepayment; and
(B) shall then be applied by IFC to
all respective outstanding repayment
installments of the A Loan and the B Loan on
a pro rata basis.
(d) Upon the occurrence of a Capacity Shortfall, the
Company shall pay, or cause to be paid, to IFC the Performance
Liquidated Damages paid by the EPC Contractor under the EPC
Contract with respect to such Capacity Shortfall to prepay a
principal amount of the IFC Loans equal to (i) the principal
amount of all outstanding IFC Loans, multiplied by (ii) the
Capacity Shortfall Percentage and shall pay, or cause to be paid,
to DEG the Performance Liquidated Damages paid by the EPC
Contractor under the EPC Contract with respect to such Capacity
Shortfall to prepay a principal amount of the DEG Loan equal to
(i) the principal amount outstanding under the DEG Loan
multiplied by (ii) the Capacity Shortfall Percentage. Such
prepayment of the IFC Loan shall be applied as provided in
Section 3.7(c)(iii) hereof. To the extent there are excess
Performance Liquidated Damages which have been paid by the EPC
Contractor and are remaining after the above-referenced
prepayment to IFC and DEG, such excess shall be applied to repay
equity in an amount equal to (x) the Dollar amount which has then
been paid in to the Company for the purchase of Shares,
multiplied by (y) the Capacity Shortfall Percentage. Such amount
shall be divided pro rata among all shareholders of the Company.
After such application, any remaining Performance Liquidated
Damages shall be transferred to the Revenue Sub-Account and
applied in accordance with the Trust and Retention Agreement.
(e) The Company shall prepay the outstanding principal
amount of the IFC Loans upon the occurrence of the Event of
Default described in Section 7.1(k) of the General Conditions,
together with accrued interest on the principal amount of the IFC
Loans to be prepaid and all other amounts then due to IFC
hereunder.
(f) The Company shall pay the prepayment premium as
specified in Section 3.8 hereof in connection with any mandatory
prepayments pursuant to Sections 3.7(a) (but only if and to the
extent that there remains any proceeds of the Purchase Price paid
by HMGN and received by the Company after (i) the aggregate
amount of all Obligations owing to IFC have been paid in full and
(ii) the shareholders of the Company at such time have recovered
the aggregate amount of their total paid in equity of the Company
to the extent provided in Section 6.3 of the Project Agreement),
and Sections 3.7(b) and 3.7(e) hereof.
Section 3.8 Prepayment Premium.
(a) On the date of any prepayment of the A Loan in
accordance with Section 3.6, 3.7(a), 3.7(b), or 3.7(e) hereof,
the Company shall pay a premium of an amount in Dollars equal to
the difference between the Net Present Value of the Anticipated
Income Stream and the Net Present Value of the Available Income
Stream or in the case of a partial prepayment, the same
proportion of such difference as the proportion which the amount
of the A Loan to be prepaid bears to the amount of the A Loan
then outstanding, all as more particularly described below.
For the purposes of this subsection (a), "Anticipated
Income Stream" means the aggregate interest payments which would
have been due on the A Loan at the applicable Tranche Interest
Rate(s) (in the case of a prepayment prior to the Consolidation
Date) or at the A Loan Interest Rate (in the case of a prepayment
on or subsequent to the Consolidation Date) for the period from
the prepayment date until the final scheduled maturity date
assuming that no prepayment had taken place and further assuming
that the A Loan repayment schedule set forth in Section 3.5
hereof had been adhered to and that all payments had been made on
their due dates.
For the purposes of this subsection (a), "Available Income
Stream" means the interest payments which would have been due on
the A Loan at a rate per annum equal to the aggregate of the A
Loan Spread and the Fixed Rate Swap Equivalent for the period
from the prepayment date until the final scheduled maturity date
assuming that no prepayment had taken place and further assuming
that the A Loan repayment schedule set forth in Section 3.5
hereof had been adhered to and that all payments had been made on
their due dates.
For the purposes of this subsection (a), the "Net Present
Value" means the value of the relevant Income Stream discounted
(with stops on the same dates as would have been Interest Payment
Dates) back to the prepayment date from each of the relevant
Interest Payment Dates at a discount rate equal to the Fixed Rate
Swap Equivalent.
(b) The determination by IFC of the prepayment premium
under subsection (a) above shall be final and conclusive unless
the Company shows, to the satisfaction of IFC, that such
determination involved clerical error.
Section 3.9 Additional Interest.
(a) Without limiting the remedies available to IFC under
this Agreement or otherwise and to the maximum extent permitted
by applicable law, if the Company fails to make any payment of
principal or interest (including interest payable pursuant to
this Section) or any other payment on or before its due date as
specified in this Agreement (whether at stated maturity or upon
prematuring by acceleration or otherwise) or, if not so
specified, as notified by IFC to the Company, the Company shall
pay in US Dollars, by way of liquidated damages, in respect of
the amount of (i) any A Loan payment due and unpaid, interest at
the relevant Tranche Interest Rate(s) or A Loan Interest Rate in
effect from time to time plus two percent (2.0%) per annum from
the date any such payment became due and (ii) any B Loan payment
due and unpaid, interest at the B Loan Floating Rate in effect
from time to time plus two percent (2.0%) per annum from the date
any such payment became due. Such interest is payable on demand,
or if not demanded, on each Interest Payment Date after such
failure.
(b) The obligation of the Company to pay liquidated
damages as provided in paragraph (a) above shall be without
prejudice to its obligation to pay principal and interest in
accordance with Sections 3.5 and 3.3 hereof and any other amounts
payable under this Agreement.
Section 3.10 Payments in Dollars.
(a) The Company shall make all payments of principal,
interest, fees, and any other payment due to IFC under this
Agreement in Dollars, no later than 2:00 p.m. (New York City
time) on the date when due, in immediately available funds, at
Northern Trust International Banking Corporation, New York, New
York (Account No. CHIPS ID 142255, in favor of International
Finance Corporation) or at such other bank in New York, New York
as IFC from time to time designates to the Company and the
Trustee.
(b) If any date for payment under this Agreement shall not
be a Business Day, then such payment shall be made on or by the
next succeeding Business Day unless, in the case of payments of
principal or interest, that next succeeding Business Day falls in
a different calendar month, in which case that payment shall be
made on the immediately preceding Business Day. Interest, fees,
including, without limitation, commitment fees, and charges (if
any) shall continue to accrue for the period from the due date
which is not a Business Day to that next succeeding Business Day.
(c) The tender or payment of any amount payable under this
Agreement (whether or not by recovery under a judgment) in any
currency other than Dollars does not novate, discharge or satisfy
the obligation of the Company to pay in Dollars all amounts
payable under this Agreement except to the extent IFC actually
receives Dollars in its account in New York, New York.
(d) If a currency other than Dollars is tendered or paid
(or recovered under any judgment) and the amount IFC receives at
its designated account in New York, New York, upon conversion at
the then-market rate of exchange, falls short of the full amount
of Dollars owed to IFC, then the Company shall continue to owe
IFC, as a separate obligation, the amount of the shortfall
(regardless of any judgment for any other amounts due under this
Agreement).
(e) Notwithstanding subsections (a) through (d) above, IFC
may require the Company to pay (or reimburse IFC) in any currency
other than Dollars for:
(i) any taxes and other amounts payable under
the provisions of this Agreement; and
(ii) any fees, costs and expenses payable
under Section 9.3 hereof and Section 8.1 of the
General Conditions;
to the extent those taxes, amounts, fees, costs, and expenses are
payable in that other currency.
Section 3.11 Allocation of Partial Payments. If IFC at
any time receives less than the full amount then due and payable
to it under this Agreement, IFC may allocate and apply such
payment in any way or manner and for such purpose or purposes
under this Agreement as IFC in its sole discretion determines,
notwithstanding any instruction that the Company may give to the
contrary.
Section 3.12 Suspension or Cancellation of Disbursements
by IFC.
(a) IFC may, by notice to the Company, suspend or cancel
the right of the Company to Disbursements of the IFC Loans, in
whole or in part:
(i) if the first Disbursement has not been
made by June 1, 1998, or such other date as the
parties agree;
(ii) if IFC cancels the subscription or
acquisition by it of any Shares or any
disbursement on account thereof as provided in
Section 4.3 hereof;
(iii) if any Event of Default or Default
shall have occurred and be continuing, or if an
expropriation, condemnation, requisition,
confiscation, seizure or nationalization of all
or any substantial part of the Project or other
assets of the Company or of its share capital or
the dissolution or disestablishment of the
Company or other action that would prevent the
Company or its officers from carrying on all or a
substantial part of the Company's business or
operations shall, in the reasonable opinion of
IFC, be imminent;
(iv) if, at any time in the reasonable
opinion of IFC, there shall exist any situation
which indicates that performance by the Company
of any of its obligations under this Agreement
cannot be expected; or
(v) if the DEG Loan has been suspended or
cancelled; or
(vi) on or after September 30, 2000.
(b) Upon the giving of any such notice, the right of the
Company to receive, and the obligation of IFC to disburse, the
undisbursed part of the IFC Loans shall be suspended or canceled,
as the case may be. The exercise by IFC of its right of
suspension does not preclude IFC from exercising its right of
cancellation, either for the same or any other reason. A
suspension does not limit any other provision of this Agreement.
Section 3.13 Termination of Commitment. The commitment of
IFC to make any Disbursement of the IFC Loans hereunder shall
automatically terminate in accordance with the provisions of
Article 7 of the General Conditions.
Section 3.14 Cancellation by the Company. The Company
may, by notice to IFC, irrevocably request IFC to cancel the
undisbursed portion of the IFC Loans on the date specified in
such request (which shall be an Interest Payment Date no earlier
than thirty (30) Business Days after the date of the request). If
IFC is reasonably satisfied that the Company has sufficient long-
term funding available, on terms satisfactory to IFC, to satisfy
the Financial Plan, and IFC receives, all fees payable under
Section 3.4 hereof, all breakage or similar costs, expenses or
losses arising out of such cancellation, and all other amounts
then due and payable under this Agreement, IFC shall cancel the
entire undisbursed portion of the IFC Loans effective as of that
Interest Payment Date.
Section 3.15 Illegality of Participation. If, after the
date of this Agreement, any change made in any applicable law or
regulation or official directive (or its interpretation or
application by any Authority charged with its administration),
makes it unlawful for any Participant to continue to maintain or
to fund its Participation, then the Company shall, upon request
by IFC (but subject to the approval of the Nepal Rastra Bank,
which the Company agrees to take all reasonable steps to obtain
as quickly as possible, if such approval is then required),
prepay immediately in full that part of the B Loan which IFC
advises corresponds to that Participation, together with all
accrued interest and the Maintenance Amount (if any) on that part
of the B Loan (and, if such prepayment is not made on an Interest
Payment Date, any amount payable in respect of the prepayment
under Section 3.16 hereof). In addition, upon receipt of such
request from IFC, the Company shall have no further right to
disbursement of the undisbursed portion of the B Loan
corresponding to that Participation.
Section 3.16 Funding Costs.
(a) If the Company:
(i) fails to pay any amount due under this
Agreement on its due date, or to borrow in
accordance with an IFC Disbursement Request or to
prepay in accordance with a notice of prepayment;
or
(ii) prepays all or any portion of the IFC
Loans on a date other than an Interest Payment
Date;
and as a result IFC or any Participant incurs any cost, expense
or loss, then the Company shall immediately pay to IFC the amount
which IFC from time to time notifies to the Company as being the
aggregate of those costs, expenses and losses incurred.
(b) For the purposes of this Section 3.16 and Section 3.14
hereof, "cost, expense or loss" include any interest paid or
payable to carry any unpaid amount and any premium, penalty or
expense incurred to liquidate or obtain third party deposits or
borrowings in order to make, maintain or fund all or any part of
the IFC Loans (but in the case of a late payment, after taking
into account any additional interest received under Section 3.9
hereof).
Section 3.17 Maintenance Amount. On each Interest Payment
Date, the Company shall pay, in addition to interest, the amount
which IFC from time to time notifies to the Company in a
Maintenance Amount Certification as being the aggregate
Maintenance Amount of IFC and each Participant accrued and unpaid
prior to that Interest Payment Date.
ARTICLE 4
IFC Subscription
Section 4.1 Subscription and Disbursement.
(a) On the terms and subject to the conditions of this
Agreement, IFC agrees to subscribe and pay for ten percent (10%)
of the ordinary shares of the Company, par value Rs. 100 per
share (the "IFC Shares") at a purchase price of ten Dollars
($10.00) per share at the time of subscription of each share;
provided, however, that IFC shall not be obligated to subscribe
and pay for any IFC Shares unless the Sponsor Shareholders shall
have, prior to IFC's Subscription, subscribed and paid into the
Company all of the Sponsor Shareholders' equity then due under
the Financial Plan in accordance with Section 2.1 of their
respective Subscription Agreements at the purchase price of ten
Dollars ($10.00) per share; and provided further, that the
aggregate purchase price of the IFC Shares which IFC may
subscribe pursuant to this Section 4.1 shall not exceed three
million Dollars ($3,000,000) (the "Aggregate Purchase Price") or
300,000 shares.
(b) The Company may request IFC to subscribe for the IFC
Shares by delivering to IFC, at least ten (10) Business Days
prior to the proposed date of subscription, a Subscription
Request in the form of Schedule 4.1(b) hereof.
(c) IFC shall disburse funds under the IFC Subscription to
the credit of the Offshore Retention Account in accordance with
the provisions of the Trust and Retention Agreement.
(d) Each request shall be for a subscription of an amount
(except with respect to the last such request) of not less than
two hundred seven thousand Dollars ($207,000), and there shall be
no more than eight (8) Subscriptions.
(e) Notwithstanding anything contained in this Agreement,
IFC may, at any time and from time to time, in its discretion and
without request by the Company, subscribe and pay, on the terms
set out in subsection (a) above, for any or all of the IFC
Shares.
(f) Upon each subscription and payment by IFC under this
Section 4.1, the Company shall:
(i) issue to IFC, or as IFC directs, the
number of IFC Shares so subscribed free of all
Liens, charges and encumbrances and which shall
rank pari passu in all respects with all other
Shares, and deliver to IFC, or as IFC directs, a
share certificate evidencing valid legal and
beneficial title to such number of IFC Shares;
(ii) furnish to IFC evidence satisfactory
to IFC that such number of IFC Shares has been
duly and validly authorized, issued and
delivered; are freely transferable; that all
requisite corporate formalities and legal
requirements in connection with the
authorization, issue and delivery thereof have
been duly satisfied; all the information and
documents necessary for the issuance of all
Governmental Approvals required for the
subscription of, and remittance of, the IFC
Shares have been obtained; and
(iii) use the net proceeds of the IFC
Subscription to subscribe for ordinary shares of
the Company.
Section 4.2 Actions Prohibited until IFC Shares Issued.
Until all of the IFC Shares have been subscribed or the right of
the Company to further subscriptions has been canceled as
provided in Section 4.3 below, whichever first occurs:
(a) the Company shall, from and after the date of the
initial IFC Subscription, maintain a sufficient number of
authorized and unissued Shares to satisfy in full the exercise of
IFC's rights under the IFC Subscription; and
(b) the Company shall not, unless IFC otherwise agrees:
(i) issue any Shares of any class, except (A)
in accordance with the Financial Plan or (B) as
permitted by this Agreement, the Share Retention
and Project Funds Agreement, the Subscription
Agreements, and the Shareholders' Agreement;
(ii) increase its respective authorized
share capital except in accordance with the
provisions of this Agreement, the Share Retention
and Project Funds Agreement, the Subscription
Agreements and the Shareholders' Agreement; or
(iii) change the par value of, or the
rights attached to, any of the Shares of any
class;
(iv) issue Shares with more privileged
rights than the IFC Shares;
(v) reduce its respective share capital
through the redemption (or otherwise) of Shares;
(vi) issue any options or warrants with
respect to its share capital; or
(vii) take any other action by amendment of
its respective Charter Documents or through
reorganization, consolidation, sales of share
capital (other than sales to Sponsors as
contemplated by the Subscription Agreements and
the Share Retention and Project Funds Agreement),
merger or sale of assets, or otherwise which
could reasonably be expected to result in a
dilution of the interest in the Company
represented by the IFC Shares.
Section 4.3 Suspension and Cancellation of IFC
Subscription.
(a) IFC may, by notice to the Company, suspend or cancel
the right of the Company to the IFC Subscription:
(i) if the first subscription and
disbursement has not been made by June 1, 1998,
or such other date as the parties agree;
(ii) if the right of the Company to
disbursements of the IFC Loans is suspended or
canceled as provided in Section 3.12 hereof;
(iii) if any Event of Default or Default
shall have occurred and be continuing, or if an
expropriation, condemnation, requisition,
confiscation, seizure or nationalization of all
or any substantial part of the Project or other
assets of the Company or of its share capital or
the dissolution or disestablishment of the
Company or other action that would prevent the
Company or its officers from carrying on all or a
substantial part of the Company's business or
operations shall, in the reasonable opinion of
IFC, be imminent;
(iv) if, at any time in the reasonable
opinion of IFC, there shall exist any situation
which indicates that performance by the Company
of any of its Obligations under this Agreement
cannot be expected;
(v) if the DEG Loan has been suspended or
cancelled; or
(vi) on or after September 30, 2000.
(b) Upon the giving of any such notice, the right of the
Company to the IFC Subscription shall be suspended or canceled,
as the case may be. The exercise by IFC of its right of
suspension does not preclude IFC from exercising its right of
cancellation, either for the same or another reason. A
suspension does not limit any other provision of this Agreement.
Section 4.4 Agreement to Cooperate. The Company shall
fully cooperate with IFC and shall provide all the information
and documents necessary for the issuance of all Governmental
Approvals required for the subscription by IFC of the IFC Shares
and for the remittance of the proceeds of the sale of the IFC
Shares and dividends.
Section 4.5 IFC Board Seat. Following subscription by
IFC of the IFC Shares, the Company shall, to the extent permitted
by applicable law, take such action that will enable IFC an
opportunity to elect one representative to the board of directors
of the Company.
ARTICLE 5
Representations and Warranties
Section 5.1 Representations and Warranties Contained in
General Conditions.
(a) The Company confirms the representations and
warranties set forth in Article 4 of the General Conditions as if
made as of the date hereof, which representations and warranties
are incorporated by reference herein as if fully set forth
herein.
(b) The Company warrants to IFC that each of such
representations is true and correct in all material respects as
of the date of this Agreement and that none of them omits any
matter the omission of which makes any of such representations
misleading in any material respect. The representations referred
to in Section 5.1 hereof shall survive the execution and delivery
of this Agreement, any Disbursement of the IFC Loans or any
subscription and disbursement under the IFC Subscription.
Section 5.2 Rights and Remedies not Limited. IFC's
rights and remedies in relation to any misrepresentation or
breach of warranty on the part of the Company are not prejudiced:
(a) by any investigation by or on behalf of IFC (or the
Participants) into the affairs of the Company;
(b) by the execution or the performance of this Agreement
(or the Participation Agreements) or any other Principal
Document;
(c) by any other act or thing which may be done by or on
behalf of IFC in connection with this Agreement (or the
Participation Agreements) or any other Principal Document and
which might, apart from this Section, prejudice such rights or
remedies.
ARTICLE 6
Conditions of Disbursement
Section 6.1 Conditions of Initial Disbursement. The
obligation of IFC to make the initial Disbursement of the IFC
Loans or the initial subscription and disbursement under the IFC
Subscription shall be subject to the fulfillment, in a manner
satisfactory to IFC, prior to or concurrently with the making of
such initial Disbursement or subscription and disbursement of the
IFC Subscription, of the conditions set forth in Section 3.1 of
the General Conditions.
Section 6.2 Conditions of All Disbursements and
Subscriptions and Disbursements under the IFC Subscription. The
obligation of IFC to make any Disbursement of the IFC Loans or
any subscription and disbursement under the IFC Subscription
shall also be subject to the fulfillment, in a manner
satisfactory to IFC, prior to or concurrently with the making of
such Disbursement or subscription and disbursement under the IFC
Subscription, of the conditions set forth in Sections 3.2, 3.3,
3.4 and 3.5 of the General Conditions, and to the fulfillment of
the further condition that the proceeds of such Disbursement or
subscription and disbursement under the IFC Subscription will not
be in reimbursement of, or used for, expenditures in the
territories of any country which is not a member of IFC (other
than any country which is a member of the International Bank for
Reconstruction and Development) or for goods produced in or
services supplied from such territories.
Section 6.3 Disbursement Relationship Among IFC Loans and
the IFC Subscription.
(a) The obligation of IFC to make any Disbursements of
the IFC Loans or subscription and disbursement under the IFC
Subscription shall also be subject to compliance by the Sponsor
Shareholders with their obligations described in Section 2.1 of
the Subscription Agreements.
(b) Notwithstanding anything provided in this Agreement,
the A Loan and the B Loan shall be disbursed pro rata in
accordance with the maximum respective principal amounts of such
A Loan and B Loan set forth in Section 3.1(a) hereof, and IFC
shall not in any event be obliged to make any Disbursement of the
B Loan except to the extent that funds shall be provided therefor
by the Participants under their respective Participation
Agreements.
(c) The obligation of IFC to make any subscription or
disbursement under the IFC Subscription is also subject to the
conditions that immediately after such subscription or
disbursement (i) IFC would not have subscribed or paid for a
higher proportion of the IFC Shares than the proportion which
each of the Company's other shareholders has by then subscribed
or paid for of the total number of Shares to be subscribed by
such shareholder in accordance with the Financial Plan, and (ii)
IFC would not have subscribed or paid a higher proportion of the
IFC Subscription to the outstanding amount under the IFC Loans
than the proportion which the IFC Subscription bears to the IFC
Loans as set forth in the Financial Plan.
Section 6.4 No Waivers.
(a) The rights and remedies of IFC in relation to any
misrepresentations or breach of warranty on the part of the
Company shall not be prejudiced by any investigation by or on
behalf of IFC (or the Participants) into the affairs of the
Company, by the execution or the performance of this Agreement
(or the Participation Agreements) or by any other act or thing
which may be done by or on behalf of IFC (or the Participants) in
connection with this Agreement (or the Participation Agreements)
and which might, apart from this Section, prejudice such rights
or remedies.
(b) No course of dealing or waiver by IFC in connection
with any condition of Disbursement or subscription and
disbursement under the IFC Subscription under this Agreement
shall impair any right, power or remedy of IFC with respect to
any other condition of Disbursement or subscription and
disbursement under the IFC Subscription, or be construed to be a
waiver thereof; nor shall the action of IFC in respect of any
Disbursement or subscription and disbursement under the IFC
Subscription affect or impair any right, power or remedy of IFC
in respect of any other Disbursement or subscription and
disbursement under the IFC Subscription.
(c) Unless otherwise notified to the Company by IFC and
without prejudice to the generality of paragraph (a) above, the
right of IFC to require compliance with any condition under this
Agreement which may be waived by IFC in respect of any
Disbursement or subscription and disbursement under the IFC
Subscription is expressly preserved for the purposes of any subse
quent Disbursement or subscription and disbursement under the IFC
Subscription.
ARTICLE 7
Particular Covenants
Section 7.1 Particular Covenants.
(a) The Company shall observe and perform the covenants
set forth in Articles 5 and 6 of the General Conditions.
(b) The Company shall make promptly all required filings
with Governmental Authorities, or financial institutions, in
Nepal to permit IFC to remit to the United States in Dollars any
amounts paid to IFC in connection with the IFC Shares.
ARTICLE 8
Events of Default
Section 8.1 Events of Default. If one or more of the
Events of Default specified in Article 7 of the General
Conditions shall have occurred and be continuing, IFC shall have
the rights and remedies set forth in said Article 7 and the other
Principal Documents, all of which rights and remedies are
incorporated by reference herein, and all other rights and
remedies which may be available at law or in equity.
ARTICLE 9
Miscellaneous
Section 9.1 Notices. Any notice, request or other
communication to be given or made under this Agreement shall be
in writing and shall be given or made in the manner set forth in
the General Conditions.
Section 9.2 English Language. All documents to be
furnished or communications to be given or made under this
Agreement shall be in the English language or, if in another
language, shall be accompanied by a translation into English
satisfactory to IFC certified by an authorized representative of
the Company, which translation shall be the governing version
between the Company and IFC.
Section 9.3 Expenses. If any amount owing to IFC under
this Agreement shall be collected through any process of law or
shall be placed in the hands of attorneys for collection, the
Company shall pay (in addition to all monies then due in respect
of the IFC Loans, the IFC Shares or otherwise payable under this
Agreement), professional consultant and attorneys' and other fees
and expenses incurred in respect of such collection.
Section 9.4 Jury Trial.
(a) The Company hereby acknowledges that IFC shall be
entitled under applicable law, including the provisions of the
International Organizations Immunities Act, to immunity from a
trial by jury in any action, suit or proceeding arising out of or
relating to this Agreement or any Principal Document or the
transactions contemplated hereby or thereby, brought against IFC
in any Federal District Court of the United States of America.
(b) The Company hereby waives any and all rights to demand
a trial by jury in any action, suit or proceeding arising out of
or relating to this Agreement or any Principal Document or the
transactions contemplated hereby or thereby, brought against IFC
in any forum in which IFC is not entitled to immunity from a
trial by jury.
Section 9.5 Confidential Information.
(a) IFC may (i) disclose to any participant in the IFC
Loans, or (ii) disclose to any person for the purpose of
exercising any power, remedy, right, authority, or discretion
under this Agreement or any other Principal Document in
connection with a Default or Event of Default, any documents or
records of, or information about, any Principal Document, or the
assets, business or affairs of the Company.
(b) The Company acknowledges and agrees that,
notwithstanding the terms of any other agreement between the
Company and IFC, a disclosure of information by IFC in the
circumstances contemplated by this subsection does not violate
any duty owed to the Company or agreement between IFC and the
Company.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed in their respective names as of the date first above
written.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: ____________________________________
Authorized Representative1
INTERNATIONAL FINANCE CORPORATION
By: ____________________________________
Authorized Representative
SCHEDULE 2.2(a)
FINANCING PLAN
Equity US$$
IFC $ 2,949,500
Sponsors' Equity $26,545,500
Total Equity $29,495,000
Loans US$$ DM
IFC A Loan $21,000,000
IFC B Loan $36,000,000
DEG Loan DM21,000,000
Total Loans $57,000,000 DM21,000,000
Total Financing $98,245,000 2/
SCHEDULE 2.2(b)
PROJECT COSTS*
Amount (US$)
EPC Plant and T-Line $46,340,000
EPC Miscellaneous Change Orders 600,000
Taxes & Duties 411,000
Land and Access Road 650,000
Preliminary Investigation 2,438,000
Engineering - Harza 5,290,000
Spare Parts and Start-up Testing 1,000,000
Development Costs 2,963,000
Construction Management & Supervision 2,653,000
Costs
Legal Fees 3,026,800
Insurance Premiums 1,558,000
GLOF Survey/Warning System 600,000
Environ. Mitigation and Community 550,000
Development
Engineering/Consulting (Lenders) 545,000
O&M/Training Costs during Construction 450,000
Contingency 12,228,476
Working Capital 1,500,000
Commitment Fee 671,478
Financing Fees 2,437,000
Interest During Construction, net 7,033,246
Debt Service Reserve 5,300,000
TOTAL PROJECT COSTS $98,245,000
* Project costs shall not include any termination or similar
fees in connection with any financing or contemplated financing
for the Project from sources other than the Lenders.
SCHEDULE 3.2(a)(i)
FORM OF IFC DISBURSEMENT REQUEST
[COMPANY LETTERHEAD]
[Date]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Director, Power Department
Ladies and Gentlemen:
Investment No. 7365
Request for Loan Disbursement No. [ ]*
1. Please refer to the IFC Investment Agreement (the "IFC
Investment Agreement") dated as of the Closing Date between Bhote
Koshi Power Company Private Limited (the "Company") and
International Finance Corporation ("IFC"). Terms defined in the
IFC Investment Agreement have their defined meanings whenever
used in this request.
2. The Company irrevocably requests the disbursement on
________, 19 (or as soon as practicable thereafter) of the
amount of _______________________________ ($__________) under the
A Loan, and of the amount of
______________________________________ ($____________) under the
B Loan** (the "Disbursement") in accordance with the provisions
of Section 3.2 of the IFC Special Conditions. With respect to
the A Loan, the Company proposes [insert date] to be the Rate
Setting Date for the requested Tranche. You are requested to pay
such amount to the credit of the Offshore Retention Account in
accordance with the Trust and Retention Agreement.
3. IFC has heretofore disbursed the sum of __________________
Dollars ($__________) under the A Loan, and the sum of
_______________________________ ($_______________) under the B
Loan pursuant to the IFC Investment Agreement. Following the
Disbursement of the amount requested hereby, there will remain
undisbursed _________________ Dollars ($__________) under the A
Loan and __________________________________ Dollars
($__________________) under the B Loan.
4. Attached hereto are (i) a signed but undated receipt*** for
the amount hereby requested to be disbursed and the Company
hereby authorizes IFC to date such receipt as of the date of
actual disbursement by IFC of the funds hereby requested to be
disbursed and (ii) a copy of the report referred to in Section
3.5(b) of the General Conditions and the certification referred
to in Section 3.1(x) of the General Conditions.
5. For the purpose of Article 6 of the IFC Special Conditions
and Article 3 of the General Conditions, the Company hereby
certifies the following:
(a) on the date hereof, (1) all representations and
warranties contained in the General Conditions (other
than the representations made pursuant to Section
4.1(e)(ii) of the General Conditions) and in the other
Loan Documents to which the Company is a party are true
and correct in all material respects with the same
effect as though such representations and warranties
had been made on and as of the date hereof except where
expressed to be made on a specified date, (2) the
representations and warranties referred to in
Section 4.1(e)(ii) of the General Conditions are true
and correct in all material respects in the manner and
on the basis as contemplated by the said Section
4.1(e)(ii), in each case, both immediately before and
after giving effect to the disbursement requested
hereby, and (3) except as fully reflected in the
financial statements delivered to date pursuant to
Sections 5.1(a) and (b) of the General Conditions,
there are as of the date of such financial statements,
no liabilities or obligations with respect to the
Company of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not
due) which, either individually or in the aggregate,
could constitute a Material Adverse Change;
(b) no Event of Default or Default has occurred and is
continuing;
(c) since the date of the IFC Investment Agreement
nothing has occurred which is reasonably likely to
materially and adversely affect the carrying out of the
Project or the Company's ability to fulfill any
material obligation under the IFC Investment Agreement;
(d) no Force Majeure Event has occurred and is
continuing;
(e) the proceeds of the requested disbursement will
not be in reimbursement of, or used for, expenditures
in the territories of any country which is not a member
of IFC (other than any country which is a member of the
International Bank for Reconstruction and Development)
or for goods produced in or services supplied from such
territories;
(f) the proceeds of the requested disbursement are
promptly needed by the Company to pay Project Costs;
(g) since the date of the IFC Investment Agreement,
the Company has not incurred any material loss or
liability (except such liabilities as may be incurred
by the Company in accordance with Section 6.5 of the
General Conditions; and
(h) the Company has the authority to request the
amount requested to be disbursed and the amount
requested to be disbursed is within the Company's
available borrowing power. The Company shall not be in
violation of (A) its Charter Documents, (B) any
covenant or agreement contained in any document to
which the Company is a party, or (C) any law, rule or
regulation, directly or indirectly, limiting or
otherwise restricting the Company's borrowing power or
authority or its ability to borrow.
The above certifications are effective as of the date of
this IFC Disbursement Request and will continue to be effective
as of the date of the disbursement hereby requested. If any of
these certifications is no longer valid as of or prior to the
date of disbursement hereby requested, the Company will
immediately notify IFC and will repay the amount disbursed upon
demand by IFC if disbursement is made prior to the receipt of
such notice.
Yours truly,
BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED
By:___________________________________
Authorized Representative
Copy to: Manager, Accounting Division
International Finance Corporation
SCHEDULE 3.2(a)(ii)
FORM OF IFC LOANS DISBURSEMENT RECEIPT
[COMPANY LETTERHEAD]
[Date]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Manager, Accounting Division
Ladies and Gentlemen:
Investment No. 7365
Disbursement Receipt No. [ ]* (Loan)
We, Bhote Koshi Power Company Private Limited (the
"Company"), hereby acknowledge receipt on the date hereof, of the
sum of , disbursed to us by International Finance
Corporation ("IFC") under the IFC Loans, consisting of the sum of
______________________ Dollars ($________________) under the A
Loan and the sum of ___________________________ Dollars
($________________) under the B Loan, provided for in the IFC
Investment Agreement dated as of the Closing Date between the
Company and International Finance Corporation.
Yours truly,
BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED
By:_____________________________
Authorized Representative**
SCHEDULE 4.1(b)
FORM OF SUBSCRIPTION REQUEST
[LETTERHEAD OF THE COMPANY]
[ Date ]*
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Gentlemen:
Investment No.7365
Subscription Request No. [**]
1. Please refer to the IFC Investment Agreement dated as
of the Closing Date (the "IFC Investment Agreement"), between
Bhote Koshi Power Company Private Limited (the "Company") and
International Finance Corporation ("IFC"). All terms used but
not defined herein are used as defined in the IFC Investment
Agreement.
2. The Company hereby irrevocably requests the
subscription and disbursement, on or before ________________ ,
199 ___ (or as soon as practicable thereafter), of the amount of
US$ _____________ , in respect of the IFC Subscription, in
accordance with the provisions of Section 4.1 of the IFC Special
Conditions. You are requested to pay such amount to the credit
of the Offshore Retention Account in accordance with the
provisions of the Trust and Retention Agreement.***
3. Against disbursement by IFC in accordance with Section
4.1 of the IFC Special Conditions, the Company will deliver to
you a share certificate representing the Shares purchased by IFC
at par with such subscription monies.
4. For the purposes of Article 6 of the IFC Special
Conditions and Article 3 of the General Conditions, the Company
hereby certifies as follows:
(a) on the date hereof, (1) all representations and
warranties contained in the General Conditions (other
than the representations made pursuant to Section
4.1(e)(ii) of the General Conditions) and in the other
Loan Documents to which the Company is a party are true
and correct in all material respects with the same
effect as though such representations and warranties
had been made on and as of the date hereof except where
expressed to be made on a specified date, (2) the
representations and warranties referred to in
Section 4.1(e)(ii) of the General Conditions are true
and correct in all material respects in the manner and
on the basis as contemplated by the said Section
4.1(e)(ii), in each case, both immediately before and
after giving effect to the disbursement requested
hereby, and (3) except as fully reflected in the
financial statements delivered to date pursuant to
Sections 5.1(a) and (b) of the General Conditions,
there are as of the date of such financial statements,
no liabilities or obligations with respect to the
Company of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not
due) which, either individually or in the aggregate,
could constitute a Material Adverse Change;
(b) no Event of Default or Default has occurred and is
continuing;
(c) since the date of the IFC Investment Agreement,
nothing has occurred which is reasonably likely to
materially and adversely affect the carrying out of the
Project or the Company's ability to fulfill any
material obligation under the IFC Investment Agreement;
(d) no Force Majeure Event has occurred and is
continuing;
(e) the proceeds of the requested disbursement will be
used to subscribe and purchase shares in the issued
share capital of the Company, and such amounts are
promptly needed by the Company for purposes of the
Project;
(f) after giving effect to the subscription requested
herein, (i) IFC will not have subscribed or paid for a
higher proportion of the IFC Shares than the proportion
which each other shareholder of the Company has
subscribed or paid for of the total number of Shares to
be subscribed by such shareholder in accordance with
the Financial Plan, and (ii) IFC will not have
subscribed or paid a higher proportion of the IFC
Subscription to the outstanding amount under the IFC
Loans than the proportion which the IFC Subscription
bears to the IFC Loans as set forth in the Financial
Plan;
(g) as of the date of this request, (1) the Sponsor
Shareholders have subscribed and paid _____ ordinary
shares of the Company at a purchase price of __________
Dollars ($ __________ ) per share at the time of
subscription of each ordinary share and (2) once the
subscription requested hereby has been paid, the
subscribed and paid share capital of the Company shall
be ______ ordinary shares;
(h) the proceeds of the requested disbursement will
not be in reimbursement of, or used for, expenditures
in the territories of any country which is not a member
of IFC (other than any country which is a member of the
International Bank for Reconstruction and Development)
or for goods produced in or services supplied from such
territories; and
(i) since the date of the IFC Investment Agreement,
the Company has not incurred any material loss or
liability (except such liabilities as may be incurred
by the Company in accordance with Section 6.5 of the
General Conditions).
5. Attached hereto is a copy of the certification referred
to in Section 3.1(x) of the General Conditions.
The above certifications are effective as of the date of
this Subscription Request and will continue to be effective as of
the date of the disbursement hereby requested. If any of these
certifications is no longer valid as of or prior to the date of
disbursement hereby requested, the Company will immediately
notify IFC and will repay the amount disbursed upon demand by IFC
if disbursement is made prior to the receipt of such notice.
Yours truly,
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Authorized Representative****
Copy to: Manager, Accounting Division
International Finance Corporation
ANNEX A
METHODOLOGY FOR TRANCHE RATE PRICING CALCULATION
The Base Fixed Rate (i.e. the rate to which the A Loan
Spread is applied) illustrated on the following table is a
weighted average calculation that uses two variables to weight
the Applicable Swap Rates quoted by the swap market. These
variables are: (i) the amortization amount and (ii) the period
for which the amortization amount will be outstanding. In
essence, each Tranche is treated as a series of bullet tranches
in amounts equal to the amounts of the relevant Disbursement
which are allocated for repayment on the respective repayment
dates and outstanding for lengths of time corresponding to the
relevant repayment dates. The terms used in the illustration are
defined below.
Definitions:
1. Applicable Swap Rates: The fixed-rate bullet swap-
equivalents of LIBOR (i.e. the fixed rate payable in the
swap market in exchange for receipt of LIBOR) obtained from
a market source as specified by IFC. The rates will provide
the basis for calculation of the Base Fixed Rate for each
Loan Disbursement. The example on the next page illustrates
swap rates quoted in the market on February 9th 1996. IFC
obtains these rates from Dow Jones, Reuters or Bloomberg
market data sources. Upon request (up to once per month)
borrowers will be informed of the service and the page from
which relevant pricing quotes have been obtained.
2. Tenor: The period in years until a specific repayment date
occurs, calculated from the drawdown date of the relevant
Disbursement.
3. Tenor Amount: The product of the amount allocated to a
repayment date and the Tenor of that amount.
4. Amortization Weight: The percentage which a specific Tenor
Amount represents of the sum of all Tenor Amounts.
5. Weighted Average Swap Rate: The product of the Applicable
Swap Rate for an allocated amount and the Amortization
Weight applicable to that amount.
6. Base Fixed Rate: The total of all the Weighted Average Swap
Rates converted to the rate basis used for the Loan, and
rounded up to two decimal points.
7. Tranche: The sum of the Base Fixed Rate and the A Loan
Spread.
Applicable Swap Rates
Quote Date: 9 Feb 1996 Effective Date: 13 Feb 1996
Quote Basis: Semi Annual, 30/360 (by market convention)
Maturity Offered Rate
2 years 5.010%
3 years 5.190%
4 years 5.370%
5 years 5.540%
Interpolated 6 years 5.655%
7 years 5.770%
Interpolated 8 years 5.867%
Interpolated 9 years 5.963%
10 years 6.060%
Base Fixed Rate for a Tranche of $15,000,000
with 3 Years Grace and 10 Years Final Maturity
Disbursement Date: 13 February 1996
<TABLE>
<CAPTION>
6 = 5 as %
Column # 1 2 3 4 5 = 1x3 of (total 5) 7 = 4 x6
Interpolated Weighted
Tenor Outstanding Amortization Offer Tenor Amortization Average
Date (Years) Principal Schedule Swap Rates Amounts Weights Swap Rate
<C> <C> <C> <C> <C> <C> <C> <C>
13 Feb 1996 0 15,000,000 0
13 Aug 1996 0.5 15,000,000 0
13 Feb 1997 1 15,000,000 0
13 Aug 1997 1.5 15,000,000 0
13 Feb 1998 2 15,000,000 0
13 Aug 1998 2.5 15,000,000 0
13 Feb 1999 3 14,000,000 1,000,000 5.190% 3,000,000 3.0769% 0.1597%
13 Aug 1999 3.5 13,000,000 1,000,000 5.280% 3,500,000 3.5897% 0.1895%
13 Feb 2000 4 12,000,000 1,000,000 5.370% 4,000,000 4.1026% 0.2203%
13 Aug 2000 4.5 11,000,000 1,000,000 5.455% 4,500,000 4.6154% 0.2518%
13 Feb 2001 5 10,000,000 1,000,000 5.540% 5,000,000 5.1282% 0.2841%
13 Aug 2001 5.5 9,000,000 1,000,000 5.598% 5,500,000 5.6410% 0.3158%
13 Feb 2002 6 8,000,000 1,000,000 5.655% 6,000,000 6.1538% 0.3480%
13 Aug 2002 6.5 7,000,000 1,000,000 5.713% 6,500,000 6.6667% 0.3808%
13 Feb 2003 7 6,000,000 1,000,000 5.770% 7,000,000 7.1795% 0.4143%
13 Aug 2003 7.5 5,000,000 1,000,000 5.818% 7,500,000 7.6923% 0.4476%
13 Feb 2004 8 4,000,000 1,000,000 5.867% 8,000,000 8.2051% 0.4814%
13 Aug 2004 8.5 3,000,000 1,000,000 5.915% 8,500,000 8.7179% 0.5157%
13 Feb 2005 9 2,000,000 1,000,000 5.963% 9,000,000 9.2308% 0.5505%
13 Aug 2005 9.5 1,000,000 1,000,000 6.012% 9,500,000 9.7436% 0.5858%
13 Feb 2006 10 0 1,000,000 6.060% 10,000,000 10.2564% 0.6215%
TOTALS $15,000,000 97,500,000 100.0000% 5.7666%
</TABLE>
The Base Fixed Rate for the tranche 5.69% on a 30/360 semi-annual
basis.
_______________________________
1 As named in the Company's Certificate of Incumbency and
Authority (see Schedule 3.1(i) to the General Conditions).
2 For purposes of this Schedule 2.2(a), an exchange rate of
DM1.7872 = $1US has been assumed.
* Each to be numbered in series.
** Disbursements of the IFC Loans must be made in the
ratios and in accordance with the other requirements set out in
the IFC Investment Agreement and the Subscription Agreements.
*** See Schedule 3.2(a)(ii) for form of receipt.
* Each to be numbered in series.
** As named in the Company's Certificate of Incumbency and
Authority (see Schedule 3.1(i) to the General Conditions).
* To be dated ten (10) Business Days before the date of any
proposed subscription and disbursement of IFC Subscription.
** Each to be numbered in series. To correspond with number of
the Disbursement Request. See Schedule 3.2(a)(i).
*** Any exchange control consents, if required, must be provided
by the Company to IFC prior to disbursement.
**** As named in the Company's Certificate of Incumbency and
Authority (see Schedule 3.1(i) to the General Conditions).
EXHIBIT NO. 10.143.03
SCHEDULE A
DEFINITIONS
1. Defined Terms. The following terms shall have the
following meanings, except to the extent otherwise defined in any
Loan Document:
"A Loan" shall mean the loan specified in
Section 3.1(a)(i) of the IFC Special Conditions hereof or, as the
context may require, the principal amount thereof from time to
time outstanding.
"A Loan Disbursement" shall mean any amount of the A
Loan which is disbursed from time to time pursuant to Section 3.2
of the IFC Special Conditions.
"A Loan Interest Rate" shall mean a rate equal to the
weighted average of the Tranche Interest Rates, the weighting
being based on the principal amount of each Tranche and the
average being rounded up to the nearest two decimal places.
"A Loan Spread" means three and one-half percent
(3.50%) per annum.
"Accounts" shall mean any "accounts" now or hereafter
owned by the Company as that term is defined in Section 9-106 of
the Code, and includes, without limitation, any and all of the
Company's currently existing and future accounts receivable and
contract rights.
"Affiliate" shall mean, with respect to any Person, any
other Person directly or indirectly controlling, controlled by,
or under common control with that Person; provided, however, that
IFC and DEG shall not be deemed to be an Affiliate of any Sponsor
or the Company. As used in this definition of "Affiliate," the
term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
"Agent" shall mean Nepal Grindlays Bank Limited or any
successors thereto under the Nepal Agency and Retention
Agreement.
"Aggregate Purchase Price" has the meaning assigned to
that term in Section 4.1(a) of the IFC Special Conditions.
"Annual Budget" shall mean, for any Fiscal Year, an
annual budget, prepared by the Company and approved by the
Independent Engineer and the Lenders in accordance with the
Investment Agreement, setting forth all Project Costs or
Operating and Maintenance Costs anticipated to be incurred during
such Fiscal Year in connection with the construction and/or
operation of the Project and shall include (a) all construction,
acquisition and non-construction Project Costs (including,
without limitation, all interest, fees, taxes and other carrying
costs), (b) the Disbursement Schedule and a schedule setting
forth the amount and dates the Company anticipates requesting
"promoter's" share amounts, and Subscription Amount Payments from
the Sponsor Shareholders, (c) the annual operating forecasts for
the Company together with the applicable assumptions, and (d)
such other information as the Lenders may reasonably request.
"Annual Financial Statements" shall mean, with
respect to the Company, the EPC Contractor, the O&M Operator
and each Sponsor, as the case may be, its audited annual
consolidated and unconsolidated balance sheets, statements of
profit and loss, retained earnings, and cash flows for such
fiscal year, together with all the notes thereto and with
comparable figures for its previous fiscal year, each in
accordance with U.S. GAAP (other than (i) with respect to Himal
International Power Corporation Pvt. Ltd., which such
statements shall be in accordance with Nepalese accounting
principles and (ii) with respect to the EPC Contractor, which
such statements shall be in the form prepared and maintained by
the EPC Contractor in the ordinary course).
"Approved Bank" shall mean any commercial bank of
recognized standing, having capital and surplus in excess of
$500,000,000 and having a rating on its commercial paper of at
least A-1 or the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc.
"Assigned Approvals" means all Governmental Approvals
issued to the Company and relating to the Company or the
Project.
"Assigned Contracts" shall mean the contracts
described on Exhibit A to the Security Agreement and Assignment
and any other agreement to which the Company is a party
executed after the date of the Investment Agreement.
"Assignment Agreement" shall mean the Security
Agreement and Assignment, dated as of the Closing Date, among
Panda of Nepal, the Trustee, IFC and DEG.
"Auditors" shall mean a firm of independent public
accountants as the Company may, with the consent of the Lenders
(consent shall be deemed given by the Lenders if the Lenders do
not object to a proposed auditor within 30 days of the Lenders'
receipt of the request for consent accompanied by adequate
supporting documentation), from time to time appoint as
auditors of the Company. The Auditors shall be capable of
auditing to U.S. GAAP standards.
"Authority" shall mean any government or
governmental, administrative, fiscal, judicial, or
government-owned, body, department, commission, authority,
tribunal, agency or entity.
"Authorized Officer" shall mean the officers of the
Company specified in its board resolution delivered to the
Lenders pursuant to Section 3.1 of the General Conditions as an
"Authorized Officer", and, for purposes of certificates or
other documents relating to financial matters, the financial
controller.
"B Loan" shall mean the loan specified in
Section 3.1(a)(ii) of the IFC Special Conditions or, as the
context may require, the principal amount thereof from time to
time outstanding.
"B Loan Disbursement" shall mean any amount of the B
Loan which is disbursed from time to time pursuant to Section
3.2 of the IFC Special Conditions.
"B Loan Interest Determination Date" shall mean the
second Business Day before the beginning of each B Loan
Interest Period.
"B Loan Interest Period" shall mean each period of
six (6) months commencing on an Interest Payment Date and
ending on the day immediately before the next following
Interest Payment Date, except in the case of the first period
for each B Loan Disbursement immediately following the
disbursement thereof when it shall mean the period commencing
with the date of disbursement of the relevant B Loan
Disbursement and ending on the day immediately before the next
following Interest Payment Date.
"B Loan 1" shall mean the loan specified in Section
3.1(a)(ii) of the IFC Special Conditions hereof, or as the
context may require, the principal amount thereof from time to
time outstanding.
"B Loan 2" shall mean the loan specified in Section
3.1(a)(ii) of the IFC Special Conditions hereof, or as the
context may require, the principal amount thereof from time to
time outstanding.
"B Loan 3" shall mean the loan specified in Section
3.1(a)(ii) of the IFC Special Conditions hereof, or as the
context may require, the principal amount thereof from time to
time outstanding.
"B Loan Floating Rate" shall mean the rate of
interest described in Section 3.3(b)(iii) of the IFC Special
Conditions.
"B Loan Spread" means three and one half percent
(3.50%) per annum for each of B Loan 1 and B Loan 2 and three
and one-quarter percent (3.25%) per annum for B Loan 3.
"Base Case Financial Projections" shall mean the
financial projections dated December 11, 1997.
"Business Day" shall mean, except to the extent
expressly provided otherwise, a day when banks are open for
business in New York, New York, Wilmington, Delaware, London,
England, Cologne, Federal Republic of Germany, Kathmandu, Nepal
and, for the purpose of determining the interest rate on the B
Loan, and for the purpose of the determination of the "Rate
Setting Date," London, England and New York, New York, and, for
the purpose of determining the due date of a payment, a day on
which banks are open for business in the cities required to
effect such payment.
"Capacity Shortfall" shall mean the failure to
deliver a Facility meeting the Guaranteed Performance Levels
(as such term is defined in the EPC Contract) in accordance
with the Performance Tests.
"Capacity Shortfall Percentage" shall mean a
fraction, the numerator of which is equal to the difference
between 41 MW and the electrical output as demonstrated during
the Project Completion Test as measured by the permanent meter
(accurately functioning) installed at the high voltage side of
the main power transformer of the Facility, with both Units
operating simultaneously at full gate at the rated net head,
after deduction of Parasitic Load (as such term is defined in
the EPC Contract), and the denominator of which is 41 MW.
"Cash Equivalents" shall mean, as to any Person, (A)
with respect to Dollars, (i) securities issued or directly and
fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof)
having maturities of not more than six months from the date of
acquisition by such Person; (ii) time deposits and certificates
of deposit, with maturities of not more than six months from
the date of acquisition by such Person, of any international
commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 and having a rating on its
commercial paper of at least A-1 or the equivalent thereof by
Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case
maturing not more than six months after the date of acquisition
by such Person; (iii) commercial paper issued by a person
having a rating on its commercial paper of at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least
P-1, or the equivalent thereof by Moody's Investors Service,
Inc.; (iv) investments in money market funds, substantially all
the assets of which are comprised of securities of the types
described in clauses (i) and (ii) above; (v) United States
Securities and Exchange Commission registered money market
mutual funds conforming to Rule 2a-7 of the Investment Company
Act of 1940 in effect in the United States, that invest
primarily in direct obligations issued by the United States
Treasury and repurchase obligations backed by those
obligations, including funds for which the Trustee or an
Affiliate of the Trustee acts as an advisor, and rated in the
highest category by Standard & Poor's Corporation and Moody's
Investors Service, Inc.; (vi) any other investment which the
Lenders agree in writing shall constitute a Dollar-denominated
Cash Equivalent; and (B) with respect to Rupees, (i) securities
issued or directly and fully guaranteed or insured by HMGN or
any agency or instrumentality thereof (provided that the full
faith and credit of HMGN is pledged in support thereof) having
maturities of not more than six months from the date of
acquisition by such Person; (ii) time deposits and certificates
of deposit of Nepal Grindlays Bank Limited or of the Nepalese
commercial bank which may from time to time have the largest
capital in Nepal having maturities of not more than six months
from the date of acquisition by such Person; and (iii) any
other Rupee investment which the Lenders agree in writing shall
constitute a Rupee-denominated Cash Equivalent (if the Lenders
fail to respond to a request for their agreement within 30
days, they shall be deemed to have agreed in writing).
"Charter Documents" shall mean, in respect of any
company, corporation, partnership, governmental agency, or
other enterprise, its founding act, charter, articles of
incorporation and by-laws, memorandum and articles of
association, statute or similar instrument.
"Closing Date" shall mean December 12, 1997.
"Code" or "UCC" shall mean the Uniform Commercial
Code, as the same may from time to time be in effect in the
State of Delaware or any other applicable jurisdiction.
"Collateral" shall mean all real and personal
property, tangible and intangible, and all proceeds and
products thereof, subjected from time to time to the Liens
intended to be created by the Security Documents.
"Collateral Proceeds" shall mean all monies due and
to become due to the Trustee or the Lenders from the Collateral
and shall include, without limitation, all accounts, contract
rights, all rights and benefits whatsoever accruing to it under
the Collateral and including without limitation, all rights to,
and rights to collect, proceeds due in connection with the
enforcement of the Collateral and the right to amend, cancel,
terminate and/or supplement the Collateral and all proceeds
thereof (as defined in the UCC).
"Commercial Operation Date" shall mean the date
specified in a certificate delivered by the independent
engineer pursuant to the PPA stating that both the Units (for
purposes of this definition, as such terms are defined in the
PPA) have satisfied and successfully demonstrated performance
in accordance with the requirements of Schedule 8 of the PPA,
or the date on which the Project is deemed to be commissioned
pursuant to Section 5.5 of the PPA, as certified by the
independent engineer, which date is scheduled as 17 Poush 2056
(January 1, 2000).
"Commitment" shall mean:
(a) the commitment of IFC to make the IFC Loans
under the IFC Investment Agreement in an aggregate principal
amount up to:
(i) for the A Loan, $21,000,000; and
(ii) for the B Loan, $36,000,000; and
(b) the commitment of DEG to make the DEG Loan under
the DEG Investment Agreement in an aggregate principal amount
up to DM21,000,000.
"Company" shall mean Bhote Koshi Power Company
Private Limited, a private limited liability company organized
and existing under the laws of Nepal.
"Company Bankruptcy" shall mean any voluntary or
involuntary bankruptcy, insolvency, reorganization, compromise,
dissolution, liquidation, arrangement or readjustment of debt
in respect of the Company.
"Company Completion Certificate" shall mean a written
certificate of an Authorized Officer of the Company, stating
the following:
(i) the Project has been properly designed,
constructed, tested and commissioned in accordance with
the PPA and in accordance in all material respects with
the EPC Contract; the Commercial Operation Date has
occurred; the Final Acceptance Certificate has been
delivered in accordance with the EPC Contract, and all
payments due as of the date of the aforesaid written
certificate (A) by the Company to NEA, or by NEA to the
Company, for penalty or otherwise, under the PPA, or (B)
by the Company to the EPC Contractor, or by the EPC
Contractor to the Company, under the EPC Contract, or (C)
by the Company to the Owner's Engineer, or by the Owner's
Engineer to the Company, under the Services Agreements, or
(D) for other Project Costs have been paid in full; and
(ii) a Project Completion Test has been successfully
performed.
All defined terms used in such certificate shall have the
meanings set forth in the Investment Agreement.
"Company's Engineer Agreement" shall mean the
Services Agreements.
"Company Equity Distribution Fund" means the fund of
that name established pursuant to Section 3.3 of the Panda
Global Holdings Indenture.
"Consents" shall mean the HMGN Consent, the HMGN
Letter Agreement, the NEA Consent, the NEA Letter Agreement,
the EPC Contractor Consent, the EPC Contractor Letter
Agreement, the ICBC Consent, the Owner's Engineer Consent, the
O&M Operator Consent and the Panda of Nepal Consent.
"Consolidation Date" means the first Interest Payment
Date after the A Loan has been fully disbursed (or the
undisbursed balance of the A Loan has been canceled, as
provided in Section 3.12 of the IFC Special Conditions).
"Construction Sub-Account" shall mean the
Construction Sub-Account created pursuant to the Trust and
Retention Agreement.
"Contingent Obligation" shall mean, as to any Person,
any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of
such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds
(x) for the purchase or payment of any such primary obligation
or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring
the holder of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or
(iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Correction Notice" shall mean a notification
delivered to the Trustee by the Lenders stating that a Payment
Requisition or Debt Service and Reserve Deposit Certificate is
incorrect, and providing correct information, or stating that
the Lenders require information (as specified in such
Correction Notice) to determine the accuracy of a Payment
Requisition or a Debt Service and Reserve Deposit Certificate.
"Debt Payment Sub-Account" shall mean the Debt
Payment Sub-Account created pursuant to the Trust and Retention
Agreement.
"Debt Service" shall mean all, or as the context may
require any portion, of the principal and interest and fees, if
any, on the Loans and all fees, charges and expenses
(including, without limitation, obligations to indemnify or to
make reimbursement), payable or to become payable under the
Investment Agreement with respect to the Loans.
"Debt Service and Reserve Deposit Certificate" shall
mean a properly executed certificate for the transfer or
deposit of funds in the Offshore Retention Account in the form
of Schedule C to the Trust and Retention Agreement.
"Debt Service Coverage Ratio" shall mean, for any
period, the ratio of net income of the Company, after corporate
Tax but before depreciation and interest charges, less any
interest income received during the period, less the amount to
be deposited in the Maintenance Reserve Sub-Account during such
period, over the aggregate amount of principal and interest and
fees, if any, on the outstanding Loans and all other
Indebtedness of the Company and all fees, charges and expenses
(including, without limitation, obligations to indemnify or to
make reimbursement) paid or required to be paid with respect to
such outstanding Loans other Indebtedness during such period.
"Debt Service Reserve Requirement" shall mean, on or
before the first scheduled Principal Payment Date, the
aggregate Debt Service payable on the Loans on the first
scheduled Principal Payment Date under the Investment
Agreement, and, thereafter, aggregate Debt Service payable on
the Loans on the next scheduled Principal Payment Date.
"Deed of Assignment of Reinsurance" shall mean the
Deed of Assignment of Reinsurance, dated November 7, 1997,
among the Company, the Trustee and National Life and General
Insurance Company Ltd.
"Debt Service Reserve Sub-Account" shall mean the
Debt Service Reserve Sub-Account created pursuant to the Trust
and Retention Agreement.
"Default" shall mean any event, act or condition
which, with notice, lapse of time, or both, or the fulfillment
of any other requirement provided for in the definition of
"Event of Default" would constitute an Event of Default.
"Defects Liability Period" shall mean the period
beginning on the Final Acceptance Date (as such term is defined
in the EPC Contract) and ending on the later of: (a) two (2)
years after the Final Acceptance Date, and (b) the date on
which the warranties provided by the EPC Contractor with
respect to the Project, as extended in accordance with Article
11.1 of the EPC Contract, expire.
"Deficiency" shall mean any Project Funds Shortfall.
"Deficiency Loan" shall mean any subordinated loan
made by a Sponsor to fund a Deficiency in accordance with
Article 3 of the Share Retention and Project Funds Agreement.
"Deficiency Notice" shall mean a notification, given
by either Lender at any time or from time to time to the
Company, Bankers Trust Company as trustee for the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund and
the Sponsors, stating that a Deficiency exists and stating the
amount of such Deficiency.
"Deficiency Sub-Account" shall mean the Deficiency
Sub-Account created pursuant to the Trust and Retention
Agreement.
"Deficiency Subscription" shall mean a subscription
for and purchase of Shares by a Sponsor to fund a Deficiency in
accordance with Article 3 of the Share Retention and Project
Funds Agreement.
"DEG" shall mean DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH, a company organized and existing
under the laws of the Federal Republic of Germany.
"DEG Investment Agreement" shall mean the DEG
Investment Agreement dated as of the Closing Date between the
Company and DEG and shall include the DEG Special Conditions
and the General Conditions.
"DEG Disbursement Request" shall mean a request by
the Company for a Disbursement of the DEG Loan substantially in
the form of Schedule 3.2(a)(i) to the DEG Special Conditions.
"DEG Loan" shall mean the loan specified in Section
3.1(a) of the DEG Special Conditions or, as the context may
require, the principal amount thereof from time to time
outstanding.
"DEG Special Conditions" shall mean the DEG Special
Conditions dated as of the Closing Date between the Company and
DEG.
"Designee" shall mean a party designated by the
Trustee with the prior approval of the Lenders, including,
without limitation, Nepal Grindlays Bank Limited to act as its
agent under the Nepal Agency and Retention Agreement.
"Deutsche Marks" or "DM" shall mean freely
transferable lawful money of the Federal Republic of Germany,
provided that to the extent so required and pursuant to the
general principles of currency law, where any amount is
outstanding or expressed in Deutsche Marks under this Agreement
or the other Loan Documents, such amount so outstanding or so
expressed shall be deemed to be so outstanding or so expressed,
as the case may be, in units of the Euro at the time when
Deutsche Marks are replaced by the Euro pursuant to the
applicable regulations of the European Union and/or of the
Federal Republic of Germany and DEG has notified the Company at
least sixty (60) days in advance that payments shall thereafter
be made in units of the Euro.
"Disbursement" means an A Loan Disbursement, a B Loan
Disbursement, or a DEG Loan Disbursement or all of such
Disbursements, as the context requires.
"Disbursement Schedule" shall mean the Schedule for
Disbursements, approved by the Lenders and the Independent
Engineer, attached to the General Conditions as Schedule
3.1(j)(ii).
"Dollars" or "US Dollars" or the sign "$" shall each
mean freely transferable lawful money of the United States.
"Dow Jones Market Screen Page" shall mean the display
of interest settlement rates (commonly known as LIBOR) for
Dollar deposits in London designated as page 3750 on the Dow
Jones Telerate Service (or any other page that replaces
page 3750 and displays London interbank settlement rates for
Dollar deposits).
"EMMP" shall mean the Environmental Mitigation,
Management and Monitoring Plan for the Upper Bhote Koshi
Hydroelectric Project dated November 1996, submitted by the
Company to HMGN and included by HMGN as an attachment to the
Project License issued December 1996, as approved by the
Lenders.
"Environmental Law" means all applicable World Bank
policies as in effect in March 1996, relating to the
environment, indigenous peoples, involuntary resettlement, and
occupational health and safety, the EMMP, any statute, law,
rule, regulation, ordinance, code, guideline or policy, or rule
of common law (including the EMMP, the HSE Plan, and Nepalese
environmental laws applicable to the Project), in each case,
now or hereafter in effect and in each case as amended, any
applicable judicial or administrative order, consent, decree,
or judgment, or any permissions, permits, certifications,
authorizations, approvals, and licenses for the Facility, both
obtained and applied for, including any variances or waivers in
effect from time to time necessary or desirable for the Project
relating to the environment or to noise, emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or
wastes into the environment, including without limitation,
those relating to vehicular noise and emissions standards,
ambient equipment noise standards, prescribed hours of
operation with respect to noise (nuisance), or discharges into
ambient air, surface water, groundwater or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
Hazardous Materials, substances or waste.
"EPC Contract" shall mean the Amended and Restated
Contract for the Engineering, Procurement and Construction of
the Upper Bhote Koshi Hydroelectric Project, dated as of
December 19, 1996, between the Company and the EPC Contractor,
together with all change orders executed thereunder on or prior
to the date of this Agreement.
"EPC Contractor" shall mean China Gezhouba
Construction Group Corporation for Water Resources and
Hydropower, a corporation organized and existing under the laws
of the People's Republic of China.
"EPC Contractor Consent" shall mean the EPC
Contractor's and Financing Parties' Acknowledgement and Consent
dated as of the Closing Date, among the EPC Contractor, IFC and
the Trustee, and the EPC Contractor Letter Agreement.
"EPC Contractor Letter Agreement" shall mean the EPC
Contractor Letter Agreement dated as of the Closing Date, among
the EPC Contractor, IFC, DEG and the Trustee.
"EPC Documents" shall mean the EPC Contract, the EPC
Contractor Consent, the EPC Contractor Letter Agreement, the
EPC Performance Guarantees, and any other documents to which
the EPC Contractor is a party in connection with the Project.
"EPC Performance Guarantees" shall mean each of the
performance guarantees issued in favor of the Company by banks
satisfactory to the Lenders and in support of the obligations
of the EPC Contractor under the EPC Contract. The EPC
Performance Guarantees shall include the EPC Performance
Guarantee and the EPC Warranty Performance Guarantee, which
instruments are intended to support the obligations of the EPC
Contractor with respect to the Performance Guarantee and the
Warranty Performance Guarantee, respectively (as such terms are
defined in the EPC Contract).
"EPC Performance Guarantee" shall mean the
performance guarantee to be delivered in connection with
Article 3.26 of the EPC Contract substantially in the form of
Annex A-1 attached to this Schedule A, in form and substance
satisfactory to the Lenders and issued in favor of the Company
by a bank satisfactory to the Lenders.
"EPC Warranty Performance Guarantee" shall mean the
performance guarantee to be delivered in connection with
Article 7.2.5 of the EPC Contract in form and substance
satisfactory to the Lenders and issued in favor of the Company
by a bank satisfactory to the Lenders.
"Equipment" shall mean both (i) Equipment, as that
term is defined in the EPC Contract and (ii) any "equipment" or
"fixtures", as those terms are defined in the Code, now or
hereafter owned by the Company, including, without limitation,
all machinery, equipment, furnishings, fixtures, vehicles,
tools, supplies, and other equipment of any kind and nature,
wherever situated, used in connection with the construction,
operation and maintenance of the Project and any and all
additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories, improvements,
upgrades, and accessories installed thereon or affixed thereto.
"Equity Letters of Credit" shall mean each of the
irrevocable letters of credit, substantially in the form of
Annex A-2 attached to this Schedule A, issued in favor of the
Trustee by banks satisfactory to the Lenders, in support of the
obligations of each Sponsor Shareholder (other than Himal
International Power Corporation Pvt. Ltd.) under its
Subscription Agreement.
"Euro" shall mean the common European currency, as
and when such currency is introduced and recognized by
applicable law of the European Union and/or the Federal
Republic of Germany as the new European currency.
"Event of Default" shall mean the occurrence of any
of the events described in Article 7 of the General Conditions
or any event described as an event of default in any Loan
Document.
"Excluded Assets" shall mean (i) the Company's right,
title and interest in and to the Holding Account or the Nepal
Holding Account and any cash, investments and securities on
deposit therein, and (ii) any rights, benefits or claims of any
Sponsor.
"Facility" shall mean the land, structures including
the dam, spillway, desanding basin, tunnel and surge shaft,
penstock, powerhouse, and necessary infrastructure, Equipment,
all electrical internal services, onsite and offsite building
and structures and infrastructure, pipelines, electrical
transmission lines and interconnection facilities,
communications systems, and disposal facilities as fully
described in the Scope of Work attached to the EPC Contract as
Exhibit I thereto and as contemplated by the Project Agreement
and the PPA.
"Facility Procedures Manual" shall mean the Facility
Procedures Manual as defined in the EPC Contract and approved
by the Lenders and the Independent Engineer.
"Final Acceptance Date" shall have the meaning
assigned thereto in the EPC Contract.
"Financial Closing Date" shall mean the date on which
each of IFC and DEG makes an initial Disbursement pursuant to
the IFC Investment Agreement and the DEG Investment Agreement,
respectively.
"Financing Plan" shall mean the Financing Plan
attached as Schedule 2.2(a) to each of the IFC Special
Conditions and the DEG Special Conditions.
"Financial Statements" shall mean, with respect to
the Company, the EPC Contractor, the O&M Operator, the Owner's
Engineer and each Sponsor, as the case may be, its Quarterly
Financial Statements, as applicable, and Annual Financial
Statements, as the case may be.
"First Unit" shall have the meaning assigned thereto
in the EPC Contract.
"First Unit Delivery" shall have the meaning assigned
thereto in the EPC Contract.
"Fiscal Year" shall mean the accounting year of the
Company commencing each year on July 16 and ending on the
following July 15, or such other accounting period of the
Company as the Company may, with the Lenders' consent and with
notice thereof to the Trustee, from time to time designate as
the accounting year of the Company.
"Fixed Rate Swap Equivalent" means for any principal
amount, the fixed interest rate payable in the swap market in
the Loan Currency against receipt of interest at LIBOR 1. on an
equivalent amount of principal on the Rate Setting Date for the
related A Loan Disbursement, or 2. in the case of any
prepayments on an amount of the Loan Currency equal to the
principal amount of the A Loan outstanding on the prepayment
date, in both cases either a. as determined by IFC from the
relevant pages of the Dow Jones Telerate service, the Reuters
service or the Bloomberg Financial Markets service (as selected
by IFC), using the information displayed on the relevant page
for the relevant Rate Setting Date or prepayment date, as the
case may be (and if the page displays information which changes
during the course of the day rather than staying fixed for the
whole day, as of such time as IFC may most recently have
advised the Company) with that information being interpolated
on a straight-line basis so as to match the actual maturities
for the relevant Tranche (as illustrated in Annex A attached to
the IFC Special Conditions) or b. (in the event that all such
services cease to be available or none of them contains all the
necessary swap equivalent information or, in IFC's reasonable
opinion, none of them any longer provides an appropriate method
of determining fixed rates, either generally or on any relevant
Rate Setting Date or prepayment date) as determined by IFC
using whatever equivalent means of calculation IFC considers
appropriate.
"Force Majeure Event" shall have the meaning assigned
thereto in the PPA, the Project Agreement, the EPC Contract, or
the Operations and Maintenance Agreement, as the case may be.
"General Conditions" shall mean the Investment
Agreement General Conditions dated as of the Closing Date,
among the Company, IFC and DEG.
"General Intangibles" shall mean any "general
intangibles", as that term is defined in the Code, now or
hereafter owned by the Company, including, without limitation,
equipment leases, partnership interests, joint venture
interests, all patent rights, trademarks, copyrights, trade
names, goodwill, registrations, license rights, rights in
intellectual property, licenses, permits, partnership and other
business records, customer and subscriber lists, computer
programs, tapes, disks and related data processing software
owned by or in which the Company has an interest, rights to
refunds or indemnification, the right to receive any Proceeds
and all other intangible personal property of the Company of
every kind and nature.
"GLOF" shall mean glacial lake outburst flood.
"Governmental Approval" shall mean any authorization,
permit, clearance, license, undertaking, consent or approval
executed or to be issued by, any Governmental Authority.
"Governmental Authority" shall mean Nepal Rastra
Bank, HMGN and any federal, national, regional, municipal or
local authority or regulatory department, body, political
subdivision, commission, instrumentality, agency, ministry,
court, legislative, judicial or administrative body, taxing
authority or other authority in any jurisdiction having
jurisdiction over any party (or any subcontractor of any such
party) to a Principal Document or the services or obligations
to be performed thereunder, or the Project or the NEA System.
"Guarantee Notice" shall have the meaning assigned
thereto in the Share Retention and Project Funds Agreement.
"Guaranteed Performance Levels" shall have the
meaning assigned thereto in the EPC Contract.
"Harza Engineering Company International, a limited
liability company" shall mean Harza Engineering Company
International, a limited liability company, a limited liability
company organized and existing under the laws of the State of
Wyoming.
"Harza Engineering Company International L.P." shall
mean Harza Engineering Company International L.P., a limited
partnership organized and existing under the laws of the State
of Delaware.
"Hazardous Materials" shall mean any chemicals,
materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of
similar import, under any Environmental Law; and any other
chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority
of Nepal by reason of its hazardous nature.
"Hedging Costs" shall mean all amounts, fees and
commissions paid or payable by the Company pursuant to any
Hedging Documents, including, without limitation, principal,
accrued interest, current replacement value or Mark-to-Market
Value of Eligible Transactions (as such terms are defined in
the Hedging Documents), amounts paid or payable by the Company
to amend, modify, terminate or settle in advance of scheduled
expiration or otherwise unwind such Hedging Documents.
"Hedging Documents" shall mean the Risk Management
Facility Agreement, Master Agreement and all documents executed
in connection therewith.
"Hedging Transactions" shall mean any swap agreement,
cap agreement, collar agreement, futures contract, forward
contract or similar arrangement with respect to interest rates,
currencies or commodities.
"Himal International Power Corporation Pvt. Ltd."
shall mean Himal International Power Corporation Pvt. Ltd., a
private limited company organized and existing under the laws
of Nepal.
"HMGN" shall mean His Majesty's Government of Nepal.
"HMGN Consent" shall mean the Consent and Agreement
dated as of October 5, 1997, among the Company, HMGN, IFC and
the Trustee, and the HMGN Letter Agreement.
"HMGN Leases" shall mean the Lease Agreement between
HMGN, Ministry of Forest and Soil Conservation, Department of
Forest and the Company, dated February 27, 1997, concerning
granting a lease on certain land referred to therein; and any
other leases of real property entered into between HMGN and the
Company.
"HMGN Letter Agreement" shall mean the HMGN Letter
Agreement to be dated on or before the Financial Closing Date,
among the Company, HMGN, IFC, DEG and the Trustee.
"HMGN Project License" shall mean the licenses to be
issued by HMGN as described in Section 3.1 of the Project
Agreement.
"Holding Account" shall mean the Holding Account
created pursuant to the Trust and Retention Agreement.
"HSE Plan" shall mean (a) prior to the Commercial
Operation Date, a Health, Safety, and Environmental Plan
relating to the period of construction of the Project,
satisfactory in form and substance to the Lenders, and (b)
after the Commercial Operation Date, the Health, Safety, and
Environmental Plan relating to the period of operation of the
Project, satisfactory in form and substance to the Lenders.
"ICBC" shall mean the Industrial and Commercial Bank
of China.
"ICBC Consent" shall mean the Acknowledgement and
Consent dated as of the Closing Date between ICBC and the
Trustee.
"IFC" shall mean International Finance Corporation,
an international organization organized and existing by virtue
of the Articles of Agreement among its member countries.
"IFC Disbursement Request" means a request by the
Company for a Disbursement of the IFC Loans substantially in
the form of Schedule 3.2(a)(i) to the IFC Special Conditions.
"IFC Investment Agreement" shall mean the IFC
Investment Agreement dated as of the Closing Date between the
Company and IFC and shall include the IFC Special Conditions
and the General Conditions.
"IFC Loans" shall mean, collectively, the A Loan and
the B Loan, or, as the context may require, the aggregate
principal amounts thereof from time to time outstanding.
"IFC Shares" has the meaning assigned to that term in
Section 4.1(a) of the IFC Special Conditions.
"IFC Special Conditions" shall mean the IFC Special
Conditions dated as of the Closing Date between the Company and
IFC.
"IFC Subscription" means the subscription for shares
provided for in Article 4 of the IFC Special Conditions.
"Indebtedness" shall mean, as to any Person, without
duplication (i) all indebtedness (including principal,
interest, fees and charges) of such Person for borrowed money
or for the deferred purchase price of property or services and
any obligation for the payment of money (other than amounts
owed by the Company to the EPC Contractor, the O&M Operator and
the Owner's Engineer under the EPC Contract, the Operations and
Maintenance Agreement and Services Agreements, respectively),
(ii) the available amount of all letters of credit issued for
the account of such Person, (iii) all liabilities secured by a
Lien on any property owned by such Person, whether or not such
liabilities have been assumed by such Person, (iv) the
aggregate amount required to be capitalized under leases under
which such Person is the lessee, (v) all Contingent Obligations
of such Person, and (vi) credit-based hedging arrangements, if
any.
"Independent Engineer" shall mean Stone & Webster
Engineering Corporation (Denver office) and Stone & Webster
Overseas Consultants, Inc., and any replacement therefor
appointed by the Lenders in consultation with the Company.
"Independent Engineer's Agreement" shall mean the
agreement dated 10 October 1996, between IFC and the
Independent Engineer, as subsequently assigned to Stone &
Webster Overseas Consultants, Inc., pursuant to that certain
Enabling and Guarantee Agreement effective November 1, 1997,
among Stone & Webster Engineering Corporation, Stone & Webster
Overseas Consultants, Inc. and IFC, the agreement dated 22
October 1996 between the Independent Engineer and Panda Energy
International, Inc. as such agreement may be subsequently
assigned to Stone & Webster Overseas Consultants, Inc., and the
Independent Engineer's Letter Agreement.
"Independent Engineer's Certificate" shall mean a
certificate of the Independent Engineer delivered to each of
the Lenders stating that the Final Acceptance Date has
occurred, the Project is in compliance with the EMMP, the
Company has implemented the approved HSE Plan, the Operations
and Maintenance Plan and Facility Procedures Manual approved by
the Lenders have been adopted and implemented, the NEA
Interconnection Facilities have been installed in accordance
with Article 7 of the PPA or, there exists an alternative
transmission line and related facilities or other means of
evacuating power (provided, however, that such alternative
transmission line and related facilities or other means of
evacuating power must in all cases be satisfactory to the
Lenders in their sole and absolute discretion), and the Company
has implemented a system to mitigate against the potential
effects of a GLOF, including implementing a GLOF early warning
system, the Company Completion Certificate is correct with
respect to certifying that (i) the Project has been properly
designed, constructed, tested and commissioned in accordance
with the PPA and in accordance in all material respects with
the EPC Contract, the Commercial Operation Date has occurred,
and the Final Acceptance Certificate has been delivered in
accordance with the EPC Contract, and (ii) a Project Completion
Test has been successfully performed, the land acquired by the
Company is the land on which the Project is to be operated and
in the Independent Engineer's reasonable judgment provides
sufficient area for operation of the Project and the NEA has
accepted the Commercial Operation Date pursuant to the PPA.
"Independent Engineer's Letter Agreement" shall mean
the Independent Engineer's Letter Agreement dated as of the
Closing Date, among IFC, DEG and the Independent Engineer.
"Independent Engineer's Report" shall mean the
Independent Engineer's written report prepared pursuant to
Section 3.1(t) of the General Conditions.
"Insurance Consultancy Services Agreement" shall mean
the letter agreement dated as of the Closing Date, among the
Insurance Consultant, IFC, DEG and the Company.
"Insurance Consultant" shall mean INDECS Ltd. and any
replacement therefor appointed by the Lenders in consultation
with the Company.
"Insurance Proceeds" shall mean any insurance
proceeds received under any insurance policy maintained by the
Company or by the EPC Contractor, the Owner's Engineer or the
O&M Operator in respect of the Project (other than proceeds
payable under third party liability policies).
"Insurance Proceeds Request" shall mean a properly
executed request for withdrawal and transfer of funds in the
Insurance Proceeds Sub-Account, in the form of Schedule B to
the Trust and Retention Agreement.
"Insurance Proceeds Sub-Account" shall mean the
Insurance Proceeds Sub-Account created pursuant to the Trust
and Retention Agreement.
"Interest Payment Date" means the 15th Day of March
and September in each year through the final Principal Payment
Date, provided that if such date is not a Business Day, the
Interest Payment Date shall be the Business Day determined in
accordance with Section 3 of this Schedule A.
"Intercreditor Agreement" shall mean the
Intercreditor Agreement between IFC and DEG, dated as of the
Closing Date.
"Inventory" shall mean "inventory" as that term is
defined in the Code, now or hereafter owned by the Company,
including, without limitation, (a) all products, goods,
materials and supplies produced, purchased or acquired by the
Company for the purpose of sale in the ordinary course of its
business, (b) maintenance materials inventory and (c) goods in
which the Company has an interest in mass or a joint or other
interest or right of any kind.
"Investment Agreement" shall mean and include the IFC
Investment Agreement dated as of the Closing Date between the
Company and IFC and the DEG Investment Agreement dated as of
the Closing Date between the Company and DEG.
"Issuer Equity Distribution Fund" means the fund of
that name established pursuant to Section 3.3 of the Panda
Global Energy Indenture.
"Joint Venture Agreement" shall mean the Amended and
Restated Joint Venture Agreement among Himal International
Power Corporation Pvt. Ltd., Panda of Nepal, RDC of Nepal and
International Finance Corporation dated as of the Closing Date.
"Land Agreements" shall mean the agreements for the
purchase of real property entered into between the Company and
Persons other than HMGN.
"Land Leases" shall mean the leases of real property
entered into between the Company and Persons other than HMGN,
as set forth in Schedule 3.1(e) of the General Conditions.
"Leases" shall mean the Land Leases and the HMGN
Leases.
"Lender Completion Notice" shall mean the Lenders'
written confirmation that the Company Completion Certificate is
acceptable to each of the Lenders and that Project Completion
has occurred.
"Lenders" shall mean IFC and DEG.
"Letter of Information" shall mean the Letter of
Information dated as of March 18, 1997, satisfactory in form
and substance to the Lenders, providing a detailed description
of the Company, the Project, and the Financing Plan, the award
of the Project by HMGN to RDC of Nepal, Panda of Nepal, Himal
International Power Corporation Ltd., Panda Energy
International, Inc., Harza Engineering Company International, a
limited liability company, Harza Engineering Company
International L.P. and any specific concessions related to the
award, actions taken or to be taken by the Company and Panda
Energy International, Inc. pursuant to Section 3.1(q) of the
General Conditions.
"LIBOR" means the interest settlement rate for
deposits of Dollars in London displayed on the page designated
as page 3750 on the Dow Jones Telerate service (or any other
page that replaces page 3750 and displays London interbank
offered rates for deposits of Dollars) in the column headed USD
as of 11:00 a.m. London time on the date of determination, for
a period of six months.
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other
security agreement of any kind or nature whatsoever including,
without limitation, (i) any conditional sale or other title
retention agreement, any financing or similar statement or
notice filed under any recording or notice statute, and any
lease having substantially the same effect as any of the
foregoing, and (ii) any designation (except as contemplated by
this Agreement) of loss payees or beneficiaries or additional
insureds or any similar arrangement under any insurance policy.
"Liquidated Damages Proceeds" shall mean any
liquidated damages paid by or on behalf of the EPC Contractor
under the EPC Contract.
"Liquidated Damages Sub-Account" shall mean the
Liquidated Damages Sub-Account created pursuant to the Trust
and Retention Agreement.
"Loans" shall mean and include the IFC Loans and the
DEG Loan.
"Loan Currency" shall mean U.S. Dollars or Deutsche
Marks or Euro.
"Loan Documents" shall mean the Investment Agreement
and the Security Documents.
"Long-term Debt" shall mean all liabilities and
Indebtedness other than Current Liabilities.
"Maintenance Amount" shall mean the amount certified
in the Maintenance Amount Certification to be the net
incremental costs of or reduction in rate of return on capital
incurred or suffered by IFC and/or DEG (or their respective
Participants, if any), as the case may be, in connection with
the making or maintaining of the IFC Loans and/or the DEG Loan
(or any of such Participant's Participation therein, as the
case may be), as the case may be, which result from:
(i) any change in any applicable law or
regulation or directive (whether or not having
force of law) or in its interpretation or
application by any Authority charged with its
administration; or
(ii) compliance with any request from, or
requirement of, any central bank or other
monetary or other Authority;
which in any case, after the date of
the Investment Agreement:
(A) imposes, modifies or makes
applicable any reserve, special deposit or
similar requirements against assets held
by, or deposits with or for the account of,
or loans or commitment to lend by IFC
and/or DEG (or their respective
Participants, if any), as the case may be;
(B) imposes a cost on IFC and/or
DEG, as the case may be, as a result of IFC
and/or DEG, as the case may be, having made
the IFC Loans and/or the DEG Loan or any
related commitment, as the case may be (or
on their respective Participants, if any as
a result of such Participant having
acquired its Participation or agreed to do
so), or reduces the rate of return on the
overall capital of IFC and/or DEG (or their
respective Participants, if any), as the
case may be, which it would have achieved,
had IFC and/or DEG (or their respective
Participants, if any), as the case may be,
not made the IFC Loans and/or the DEG Loan
(or acquired such Participant's
Participation or committed to do so), as
the case may be;
(C) changes the basis of
taxation on payments received by IFC and/or
DEG (or their respective Participants, if
any), as the case may be, in respect of the
IFC Loans and/or the DEG Loan (or such
Participant's Participation or any related
commitment), as the case may be (otherwise
than by a change in taxation of the overall
net income of IFC and/or DEG (or their
respective Participants, if any), as the
case may be, imposed by the jurisdiction of
its incorporation (or in which any such
Participant books its Participation) or in
any political subdivision of any such
jurisdiction); or
(D) imposes on IFC and/or DEG
(or their respective Participants, if any),
as the case may be, any other condition
regarding the making or maintaining of the
IFC Loans and/or the DEG Loan (or such
Participant's Participation or their
respective commitments to do so), as the
case may be.
"Maintenance Amount Certification" shall mean a
certification furnished from time to time by IFC and/or DEG, as
the case may be, certifying:
(i) the circumstances giving rise to the
Maintenance Amount;
(ii) that the costs of IFC and/or DEG (or
their respective Participants, if any), as the
case may be, have increased or the rate of
return or on capital of any of them has been
reduced;
(iii) that, in the opinion of IFC
and/or DEG (or their respective Participants, if
any), as the case may be, it has exercised
reasonable efforts to minimize or eliminate such
increase or reduction as the case may be; and
(iv) the Maintenance Amount.
"Maintenance Reserve Requirement" shall mean fifty
five thousand Dollars ($55,000), which amount shall be
increased on each January 1 of each year, commencing on the
earlier of (i) January 1, 2001 and (ii) one year after the
Commercial Operation Date, to reflect increases in the U.S.
Consumer Price Index from the year preceding the year with
respect to which the adjustment is occurring.
"Master Agreement" shall mean the Master Agreement
dated as of the Closing Date between the Company and IFC
relating to Hedging Transactions between the Company and IFC.
"Maintenance Reserve Sub-Account" shall mean the
Maintenance Reserve Sub-Account created pursuant to the Trust
and Retention Agreement.
"Material Adverse Change" shall mean that one or more
events, conditions or circumstances have occurred or exist
which, in the reasonable judgment of the Lenders, materially
adversely affects or might adversely affect (i) the Project, or
(ii) the ability of the Company, the Sponsors, the O&M Operator
or, prior to the later of the date of expiration of the Defects
Liability Period and the Project Completion Date, the EPC
Contractor or the Owner's Engineer to meet in the normal course
of business their respective obligations under any of the
Principal Documents, (iii) the validity or enforceability of
any Principal Document, or (iv) the Lenders' rights and
security interests under the Security Documents.
"Month" shall mean a calendar month.
"Mortgage" shall mean the first mortgages and charges
over immovable and movable assets of the Company.
"NEA" shall mean Nepal Electricity Authority,
constituted under the Nepal Electricity Authority Act 2041,
having its registered office at Durbar Marg, Kathmandu, Nepal.
"NEA Consent" shall mean the Consent and Agreement
dated May 25, 1997, among the Company, NEA, IFC and the
Trustee, and the NEA Letter Agreement.
"NEA Interconnection Facilities" shall have the
meaning assigned thereto in the PPA.
"NEA Letter Agreement" shall mean the NEA Letter
Agreement dated December 8, 1997, among the Company, NEA, IFC,
DEG and the Trustee.
"NEA Letter of Credit" shall mean the irrevocable
letter of credit, in form and substance satisfactory to the
Lenders, issued by a bank acceptable to the Lenders in favor of
the Company, in support of the obligations of the NEA under the
PPA, and as provided by NEA pursuant to Section 9.4 of the PPA.
"NEA System" shall have the meaning assigned thereto
in the PPA.
"Nepal Agency and Retention Agreement" shall mean the
Nepal Agency and Retention Agreement, dated as of the Closing
Date, among the Company, IFC, DEG, the Trustee and the Agent.
"Nepal Deposit Certificate" shall mean a properly
executed certificate for the deposit of funds in the form of
Schedule B to the Nepal Agency and Retention Agreement.
"Nepal Dollar Sub-Account" shall mean the Nepal
Dollar Sub-Account created pursuant to the Nepal Agency and
Retention Agreement.
"Nepal Holding Account" shall mean the Nepal Holding
Account created pursuant to the Nepal Agency and Retention
Agreement.
"Nepal Operations and Maintenance Sub-Account" shall
mean the Nepal Operations and Maintenance Sub-Account created
pursuant to the Nepal Agency and Retention Agreement.
"Nepal Payment Requisition" shall mean a properly
executed certificate for the deposit of funds in the form of
Schedule A to the Nepal Agency and Retention Agreement.
"Nepal Reserve Sub-Account" shall mean the Nepal
Reserve Sub-Account created pursuant to the Nepal Agency and
Retention Agreement.
"Nepal Retention Account" shall mean the Nepal
Retention Account created pursuant to the Nepal Agency and
Retention Agreement, including all sub-accounts thereof.
"Non-Material Agreements" shall mean (i) agreements
entered into by the Company in the ordinary course of business
with environmental consultants, public relations consultants,
financial consultants, and legal counsel for corresponding
professional services in connection with the Project under
which the Company shall have obligations not in excess of
$150,000 under any such agreements or $450,000 in the aggregate
under all such agreements in any Fiscal Year and (ii)
agreements (other than those described in clause (i)) entered
into by the Company in the ordinary course of business under
which the Company shall have obligations not in excess of
$100,000 under any of such agreements or $250,000 in the
aggregate under all such agreements in any fiscal year,
excluding, however, in all cases any agreement of the Company
the performance or non-performance of which could reasonably be
expected to result in a Material Adverse Change.
"Notice of Default" shall mean a notice, delivered by
the Company to the Trustee and each of the Lenders, of any act,
occurrence, or condition the happening or existence of which
constitutes a Default or an Event of Default or a notice
delivered by the Lenders to the Company and the Trustee of a
Default or Event of Default. Any such notice delivered by the
Lenders shall specify the nature of such act, occurrence or
condition, the date of the happening or the beginning of the
existence thereof and any Notice of Default delivered by the
Company shall describe the steps taken or proposed to be taken
by the Company to cure such Default or Event of Default.
"Notice to Proceed" shall have the meaning assigned
thereto in the EPC Contract.
"O&M Operator" shall mean Harza Engineering Company
International L.P., and, if and to the extent expressly
permitted under the Investment Agreement, its assignees.
"O&M Operator Consent" shall mean the Consent and
Agreement dated as of the Closing Date, among the Company, the
O&M Operator, IFC, DEG and the Trustee.
"Obligations" shall mean all amounts owing by the
Company to the Trustee, IFC or DEG pursuant to the terms of any
Loan Document, including without limitation (1) the principal
of and interest on the Loans and the payment of all other
obligations and liabilities (including, without limitation,
indemnities, fees, expenses, commissions and interest) of the
Company incurred under, arising out of or in connection with
such Loans or the Investment Agreement or any other Loan
Document; (2) any and all sums advanced by the Trustee, IFC or
DEG in order to preserve the Collateral or preserve its
security interest in the Collateral or maintain in full force
and effect any Governmental Approval or any insurance policy
maintained by the Company, the EPC Contractor or the O&M
Operator in respect of the Project; (3) in the event of any
proceeding for the collection or enforcement of the Obligations
after an Event of Default shall have occurred and be
continuing, the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on
the Collateral, or of any exercise by the Trustee, IFC or DEG
of its rights under the Loan Documents, together with
reasonable attorneys' fees and court costs; and (4) the Hedging
Costs.
"Offering Period" shall mean the thirty day (30)
period following the date of a Deficiency Notice.
"Offshore Retention Account" shall mean the Offshore
Retention Account created pursuant to the Trust and Retention
Agreement, including all sub-accounts thereof.
"Operations and Maintenance Agreement" shall mean the
Operations and Maintenance Agreement dated as of April 24,
1997, between the Company and the O&M Operator.
"Operating and Maintenance Costs" shall mean costs
incurred by the Company or the O&M Operator, as applicable, for
maintaining and operating the Project (other than amounts in
respect of depreciation and other non-cash charges and major
scheduled maintenance to be paid for with funds on deposit in
the Maintenance Reserve Sub-Account), including costs of fuel,
water, utilities and labor, expenses incurred to maintain and
preserve the Project in good working order, expenses incurred
in maintaining insurance required by the Principal Documents,
Taxes, permitting fees, wheeling charges payable to NEA under
Section 2.3 of the PPA and general administrative expenses.
"Operations and Maintenance Plan" shall mean the
Operations and Maintenance Plan for the Project, approved by
the Lenders and the Independent Engineer, detailing a major
replacement or maintenance schedule, training plan, rebuilding
plan, and plans for routine shutdowns, operations and interface
with NEA grid.
"Operations and Maintenance Sub-Account" shall mean
the Operations and Maintenance Sub-Account created pursuant to
the Trust and Retention Agreement.
"Owner's Engineer" shall mean Harza Engineering
Company International L.P., and, if and to the extent expressly
permitted under the Investment Agreement, its assignees.
"Owner's Engineer Consent" shall mean the Consent and
Agreement dated as of the Closing Date, among the Owner's
Engineer, the Company, IFC, DEG and the Trustee.
"Panda Bhote Koshi" shall mean Panda Bhote Koshi, an
exempted company with limited liability company organized and
existing under the laws of the Cayman Islands.
"Panda Bhote Koshi Documents" shall mean all
documents pertaining to the equity funds for the Project,
including, without limitation, any shareholders' agreement,
consent, security agreement, legal opinion and other agreements
executed in connection therewith, all in form and substance
satisfactory to the Lenders.
"Panda Energy International, Inc." shall mean Panda
Energy International, Inc., a corporation organized and
existing under the laws of the State of Texas.
"Panda Global Energy" means Panda Global Energy
Company, a Cayman Islands exempted company.
"Panda Global Energy Indenture" means the Trust
Indenture dated as of April 22, 1997, between Panda Global
Energy and Bankers Trust Company, as Trustee.
"Panda Global Energy Officer's Certificate" means an
Officer's Certificate as defined in Appendix A to the Panda
Global Energy Indenture.
"Panda Global Holdings" means Panda Global Holdings,
Inc., a Delaware corporation.
"Panda Global Holdings Indenture" means the Trust
Indenture dated as of April 22, 1997, between Panda Global
Holdings and Bankers Trust Company, as Trustee.
"Panda Global Holdings Officer's Certificate" means
an Officer's Certificate as defined in Appendix A to the Panda
Global Holdings Indenture.
"Panda Guarantee Letter of Credit" shall mean the
irrevocable standby letter of credit, in form and substance
satisfactory to the Lenders, issued by an Approved Bank in
favor of the Trustee, as provided pursuant to Section 7.1(b) of
the Share Retention and Project Funds Agreement.
"Panda Letter of Credit" shall mean the irrevocable
standby letter of credit, in form and substance satisfactory to
the Lenders, issued by an Approved Bank in favor of the
Trustee, as provided pursuant to Section 3.2(b) of the Share
Retention and Project Funds Agreement.
"Panda of Nepal" shall mean Panda of Nepal, an
exempted company with limited liability organized and existing
under the laws of the Cayman Islands.
"Panda of Nepal Consent" shall mean the Consent and
Agreement dated as of the Closing Date, among the Owner's
Engineer, Panda of Nepal, IFC, DEG and the Trustee.
"Panda Projects" shall mean the Brandywine Facility,
the Rosemary Facility, the Luannan Facility (as such terms are
defined in the Panda Global Holdings Indenture) and the
Project.
"Panda Project Completion Letter of Credit" shall
mean the irrevocable standby letter of credit, in form and
substance satisfactory to the Lenders, issued by an Approved
Bank in favor of the Trustee, as provided pursuant to Section
3.3(c)(iv) of the Share Retention and Project Funds Agreement.
"Participant" means any Person who acquires a
Participation or, as the case may be, any successor or
permitted assignee of such Person under a Participation
Agreement.
"Participation" means the investment of a Participant
in any of the Loans or, as the context may require, in any
applicable Disbursement.
"Participation Agreement" means an agreement between
IFC and a Participant pursuant to which such Participant
acquires a Participation.
"Payment Date" shall mean any Interest Payment Date
and/or Principal Payment Date.
"Payment Requisition" shall mean a properly executed
requisition for the withdrawal and transfer of funds in the
Offshore Retention Account, in the form of Schedule A to the
Trust and Retention Agreement.
"Performance Liquidated Damages" shall have the
meaning assigned thereto in the EPC Contract.
"Performance Testing Guidelines" shall have the
meaning assigned thereto in the EPC Contract.
"Performance Testing Procedures" shall have the
meaning assigned thereto in the EPC Contract.
"Performance Tests" shall mean the tests required to
be performed pursuant to the EPC Contract to determine if the
Facility meets the Guaranteed Performance Levels and Minimum
Performance Levels (as such terms are defined in the EPC
Contract).
"Permitted Indebtedness" shall mean (i) indebtedness
of the Company incurred under any of the Loan Documents or in
accordance with the Share Retention and Project Funds Agreement
and (ii) after the Commercial Operation Date, unsecured
short-term indebtedness (up to one year) for borrowed money in
an aggregate amount at any time equal to no more than
US$2,000,000, the payment of which does not have priority (by
law or otherwise) to payment of the Obligations.
"Permitted Investments" shall mean any temporary
investment in Cash Equivalents by the Company of funds not
currently needed for Debt Service or Operating and Maintenance
Costs.
"Permitted Lien" shall mean the creation, assumption,
incurrence or existence of (i) any statutory or other Lien for
Taxes not yet due, or for Taxes which are discharged within
thirty (30) days after the Company becomes aware of such Lien,
or any such Lien being contested in good faith by the Company
and for which the Company has posted security satisfactory to
the Lenders, provided that such Lien is satisfied, removed or
discharged within thirty (30) days after final adjudication;
(ii) Liens created pursuant to the Security Documents in favor
of the Lenders or a Person acting on behalf of the Lenders; and
(iii) Liens arising as a result of the acts or omissions of the
Trustee or Wilmington Trust Company.
"Person" shall mean any individual, partnership,
joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plant" shall mean a run-of-the-river hydroelectric
power plant with a rated capacity of 36 MW (nominal net) to be
located in the Sindhupalchok District in Nepal, and constructed
pursuant to the Project Agreement and the EPC Contract.
"Pledged Collateral" shall, with respect to any
Sponsor (other than Panda Energy International, Inc. and Harza
Engineering Company International, a limited liability
company), have the meaning provided in Article 1 of the Share
Pledge Agreement to which it is a party.
"Pledged Shares" shall mean all Shares or other
shares, as the case may be, pledged under the Share Pledge
Agreement.
"Post-petition Interest" shall mean interest payable
with respect to the Obligations from the date of entry of any
action, including, without limitation, the institution of any
action, suit or other proceeding under bankruptcy, insolvency
or similar laws of any jurisdiction in a Company bankruptcy,
until the date such interest is paid.
"PPA" shall mean the Power Purchase Agreement, dated
as of 6 Shrawan 2053 (21 July 1996), between NEA and the
Company.
"Principal Documents" shall mean the Loan Documents,
the Third Party Agreements, the Share Retention and Project
Funds Agreement, the Subscription Agreements, the Insurance
Consultancy Services Agreement, the Shareholders' Agreement,
the Intercreditor Agreement, the Panda Bhote Koshi Documents
and any agreements or other documents executed or delivered at
any time and from time to time in connection with any of the
foregoing.
"Principal Payment Date" means March 15, 2001 and the
15th Day of each March and September thereafter through the
final Principal Payment Date, provided that if such date is not
a Business Day, the Principal Payment Date shall be the
Business Day determined in accordance with Section 3 of this
Schedule A.
"Proceeds" shall mean Sales Proceeds, Liquidated
Damages Proceeds, Collateral Proceeds and Insurance Proceeds.
"Project" shall mean the Plant, the Facility, the
Site, all auxiliary facilities, utilities and the sites thereof
and the construction, equipping, placing into operation and
operation of the Plant and such other facilities and utilities
and provision of working capital for the foregoing.
"Project Agreement" shall mean the Project Agreement,
dated 6 Shrawan 2053 (21 July 1996), between HMGN and the
Company.
"Project Completion" shall mean that the following
requirements have been met in full:
(i) The Company shall have delivered to each of
the Lenders, the Trustee and the Independent
Engineer:
(A) a Company Completion Certificate,
signed by an Authorized Officer of the Company
(together with all relevant supporting
documentation), together with
(B) a certificate, signed by an
Authorized Officer of the Company, stating the
following:
(I) There exist no Liens on
the Project relating to any of the
Construction Contractors' or other
contractors' work or equipment;
(II) All Governmental
Approvals required for the operation of the
Project have been obtained, are in full
force and effect and, other than with
respect to inconsequential Governmental
Approvals, are not subject to appeal by or
to any Governmental Authority;
(III) (y) The Project is
in compliance with the EMMP and (z) the
Company has implemented the approved HSE
Plan;
(IV) No Default or Event of
Default exists under any Principal
Document;
(V) There are no actions,
suits, or proceedings pending with respect
to the Company, the O&M Operator (other
than any actions, suits or proceedings
which are unrelated to the Project), the
EPC Contractor (other than any actions,
suits or proceedings which are unrelated to
the Project), the Owner's Engineer (other
than any actions, suits or proceedings
which are unrelated to the Project) or the
Project, including, without limitation,
with respect to any Principal Document
(other than any Non-Material Agreement), or
the transactions contemplated thereby or
with respect to or affecting any
Governmental Approval;
(VI) The NEA Letter of
Credit is in full force and effect and in
form and substance previously approved by
the Lenders, and the Lenders have received
satisfactory evidence of the assignment of
the NEA Letter of Credit to the Lenders,
together with accompanying documentation in
connection therewith as is acceptable in
form and substance to the Lenders;
(VII) The Operations and
Maintenance Plan and Facility Procedures
Manual approved by the Lenders have been
adopted and implemented;
(VIII) In the event
Insurance Proceeds theretofore received
exceed US$5 million, the Company, if the
Lenders have so directed, will have applied
such Insurance Proceeds to prepay the
Loans;
(IX) NEA has accepted the
Commercial Operation Date pursuant to the
PPA;
(X) The NEA Interconnection
Facilities have been installed in
accordance with Article 7 of the PPA or,
there exists an alternative transmission
line and related facilities or other means
of evacuating power (provided, however,
that such alternative transmission line and
related facilities or other means of
evacuating power must in all cases be
satisfactory to the Lenders in their sole
and absolute discretion);
(XI) The Company has
implemented a system to mitigate against
the potential effects of a GLOF, including
implementing a GLOF early warning system;
(XII) The Company has
delivered to each of the Lenders (x)
certified copies of certificates of title
and Leases evidencing that the Company has
acquired, in a manner satisfactory to the
Lenders, all necessary rights to the Site
and all other rights necessary for the
present and proposed conduct of its
business and the carrying out of the
Project (including water and other items
described in the Project Agreement), free
and clear of all Liens and encumbrances
(except for Permitted Liens) and (y)
evidence that all payments required to be
made during the entire term of the Leases
have been made;
(XIII) The EPC Warranty
Performance Guarantee is in full force and
effect;
(XIV) There are no
material disputes pending between the
Company and any other party to a Principal
Document;
(XV) NEA has met all of its
material obligations of any kind under the
PPA to be performed on or before the
Project Completion Date;
(XVI) HMGN has met all
of its material obligations of any kind
under the Project Agreement to be performed
on or before the Project Completion Date;
(XVII) No Material Adverse
Change has occurred and is continuing, and
no Force Majeure Event has occurred and the
effect of which Force Majeure Event has not
been cured to the Lenders' satisfaction;
and
(XVIII)The Company's Debt
Service Coverage Ratio complies with the
provisions of Section 5.6(i) of the General
Conditions;
(ii) The Company shall have delivered to each of
the Lenders an opinion of legal counsel, dated as of
the Project Completion Date, with respect to the
matters specified in this subsection (B)(I) and
(B)(II);
(iii) In the event of a Capacity Shortfall,
the prepayment of the Loans has been made in
accordance with the Investment Agreement;
(iv) The Independent Engineer shall have
delivered to each of the Lenders, the Trustee and the
Company an Independent Engineer's Certificate (with a
copy to the Company);
(v) The Lenders shall have determined in their
good faith judgment that the foregoing requirements
have been met and that the contents of the Company
Completion Certificate and the certificate described
in subsection (i)(B) above are true and shall have
executed and delivered to the Company and the Trustee
a Lender Completion Notice; and
(vi) The Debt Service Reserve Sub-Account shall
contain funds equal to the next six (6) months of
Debt Service.
All defined terms used in such certificate shall have the
meanings set forth in the Investment Agreement.
"Project Completion Date" shall mean the date on
which the requirements for Project Completion have been met in
full.
"Project Completion Test" shall mean the carrying out
of all commissioning tests described in the EPC Contract shall
have been performed in accordance with the EPC Contract to the
satisfaction of the Independent Engineer and the Lenders on
each generating unit individually and on the total Plant.
"Project Costs" shall mean the costs incurred in
connection with the Project set forth in Schedule 2.2(b) to
each of the IFC Special Conditions and the DEG Special
Conditions.
"Project Funds Shortfall" shall mean, at any point in
time on or before the Project Completion Date, in the
reasonable judgment of either Lender, the amount by which
Project Costs or principal, interest, fees and other amounts
payable under the Loan Documents exceed funds then available to
the Company from the sources described in the Financing Plan or
the EPC Contract or from other sources (on terms and subject to
conditions acceptable to the Lenders). For the avoidance of
doubt, funds, including, without limitation, Insurance Proceeds
and Liquidated Damages Proceeds, shall not be deemed available
to the Company until such funds have been received by the
Company.
"Project Licenses" shall mean the licenses to be
issued by HMGN as described in Section 3.1 of the Project
Agreement.
"Prudent Utility Practices" shall have the meaning
provided in Section 1.1 of the PPA.
"PUHCA" shall mean the U.S. Public Utility Holding
Company Act of 1935.
"Purchase Date" shall have the meaning assigned
thereto in the Project Agreement.
"Purchase Notice" shall have the meaning assigned
thereto in the Project Agreement.
"Purchase Price" shall have the meaning assigned
thereto in the Project Agreement.
"Quarter" means each calendar quarter.
"Quarterly Financial Statements" shall mean, with
respect to the Company, the EPC Contractor, the O&M Operator
and each Sponsor, as the case may be, its quarterly
consolidated and unconsolidated balance sheets and statements
of profit and loss and cash flows for such quarterly reporting
period, together with comparable figures for the corresponding
quarterly reporting period of the previous fiscal year, each
prepared in accordance with U.S. GAAP (other than with respect
to Himal International Power Corporation Pvt. Ltd., which such
statements shall be in accordance with Nepalese accounting
principles and with respect to the EPC Contractor, which such
statements shall be in the form prepared and maintained by the
EPC Contractor in the ordinary course).
"Rate Setting Date" means, with regard to each
Tranche, the date referred to in Section 3.2(b) of the IFC
Special Conditions.
"RDC of Nepal" shall mean RDC of Nepal, an exempted
company with limited liability organized and existing under the
laws of the Cayman Islands.
"Real Estate Documents" shall mean the Mortgage, the
Leases, the real property ownership deeds and the land
ownership certificates in respect of the plots of land set
forth on Exhibit A to the Mortgage.
"Repatriation and Remittance Approvals" shall mean
all requisite foreign exchange control approvals and other
Governmental Approvals, if any, from HMGN or any department or
agency thereof, or from Nepal Rastra Bank, including the
authorization for opening a bank account outside Nepal,
necessary to assure the availability of U.S. Dollars to the
Company to enable the Company to perform all of its obligations
under the Loan Documents or any of the other Principal
Documents in accordance with their respective terms.
"Request for Payment" shall have the meaning assigned
thereto in the EPC Contract.
"Required Commercial Operation Date" shall have the
meaning assigned thereto in the PPA.
"Resettlement Plan" shall mean the Resettlement Plan
of the Company dated as of March 30, 1997.
"Resource Development Consultants, a limited
liability company" shall mean Resource Development Consultants,
a limited liability company, a limited liability company
organized and existing under the laws of the State of Wyoming.
"Revenue Sub-Account" shall mean the Revenue
Sub-Account created pursuant to the Trust and Retention
Agreement.
"Risk Management Facility Agreement" shall mean the
Risk Management Facility Agreement dated as of the Closing Date
between the Company and IFC relating to Hedging Transactions
between the Company and IFC.
"Rupees" or "Rs." shall each mean freely transferable
lawful money of Nepal.
"Sales" shall mean all sales by the Company of
electricity to NEA, or any other Person, under the PPA or
otherwise.
"Sales Proceeds" shall mean all monies due and to
become due to the Company from all Sales and shall include,
without limitation, all accounts, contract rights, all rights
and benefits whatsoever accruing to it under the PPA and
including without limitation, all rights to, and rights to
collect, proceeds due in connection with the sale of
electricity under the PPA.
"Scheduled Commercial Operation Date" shall have the
meaning assigned thereto in the PPA.
"Scheduled Synchronization Date" shall have the
meaning assigned thereto in the PPA.
"Second Unit Delivery" shall have the meaning
assigned thereto in the EPC Contract.
"Security" shall mean (a) the Security Documents,
(b) the power or powers of attorney provided for in any of the
Security Documents, (c) the benefits and/or assignment of
benefits under all insurance policies relating to the Project,
(d) all rights, powers and remedies of the Trustee or the Agent
or each of the Lenders under the Loan Documents or the Security
Documents as well as such other security, liens, rights, powers
and remedies as may be created or granted by the Company, the
Sponsors, the EPC Contractor, the O&M Operator, the Owner's
Engineer or any other Person in favor of the Trustee or the
Agent for the benefit of or in favor of the Lenders, at a later
date under any other agreement with the Company, the Sponsors,
or the EPC Contractor, the O&M Operator, the Owner's Engineer
or such Person; together with the rights, benefits and remedies
of the Trustee and the Lenders inherent thereto or provided for
herein or therein.
"Security Agreement and Assignment" shall mean the
Security Agreement and Assignment, dated as of the Closing
Date, among the Company, IFC, DEG and the Trustee.
"Security Documents" shall mean the Trust and
Retention Agreement, the Nepal Agency and Retention Agreement,
the Mortgage, the Security Agreement and Assignment, the Share
Pledge Agreement, the NEA Letter of Credit, the Equity Letters
of Credit, the EPC Performance Guarantees, the Panda Letter of
Credit, the Panda Project Completion Letter of Credit, the
Assignment Agreement, the Deed of Assignment of Reinsurance,
the Real Estate Documents, the Consents and the Hedging
Documents and any agreements or other documents executed or
delivered at any time or from time to time in connection with
any of the foregoing.
"Senior Secured Notes" means the Senior Secured
Notes as defined in Appendix A to the Panda Global Energy
Indenture.
"Services Agreements" shall mean (i) the Amended and
Restated Services Agreement dated July 11, 1997, between Panda
of Nepal and Harza Engineering Company International, L.P., as
amended by that certain Amendment No. 1 dated December 5, 1997,
for services provided outside Nepal and (ii) the Amended and
Restated Services Agreement dated July 11, 1997, between the
Company and Harza Engineering Company International, L.P., for
services provided inside Nepal.
"Shareholders' Agreement" shall mean the
Shareholders' Agreement, dated as of the Closing Date, among
the Company, Himal International Power Corporation Pvt. Ltd.,
Panda of Nepal, RDC of Nepal and IFC.
"Share Pledge Agreement" shall mean the Share Pledge
Agreements, each dated as of the Closing Date, among each
Sponsor (other than Panda Energy International, Inc. and Harza
Engineering Company International, a limited liability
company), as Pledgor, the Trustee, as Pledgee, and the Company.
"Share Retention and Project Funds Agreement" shall
mean the Share Retention and Project Funds Agreement, dated as
of the Closing Date, among the Company, the Sponsors, IFC and
DEG.
"Shares" shall mean ordinary shares of the Company
issued and outstanding from time to time.
"Short-term Debt" shall mean, at any date, all
Indebtedness of the Company other than Long-term Debt.
"Site" shall mean the real property and related
rights described on Schedule 3.1(e) of the General Conditions.
"Soaltee Enterprises Private Ltd." shall mean Soaltee
Enterprises Private Ltd., a private company organized and
existing under the laws of Nepal.
"Soaltee Hotel Ltd." shall mean Soaltee Hotel Ltd., a
public company organized and existing under the laws of Nepal.
"Special Buyout Event" shall have the meaning set
forth in the definition section of the Project Agreement.
"Special Conditions" shall have the meaning assigned
thereto in the Investment Agreement.
"Sponsor Share" shall have the meaning assigned
thereto in Section 3.2 of the Share Retention and Project Funds
Agreement.
"Sponsor Shareholders" shall mean Panda of Nepal, RDC
of Nepal and Himal International Power Corporation Pvt. Ltd.
"Sponsors" shall mean Panda Energy International,
Inc., Harza Engineering Company International, a limited
liability company, Harza Engineering Company International
L.P., Himal International Power Corporation Pvt. Ltd., Soaltee
Enterprises Private Ltd., Soaltee Hotel Ltd., Surya Enterprises
Private Ltd., Panda Bhote Koshi, Resource Development
Consultants, a limited liability company, Panda of Nepal and
RDC of Nepal and "Sponsors" shall mean any of the Sponsors.
"Subscribed Shares" shall mean the number of Shares
that each Sponsor has agreed to purchase pursuant to Section
2.1(a) of its Subscription Agreement.
"Subscription Agreements" shall mean (i) the Equity
Subscription Agreement dated as of the Closing Date, among the
Company, Panda of Nepal and the Trustee; (ii) the Equity
Subscription Agreement dated as of the Closing Date, among the
Company, RDC of Nepal and the Trustee; and (iii) the Equity
Subscription Agreement dated as of the Closing Date, between
the Company, Himal International Power Corporation Pvt. Ltd.
and the Trustee.
"Subscription Amount" shall mean the total commitment
of a Sponsor Shareholder's Subscribed Shares, as set forth in
Section 2.1(a)(i) of the Sponsor Shareholder's Subscription
Agreement.
"Subscription Amount Payment" shall mean a payment by
a Sponsor Shareholder of the Sponsor Shareholder's Subscription
Amount or any part thereof.
"Substantial Subcontractors" shall have the meaning
assigned thereto in the EPC Contract.
"Substantial Vendors" shall have the meaning assigned
thereto in the EPC Contract.
"Supplies and Raw Materials" shall mean all fuel,
materials, stores, spare parts and supplies and other personal
property which are consumable (otherwise than by ordinary wear
and tear) in the operation of the business of, or in the
production of power by, the Company at the Project.
"Surya Enterprises Private Ltd." shall mean Surya
Enterprises Private Ltd., a private company organized and
existing under the laws of Nepal.
"Taxes" shall mean any taxes (including income
taxes), levies, imposts, duties or other charges, of whatsoever
nature, imposed by HMGN or any other Governmental Authority
(including without limitation Governmental Authorities outside
of Nepal) or any political subdivision or taxing authority
thereof.
"Ten Year Anniversary" shall mean the tenth
anniversary of the Commercial Operation Date.
"Termination Date" shall have the meaning assigned
thereto in Section 2.1(a) of the Share Retention and Project
Funds Agreement.
"Third Party Agreements" shall mean the Project
Agreement, the PPA, the Services Agreements, the NEA Letter of
Credit, the Equity Letters of Credit, the EPC Contract, the EPC
Performance Guarantees, the Panda Letter of Credit, the Panda
Project Completion Letter of Credit, the Operations and
Maintenance Agreement, the Independent Engineer's Agreement,
and any other agreement to which the Company is a party
executed after the date hereof.
"Tranche" means the amount of each A Loan
Disbursement outstanding from time to time.
"Tranche Interest Rate" means, for each Tranche, a
rate of interest equal to the aggregate of:
(i) the Spread; and
(ii) the weighted average of the Fixed Rate
Swap Equivalents for the respective maturity
amounts of the relevant Tranche (i.e. the
amounts of the relevant Disbursement allocated
for repayment on the respective repayment dates
in accordance with Section 3.6(c) of the IFC
Special Conditions), with the weighting being
based on the relevant amounts and their
respective maturities and the average being
rounded up to the nearest two decimal places,
using the methodology set out in Annex A
attached to the IFC Special Conditions.
"Transfer" shall mean any sale, transfer, assignment,
pledge, or other disposition of, or encumbrance or existence of
any Lien on, any Share.
"Trust and Retention Agreement" shall mean the Trust
and Retention Agreement, dated as of the Closing Date, among
the Company, IFC, DEG and Wilmington Trust Company.
"Trustee" shall mean Wilmington Trust Company, not in
its individual capacity but solely as Trustee under the Trust
and Retention Agreement, or any successors thereto under the
Trust and Retention Agreement.
"Unit Delivery Date" shall have the meaning assigned
thereto in the PPA.
"United States" or "US" shall mean the United States
of America.
"U.S. GAAP" means generally accepted accounting
principles in the United States of America in effect from time
to time, applied on a consistent basis both as to
classification of items and amounts.
"World Bank" shall mean the International Bank for
Reconstruction and Development, an international organization
organized and existing by virtue of the Articles of Agreement
among its member countries.
2. Principles of Construction.
(a) The meanings set forth for defined terms in this
Schedule A or in any Loan Document shall be equally applicable
to both the singular and plural forms of the terms defined.
(b) All references in any Loan Document to clauses,
Articles, Sections, Schedules and Exhibits are to clauses,
Articles, Sections, Schedules and Exhibits in or to such Loan
Document unless otherwise specified therein. The words
"hereof," "herein" and "hereunder" and words of similar import
when used in a Loan Document shall refer to such Loan Document
as a whole and not to any particular provision of such Loan
Document.
(c) All accounting terms not specifically defined in
a Loan Document shall be construed in accordance with U.S.
GAAP.
(d) References in any Loan Document to any law,
statute, decree or regulation shall be construed as a reference
to such statute, law, decree or regulation as reenacted,
redesigned, as amended or extended from time to time, except to
the extent otherwise provided, and references in any Loan
Document to any document or agreement shall be construed as a
reference to such document or agreement as amended, varied,
supplemented or replaced from time to time.
(e) "Including" shall be deemed to mean "including,
without limitation".
(f) If any amount to be determined or measured
pursuant to any of the Loan Documents relates to a transaction
in a currency other than Dollars, such determination shall be
made by converting such currency by reference to the prevailing
buying spot market rate of exchange on the date of such
transaction.
(g) References to any Person or Persons shall be
construed as a reference to any permitted successors or assigns
of such Person or Persons.
3. Business Day Adjustment. Where the day on or by
which a payment is due to be made is not a Business Day, that
payment shall be made on or by the next succeeding Business Day
unless, in the case of payments of principal or interest, that
next succeeding Business Day falls in a different calendar
month, in which case that payment shall be made on the
immediately preceding Business Day. Interest, fees and charges
(if any) shall continue to accrue for the period from the due
date which is not a Business Day to that next succeeding
Business Day.
Schedules
A-1 Form of EPC Performance Guarantee
A-2 Form of Equity Letter of Credit
EXHIBIT NO. 10.144
INVESTMENT NUMBER 7365
Participation Agreement
in respect of
a B Loan to
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
between
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions 2
Section 1.2. Interpretation 2
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate 3
Section 2.2. Prepayment 4
Section 2.3. Balance of Loan 4
Section 2.4. Disbursements 4
Section 2.5. Commitment Fee 5
Section 2.6. Front-end Fee 5
Section 2.7. Maintenance Amount 5
Section 2.8. Additional (Default Rate)
Interest 5
Section 2.9. Funding Costs 6
Section 2.10. Illegality 6
Section 2.11. Taxes 6
Section 2.12. Payments 7
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate 7
Section 3.2. Pre-Bankruptcy or
Liquidation Allocation 7
Section 3.3. Post-Bankruptcy or
Liquidation Allocation 8
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and
Waivers - Conditions of
Disbursement and Payments 8
Section 4.2. Consent for Amendments and
Waivers - Project Funds
Agreement 8
Section 4.3. Consultation for Amendments
and Waivers - Covenants 8
Section 4.4. Consent and Consultation
for Amendments and Waivers
- Security 9
Section 4.5. Exercise of Other Rights 9
Section 4.6. Events of Default:
Notification 9
Section 4.7. Voluntary Acceleration 9
Section 4.8. Mandatory Acceleration 10
Section 4.9. Payments With Regard to
Security and Insurance. 10
Section 4.10. Costs and Expenses 10
Section 4.11. Refund of Distributions 11
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment 12
Section 5.2. Financial Statements and
Reports 12
Section 5.3. Confidential Information 12
Section 5.4. No Representations 12
Section 5.5. IFC's Standard of Care 13
Section 5.6. Assignment 13
Section 5.7. IFC's Rights not affected by
other Investments and Loans 14
Section 5.8. Reliance on Notices 14
Section 5.9. Applicable Law 14
Section 5.10. Notices 14
Section 5.11. Counterparts 15
PARTICIPATION AGREEMENT
AGREEMENT, dated as of the Closing Date, between Dresdner Bank
AG, New York and Grand Cayman Branches, a company organized and
existing under the laws of New York and the Cayman Islands
(herein called the "Participant") and International Finance
Corporation (herein called "IFC").
WHEREAS:
(A) Pursuant to an investment agreement (herein called the "IFC
Investment Agreement") dated as of the Closing Date, between
Bhote Koshi Power Company Private Limited (herein called the
"Company") and IFC, IFC has agreed to make a loan (the
"Loan") to the Company, the Loan being composed of two
portions (the "A Loan" and the "B Loan", respectively), in
the amounts, for the purpose and on the terms and conditions
set forth in the IFC Investment Agreement.
(B) Pursuant to a Share Retention and Project Funds Agreement
(the "Project Funds Agreement") dated as of the Closing
Date, between Panda Energy International, Inc., Harza
Engineering Company International L.P., Harza Engineering
Company International, a limited liability company, Himal
International Power Corporation Pvt. Ltd., Panda of Nepal,
RDC of Nepal, Panda Bhote Koshi Company, Resource
Development Consultants, a limited liability company,
Soaltee Enterprises Private Ltd., Soaltee Hotel Ltd. and
Surya Enterprises Private Ltd. (the "Sponsors"), the
Company, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG"), the Sponsors have, on
the terms and conditions set forth therein, undertaken to
provide additional funds to enable the Company to complete
the Project and meet certain of its financial obligations as
they fall due.
(C) Xerox copies of the signed IFC Investment Agreement and the
Project Funds Agreement have been provided to the
Participant.
(D) The Participant has agreed to purchase a participation in
the B Loan in the amount of sixteen million Dollars
($16,000,000) (and to pay for such participation a
corresponding sum in Dollars, payable upon request by IFC
and otherwise as provided below), and in consideration
thereof IFC has agreed to sell to the Participant a
participation in the B Loan, on the terms and conditions set
out in this Participation Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions. Wherever used in this Agreement
and unless the context otherwise requires:
(a) the terms defined in Schedule A to the IFC Investment
Agreement and not defined herein shall have the same meanings
when used herein. In particular and as defined in Schedule A to
the IFC Investment Agreement, the term "Participants" means the
Participant and the other participants in the B Loan (or their
successors and assignees) and the term "Participations" means the
Relevant Participation and the participations of the other
Participants in the B Loan.
(b) In addition the following terms shall have the
following meanings:
(i) the terms "A Loan", "B
Loan", "Company", "Project Funds
Agreement", "IFC", "IFC Investment
Agreement", "Loan", "Participant"
and "Sponsors" have the respective
meanings already given to them; and
(ii) the term "Relevant
Participation" means the
participation of the Participant in
the B Loan in the amount referred
to in Section 2.01 below, or, as
the context may require, the
principal amount thereof from time
to time outstanding.
Section 1.2. Interpretation. In this Agreement, unless the
context otherwise requires:
(a) headings and underlinings are for convenience only and
do not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and
vice versa;
(c) an expression importing a natural person includes any
company, partnership, trust, joint venture, association,
corporation or other body corporate and any governmental
authority or agency;
(d) a reference to a Section, Article or Annex is a
reference to that Section or Article of, or that Annex to, this
Agreement;
(e) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document but
disregarding any amendment, supplement, replacement or novation
made in breach of this Agreement; and
(f) a reference to a party to any document includes that
party's successors and permitted assigns.
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate. (a) The Relevant
Participation which the Participant has agreed to purchase and
which IFC has agreed to sell is in the amount of sixteen million
Dollars ($16,000,000), representing a part of the B Loan as and
when it is disbursed, and shall be repayable in the principal
amounts and on the maturity dates as set forth below:
Principal
Amount Maturity Date
$690,192.87 March 15, 2001
$722,973.58 September 15, 2001
$757,311.21 March 15, 2002
$793,279.71 September 15, 2002
$830,956.53 March 15, 2003
$870,422.81 September 15, 2003
$911,763.54 March 15, 2004
$955,067.75 September 15, 2004
$1,000,428.69 March 15, 2005
$1,047,944.05 September 15, 2005
$1,097,716.15 March 15, 2006
$1,149,852.18 September 15, 2006
$1,204,464.41 March 15, 2007
$1,261,670.45 September 15, 2007
$1,321,593.49 March 15, 2008
$1,384,362.58 September 15, 2008
Total $16,000,000.00
(b) The interest rate on the Relevant Participation shall
be three and one-quarter percent (3.25%) per annum above the rate
which appears on the Dow Jones Market Screen Page the column
headed "USD" as of 11:00 a.m., London time, on the B Loan
Interest Determination Date for one month, two months, three
months or six months, whichever period is closest to the duration
of the B Loan Interest Period (or, if two periods are equally
close to the duration of the B Loan Interest Period, the longer
one) (the "B Loan Floating Rate"), and shall be payable in
Dollars on the dates provided for in the Special Conditions of
the IFC Investment Agreement and shall otherwise be in accordance
with Sections 3.3(b)(i), (ii), (iv) and (v). IFC shall promptly
advise the Participants of the B Loan Floating Rate each time
that it is determined.
Section 2.2. Prepayment. The B Loan (and in certain
circumstances, just the part of the B Loan represented by the
Relevant Participation) is subject to prepayment as provided in
the IFC Investment Agreement.
Section 2.3. Balance of Loan. IFC reserves the right to
allot, assign or transfer any part of the Loan which is not
represented by the Relevant Participation; provided, however,
that IFC shall at all times retain not less than 25% of the A
Loan for its own account. In addition, IFC shall not assign or
transfer its right (as lender of the B Loan) to receive from the
Company payments on or with respect to the B Loan.
Section 2.4. Disbursements. (a) IFC shall request
remittance by the Participant on account of the Relevant
Participation (in an aggregate amount up to the full amount of
the Relevant Participation) only as needed to meet B Loan
Disbursements to the Company. IFC shall give the Participant not
less than three (3) Business Days' notice of the date when any
such remittance is due. The Participant shall remit the amount
specified in the said notice to Northern Trust International
Banking Corporation, New York (or such other bank in New York as
IFC may notify the Participant from time to time) for credit to
IFC's account on or before 11:00 a.m. (New York time) on the date
specified in the said notice for value that date. Provided that
the funds are received by IFC in good time on the date so
specified, then unless any event occurs which would justify IFC
in not making the relevant Disbursement to the Company, IFC shall
disburse those funds as part of the relevant B Loan Disbursement
for value the same day that they are remitted to IFC by the
Participant.
(b) Upon receipt from Northern Trust International Banking
Corporation (or such other bank as aforesaid) of advice that
IFC's account has been credited with such remittance and after
having effected the relevant Disbursement to the Company, IFC
shall, if so requested by the Participant, deliver to the
Participant a receipt substantially in the form of Annex A, dated
the date of such Disbursement and in the amount of such
remittance. After the final Disbursement of the B Loan or
cancellation of the undisbursed portion thereof, the Participant
may request IFC to deliver to the Participant a Participation
Certificate substantially in the form of Annex B, in the
aggregate amount of all such remittances made to IFC by the
Participant hereunder and disbursed by IFC to the Company. IFC
shall then deliver such Participation Certificate to the
Participant which shall return to IFC any receipts previously
delivered to the Participant evidencing such remittances.
(c) All Disbursements of the B Loan shall be made as set
out in Section 3.2 of the Special Conditions of the IFC
Investment Agreement and pro rata with Disbursements of the A
Loan (as provided in such Section 3.2). IFC shall request
remittances from each of the Participants to meet each B Loan
Disbursement in proportion (as nearly as practicable) to the
amounts of their respective Participations. The Participant
acknowledges that IFC may however make a B Loan Disbursement on a
relevant Disbursement date even if the amount disbursed is less
than the full aggregate amount whose remittance was requested by
IFC, due to the fact that (for whatever reason) not all of the
Participants have remitted their funds in time.
(d) At the request of the Participant on or after
September 30, 2000, IFC shall cancel the right of the Company to
request Disbursements in respect of the undisbursed portion of
the B Loan which is represented by the undisbursed portion of the
Relevant Participation.
Section 2.5. Commitment Fee. IFC shall also pay to the
Participant (but only proportionately out of amounts received by
IFC by way of the commitment fee for the B Loan pursuant to
Section 3.4(a)(i)(B) of the Special Conditions of the IFC
Investment Agreement) a commitment fee at the rate of one-half of
one percent (0.5%) per annum on so much of the Relevant
Participation as from time to time remains unremitted by the
Participant. The commitment fee shall accrue from the date of
this Participation Agreement and with regard to each Disbursement
of the B Loan, shall cease to accrue as of the date on which a
remittance is due from the Participant as provided in Section
2.04 (a) above with respect to the amount of the remittance then
due. The commitment fee shall be payable semi-annually on March
15 and September 15 in each year; the first such payment to be
made on March 15, 1998.
Section 2.6. Front-end Fee. IFC shall also pay to the
Participant (but only proportionately out of the amounts received
by IFC pursuant to Section 3.4(a)(ii)(B) of the Special
Conditions of the IFC Investment Agreement) a front-end fee of
one percent (1%) of the amount of the Relevant Participation.
Section 2.7. Maintenance Amount. IFC shall request the
Company to remit to IFC, in accordance with Section 3.17 of the
Special Conditions of the IFC Investment Agreement, such amounts
as the Participant shall from time to time certify to IFC as
being its Maintenance Amount as specified in that Section. The
Participant shall take all steps necessary to enable IFC to
comply with all the requirements on IFC's part contained in that
Section (and the related definitions) with respect to any claim
to be made by IFC thereunder in respect of the Relevant
Participation. IFC shall pay to the Participant (but only out of
any amounts received by it under that Section) such amounts as
are received by IFC under that Section in respect of the Relevant
Participation.
Section 2.8. Additional (Default Rate) Interest. IFC shall
pay to the Participant (but only proportionately out of any
amounts received by IFC under Section 3.9 of the Special
Conditions of the IFC Investment Agreement) such amounts of
interest at the default rate specified in that Section as are
attributable to the Relevant Participation.
Section 2.9. Funding Costs. With regard to amounts payable
by the Company pursuant to Section 3.16 of the Special Conditions
of the IFC Investment Agreement, IFC shall pay to the Participant
(but only out of any amounts received by IFC thereunder) such
amounts as are attributable to the Relevant Participation. The
Participant agrees to use reasonable efforts, in its discretion,
to minimize any costs, expenses or losses of the nature referred
to in the said Section 3.16 and relevant to the Relevant
Participation, and the Participant agrees that promptly after any
such costs, expenses or losses have been incurred, it will notify
IFC of such fact and the amount and calculation thereof.
Section 2.10. Illegality. With respect to Section 3.15 of
the Special Conditions of the IFC Investment Agreement:
(a) the Participant shall give notice to IFC of (i) any new
legislation or regulation and/or amendment to existing
legislation or regulation or the interpretation or application
thereof which would make it unlawful for the Participant to
maintain or to fund the Relevant Participation and (ii) any
proposal or action which might result in the legal changes
referred to in (i) above, promptly after the relevant event or
proposal has become known to the Participant;
(b) the Participant shall not request IFC to call upon the
Company for the repayment of the portion of the B Loan
represented by the Relevant Participation until all applicable
grace periods granted by the new law or regulation (or its
interpretation or application) have expired;
(c) at the request of IFC, the Participant shall use
reasonable efforts, but without prejudice to it, to seek
extensions of the said applicable grace periods and shall submit
the necessary application to the competent authorities requesting
that the Relevant Participation be exempted from the application
of the new law or regulation or its interpretation, if there are
reasonable grounds for such application;
(d) the Participant shall use reasonable efforts (but
without prejudice to it) to assign and transfer the Relevant
Participation and shall collaborate with IFC in seeking
appropriate transferee(s) of the Relevant Participation; and
(e) in the event that the reasonable efforts of the
Participant under sub-sections (c) and (d) above are of no avail
and it has become unlawful for the Participant to maintain or to
fund the Relevant Participation, then upon written notice to IFC
from the Participant, IFC shall promptly request the Company to
prepay the portion of the B Loan represented by the Relevant
Participation, together with all interest and Maintenance Amount
(if any) accrued thereon, in accordance with the provisions of
the said Section 3.15.
Section 2.11. Taxes. If the Company is required under the
terms of Section 5.9 of the General Conditions of the IFC
Investment Agreement to gross-up the amount of any payment and
then to deduct or withhold tax from such grossed-up payment, IFC
shall endeavor to pass on to the Participant, to the extent
practicable, its proportionate share of the tax receipt or other
evidence of deduction or withholding which the Company sends to
IFC.
Section 2.12. Payments. (a) IFC shall pay to the
Participant all amounts payable in respect of the Relevant
Participation promptly after it receives the corresponding amount
itself, whether from the Company or otherwise. All payments made
to the Participant by IFC shall be made in same day funds
(together with any interest actually earned by IFC on such funds
from the date of receipt by IFC to the date of payment to the
Participant) to such account as the Participant may advise IFC
from time to time.
(b) Any taxes or other charges which may be applicable to
any payments made in respect of the Relevant Participation and
which for whatever reason are not paid or reimbursed by the
Company pursuant to the IFC Investment Agreement, shall be for
the account of the Participant.
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate. If IFC should receive
less than the full amount then due and payable to IFC under the
IFC Investment Agreement, then notwithstanding any of the other
provisions of this Agreement, IFC shall (unless it is prevented
by applicable law or by the order of a court of competent
jurisdiction) apply and allocate such amounts between the A Loan
and the B Loan and among the various Participants as set forth in
Sections 3.2 and 3.3 below and in accordance with the Trust and
Retention Agreement.
Section 3.2. Pre-Bankruptcy or Liquidation Allocation.
Unless the Company becomes bankrupt or insolvent or goes into
liquidation (or any analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any), secondly to interest and any other sums
besides principal then due and payable and thirdly to any
principal of the A Loan and the B Loan then due and payable;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective amounts of interest
and other sums besides principal, or (as the case may be) of
principal, then due and payable on and in respect of the A Loan
and the B Loan respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective amounts of
interest and other sums besides principal, or (as the case may
be) of principal then due and payable in respect of their
respective Participations.
Section 3.3. Post-Bankruptcy or Liquidation Allocation. If
the Company becomes bankrupt or insolvent or goes into
liquidation (or an analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any) and then to the principal of, interest on and
any other sums due and payable in respect of the A Loan and the B
Loan;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective aggregate amounts then
due and payable on and in respect of the A Loan and the B Loan,
respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective aggregate
amounts then due and payable in respect of their respective
Participations.
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and Waivers -
Conditions of Disbursement and Payments. IFC shall not, without
the consent of the Participant:
(a) amend or waive any condition of Disbursement contained
in Article 3 of the General Conditions or Article 6 of the
Special Conditions which is relevant to a Disbursement of the B
Loan; or
(b) amend or waive the obligations of the Company to pay,
in the specified currency and (where specified) on the relevant
due dates and in the relevant place(s), the amounts of principal,
interest or any other payments due on or in respect of the B Loan
in accordance with the provisions of the IFC Investment Agreement
(or, for the avoidance of doubt, increase the amount of the B
Loan provided for in the IFC Investment Agreement).
Section 4.2. Consent for Amendments and Waivers - Project
Funds Agreement. IFC shall also not, without the consent of the
Participant, agree to any amendments to, or grant any waivers in
respect of, any of the obligations on the part of the Sponsors
contained in the Project Funds Agreement if those amendments or
waivers would, in the reasonable opinion of IFC, materially and
adversely affect the interests of the Participants (as
Participants).
Section 4.3. Consultation for Amendments and Waivers -
Covenants. IFC shall consult with the Participants before
agreeing to any amendment or granting any waiver or consent with
respect to any of the covenants contained in Articles 5 and 6 of
the General Conditions of the IFC Investment Agreement or Article
7 of the Special Conditions of the IFC Investment Agreement, if
such amendment, waiver or consent would, in the reasonable
opinion of IFC, materially and adversely affect the interests of
the Participants (as Participants).
Section 4.4. Consent and Consultation for Amendments and
Waivers - Security. If, in the reasonable opinion of IFC, any
release, amendment, waiver or consent referred to below would
materially and adversely affect the interests of the Participants
(as Participants):
(a) IFC shall not without the consent of Participants
holding Participations which in the aggregate represent sixty-
seven per cent (67%) or more of the outstanding principal amount
of the B Loan agree to release any part of the Security; and
(b) IFC shall consult with the Participants before agreeing
to any amendment or granting any other waiver or consent with
respect to any of the Security Documents.
Section 4.5. Exercise of Other Rights. Subject to the
preceding provisions of this Article and subject to the other
provisions of this Agreement:
(a) the administration and exercise of rights under the IFC
Investment Agreement and the Project Funds Agreement, including
all matters provided for or contemplated by any provision of the
IFC Investment Agreement and the Project Funds Agreement, shall
be handled solely by IFC; and
(b) IFC specifically reserves the right, in its discretion
and without notice to the Participants, to exercise, refrain from
exercising or waive any rights under or in relation to the IFC
Investment Agreement or any other agreement with the Company or
under or in relation to the Project Funds Agreement or to modify
any provisions of any of them.
Section 4.6. Events of Default: Notification. As promptly
as practicable but, in any event, within fifteen (15) days after
the occurrence of an Event of Default shall become known to IFC,
IFC shall advise the Participants of the occurrence of such Event
of Default and shall consult with the Participants on the course
of action which IFC intends to take with respect to such Event of
Default. Except in the case of payment defaults, IFC shall not be
deemed to have knowledge of any Event of Default unless notified
in writing thereof by the Company or the Participant.
Section 4.7. Voluntary Acceleration. (a) At any time
after the occurrence of an Event of Default IFC may, at its
discretion (but after consultation with the Participants, if time
permits), declare the principal of, all accrued interest on and
any other amounts payable in respect of, the A Loan and/or the B
Loan to be immediately due and payable and make demand on the
Company for the payment thereof pursuant to the terms of the IFC
Investment Agreement.
(b) If IFC declares the principal of, all interest accrued
on and any other amounts payable in respect of, the A Loan to be
due and payable as a result of the happening of an Event of
Default, IFC shall concurrently therewith declare the principal
of, all interest accrued on and any other amounts payable in
respect of, the B Loan to be due and payable.
Section 4.8. Mandatory Acceleration. If the Event of
Default is for non-payment of the principal of, or interest on,
the B Loan and if the Participants do not agree with IFC on IFC's
proposed course of action within thirty (30) days after the
commencement of IFC's consultation with the Participants, IFC,
shall at the written request of Participants holding
Participations which in the aggregate represent sixty-seven per
cent (67%) or more of the outstanding principal amount of the B
Loan sent to IFC at any time after the said period of thirty (30)
days has elapsed, if the said Event of Default is still then
continuing, declare the principal of, all accrued interest on and
any other amounts payable in respect of, the B Loan to be
immediately due and payable and make demand on the Company for
payment thereof pursuant to the IFC Investment Agreement.
Section 4.9. Payments With Regard to Security and
Insurance. (a) If the Security is enforced in whole or in part,
IFC shall account to the Participants for the proceeds which IFC
receives of any property which is charged or pledged as part of
the Security in the same way as it accounts for monies received
by it under the IFC Investment Agreement.
(b) If in accordance with and subject to the applicable
provisions of the IFC Investment Agreement and the Security
Documents, IFC receives (or is entitled to receive) the proceeds
of any insurance coverage (as loss payee or assignee or
otherwise) and IFC has the right to apply such proceeds to prepay
all or part of the Loan, it is expressly agreed that IFC may,
after consultation with the Participants, return to the Company
up to the full amount of any insurance proceeds if, in IFC's
reasonable opinion, the Company should be allowed to use the said
proceeds to replace or repair the relevant loss or destruction
and carry on with the Project; provided, however, that if the
Loan has been accelerated or the Security enforced, IFC shall
account to the Participants for all the insurance proceeds which
it receives in the same way as it accounts for any other monies
which it receives from the Company or as part of the proceeds of
the enforcement of the Security.
Section 4.10. Costs and Expenses. (a) The Participant
shall indemnify and keep IFC indemnified against, and promptly
upon demand by IFC pay to IFC, its pro rata share (in the same
proportion as the Relevant Participation bears to the whole of
the B Loan), of any liabilities, costs, damages and reasonable
expenses incurred by IFC in respect of the B Loan in connection
with the implementation or enforcement of the IFC Investment
Agreement or any other agreement with the Company, or the Project
Funds Agreement or the Security, or the protection or
preservation of rights thereunder or in connection with any
matter arising therefrom and against any sums in respect of the B
Loan which IFC may be required to pay to any person thereunder
(and which are not the result of IFC's own gross negligence or
willful misconduct). IFC acknowledges, however, that it will seek
reimbursement of any such costs and expenses from the Company in
the first instance (without being under any obligation to
commence legal proceedings or take any other action beyond making
demand for such reimbursement), that any monies received from the
Company will be allocated pro rata to costs and expenses
attributable to the A Loan and the B Loan, and that it will only
ask the Participants for reimbursement of a pro rata share of
such costs and expenses if and to the extent that the Company
does not reimburse the full amount of such costs and expenses to
IFC. Any request for reimbursement will provide reasonable
details of the costs and expenses involved.
(b) Without prejudice to the foregoing, IFC shall be
entitled, before exercising any discretion or performing any
duties in respect of the B Loan under this Agreement, the IFC
Investment Agreement, or any other agreement with the Company or
the Project Funds Agreement or the Security to be indemnified by
the Participants (pro rata to the participation in the B Loan of
each of the Participants) against any liability directly
resulting from such exercise on such terms as IFC may reasonably
require.
(c) Any costs and/or expenses which apply to the
preservation or protection of both the A Loan and the B Loan and
their respective rights or which arise in respect of both the A
Loan and the B Loan shall be allocated pro rata between the A
Loan and the B Loan; and the Participants shall bear their
respective shares of the portion allocated to the B Loan, as
provided in subsections (a) and (b) above.
Section 4.11. Refund of Distributions. (a) If for any
reason IFC is required by law to refund to any person any payment
in respect of the Loan received by IFC under the IFC Investment
Agreement or the Security Documents or any other agreement
contemplated by the IFC Investment Agreement and IFC has already
made a corresponding payment of all or any part of such receipt
to the Participant (whether by way of the repayment of principal
, payment of interest thereon or otherwise), then IFC shall give
notice of such requirement to the Participant as promptly as
practicable after IFC becomes aware thereof. The Participant
shall pay to IFC (pro rata to the payment received by it to which
the refund or payment relates) a sum in Dollars equivalent to
such refund or payment, together with a similar pro rata portion
of the interest and other costs (if any) required by law to be
paid by IFC to such person in relation to such refund or payment.
(b) IFC shall endeavor to minimize the amount of any sums
which it may be required to refund as aforesaid and shall only
refund to the Company or such other person the minimum amount
required by, and at latest time permitted by, law. If, subsequent
to such refund, IFC shall recover from any person (other than a
Participant) any amount on account of a refund payment made by
IFC in respect of the Loan of the sort contemplated in this
Section, then IFC shall pay to the Participant (but only
proportionately out of those amounts so received or recovered by
IFC in respect of the Loan and then pro rata to the entitlement
of the Participant to the amount so received or recovered by IFC
in respect of the Loan) an amount in Dollars equal to the
Participant's entitlement to any such amount.
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment. If the whole or any
part of the B Loan is cancelled pursuant to Section 3.14 of the
Special Conditions of the IFC Investment Agreement (except at the
request of the Participant pursuant to Section 2.4 (d) of this
Agreement, or of any other Participants pursuant to similar
provisions in their Participation Agreements), the amounts of the
Participations which the Participants have agreed to acquire
shall be reduced pro rata. In addition, if the Participant is
unreasonably refusing to respond to any request to remit funds to
meet a B Loan Disbursement, IFC may, by notice to the
Participant, reduce the principal amount of the Relevant
Participation, except in respect of amounts previously remitted
by the Participant. In any such case, the commitment fee shall
immediately cease to accrue as to the amount by which the
Relevant Participation is reduced.
Section 5.2. Financial Statements and Reports. IFC shall
deliver to the Participant as promptly as practicable copies of
(a) all financial statements and Project progress reports
received by IFC from the Company in accordance with the IFC
Investment Agreement and (b) such other periodic reports and
certificates as IFC may receive from the Company under the IFC
Investment Agreement.
Section 5.3. Confidential Information. Notwithstanding
anything to the contrary expressed or implied in this Agreement,
IFC shall not be bound to disclose to any other person
information relating to the Company or the Sponsors if such
disclosure would or might in IFC's reasonable opinion constitute
a breach of any law or regulation or be otherwise actionable at
the suit of any person.
Section 5.4. No Representations. (a) IFC makes no
representation or warranty as to the merits of the investment,
the financial condition of the Company, the Sponsors or of any
other Project participants, the validity or enforceability of the
IFC Investment Agreement (or any related agreements) or the
Project Funds Agreement or the performance by the Company, the
Sponsors or of any other Project participants of their
obligations contained in the IFC Investment Agreement (or any
related agreements), the Project Funds Agreement or of any other
agreements executed in connection with the Project respectively.
(b) The Participant confirms that it is not entering into
this Agreement in reliance on any statement, representation or
warranty by IFC and confirms that: (i) it has itself been, and
will continue to be, responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, affairs, status and nature of the Company, the
Sponsors and of any other Project participants; and (ii) it has
not solely relied, and will not solely rely, on IFC to appraise
or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of the Company, the
Sponsors or of any other Project participant.
(c) The Participant acknowledges that IFC makes no
representation or warranty, express or implied, as to, and
assumes no responsibility for, or with respect to, the accuracy
or completeness of the Information Memorandum dated April 1997 or
the other documents distributed in connection with the financing
hereby contemplated.
Section 5.5. IFC's Standard of Care. IFC shall exercise
the same care in the administration and enforcement of rights
under or in relation to the IFC Investment Agreement and the
Project Funds Agreement so far as the B Loan is concerned as it
exercises with respect to the A Loan or any other loans which are
for its own account. Nonetheless IFC shall not in the
administration of the Loan, be liable for any loss, costs,
damages or otherwise which may result from any act or omission on
the part of IFC unless caused by its gross negligence or willful
misconduct.
Section 5.6. Assignment. (a) The Participant represents
that it is acquiring the Relevant Participation for its own
account and not with a view to resale or distribution. The
Participant shall consult with IFC prior to any proposed sale,
transfer or other disposal ("assignment") of the whole or any
part of the Relevant Participation. It is however expressly
agreed that without the express consent of IFC (such consent not
to be unreasonably withheld or delayed), the Participant may not:
(i) assign the Relevant Participation before the full
Disbursement of the B Loan (or the cancellation of any
undisbursed balance); (ii) assign less than the whole of the
Relevant Participation or to more than one transferee; or (iii)
assign the whole or any part of the Relevant Participation to a
transferee which is not a financial institution or which is
incorporated or resident (as a branch or otherwise) in Nepal.
(b) Until such time as IFC has received written notice of
assignment (after IFC's consent has been obtained, if such
consent is required), IFC may deem and treat the Participant as
the absolute owner of the Relevant Participation for all
purposes, notwithstanding any notice to the contrary, and any
payment made to or on the order of the Participant shall
discharge the liability of IFC to the extent of the payment so
made. The provisions of this subsection are however expressly
subject to the provisions of any Participation Certificate which
may be issued, as provided in Section 2.4 (b) above.
(c) If the Participant does make any such assignment (with
IFC's consent, if so required), any assignee of the whole or any
part of the Relevant Participation shall be bound by the terms of
this Agreement as if references to the Participant and the
Relevant Participation were references to the assignee and its
Participation and otherwise mutatis mutandis.
(d) Solely for the purposes of item (iii) of subsection (a)
above it is expressly agreed and understood: (i) that a transfer
from one office or branch to another office or branch of the
Participant shall be treated as an assignment and accordingly
that no assignment to an office or branch resident in Nepal shall
be permitted without the express consent of IFC; and (ii) that
the Participant is initially taking the Relevant Participation
for the account of the office or branch disclosed in the Notices
Section of this Agreement (Section 5.10) and that the Participant
will inform IFC forthwith of any change in such office or
account.
Section 5.7. IFC's Rights not affected by other Investments
and Loans. The Participant expressly acknowledges that although
IFC may make other loans to and investments in the Company in the
future, that shall not diminish in any respect: (a) any of IFC's
rights, authority or discretion with respect to the
administration of the Loan or (b) IFC's freedom to exercise any
of such rights, authority or discretion in the manner it deems
appropriate under the terms of this Agreement.
Section 5.8. Reliance on Notices. In the absence of
manifest error, IFC may rely on any notice or other communication
received from the Participant, the Company or any other person as
contemplated in this Agreement which IFC reasonably believes to
be genuine and correct and to have been communicated or signed by
the person by whom it purports to be communicated or signed, and
IFC shall not be liable to the Participant for any of the
consequences of such reliance.
Section 5.9. Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA WITHOUT REGARD TO
THE CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTIONS 5-
1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK).
Section 5.10. Notices. Any notice or other communication
hereunder shall be in writing and may be delivered by hand, mail
(if the Participant has an address in the United States of
America), airmail, facsimile or telex and may be sent by either
party to the other at its address specified below (or by SWIFT or
by any other means in common usage, if agreed by the parties) or
to such other address as either party by notice shall have
designated. Any such notice or other communication shall be
effective upon receipt.
For the Participant:
Michael Terry
Dresdner Bank AG
75 Wall Street
New York, New York 10005
Alternative address for communications by telex:
_____________________
_____________________
Alternative address for communications by facsimile:
(212) 429 2192
For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Alternative address for communications by telex:
248423 - World Bank
64145 - World Bank
197688 - World Bank
82987 - World Bank
Alternative address for communications by facsimile:
(202) 974-4307
Section 5.11. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their
respective duly authorized representatives, have caused this
Agreement to be signed in their respective names, as of the date
and year first above written.
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By:
Authorized Representative
By:
Authorized Representative
INTERNATIONAL FINANCE CORPORATION
By:
Authorized Representative
ANNEX A
Page 1 of 1
RECEIPT
International Finance Corporation ("IFC") has received from
Dresdner Bank AG, New York and Grand Cayman Branches (the
"Participant") the principal amount of ____________________
Dollars ($__________) and has registered on its books in the name
of the Participant a participation of that amount in the B Loan
provided by IFC to Bhote Koshi Power Company Private Limited (the
"Company") pursuant to an IFC Investment Agreement dated as of
the Closing Date, between the Company and IFC.
Such participation is subject to the terms of the Participation
Agreement between IFC and the Participant, dated as of the
Closing Date.
THIS RECEIPT IS NOT AN OBLIGATION OF THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT OR OF ANY GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:
Authorized Signature
ANNEX B
Page 1 of 5
PARTICIPATION CERTIFICATE
THIS IS TO CERTIFY that International Finance Corporation
("IFC") for value received has registered on its books in the
name of Dresdner Bank AG, New York and Grand Cayman Branches (the
"Participant") a participation (the "Relevant Participation") in
the principal amount of ____________________ Dollars
($__________) in the B Loan (the "B Loan"), which together with
the A Loan (the "A Loan"), was provided by IFC to Bhote Koshi
Power Company Private Limited (the "Company"), pursuant to the
IFC Investment Agreement (the "IFC Investment Agreement") dated
as of the Closing Date, between the Company and IFC.
ANNEX B
Page 2 of 5
1. The Relevant Participation shall be repayable in the
principal amounts and on the maturity dates, and shall bear
interest at the rate per annum all as set forth below:
Principal
Amount Maturity Date Interest
1$__________ ________________ The B Loan Floating
$__________ ________________ Rate, and as otherwise
$__________ ________________ in accordance with
$__________ ________________ Sections 3.3(b)(i), (ii),
$__________ ________________ (iv) and (v) of the
$__________ ________________ Special Conditions of
$__________ ________________ the IFC Investment
$__________ ________________ Agreement, payable
$__________ ________________ in Dollars on the
$__________ ________________ dates provided for in
$__________ ________________ the IFC Investment
$__________ ________________ Agreement.
$__________ ________________
$__________ ________________
$__________ ________________
$__________ ________________
$__________ ________________
Total $__________
The Relevant Participation is limited to the principal and
interest specified above and does not include the A Loan or any
other part of any other investment by IFC in the Company.
ANNEX B
Page 3 of 5
2. This Participation Certificate is transferable by the
Participant, or by the Participant's attorney duly authorized in
writing, upon presentation and surrender thereof for
cancellation, duly endorsed, or accompanied by a proper
instrument of assignment and transfer. Upon such transfer, a new
certificate of the same tenor shall be issued to the transferee.
IFC may deem and treat the person in whose name this
Participation Certificate is registered on the books of IFC as
the absolute owner thereof for all purposes, notwithstanding any
notice to the contrary; and any payment to or on the order of
such person shall discharge the liability of IFC to the extent of
the payment so made.
3. Payment of all sums payable by IFC hereunder shall be
made in accordance with the provisions of the Participation
Agreement referred to below.
4. This Participation Certificate is issued pursuant to
the Participation Agreement dated as of the Closing Date, between
IFC and Dresdner Bank AG, New York and Cayman Branches and is
subject to the provisions of that Agreement.
ANNEX B
Page 4 of 5
5. This Participation Certificate shall be surrendered to
IFC upon payment in full of all sums due hereunder.
THIS PARTICIPATION CERTIFICATE IS NOT AN OBLIGATION OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT OR OF ANY
GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:____________________________________________
Authorized Signature
ANNEX B
Page 5 of 5
Date:
FOR VALUE RECEIVED (I) (we) hereby sell, assign and transfer
to
_________________________________________________________________
_________________________________________________ the certificate
issued by International Finance Corporation to which this form of
transfer is attached; and we hereby irrevocably authorize
International Finance Corporation to transfer such certificate on
its books.
Dated
Witness:
_______________________________
1 To be completed only when and if the Participation
Certificate is issued.
EXHIBIT NO. 145
INVESTMENT NUMBER 7365
Participation Agreement
in respect of
a B Loan to
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
between
BAYERISCHE VEREINSBANK AG
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions 2
Section 1.2. Interpretation 2
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate 3
Section 2.2. Prepayment 4
Section 2.3. Balance of Loan 4
Section 2.4. Disbursements 4
Section 2.5. Commitment Fee 5
Section 2.6. Front-end Fee 5
Section 2.7. Annual Fee. 5
Section 2.8. Maintenance Amount 5
Section 2.9. Additional (Default Rate) Interest 6
Section 2.10. Funding Costs 6
Section 2.11. Illegality 6
Section 2.12. Taxes 7
Section 2.13. Payments 7
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate 7
Section 3.2. Pre-Bankruptcy or Liquidation
Allocation 7
Section 3.3. Post-Bankruptcy or Liquidation
Allocation 8
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and Waivers
Conditions of Disbursement and
Payments 8
Section 4.2. Consent for Amendments and Waivers
Project Funds Agreement 8
Section 4.3. Consultation for Amendments and
Waivers - Covenants 8
Section 4.4. Consent and Consultation for
Amendments and Waivers - Security 9
Section 4.5. Exercise of Other Rights 9
Section 4.6. Events of Default: Notification 9
Section 4.7. Voluntary Acceleration 9
Section 4.8. Mandatory Acceleration 10
Section 4.9. Payments With Regard to Security
and Insurance. 10
Section 4.10. Costs and Expenses 10
Section 4.11. Refund of Distributions 11
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment 12
Section 5.2. Financial Statements and Reports 12
Section 5.3. Confidential Information 12
Section 5.4. No Representations 12
Section 5.5. IFC's Standard of Care 13
Section 5.6. Assignment 13
Section 5.7. IFC's Rights not affected by
other Investments and Loans 14
Section 5.8. Reliance on Notices 14
Section 5.9. Applicable Law 14
Section 5.10. Notices 14
Section 5.11. Counterparts 15
PARTICIPATION AGREEMENT
AGREEMENT, dated as of the Closing Date, between Bayerische
Vereinsbank AG, a company organized and existing under the laws
of the Federal Republic of Germany (herein called the
"Participant") and International Finance Corporation (herein
called "IFC").
WHEREAS:
(A) Pursuant to an investment agreement (herein called the "IFC
Investment Agreement") dated as of the Closing Date, between
Bhote Koshi Power Company Private Limited (herein called the
"Company") and IFC, IFC has agreed to make a loan (the
"Loan") to the Company, the Loan being composed of two
portions (the "A Loan" and the "B Loan", respectively), in
the amounts, for the purpose and on the terms and conditions
set forth in the IFC Investment Agreement.
(B) Pursuant to a Share Retention and Project Funds Agreement
(the "Project Funds Agreement") dated as of the Closing
Date, between Panda Energy International, Inc., Harza
Engineering Company International L.P., Harza Engineering
Company International, a limited liability company, Himal
International Power Corporation Pvt. Ltd., Panda of Nepal,
RDC of Nepal, Panda Bhote Koshi Company, Resource
Development Consultants, a limited liability company,
Soaltee Enterprises Private Ltd., Soaltee Hotel Ltd. and
Surya Enterprises Private Ltd. (the "Sponsors"), the
Company, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG"), the Sponsors have, on
the terms and conditions set forth therein, undertaken to
provide additional funds to enable the Company to complete
the Project and meet certain of its financial obligations as
they fall due.
(C) Xerox copies of the signed IFC Investment Agreement and the
Project Funds Agreement have been provided to the
Participant.
(D) The Participant has agreed to purchase a participation in
the B Loan in the amount of ten million Dollars
($10,000,000) (and to pay for such participation a
corresponding sum in Dollars, payable upon request by IFC
and otherwise as provided below), and in consideration
thereof IFC has agreed to sell to the Participant a
participation in the B Loan, on the terms and conditions set
out in this Participation Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions. Wherever used in this Agreement
and unless the context otherwise requires:
(a) the terms defined in Schedule A to the IFC Investment
Agreement and not defined herein shall have the same meanings
when used herein. In particular and as defined in Schedule A to
the IFC Investment Agreement, the term "Participants" means the
Participant and the other participants in the B Loan (or their
successors and assignees) and the term "Participations" means the
Relevant Participation and the participations of the other
Participants in the B Loan.
(b) In addition the following terms shall have the
following meanings:
(i) the terms "A Loan", "B
Loan", "Company", "Project Funds
Agreement", "IFC", "IFC Investment
Agreement", "Loan", "Participant"
and "Sponsors" have the respective
meanings already given to them; and
(ii) the term "Relevant
Participation" means the
participation of the Participant in
the B Loan in the amount referred
to in Section 2.01 below, or, as
the context may require, the
principal amount thereof from time
to time outstanding.
Section 1.2. Interpretation. In this Agreement, unless the
context otherwise requires:
(a) headings and underlinings are for convenience only and
do not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and
vice versa;
(c) an expression importing a natural person includes any
company, partnership, trust, joint venture, association,
corporation or other body corporate and any governmental
authority or agency;
(d) a reference to a Section, Article or Annex is a
reference to that Section or Article of, or that Annex to, this
Agreement;
(e) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document but
disregarding any amendment, supplement, replacement or novation
made in breach of this Agreement; and
(f) a reference to a party to any document includes that
party's successors and permitted assigns.
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate. (a) The Relevant
Participation which the Participant has agreed to purchase and
which IFC has agreed to sell is in the amount of ten million
Dollars ($10,000,000), representing a part of the B Loan as and
when it is disbursed, and shall be repayable in the principal
amounts and on the maturity dates as set forth below:
Principal
Amount Maturity Date
$262,359.69 March 15, 2001
$275,252.04 September 15, 2001
$288,777.93 March 15, 2002
$302,968.48 September 15, 2002
$317,856.35 March 15, 2003
$333,475.81 September 15, 2003
$349,862.81 March 15, 2004
$367,055.07 September 15, 2004
$385,092.16 March 15, 2005
$404,015.58 September 15, 2005
$423,868.91 March 15, 2006
$444,697.83 September 15, 2006
$466,550.28 March 15, 2007
$489,476.56 September 15, 2007
$513,529.44 March 15, 2008
$538,764.27 September 15, 2008
$565,239.15 March 15, 2009
$593,015.00 September 15, 2009
$622,155.76 March 15, 2010
$652,728.49 September 15, 2010
$684,803.57 March 15, 2011
$718,454.82 September 15,2011
Total $10,000,000.00
(b) The interest rate on the Relevant Participation shall
be three and one-half percent (3.50%) per annum above the rate
which appears on the Dow Jones Market Screen Page the column
headed "USD" as of 11:00 a.m., London time, on the B Loan
Interest Determination Date for one month, two months, three
months or six months, whichever period is closest to the duration
of the B Loan Interest Period (or, if two periods are equally
close to the duration of the B Loan Interest Period, the longer
one) (the "B Loan Floating Rate"), and shall be payable in
Dollars on the dates provided for in the Special Conditions of
the IFC Investment Agreement and shall otherwise be in accordance
with Sections 3.3(b)(i), (ii), (iv) and (v). IFC shall promptly
advise the Participants of the B Loan Floating Rate each time
that it is determined.
Section 2.2. Prepayment. The B Loan (and in certain
circumstances, just the part of the B Loan represented by the
Relevant Participation) is subject to prepayment as provided in
the IFC Investment Agreement.
Section 2.3. Balance of Loan. IFC reserves the right to
allot, assign or transfer any part of the Loan which is not
represented by the Relevant Participation; provided, however,
that IFC shall at all times retain not less than 25% of the A
Loan for its own account. In addition, IFC shall not assign or
transfer its right (as lender of the B Loan) to receive from the
Company payments on or with respect to the B Loan.
Section 2.4. Disbursements. (a) IFC shall request
remittance by the Participant on account of the Relevant
Participation (in an aggregate amount up to the full amount of
the Relevant Participation) only as needed to meet B Loan
Disbursements to the Company. IFC shall give the Participant not
less than three (3) Business Days' notice of the date when any
such remittance is due. The Participant shall remit the amount
specified in the said notice to Northern Trust International
Banking Corporation, New York (or such other bank in New York as
IFC may notify the Participant from time to time) for credit to
IFC's account on or before 11:00 a.m. (New York time) on the date
specified in the said notice for value that date. Provided that
the funds are received by IFC in good time on the date so
specified, then unless any event occurs which would justify IFC
in not making the relevant Disbursement to the Company, IFC shall
disburse those funds as part of the relevant B Loan Disbursement
for value the same day that they are remitted to IFC by the
Participant.
(b) Upon receipt from Northern Trust International Banking
Corporation (or such other bank as aforesaid) of advice that
IFC's account has been credited with such remittance and after
having effected the relevant Disbursement to the Company, IFC
shall, if so requested by the Participant, deliver to the
Participant a receipt substantially in the form of Annex A, dated
the date of such Disbursement and in the amount of such
remittance. After the final Disbursement of the B Loan or
cancellation of the undisbursed portion thereof, the Participant
may request IFC to deliver to the Participant a Participation
Certificate substantially in the form of Annex B, in the
aggregate amount of all such remittances made to IFC by the
Participant hereunder and disbursed by IFC to the Company. IFC
shall then deliver such Participation Certificate to the
Participant which shall return to IFC any receipts previously
delivered to the Participant evidencing such remittances.
(c) All Disbursements of the B Loan shall be made as set
out in Section 3.2 of the Special Conditions of the IFC
Investment Agreement and pro rata with Disbursements of the A
Loan (as provided in such Section 3.2). IFC shall request
remittances from each of the Participants to meet each B Loan
Disbursement in proportion (as nearly as practicable) to the
amounts of their respective Participations. The Participant
acknowledges that IFC may however make a B Loan Disbursement on a
relevant Disbursement date even if the amount disbursed is less
than the full aggregate amount whose remittance was requested by
IFC, due to the fact that (for whatever reason) not all of the
Participants have remitted their funds in time.
(d) At the request of the Participant on or after
September 30, 2000, IFC shall cancel the right of the Company to
request Disbursements in respect of the undisbursed portion of
the B Loan which is represented by the undisbursed portion of the
Relevant Participation.
Section 2.5. Commitment Fee. IFC shall also pay to the
Participant (but only proportionately out of amounts received by
IFC by way of the commitment fee for the B Loan pursuant to
Section 3.4(a)(i)(B) of the Special Conditions of the IFC
Investment Agreement) a commitment fee at the rate of one-half of
one percent (0.5%) per annum on so much of the Relevant
Participation as from time to time remains unremitted by the
Participant. The commitment fee shall accrue from the date of
this Participation Agreement and with regard to each Disbursement
of the B Loan, shall cease to accrue as of the date on which a
remittance is due from the Participant as provided in Section
2.04 (a) above with respect to the amount of the remittance then
due. The commitment fee shall be payable semi-annually on March
15 and September 15 in each year; the first such payment to be
made on March 15, 1998.
Section 2.6. Front-end Fee. IFC shall also pay to the
Participant (but only proportionately out of the amounts received
by IFC pursuant to Section 3.4(a)(ii)(B) of the Special
Conditions of the IFC Investment Agreement) a front-end fee of
one percent (1%) of the amount of the Relevant Participation.
Section 2.7. Annual Fee. IFC shall also pay to the
Participant (but only proportionately out of the amounts received
by IFC pursuant to Section 3.4(a)(iii) of the Special Conditions
of the IFC Investment Agreement) an annual fee of six thousand
two hundred fifty Dollars ($6,250.00), to be paid on the first
Interest Payment Date and every second Interest Payment Date
thereafter until the B Loan is repaid in full.
Section 2.8. Maintenance Amount. IFC shall request the
Company to remit to IFC, in accordance with Section 3.17 of the
Special Conditions of the IFC Investment Agreement, such amounts
as the Participant shall from time to time certify to IFC as
being its Maintenance Amount as specified in that Section. The
Participant shall take all steps necessary to enable IFC to
comply with all the requirements on IFC's part contained in that
Section (and the related definitions) with respect to any claim
to be made by IFC thereunder in respect of the Relevant
Participation. IFC shall pay to the Participant (but only out of
any amounts received by it under that Section) such amounts as
are received by IFC under that Section in respect of the Relevant
Participation.
Section 2.9. Additional (Default Rate) Interest. IFC shall
pay to the Participant (but only proportionately out of any
amounts received by IFC under Section 3.9 of the Special
Conditions of the IFC Investment Agreement) such amounts of
interest at the default rate specified in that Section as are
attributable to the Relevant Participation.
Section 2.10. Funding Costs. With regard to amounts
payable by the Company pursuant to Section 3.16 of the Special
Conditions of the IFC Investment Agreement, IFC shall pay to the
Participant (but only out of any amounts received by IFC
thereunder) such amounts as are attributable to the Relevant
Participation. The Participant agrees to use reasonable efforts,
in its discretion, to minimize any costs, expenses or losses of
the nature referred to in the said Section 3.16 and relevant to
the Relevant Participation, and the Participant agrees that
promptly after any such costs, expenses or losses have been
incurred, it will notify IFC of such fact and the amount and
calculation thereof.
Section 2.11. Illegality. With respect to Section 3.15 of
the Special Conditions of the IFC Investment Agreement:
(a) the Participant shall give notice to IFC of (i) any new
legislation or regulation and/or amendment to existing
legislation or regulation or the interpretation or application
thereof which would make it unlawful for the Participant to
maintain or to fund the Relevant Participation and (ii) any
proposal or action which might result in the legal changes
referred to in (i) above, promptly after the relevant event or
proposal has become known to the Participant;
(b) the Participant shall not request IFC to call upon the
Company for the repayment of the portion of the B Loan
represented by the Relevant Participation until all applicable
grace periods granted by the new law or regulation (or its
interpretation or application) have expired;
(c) at the request of IFC, the Participant shall use
reasonable efforts, but without prejudice to it, to seek
extensions of the said applicable grace periods and shall submit
the necessary application to the competent authorities requesting
that the Relevant Participation be exempted from the application
of the new law or regulation or its interpretation, if there are
reasonable grounds for such application;
(d) the Participant shall use reasonable efforts (but
without prejudice to it) to assign and transfer the Relevant
Participation and shall collaborate with IFC in seeking
appropriate transferee(s) of the Relevant Participation; and
(e) in the event that the reasonable efforts of the
Participant under sub-sections (c) and (d) above are of no avail
and it has become unlawful for the Participant to maintain or to
fund the Relevant Participation, then upon written notice to IFC
from the Participant, IFC shall promptly request the Company to
prepay the portion of the B Loan represented by the Relevant
Participation, together with all interest and Maintenance Amount
(if any) accrued thereon, in accordance with the provisions of
the said Section 3.15.
Section 2.12. Taxes. If the Company is required under the
terms of Section 5.9 of the General Conditions of the IFC
Investment Agreement to gross-up the amount of any payment and
then to deduct or withhold tax from such grossed-up payment, IFC
shall endeavor to pass on to the Participant, to the extent
practicable, its proportionate share of the tax receipt or other
evidence of deduction or withholding which the Company sends to
IFC.
Section 2.13. Payments. (a) IFC shall pay to the
Participant all amounts payable in respect of the Relevant
Participation promptly after it receives the corresponding amount
itself, whether from the Company or otherwise. All payments made
to the Participant by IFC shall be made in same day funds
(together with any interest actually earned by IFC on such funds
from the date of receipt by IFC to the date of payment to the
Participant) to such account as the Participant may advise IFC
from time to time.
(b) Any taxes or other charges which may be applicable to
any payments made in respect of the Relevant Participation and
which for whatever reason are not paid or reimbursed by the
Company pursuant to the IFC Investment Agreement, shall be for
the account of the Participant.
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate. If IFC should receive
less than the full amount then due and payable to IFC under the
IFC Investment Agreement, then notwithstanding any of the other
provisions of this Agreement, IFC shall (unless it is prevented
by applicable law or by the order of a court of competent
jurisdiction) apply and allocate such amounts between the A Loan
and the B Loan and among the various Participants as set forth in
Sections 3.2 and 3.3 below and in accordance with the Trust and
Retention Agreement.
Section 3.2. Pre-Bankruptcy or Liquidation Allocation.
Unless the Company becomes bankrupt or insolvent or goes into
liquidation (or any analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any), secondly to interest and any other sums
besides principal then due and payable and thirdly to any
principal of the A Loan and the B Loan then due and payable;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective amounts of interest
and other sums besides principal, or (as the case may be) of
principal, then due and payable on and in respect of the A Loan
and the B Loan respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective amounts of
interest and other sums besides principal, or (as the case may
be) of principal then due and payable in respect of their
respective Participations.
Section 3.3. Post-Bankruptcy or Liquidation Allocation. If
the Company becomes bankrupt or insolvent or goes into
liquidation (or an analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any) and then to the principal of, interest on and
any other sums due and payable in respect of the A Loan and the B
Loan;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective aggregate amounts then
due and payable on and in respect of the A Loan and the B Loan,
respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective aggregate
amounts then due and payable in respect of their respective
Participations.
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and Waivers -
Conditions of Disbursement and Payments. IFC shall not, without
the consent of the Participant:
(a) amend or waive any condition of Disbursement contained
in Article 3 of the General Conditions or Article 6 of the
Special Conditions which is relevant to a Disbursement of the B
Loan; or
(b) amend or waive the obligations of the Company to pay,
in the specified currency and (where specified) on the relevant
due dates and in the relevant place(s), the amounts of principal,
interest or any other payments due on or in respect of the B Loan
in accordance with the provisions of the IFC Investment Agreement
(or, for the avoidance of doubt, increase the amount of the B
Loan provided for in the IFC Investment Agreement).
Section 4.2. Consent for Amendments and Waivers - Project
Funds Agreement. IFC shall also not, without the consent of the
Participant, agree to any amendments to, or grant any waivers in
respect of, any of the obligations on the part of the Sponsors
contained in the Project Funds Agreement if those amendments or
waivers would, in the reasonable opinion of IFC, materially and
adversely affect the interests of the Participants (as
Participants).
Section 4.3. Consultation for Amendments and Waivers -
Covenants. IFC shall consult with the Participants before
agreeing to any amendment or granting any waiver or consent with
respect to any of the covenants contained in Articles 5 and 6 of
the General Conditions of the IFC Investment Agreement or Article
7 of the Special Conditions of the IFC Investment Agreement, if
such amendment, waiver or consent would, in the reasonable
opinion of IFC, materially and adversely affect the interests of
the Participants (as Participants).
Section 4.4. Consent and Consultation for Amendments and
Waivers - Security. If, in the reasonable opinion of IFC, any
release, amendment, waiver or consent referred to below would
materially and adversely affect the interests of the Participants
(as Participants):
(a) IFC shall not without the consent of Participants
holding Participations which in the aggregate represent sixty-
seven per cent (67%) or more of the outstanding principal amount
of the B Loan agree to release any part of the Security; and
(b) IFC shall consult with the Participants before agreeing
to any amendment or granting any other waiver or consent with
respect to any of the Security Documents.
Section 4.5. Exercise of Other Rights. Subject to the
preceding provisions of this Article and subject to the other
provisions of this Agreement:
(a) the administration and exercise of rights under the IFC
Investment Agreement and the Project Funds Agreement, including
all matters provided for or contemplated by any provision of the
IFC Investment Agreement and the Project Funds Agreement, shall
be handled solely by IFC; and
(b) IFC specifically reserves the right, in its discretion
and without notice to the Participants, to exercise, refrain from
exercising or waive any rights under or in relation to the IFC
Investment Agreement or any other agreement with the Company or
under or in relation to the Project Funds Agreement or to modify
any provisions of any of them.
Section 4.6. Events of Default: Notification. As promptly
as practicable but, in any event, within fifteen (15) days after
the occurrence of an Event of Default shall become known to IFC,
IFC shall advise the Participants of the occurrence of such Event
of Default and shall consult with the Participants on the course
of action which IFC intends to take with respect to such Event of
Default. Except in the case of payment defaults, IFC shall not be
deemed to have knowledge of any Event of Default unless notified
in writing thereof by the Company or the Participant.
Section 4.7. Voluntary Acceleration. (a) At any time
after the occurrence of an Event of Default IFC may, at its
discretion (but after consultation with the Participants, if time
permits), declare the principal of, all accrued interest on and
any other amounts payable in respect of, the A Loan and/or the B
Loan to be immediately due and payable and make demand on the
Company for the payment thereof pursuant to the terms of the IFC
Investment Agreement.
(b) If IFC declares the principal of, all interest accrued
on and any other amounts payable in respect of, the A Loan to be
due and payable as a result of the happening of an Event of
Default, IFC shall concurrently therewith declare the principal
of, all interest accrued on and any other amounts payable in
respect of, the B Loan to be due and payable.
Section 4.8. Mandatory Acceleration. If the Event of
Default is for non-payment of the principal of, or interest on,
the B Loan and if the Participants do not agree with IFC on IFC's
proposed course of action within thirty (30) days after the
commencement of IFC's consultation with the Participants, IFC,
shall at the written request of Participants holding
Participations which in the aggregate represent sixty-seven per
cent (67%) or more of the outstanding principal amount of the B
Loan sent to IFC at any time after the said period of thirty (30)
days has elapsed, if the said Event of Default is still then
continuing, declare the principal of, all accrued interest on and
any other amounts payable in respect of, the B Loan to be
immediately due and payable and make demand on the Company for
payment thereof pursuant to the IFC Investment Agreement.
Section 4.9. Payments With Regard to Security and
Insurance. (a) If the Security is enforced in whole or in part,
IFC shall account to the Participants for the proceeds which IFC
receives of any property which is charged or pledged as part of
the Security in the same way as it accounts for monies received
by it under the IFC Investment Agreement.
(b) If in accordance with and subject to the applicable
provisions of the IFC Investment Agreement and the Security
Documents, IFC receives (or is entitled to receive) the proceeds
of any insurance coverage (as loss payee or assignee or
otherwise) and IFC has the right to apply such proceeds to prepay
all or part of the Loan, it is expressly agreed that IFC may,
after consultation with the Participants, return to the Company
up to the full amount of any insurance proceeds if, in IFC's
reasonable opinion, the Company should be allowed to use the said
proceeds to replace or repair the relevant loss or destruction
and carry on with the Project; provided, however, that if the
Loan has been accelerated or the Security enforced, IFC shall
account to the Participants for all the insurance proceeds which
it receives in the same way as it accounts for any other monies
which it receives from the Company or as part of the proceeds of
the enforcement of the Security.
Section 4.10. Costs and Expenses. (a) The Participant
shall indemnify and keep IFC indemnified against, and promptly
upon demand by IFC pay to IFC, its pro rata share (in the same
proportion as the Relevant Participation bears to the whole of
the B Loan), of any liabilities, costs, damages and reasonable
expenses incurred by IFC in respect of the B Loan in connection
with the implementation or enforcement of the IFC Investment
Agreement or any other agreement with the Company, or the Project
Funds Agreement or the Security, or the protection or
preservation of rights thereunder or in connection with any
matter arising therefrom and against any sums in respect of the B
Loan which IFC may be required to pay to any person thereunder
(and which are not the result of IFC's own gross negligence or
willful misconduct). IFC acknowledges, however, that it will seek
reimbursement of any such costs and expenses from the Company in
the first instance (without being under any obligation to
commence legal proceedings or take any other action beyond making
demand for such reimbursement), that any monies received from the
Company will be allocated pro rata to costs and expenses
attributable to the A Loan and the B Loan, and that it will only
ask the Participants for reimbursement of a pro rata share of
such costs and expenses if and to the extent that the Company
does not reimburse the full amount of such costs and expenses to
IFC. Any request for reimbursement will provide reasonable
details of the costs and expenses involved.
(b) Without prejudice to the foregoing, IFC shall be
entitled, before exercising any discretion or performing any
duties in respect of the B Loan under this Agreement, the IFC
Investment Agreement, or any other agreement with the Company or
the Project Funds Agreement or the Security to be indemnified by
the Participants (pro rata to the participation in the B Loan of
each of the Participants) against any liability directly
resulting from such exercise on such terms as IFC may reasonably
require.
(c) Any costs and/or expenses which apply to the
preservation or protection of both the A Loan and the B Loan and
their respective rights or which arise in respect of both the A
Loan and the B Loan shall be allocated pro rata between the A
Loan and the B Loan; and the Participants shall bear their
respective shares of the portion allocated to the B Loan, as
provided in subsections (a) and (b) above.
Section 4.11. Refund of Distributions. (a) If for any
reason IFC is required by law to refund to any person any payment
in respect of the Loan received by IFC under the IFC Investment
Agreement or the Security Documents or any other agreement
contemplated by the IFC Investment Agreement and IFC has already
made a corresponding payment of all or any part of such receipt
to the Participant (whether by way of the repayment of principal
, payment of interest thereon or otherwise), then IFC shall give
notice of such requirement to the Participant as promptly as
practicable after IFC becomes aware thereof. The Participant
shall pay to IFC (pro rata to the payment received by it to which
the refund or payment relates) a sum in Dollars equivalent to
such refund or payment, together with a similar pro rata portion
of the interest and other costs (if any) required by law to be
paid by IFC to such person in relation to such refund or payment.
(b) IFC shall endeavor to minimize the amount of any sums
which it may be required to refund as aforesaid and shall only
refund to the Company or such other person the minimum amount
required by, and at latest time permitted by, law. If, subsequent
to such refund, IFC shall recover from any person (other than a
Participant) any amount on account of a refund payment made by
IFC in respect of the Loan of the sort contemplated in this
Section, then IFC shall pay to the Participant (but only
proportionately out of those amounts so received or recovered by
IFC in respect of the Loan and then pro rata to the entitlement
of the Participant to the amount so received or recovered by IFC
in respect of the Loan) an amount in Dollars equal to the
Participant's entitlement to any such amount.
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment. If the whole or any
part of the B Loan is cancelled pursuant to Section 3.14 of the
Special Conditions of the IFC Investment Agreement (except at the
request of the Participant pursuant to Section 2.4 (d) of this
Agreement, or of any other Participants pursuant to similar
provisions in their Participation Agreements), the amounts of the
Participations which the Participants have agreed to acquire
shall be reduced pro rata. In addition, if the Participant is
unreasonably refusing to respond to any request to remit funds to
meet a B Loan Disbursement, IFC may, by notice to the
Participant, reduce the principal amount of the Relevant
Participation, except in respect of amounts previously remitted
by the Participant. In any such case, the commitment fee shall
immediately cease to accrue as to the amount by which the
Relevant Participation is reduced.
Section 5.2. Financial Statements and Reports. IFC shall
deliver to the Participant as promptly as practicable copies of
(a) all financial statements and Project progress reports
received by IFC from the Company in accordance with the IFC
Investment Agreement and (b) such other periodic reports and
certificates as IFC may receive from the Company under the IFC
Investment Agreement.
Section 5.3. Confidential Information. Notwithstanding
anything to the contrary expressed or implied in this Agreement,
IFC shall not be bound to disclose to any other person
information relating to the Company or the Sponsors if such
disclosure would or might in IFC's reasonable opinion constitute
a breach of any law or regulation or be otherwise actionable at
the suit of any person.
Section 5.4. No Representations. (a) IFC makes no
representation or warranty as to the merits of the investment,
the financial condition of the Company, the Sponsors or of any
other Project participants, the validity or enforceability of the
IFC Investment Agreement (or any related agreements) or the
Project Funds Agreement or the performance by the Company, the
Sponsors or of any other Project participants of their
obligations contained in the IFC Investment Agreement (or any
related agreements), the Project Funds Agreement or of any other
agreements executed in connection with the Project respectively.
(b) The Participant confirms that it is not entering into
this Agreement in reliance on any statement, representation or
warranty by IFC and confirms that: (i) it has itself been, and
will continue to be, responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, affairs, status and nature of the Company, the
Sponsors and of any other Project participants; and (ii) it has
not solely relied, and will not solely rely, on IFC to appraise
or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of the Company, the
Sponsors or of any other Project participant.
(c) The Participant acknowledges that IFC makes no
representation or warranty, express or implied, as to, and
assumes no responsibility for, or with respect to, the accuracy
or completeness of the Information Memorandum dated April 1997 or
the other documents distributed in connection with the financing
hereby contemplated.
Section 5.5. IFC's Standard of Care. IFC shall exercise
the same care in the administration and enforcement of rights
under or in relation to the IFC Investment Agreement and the
Project Funds Agreement so far as the B Loan is concerned as it
exercises with respect to the A Loan or any other loans which are
for its own account. Nonetheless IFC shall not in the
administration of the Loan, be liable for any loss, costs,
damages or otherwise which may result from any act or omission on
the part of IFC unless caused by its gross negligence or willful
misconduct.
Section 5.6. Assignment. (a) The Participant represents
that it is acquiring the Relevant Participation for its own
account and not with a view to resale or distribution. The
Participant shall consult with IFC prior to any proposed sale,
transfer or other disposal ("assignment") of the whole or any
part of the Relevant Participation. It is however expressly
agreed that without the express consent of IFC (such consent not
to be unreasonably withheld or delayed), the Participant may not:
(i) assign the Relevant Participation before the full
Disbursement of the B Loan (or the cancellation of any
undisbursed balance); (ii) assign less than the whole of the
Relevant Participation or to more than one transferee; or (iii)
assign the whole or any part of the Relevant Participation to a
transferee which is not a financial institution or which is
incorporated or resident (as a branch or otherwise) in Nepal.
(b) Until such time as IFC has received written notice of
assignment (after IFC's consent has been obtained, if such
consent is required), IFC may deem and treat the Participant as
the absolute owner of the Relevant Participation for all
purposes, notwithstanding any notice to the contrary, and any
payment made to or on the order of the Participant shall
discharge the liability of IFC to the extent of the payment so
made. The provisions of this subsection are however expressly
subject to the provisions of any Participation Certificate which
may be issued, as provided in Section 2.4 (b) above.
(c) If the Participant does make any such assignment (with
IFC's consent, if so required), any assignee of the whole or any
part of the Relevant Participation shall be bound by the terms of
this Agreement as if references to the Participant and the
Relevant Participation were references to the assignee and its
Participation and otherwise mutatis mutandis.
(d) Solely for the purposes of item (iii) of subsection (a)
above it is expressly agreed and understood: (i) that a transfer
from one office or branch to another office or branch of the
Participant shall be treated as an assignment and accordingly
that no assignment to an office or branch resident in Nepal shall
be permitted without the express consent of IFC; and (ii) that
the Participant is initially taking the Relevant Participation
for the account of the office or branch disclosed in the Notices
Section of this Agreement (Section 5.10) and that the Participant
will inform IFC forthwith of any change in such office or
account.
Section 5.7. IFC's Rights not affected by other Investments
and Loans. The Participant expressly acknowledges that although
IFC may make other loans to and investments in the Company in the
future, that shall not diminish in any respect: (a) any of IFC's
rights, authority or discretion with respect to the
administration of the Loan or (b) IFC's freedom to exercise any
of such rights, authority or discretion in the manner it deems
appropriate under the terms of this Agreement.
Section 5.8. Reliance on Notices. In the absence of
manifest error, IFC may rely on any notice or other communication
received from the Participant, the Company or any other person as
contemplated in this Agreement which IFC reasonably believes to
be genuine and correct and to have been communicated or signed by
the person by whom it purports to be communicated or signed, and
IFC shall not be liable to the Participant for any of the
consequences of such reliance.
Section 5.9. Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REGARD
TO THE CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK).
Section 5.10. Notices. Any notice or other communication
hereunder shall be in writing and may be delivered by hand, mail
(if the Participant has an address in the United States of
America), airmail, facsimile or telex and may be sent by either
party to the other at its address specified below (or by SWIFT or
by any other means in common usage, if agreed by the parties) or
to such other address as either party by notice shall have
designated. Any such notice or other communication shall be
effective upon receipt.
For the Participant:
__________________________
__________________________
__________________________
__________________________
Alternative address for communications by telex:
__________________________
__________________________
Alternative address for communications by facsimile:
__________________________
__________________________
For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Alternative address for communications by telex:
248423 - World Bank
64145 - World Bank
197688 - World Bank
82987 - World Bank
Alternative address for communications by facsimile:
(202) 974-4307
Section 5.11. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their
respective duly authorized representatives, have caused this
Agreement to be signed in their respective names, as of the date
and year first above written.
BAYERISCHE VEREINSBANK AG
By:_________________________________________
Authorized Representative
INTERNATIONAL FINANCE CORPORATION
By:_________________________________________
Authorized Representative
ANNEX A
Page 1 of 1
RECEIPT
International Finance Corporation ("IFC") has received from
Bayerische Vereinsbank AG (the "Participant") the principal
amount of _____________________ Dollars ($__________) and has
registered on its books in the name of the Participant a
participation of that amount in the B Loan provided by IFC to
Bhote Koshi Power Company Private Limited (the "Company")
pursuant to an IFC Investment Agreement dated as of the Closing
Date, between the Company and IFC.
Such participation is subject to the terms of the Participation
Agreement between IFC and the Participant, dated as of the
Closing Date.
THIS RECEIPT IS NOT AN OBLIGATION OF THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT OR OF ANY GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:__________________________________________
Authorized Signature
ANNEX B
Page 1 of 5
PARTICIPATION CERTIFICATE
THIS IS TO CERTIFY that International Finance Corporation
("IFC") for value received has registered on its books in the
name of Bayerische Vereinsbank AG (the "Participant") a
participation (the "Relevant Participation") in the principal
amount of __________________ Dollars ($__________) in the B Loan
(the "B Loan"), which together with the A Loan (the "A Loan"),
was provided by IFC to Bhote Koshi Power Company Private Limited
(the "Company"), pursuant to the IFC Investment Agreement (the
"IFC Investment Agreement") dated as of the Closing Date, between
the Company and IFC.
ANNEX B
Page 2 of 5
1. The Relevant Participation shall be repayable in the
principal amounts and on the maturity dates, and shall bear
interest at the rate per annum all as set forth below:
Principal
Amount Maturity Date Interest
$__________ ________________ The B Loan Floating
$__________ ________________ Rate, and as otherwise
$__________ ________________ in accordance with
$__________ ________________ Sections 3.3(b)(i), (ii),
$__________ ________________ (iv) and (v) of the
$__________ ________________ Special Conditions of
$__________ ________________ the IFC Investment
$__________ ________________ Agreement, payable
$__________ ________________ in Dollars on the
$__________ ________________ dates provided for in
$__________ ________________ the IFC Investment
$__________ ________________ Agreement.
$__________ ________________
$__________ ________________
$__________ ________________
$__________ ________________
$__________ ________________
Total $__________
The Relevant Participation is limited to the principal and
interest specified above and does not include the A Loan or any
other part of any other investment by IFC in the Company.
ANNEX B
Page 3 of 5
2. This Participation Certificate is transferable by the
Participant, or by the Participant's attorney duly authorized in
writing, upon presentation and surrender thereof for
cancellation, duly endorsed, or accompanied by a proper
instrument of assignment and transfer. Upon such transfer, a new
certificate of the same tenor shall be issued to the transferee.
IFC may deem and treat the person in whose name this
Participation Certificate is registered on the books of IFC as
the absolute owner thereof for all purposes, notwithstanding any
notice to the contrary; and any payment to or on the order of
such person shall discharge the liability of IFC to the extent of
the payment so made.
3. Payment of all sums payable by IFC hereunder shall be
made in accordance with the provisions of the Participation
Agreement referred to below.
4. This Participation Certificate is issued pursuant to
the Participation Agreement dated as of the Closing Date, between
IFC and Bayerische Vereinsbank AG, and is subject to the
provisions of that Agreement.
ANNEX B
Page 4 of 5
5. This Participation Certificate shall be surrendered to
IFC upon payment in full of all sums due hereunder.
THIS PARTICIPATION CERTIFICATE IS NOT AN OBLIGATION OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT OR OF ANY
GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:___________________________________________
Authorized Signature
ANNEX B
Page 5 of 5
Date:
FOR VALUE RECEIVED (I) (we) hereby sell, assign and transfer
to
_________________________________________________________________
_________________________________________________ the certificate
issued by International Finance Corporation to which this form of
transfer is attached; and we hereby irrevocably authorize
International Finance Corporation to transfer such certificate on
its books.
Dated
Witness:
EXHIBIT NO. 146
INVESTMENT NUMBER 7365
Participation Agreement
in respect of
a B Loan to
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
between
NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR
ONTWIKKELINGSLANDEN N.V.
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions 2
Section 1.2. Interpretation 2
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate 3
Section 2.2. Prepayment 4
Section 2.3. Balance of Loan 4
Section 2.4. Disbursements 4
Section 2.5. Commitment Fee 5
Section 2.6. Front-end Fee 5
Section 2.7. Annual Fee. 5
Section 2.8. Maintenance Amount 5
Section 2.9. Additional (Default Rate) Interest 6
Section 2.10. Funding Costs 6
Section 2.11. Illegality 6
Section 2.12. Taxes 7
Section 2.13. Payments 7
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate 7
Section 3.2. Pre-Bankruptcy or Liquidation
Allocation 7
Section 3.3. Post-Bankruptcy or Liquidation
Allocation 8
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and Waivers -
Conditions of Disbursement and
Payments 8
Section 4.2. Consent for Amendments and Waivers -
Project Funds Agreement 8
Section 4.3. Consultation for Amendments and
Waivers - Covenants 9
Section 4.4. Consent and Consultation for
Amendments and Waivers - Security 9
Section 4.5. Exercise of Other Rights 9
Section 4.6. Events of Default: Notification 9
Section 4.7. Voluntary Acceleration 9
Section 4.8. Mandatory Acceleration 10
Section 4.9. Payments With Regard to Security and
Insurance. 10
Section 4.10. Costs and Expenses 10
Section 4.11. Refund of Distributions 11
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment 12
Section 5.2. Financial Statements and Reports 12
Section 5.3. Confidential Information 12
Section 5.4. No Representations 12
Section 5.5. IFC's Standard of Care 13
Section 5.6. Assignment 13
Section 5.7. IFC's Rights not affected by other
Investments and Loans 14
Section 5.8. Reliance on Notices 14
Section 5.9. Applicable Law 14
Section 5.10. Notices 14
Section 5.11. Counterparts 15
PARTICIPATION AGREEMENT
AGREEMENT, dated as of the Closing Date, between Nederlandse
Financierings-Maatschappij voor Ontwikkelingslanden N.V., a
company organized and existing under the laws of the Netherlands
(herein called the "Participant") and International Finance
Corporation (herein called "IFC").
WHEREAS:
(A) Pursuant to an investment agreement (herein called the "IFC
Investment Agreement") dated as of the Closing Date, between
Bhote Koshi Power Company Private Limited (herein called the
"Company") and IFC, IFC has agreed to make a loan (the
"Loan") to the Company, the Loan being composed of two
portions (the "A Loan" and the "B Loan", respectively), in
the amounts, for the purpose and on the terms and conditions
set forth in the IFC Investment Agreement.
(B) Pursuant to a Share Retention and Project Funds Agreement
(the "Project Funds Agreement") dated as of the Closing
Date, between Panda Energy International, Inc., Harza
Engineering Company International L.P., Harza Engineering
Company International, a limited liability company, Himal
International Power Corporation Pvt. Ltd., Panda of Nepal,
RDC of Nepal, Panda Bhote Koshi Company, Resource
Development Consultants, a limited liability company,
Soaltee Enterprises Private Ltd., Soaltee Hotel Ltd. and
Surya Enterprises Private Ltd. (the "Sponsors"), the
Company, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG"), the Sponsors have, on
the terms and conditions set forth therein, undertaken to
provide additional funds to enable the Company to complete
the Project and meet certain of its financial obligations as
they fall due.
(C) Xerox copies of the signed IFC Investment Agreement and the
Project Funds Agreement have been provided to the
Participant.
(D) The Participant has agreed to purchase a participation in
the B Loan in the amount of ten million Dollars
($10,000,000) (and to pay for such participation a
corresponding sum in Dollars, payable upon request by IFC
and otherwise as provided below), and in consideration
thereof IFC has agreed to sell to the Participant a
participation in the B Loan, on the terms and conditions set
out in this Participation Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions. Wherever used in this Agreement
and unless the context otherwise requires:
(a) the terms defined in Schedule A to the IFC Investment
Agreement and not defined herein shall have the same meanings
when used herein. In particular and as defined in Schedule A to
the IFC Investment Agreement, the term "Participants" means the
Participant and the other participants in the B Loan (or their
successors and assignees) and the term "Participations" means the
Relevant Participation and the participations of the other
Participants in the B Loan.
(b) In addition the following terms shall have the
following meanings:
(i) the terms "A Loan", "B
Loan", "Company", "Project Funds
Agreement", "IFC", "IFC Investment
Agreement", "Loan", "Participant"
and "Sponsors" have the respective
meanings already given to them; and
(ii) the term "Relevant
Participation" means the
participation of the Participant in
the B Loan in the amount referred
to in Section 2.01 below, or, as
the context may require, the
principal amount thereof from time
to time outstanding.
Section 1.2. Interpretation. In this Agreement, unless the
context otherwise requires:
(a) headings and underlinings are for convenience only and
do not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and
vice versa;
(c) an expression importing a natural person includes any
company, partnership, trust, joint venture, association,
corporation or other body corporate and any governmental
authority or agency;
(d) a reference to a Section, Article or Annex is a
reference to that Section or Article of, or that Annex to, this
Agreement;
(e) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document but
disregarding any amendment, supplement, replacement or novation
made in breach of this Agreement; and
(f) a reference to a party to any document includes that
party's successors and permitted assigns.
ARTICLE II
Terms of Participation
Section 2.1. Amount and Interest Rate. (a) The Relevant
Participation which the Participant has agreed to purchase and
which IFC has agreed to sell is in the amount of ten million
Dollars ($10,000,000), representing a part of the B Loan as and
when it is disbursed, and shall be repayable in the principal
amounts and on the maturity dates as set forth below:
Principal
Amount Maturity Date
$262,359.69 March 15, 2001
$275,252.04 September 15, 2001
$288,777.93 March 15, 2002
$302,968.48 September 15, 2002
$317,856.35 March 15, 2003
$333,475.81 September 15, 2003
$349,862.81 March 15, 2004
$367,055.07 September 15, 2004
$385,092.16 March 15, 2005
$404,015.58 September 15, 2005
$423,868.91 March 15, 2006
$444,697.83 September 15, 2006
$466,550.28 March 15, 2007
$489,476.56 September 15, 2007
$513,529.44 March 15, 2008
$538,764.27 September 15, 2008
$565,239.15 March 15, 2009
$593,015.00 September 15, 2009
$622,155.76 March 15, 2010
$652,728.49 September 15, 2010
$684,803.57 March 15, 2011
$718,454.82 September 15, 2011
Total $10,000,000.00
(b) The interest rate on the Relevant Participation shall
be three and one-half percent (3.50%) per annum above the rate
which appears on the Dow Jones Market Screen Page the column
headed "USD" as of 11:00 a.m., London time, on the B Loan
Interest Determination Date for one month, two months, three
months or six months, whichever period is closest to the duration
of the B Loan Interest Period (or, if two periods are equally
close to the duration of the B Loan Interest Period, the longer
one) (the "B Loan Floating Rate"), and shall be payable in
Dollars on the dates provided for in the Special Conditions of
the IFC Investment Agreement and shall otherwise be in accordance
with Sections 3.3(b)(i), (ii), (iv) and (v). IFC shall promptly
advise the Participants of the B Loan Floating Rate each time
that it is determined.
Section 2.2. Prepayment. The B Loan (and in certain
circumstances, just the part of the B Loan represented by the
Relevant Participation) is subject to prepayment as provided in
the IFC Investment Agreement.
Section 2.3. Balance of Loan. IFC reserves the right to
allot, assign or transfer any part of the Loan which is not
represented by the Relevant Participation; provided, however,
that IFC shall at all times retain not less than 25% of the A
Loan for its own account. In addition, IFC shall not assign or
transfer its right (as lender of the B Loan) to receive from the
Company payments on or with respect to the B Loan.
Section 2.4. Disbursements. (a) IFC shall request
remittance by the Participant on account of the Relevant
Participation (in an aggregate amount up to the full amount of
the Relevant Participation) only as needed to meet B Loan
Disbursements to the Company. IFC shall give the Participant not
less than three (3) Business Days' notice of the date when any
such remittance is due. The Participant shall remit the amount
specified in the said notice to Northern Trust International
Banking Corporation, New York (or such other bank in New York as
IFC may notify the Participant from time to time) for credit to
IFC's account on or before 11:00 a.m. (New York time) on the date
specified in the said notice for value that date. Provided that
the funds are received by IFC in good time on the date so
specified, then unless any event occurs which would justify IFC
in not making the relevant Disbursement to the Company, IFC shall
disburse those funds as part of the relevant B Loan Disbursement
for value the same day that they are remitted to IFC by the
Participant.
(b) Upon receipt from Northern Trust International Banking
Corporation (or such other bank as aforesaid) of advice that
IFC's account has been credited with such remittance and after
having effected the relevant Disbursement to the Company, IFC
shall, if so requested by the Participant, deliver to the
Participant a receipt substantially in the form of Annex A, dated
the date of such Disbursement and in the amount of such
remittance. After the final Disbursement of the B Loan or
cancellation of the undisbursed portion thereof, the Participant
may request IFC to deliver to the Participant a Participation
Certificate substantially in the form of Annex B, in the
aggregate amount of all such remittances made to IFC by the
Participant hereunder and disbursed by IFC to the Company. IFC
shall then deliver such Participation Certificate to the
Participant which shall return to IFC any receipts previously
delivered to the Participant evidencing such remittances.
(c) All Disbursements of the B Loan shall be made as set
out in Section 3.2 of the Special Conditions of the IFC
Investment Agreement and pro rata with Disbursements of the A
Loan (as provided in such Section 3.2). IFC shall request
remittances from each of the Participants to meet each B Loan
Disbursement in proportion (as nearly as practicable) to the
amounts of their respective Participations. The Participant
acknowledges that IFC may however make a B Loan Disbursement on a
relevant Disbursement date even if the amount disbursed is less
than the full aggregate amount whose remittance was requested by
IFC, due to the fact that (for whatever reason) not all of the
Participants have remitted their funds in time.
(d) At the request of the Participant on or after
September 30, 2000, IFC shall cancel the right of the Company to
request Disbursements in respect of the undisbursed portion of
the B Loan which is represented by the undisbursed portion of the
Relevant Participation.
Section 2.5. Commitment Fee. IFC shall also pay to the
Participant (but only proportionately out of amounts received by
IFC by way of the commitment fee for the B Loan pursuant to
Section 3.4(a)(i)(B) of the Special Conditions of the IFC
Investment Agreement) a commitment fee at the rate of one-half of
one percent (0.5%) per annum on so much of the Relevant
Participation as from time to time remains unremitted by the
Participant. The commitment fee shall accrue from the date of
this Participation Agreement and with regard to each Disbursement
of the B Loan, shall cease to accrue as of the date on which a
remittance is due from the Participant as provided in Section
2.04 (a) above with respect to the amount of the remittance then
due. The commitment fee shall be payable semi-annually on March
15 and September 15 in each year; the first such payment to be
made on March 15, 1998.
Section 2.6. Front-end Fee. IFC shall also pay to the
Participant (but only proportionately out of the amounts received
by IFC pursuant to Section 3.4(a)(ii)(B) of the Special
Conditions of the IFC Investment Agreement) a front-end fee of
one percent (1%) of the amount of the Relevant Participation.
Section 2.7. Annual Fee. IFC shall also pay to the
Participant (but only proportionately out of the amounts received
by IFC pursuant to Section 3.4(a)(iii) of the Special Conditions
of the IFC Investment Agreement) an annual fee of six thousand
two hundred fifty Dollars ($6,250.00), to be paid on the first
Interest Payment Date and every second Interest Payment Date
thereafter until the B Loan is repaid in full.
Section 2.8. Maintenance Amount. IFC shall request the
Company to remit to IFC, in accordance with Section 3.17 of the
Special Conditions of the IFC Investment Agreement, such amounts
as the Participant shall from time to time certify to IFC as
being its Maintenance Amount as specified in that Section. The
Participant shall take all steps necessary to enable IFC to
comply with all the requirements on IFC's part contained in that
Section (and the related definitions) with respect to any claim
to be made by IFC thereunder in respect of the Relevant
Participation. IFC shall pay to the Participant (but only out of
any amounts received by it under that Section) such amounts as
are received by IFC under that Section in respect of the Relevant
Participation.
Section 2.9. Additional (Default Rate) Interest. IFC shall
pay to the Participant (but only proportionately out of any
amounts received by IFC under Section 3.9 of the Special
Conditions of the IFC Investment Agreement) such amounts of
interest at the default rate specified in that Section as are
attributable to the Relevant Participation.
Section 2.10. Funding Costs. With regard to amounts
payable by the Company pursuant to Section 3.16 of the Special
Conditions of the IFC Investment Agreement, IFC shall pay to the
Participant (but only out of any amounts received by IFC
thereunder) such amounts as are attributable to the Relevant
Participation. The Participant agrees to use reasonable efforts,
in its discretion, to minimize any costs, expenses or losses of
the nature referred to in the said Section 3.16 and relevant to
the Relevant Participation, and the Participant agrees that
promptly after any such costs, expenses or losses have been
incurred, it will notify IFC of such fact and the amount and
calculation thereof.
Section 2.11. Illegality. With respect to Section 3.15 of
the Special Conditions of the IFC Investment Agreement:
(a) the Participant shall give notice to IFC of (i) any new
legislation or regulation and/or amendment to existing
legislation or regulation or the interpretation or application
thereof which would make it unlawful for the Participant to
maintain or to fund the Relevant Participation and (ii) any
proposal or action which might result in the legal changes
referred to in (i) above, promptly after the relevant event or
proposal has become known to the Participant;
(b) the Participant shall not request IFC to call upon the
Company for the repayment of the portion of the B Loan
represented by the Relevant Participation until all applicable
grace periods granted by the new law or regulation (or its
interpretation or application) have expired;
(c) at the request of IFC, the Participant shall use
reasonable efforts, but without prejudice to it, to seek
extensions of the said applicable grace periods and shall submit
the necessary application to the competent authorities requesting
that the Relevant Participation be exempted from the application
of the new law or regulation or its interpretation, if there are
reasonable grounds for such application;
(d) the Participant shall use reasonable efforts (but
without prejudice to it) to assign and transfer the Relevant
Participation and shall collaborate with IFC in seeking
appropriate transferee(s) of the Relevant Participation; and
(e) in the event that the reasonable efforts of the
Participant under sub-sections (c) and (d) above are of no avail
and it has become unlawful for the Participant to maintain or to
fund the Relevant Participation, then upon written notice to IFC
from the Participant, IFC shall promptly request the Company to
prepay the portion of the B Loan represented by the Relevant
Participation, together with all interest and Maintenance Amount
(if any) accrued thereon, in accordance with the provisions of
the said Section 3.15.
Section 2.12. Taxes. If the Company is required under the
terms of Section 5.9 of the General Conditions of the IFC
Investment Agreement to gross-up the amount of any payment and
then to deduct or withhold tax from such grossed-up payment, IFC
shall endeavor to pass on to the Participant, to the extent
practicable, its proportionate share of the tax receipt or other
evidence of deduction or withholding which the Company sends to
IFC.
Section 2.13. Payments. (a) IFC shall pay to the
Participant all amounts payable in respect of the Relevant
Participation promptly after it receives the corresponding amount
itself, whether from the Company or otherwise. All payments made
to the Participant by IFC shall be made in same day funds
(together with any interest actually earned by IFC on such funds
from the date of receipt by IFC to the date of payment to the
Participant) to such account as the Participant may advise IFC
from time to time.
(b) Any taxes or other charges which may be applicable to
any payments made in respect of the Relevant Participation and
which for whatever reason are not paid or reimbursed by the
Company pursuant to the IFC Investment Agreement, shall be for
the account of the Participant.
ARTICLE III
Allocation
Section 3.1. Obligation to Allocate. If IFC should receive
less than the full amount then due and payable to IFC under the
IFC Investment Agreement, then notwithstanding any of the other
provisions of this Agreement, IFC shall (unless it is prevented
by applicable law or by the order of a court of competent
jurisdiction) apply and allocate such amounts between the A Loan
and the B Loan and among the various Participants as set forth in
Sections 3.2 and 3.3 below and in accordance with the Trust and
Retention Agreement.
Section 3.2. Pre-Bankruptcy or Liquidation Allocation.
Unless the Company becomes bankrupt or insolvent or goes into
liquidation (or any analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any), secondly to interest and any other sums
besides principal then due and payable and thirdly to any
principal of the A Loan and the B Loan then due and payable;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective amounts of interest
and other sums besides principal, or (as the case may be) of
principal, then due and payable on and in respect of the A Loan
and the B Loan respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective amounts of
interest and other sums besides principal, or (as the case may
be) of principal then due and payable in respect of their
respective Participations.
Section 3.3. Post-Bankruptcy or Liquidation Allocation. If
the Company becomes bankrupt or insolvent or goes into
liquidation (or an analogous event occurs):
(a) such monies shall be applied first to costs and
expenses (if any) and then to the principal of, interest on and
any other sums due and payable in respect of the A Loan and the B
Loan;
(b) such monies shall be allocated between the A Loan and
the B Loan in proportion to the respective aggregate amounts then
due and payable on and in respect of the A Loan and the B Loan,
respectively; and
(c) monies allocated to the B Loan shall be applied among
the Participants in proportion to the respective aggregate
amounts then due and payable in respect of their respective
Participations.
ARTICLE IV
Other Aspects of Administration
Section 4.1. Consent for Amendments and Waivers -
Conditions of Disbursement and Payments. IFC shall not, without
the consent of the Participant:
(a) amend or waive any condition of Disbursement contained
in Article 3 of the General Conditions or Article 6 of the
Special Conditions which is relevant to a Disbursement of the B
Loan; or
(b) amend or waive the obligations of the Company to pay,
in the specified currency and (where specified) on the relevant
due dates and in the relevant place(s), the amounts of principal,
interest or any other payments due on or in respect of the B Loan
in accordance with the provisions of the IFC Investment Agreement
(or, for the avoidance of doubt, increase the amount of the B
Loan provided for in the IFC Investment Agreement).
Section 4.2. Consent for Amendments and Waivers - Project
Funds Agreement. IFC shall also not, without the consent of the
Participant, agree to any amendments to, or grant any waivers in
respect of, any of the obligations on the part of the Sponsors
contained in the Project Funds Agreement if those amendments or
waivers would, in the reasonable opinion of IFC, materially and
adversely affect the interests of the Participants (as
Participants).
Section 4.3. Consultation for Amendments and Waivers -
Covenants. IFC shall consult with the Participants before
agreeing to any amendment or granting any waiver or consent with
respect to any of the covenants contained in Articles 5 and 6 of
the General Conditions of the IFC Investment Agreement or Article
7 of the Special Conditions of the IFC Investment Agreement, if
such amendment, waiver or consent would, in the reasonable
opinion of IFC, materially and adversely affect the interests of
the Participants (as Participants).
Section 4.4. Consent and Consultation for Amendments and
Waivers - Security. If, in the reasonable opinion of IFC, any
release, amendment, waiver or consent referred to below would
materially and adversely affect the interests of the Participants
(as Participants):
(a) IFC shall not without the consent of Participants
holding Participations which in the aggregate represent sixty-
seven per cent (67%) or more of the outstanding principal amount
of the B Loan agree to release any part of the Security; and
(b) IFC shall consult with the Participants before agreeing
to any amendment or granting any other waiver or consent with
respect to any of the Security Documents.
Section 4.5. Exercise of Other Rights. Subject to the
preceding provisions of this Article and subject to the other
provisions of this Agreement:
(a) the administration and exercise of rights under the IFC
Investment Agreement and the Project Funds Agreement, including
all matters provided for or contemplated by any provision of the
IFC Investment Agreement and the Project Funds Agreement, shall
be handled solely by IFC; and
(b) IFC specifically reserves the right, in its discretion
and without notice to the Participants, to exercise, refrain from
exercising or waive any rights under or in relation to the IFC
Investment Agreement or any other agreement with the Company or
under or in relation to the Project Funds Agreement or to modify
any provisions of any of them.
Section 4.6. Events of Default: Notification. As promptly
as practicable but, in any event, within fifteen (15) days after
the occurrence of an Event of Default shall become known to IFC,
IFC shall advise the Participants of the occurrence of such Event
of Default and shall consult with the Participants on the course
of action which IFC intends to take with respect to such Event of
Default. Except in the case of payment defaults, IFC shall not be
deemed to have knowledge of any Event of Default unless notified
in writing thereof by the Company or the Participant.
Section 4.7. Voluntary Acceleration. (a) At any time
after the occurrence of an Event of Default IFC may, at its
discretion (but after consultation with the Participants, if time
permits), declare the principal of, all accrued interest on and
any other amounts payable in respect of, the A Loan and/or the B
Loan to be immediately due and payable and make demand on the
Company for the payment thereof pursuant to the terms of the IFC
Investment Agreement.
(b) If IFC declares the principal of, all interest accrued
on and any other amounts payable in respect of, the A Loan to be
due and payable as a result of the happening of an Event of
Default, IFC shall concurrently therewith declare the principal
of, all interest accrued on and any other amounts payable in
respect of, the B Loan to be due and payable.
Section 4.8. Mandatory Acceleration. If the Event of
Default is for non-payment of the principal of, or interest on,
the B Loan and if the Participants do not agree with IFC on IFC's
proposed course of action within thirty (30) days after the
commencement of IFC's consultation with the Participants, IFC,
shall at the written request of Participants holding
Participations which in the aggregate represent sixty-seven per
cent (67%) or more of the outstanding principal amount of the B
Loan sent to IFC at any time after the said period of thirty (30)
days has elapsed, if the said Event of Default is still then
continuing, declare the principal of, all accrued interest on and
any other amounts payable in respect of, the B Loan to be
immediately due and payable and make demand on the Company for
payment thereof pursuant to the IFC Investment Agreement.
Section 4.9. Payments With Regard to Security and
Insurance. (a) If the Security is enforced in whole or in part,
IFC shall account to the Participants for the proceeds which IFC
receives of any property which is charged or pledged as part of
the Security in the same way as it accounts for monies received
by it under the IFC Investment Agreement.
(b) If in accordance with and subject to the applicable
provisions of the IFC Investment Agreement and the Security
Documents, IFC receives (or is entitled to receive) the proceeds
of any insurance coverage (as loss payee or assignee or
otherwise) and IFC has the right to apply such proceeds to prepay
all or part of the Loan, it is expressly agreed that IFC may,
after consultation with the Participants, return to the Company
up to the full amount of any insurance proceeds if, in IFC's
reasonable opinion, the Company should be allowed to use the said
proceeds to replace or repair the relevant loss or destruction
and carry on with the Project; provided, however, that if the
Loan has been accelerated or the Security enforced, IFC shall
account to the Participants for all the insurance proceeds which
it receives in the same way as it accounts for any other monies
which it receives from the Company or as part of the proceeds of
the enforcement of the Security.
Section 4.10. Costs and Expenses. (a) The Participant
shall indemnify and keep IFC indemnified against, and promptly
upon demand by IFC pay to IFC, its pro rata share (in the same
proportion as the Relevant Participation bears to the whole of
the B Loan), of any liabilities, costs, damages and reasonable
expenses incurred by IFC in respect of the B Loan in connection
with the implementation or enforcement of the IFC Investment
Agreement or any other agreement with the Company, or the Project
Funds Agreement or the Security, or the protection or
preservation of rights thereunder or in connection with any
matter arising therefrom and against any sums in respect of the B
Loan which IFC may be required to pay to any person thereunder
(and which are not the result of IFC's own gross negligence or
willful misconduct). IFC acknowledges, however, that it will seek
reimbursement of any such costs and expenses from the Company in
the first instance (without being under any obligation to
commence legal proceedings or take any other action beyond making
demand for such reimbursement), that any monies received from the
Company will be allocated pro rata to costs and expenses
attributable to the A Loan and the B Loan, and that it will only
ask the Participants for reimbursement of a pro rata share of
such costs and expenses if and to the extent that the Company
does not reimburse the full amount of such costs and expenses to
IFC. Any request for reimbursement will provide reasonable
details of the costs and expenses involved.
(b) Without prejudice to the foregoing, IFC shall be
entitled, before exercising any discretion or performing any
duties in respect of the B Loan under this Agreement, the IFC
Investment Agreement, or any other agreement with the Company or
the Project Funds Agreement or the Security to be indemnified by
the Participants (pro rata to the participation in the B Loan of
each of the Participants) against any liability directly
resulting from such exercise on such terms as IFC may reasonably
require.
(c) Any costs and/or expenses which apply to the
preservation or protection of both the A Loan and the B Loan and
their respective rights or which arise in respect of both the A
Loan and the B Loan shall be allocated pro rata between the A
Loan and the B Loan; and the Participants shall bear their
respective shares of the portion allocated to the B Loan, as
provided in subsections (a) and (b) above.
Section 4.11. Refund of Distributions. (a) If for any
reason IFC is required by law to refund to any person any payment
in respect of the Loan received by IFC under the IFC Investment
Agreement or the Security Documents or any other agreement
contemplated by the IFC Investment Agreement and IFC has already
made a corresponding payment of all or any part of such receipt
to the Participant (whether by way of the repayment of principal
, payment of interest thereon or otherwise), then IFC shall give
notice of such requirement to the Participant as promptly as
practicable after IFC becomes aware thereof. The Participant
shall pay to IFC (pro rata to the payment received by it to which
the refund or payment relates) a sum in Dollars equivalent to
such refund or payment, together with a similar pro rata portion
of the interest and other costs (if any) required by law to be
paid by IFC to such person in relation to such refund or payment.
(b) IFC shall endeavor to minimize the amount of any sums
which it may be required to refund as aforesaid and shall only
refund to the Company or such other person the minimum amount
required by, and at latest time permitted by, law. If, subsequent
to such refund, IFC shall recover from any person (other than a
Participant) any amount on account of a refund payment made by
IFC in respect of the Loan of the sort contemplated in this
Section, then IFC shall pay to the Participant (but only
proportionately out of those amounts so received or recovered by
IFC in respect of the Loan and then pro rata to the entitlement
of the Participant to the amount so received or recovered by IFC
in respect of the Loan) an amount in Dollars equal to the
Participant's entitlement to any such amount.
ARTICLE V
Miscellaneous
Section 5.1. Reduction of Commitment. If the whole or any
part of the B Loan is cancelled pursuant to Section 3.14 of the
Special Conditions of the IFC Investment Agreement (except at the
request of the Participant pursuant to Section 2.4 (d) of this
Agreement, or of any other Participants pursuant to similar
provisions in their Participation Agreements), the amounts of the
Participations which the Participants have agreed to acquire
shall be reduced pro rata. In addition, if the Participant is
unreasonably refusing to respond to any request to remit funds to
meet a B Loan Disbursement, IFC may, by notice to the
Participant, reduce the principal amount of the Relevant
Participation, except in respect of amounts previously remitted
by the Participant. In any such case, the commitment fee shall
immediately cease to accrue as to the amount by which the
Relevant Participation is reduced.
Section 5.2. Financial Statements and Reports. IFC shall
deliver to the Participant as promptly as practicable copies of
(a) all financial statements and Project progress reports
received by IFC from the Company in accordance with the IFC
Investment Agreement and (b) such other periodic reports and
certificates as IFC may receive from the Company under the IFC
Investment Agreement.
Section 5.3. Confidential Information. Notwithstanding
anything to the contrary expressed or implied in this Agreement,
IFC shall not be bound to disclose to any other person
information relating to the Company or the Sponsors if such
disclosure would or might in IFC's reasonable opinion constitute
a breach of any law or regulation or be otherwise actionable at
the suit of any person.
Section 5.4. No Representations. (a) IFC makes no
representation or warranty as to the merits of the investment,
the financial condition of the Company, the Sponsors or of any
other Project participants, the validity or enforceability of the
IFC Investment Agreement (or any related agreements) or the
Project Funds Agreement or the performance by the Company, the
Sponsors or of any other Project participants of their
obligations contained in the IFC Investment Agreement (or any
related agreements), the Project Funds Agreement or of any other
agreements executed in connection with the Project respectively.
(b) The Participant confirms that it is not entering into
this Agreement in reliance on any statement, representation or
warranty by IFC and confirms that: (i) it has itself been, and
will continue to be, responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, affairs, status and nature of the Company, the
Sponsors and of any other Project participants; and (ii) it has
not solely relied, and will not solely rely, on IFC to appraise
or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of the Company, the
Sponsors or of any other Project participant.
(c) The Participant acknowledges that IFC makes no
representation or warranty, express or implied, as to, and
assumes no responsibility for, or with respect to, the accuracy
or completeness of the Information Memorandum dated April 1997 or
the other documents distributed in connection with the financing
hereby contemplated.
Section 5.5. IFC's Standard of Care. IFC shall exercise
the same care in the administration and enforcement of rights
under or in relation to the IFC Investment Agreement and the
Project Funds Agreement so far as the B Loan is concerned as it
exercises with respect to the A Loan or any other loans which are
for its own account. Nonetheless IFC shall not in the
administration of the Loan, be liable for any loss, costs,
damages or otherwise which may result from any act or omission on
the part of IFC unless caused by its gross negligence or willful
misconduct.
Section 5.6. Assignment. (a) The Participant represents
that it is acquiring the Relevant Participation for its own
account and not with a view to resale or distribution. The
Participant shall consult with IFC prior to any proposed sale,
transfer or other disposal ("assignment") of the whole or any
part of the Relevant Participation. It is however expressly
agreed that without the express consent of IFC (such consent not
to be unreasonably withheld or delayed), the Participant may not:
(i) assign the Relevant Participation before the full
Disbursement of the B Loan (or the cancellation of any
undisbursed balance); (ii) assign less than the whole of the
Relevant Participation or to more than one transferee; or (iii)
assign the whole or any part of the Relevant Participation to a
transferee which is not a financial institution or which is
incorporated or resident (as a branch or otherwise) in Nepal.
(b) Until such time as IFC has received written notice of
assignment (after IFC's consent has been obtained, if such
consent is required), IFC may deem and treat the Participant as
the absolute owner of the Relevant Participation for all
purposes, notwithstanding any notice to the contrary, and any
payment made to or on the order of the Participant shall
discharge the liability of IFC to the extent of the payment so
made. The provisions of this subsection are however expressly
subject to the provisions of any Participation Certificate which
may be issued, as provided in Section 2.4 (b) above.
(c) If the Participant does make any such assignment (with
IFC's consent, if so required), any assignee of the whole or any
part of the Relevant Participation shall be bound by the terms of
this Agreement as if references to the Participant and the
Relevant Participation were references to the assignee and its
Participation and otherwise mutatis mutandis.
(d) Solely for the purposes of item (iii) of subsection (a)
above it is expressly agreed and understood: (i) that a transfer
from one office or branch to another office or branch of the
Participant shall be treated as an assignment and accordingly
that no assignment to an office or branch resident in Nepal shall
be permitted without the express consent of IFC; and (ii) that
the Participant is initially taking the Relevant Participation
for the account of the office or branch disclosed in the Notices
Section of this Agreement (Section 5.10) and that the Participant
will inform IFC forthwith of any change in such office or
account.
Section 5.7. IFC's Rights not affected by other Investments
and Loans. The Participant expressly acknowledges that although
IFC may make other loans to and investments in the Company in the
future, that shall not diminish in any respect: (a) any of IFC's
rights, authority or discretion with respect to the
administration of the Loan or (b) IFC's freedom to exercise any
of such rights, authority or discretion in the manner it deems
appropriate under the terms of this Agreement.
Section 5.8. Reliance on Notices. In the absence of
manifest error, IFC may rely on any notice or other communication
received from the Participant, the Company or any other person as
contemplated in this Agreement which IFC reasonably believes to
be genuine and correct and to have been communicated or signed by
the person by whom it purports to be communicated or signed, and
IFC shall not be liable to the Participant for any of the
consequences of such reliance.
Section 5.9. Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA WITHOUT REGARD TO
THE CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTIONS 5-
1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK).
Section 5.10. Notices. Any notice or other communication
hereunder shall be in writing and may be delivered by hand, mail
(if the Participant has an address in the United States of
America), airmail, facsimile or telex and may be sent by either
party to the other at its address specified below (or by SWIFT or
by any other means in common usage, if agreed by the parties) or
to such other address as either party by notice shall have
designated. Any such notice or other communication shall be
effective upon receipt.
For the Participant:
Gerrit M. van Kampen
FMO, Koningskade 40
P.O. Box 93060
2509 AB The Hague
The Netherlands
Alternative address for communications by telex:
_____________________
_____________________
Alternative address for communications by facsimile:
70-3246187
Alternative address for communications by telephone:
70-3149660
For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Alternative address for communications by telex:
248423 - World Bank
64145 - World Bank
197688 - World Bank
82987 - World Bank
Alternative address for communications by facsimile:
(202) 974-4307
Section 5.11. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their
respective duly authorized representatives, have caused this
Agreement to be signed in their respective names, as of the date
and year first above written.
NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ
VOOR ONTWIKKELINGSLANDEN N.V.
By:
Dr. L.B.M. Mennes
Managing Director
INTERNATIONAL FINANCE CORPORATION
By:__________________________________________
Authorized Representative
ANNEX A
Page 1 of 1
RECEIPT
International Finance Corporation ("IFC") has received from
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden
N.V. (the "Participant") the principal amount of
______________________ Dollars ($__________) and has registered
on its books in the name of the Participant a participation of
that amount in the B Loan provided by IFC to Bhote Koshi Power
Company Private Limited (the "Company") pursuant to an IFC
Investment Agreement dated as of the Closing Date, between the
Company and IFC.
Such participation is subject to the terms of the Participation
Agreement between IFC and the Participant, dated as of the
Closing Date.
THIS RECEIPT IS NOT AN OBLIGATION OF THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT OR OF ANY GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:_________________________________________
Authorized Signature
ANNEX B
Page 1 of 5
PARTICIPATION CERTIFICATE
THIS IS TO CERTIFY that International Finance Corporation
("IFC") for value received has registered on its books in the
name of Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. (the "Participant") a participation (the
"Relevant Participation") in the principal amount of
_______________ Dollars ($__________) in the B Loan (the "B
Loan"), which together with the A Loan (the "A Loan"), was
provided by IFC to Bhote Koshi Power Company Private Limited (the
"Company"), pursuant to the IFC Investment Agreement (the "IFC
Investment Agreement") dated as of the Closing Date between the
Company and IFC.
ANNEX B
Page 2 of 5
1. The Relevant Participation shall be repayable in the
principal amounts and on the maturity dates, and shall bear
interest at the rate per annum all as set forth below:
Principal
Amount Maturity Date Interest
$__________ _____________ Three and one-half percent
$__________ _____________ (3.50%) per annum above the
$__________ _____________ rate which appears on the
$__________ _____________ Dow Jones Market Screen
$__________ _____________ Page the column headed
$__________ _____________ "USD" as of 11:00 a.m.,
$__________ _____________ London time, on the B Loan
$__________ _____________ Interest Determination
$__________ _____________ Date for one month, two
$__________ _____________ months, three months or
$__________ _____________ six months, whichever
$__________ _____________ period is closest to the
$__________ _____________ duration of the B Loan
$__________ _____________ Interest Period (or, if two
$__________ _____________ periods are equally close to
$__________ _____________ the duration of the B Loan
$__________ _____________ Interest Period, the longer
$__________ _____________ one), and shall be payable
in Dollars on the dates
provided for in the Special
Conditions of the IFC
Investment Agreement and
shall otherwise be in
accordance with Sections
3.3(b)(i), (ii), (iv) and (v)
thereof.
Total $_________
The Relevant Participation is limited to the principal and
interest specified above and does not include the A Loan or any
other part of any other investment by IFC in the Company.
ANNEX B
Page 3 of 5
2. This Participation Certificate is transferable by the
Participant, or by the Participant's attorney duly authorized in
writing, upon presentation and surrender thereof for
cancellation, duly endorsed, or accompanied by a proper
instrument of assignment and transfer. Upon such transfer, a new
certificate of the same tenor shall be issued to the transferee.
IFC may deem and treat the person in whose name this
Participation Certificate is registered on the books of IFC as
the absolute owner thereof for all purposes, notwithstanding any
notice to the contrary; and any payment to or on the order of
such person shall discharge the liability of IFC to the extent of
the payment so made.
3. Payment of all sums payable by IFC hereunder shall be
made in accordance with the provisions of the Participation
Agreement referred to below.
4. This Participation Certificate is issued pursuant to
the Participation Agreement dated as of the Closing Date, between
IFC and Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V., and is subject to the provisions of
that Agreement.
ANNEX B
Page 4 of 5
5. This Participation Certificate shall be surrendered to
IFC upon payment in full of all sums due hereunder.
THIS PARTICIPATION CERTIFICATE IS NOT AN OBLIGATION OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT OR OF ANY
GOVERNMENT.
INTERNATIONAL FINANCE CORPORATION
By:____________________________________
Authorized Signature
ANNEX B
Page 5 of 5
Date:
FOR VALUE RECEIVED (I) (we) hereby sell, assign and transfer
to
_________________________________________________________________
_________________________________________________ the certificate
issued by International Finance Corporation to which this form of
transfer is attached; and we hereby irrevocably authorize
International Finance Corporation to transfer such certificate on
its books.
Dated
Witness:
EXHIBIT NO. 147
SHARE RETENTION AND
PROJECT FUNDS AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED,
PANDA ENERGY INTERNATIONAL, INC.,
PANDA BHOTE KOSHI,
PANDA OF NEPAL,
HARZA ENGINEERING COMPANY INTERNATIONAL,
A LIMITED LIABILITY COMPANY,
HARZA ENGINEERING COMPANY INTERNATIONAL L.P.,
RESOURCE DEVELOPMENT CONSULTANTS,
A LIMITED LIABILITY COMPANY,
RDC OF NEPAL,
SOALTEE ENTERPRISES PRIVATE LTD.,
SOALTEE HOTEL LTD.,
SURYA ENTERPRISES PRIVATE LTD.,
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.,
INTERNATIONAL FINANCE CORPORATION, and
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS 2
ARTICLE 2.
SHARE RETENTION
Section 2.1 Restriction on Transfers 2
Section 2.2 Share Registry; Legends on Shares;
Notice of Transfers 4
ARTICLE 3.
DEFICIENCY FINANCING
Section 3.1 Notice of Deficiency 5
Section 3.2 Deficiency Fundings 5
Section 3.3 Deficiency Subscriptions 6
Section 3.4 Maximum Liability 8
Section 3.5 Terms of Obligations 9
ARTICLE 4.
ADDITIONAL COVENANTS
Section 4.1 Sponsors' Covenants 10
Section 4.2 Panda Guarantee 11
Section 4.3 Harza LP, RDC Wyoming and Harza LLC Guarantee 14
Section 4.4 Soaltee Enterprises, Soaltee Hotel and Surya
Guarantee 18
ARTICLE 5.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations, Warranties and Covenants of
the Sponsors 21
Section 5.2 Additional Representations, Warranties and
Covenants of Panda 23
ARTICLE 6.
FURTHER ASSURANCE
Section 6.1 Additional Approvals 24
Section 6.2 Exercise of Rights 24
ARTICLE 7.
PANDA PERFORMANCE GUARANTEE
Section 7.1 Performance Guarantee 25
ARTICLE 8.
MISCELLANEOUS
Section 8.1 Deficiency Notices; Guarantee Notices;
Funding Obligations; Etc 29
Section 8.2 No Waivers; Obligations Absolute 30
Section 8.3 Notices 31
Section 8.4 Governing Law Submission to
Jurisdiction; Venue 36
Section 8.5 Successors or Assigns 37
Section 8.6 No Waiver; Remedies Cumulative 38
Section 8.7 Severability 38
Section 8.8 Documents 38
Section 8.9 Headings Descriptive 39
Section 8.10 Amendment or Waiver 39
Section 8.11 Counterparts 39
Section 8.12 Limitation on Recourse 39
EXHIBIT A Terms and Conditions of Deficiency Loans A-1
EXHIBIT B Instructions to Bankers Trust Company B-1
EXHIBIT C Permitted Uses of Issuer Equity Distribution Fund
and Company Equity Distribution Fund C-1
SHARE RETENTION AND
PROJECT FUNDS AGREEMENT
SHARE RETENTION AND PROJECT FUNDS AGREEMENT, (this
"Agreement") dated as of the Closing Date, among BHOTE KOSHI
POWER COMPANY PRIVATE LIMITED, a private limited liability
company organized and existing under the Nepal Company Act, 2021
(the "Company"), PANDA ENERGY INTERNATIONAL, INC, a corporation
organized and existing under the laws of the State of Texas
("Panda"), PANDA BHOTE KOSHI, an exempted company with limited
liability organized and existing under the laws of the Cayman
Islands ("Panda Bhote Koshi"), PANDA OF NEPAL, an exempted
company with limited liability organized and existing under the
laws of the Cayman Islands ("Panda of Nepal"), HARZA ENGINEERING
COMPANY INTERNATIONAL, A LIMITED LIABILITY COMPANY, a limited
liability company organized and existing under the laws of the
State of Wyoming ("Harza LLC"), HARZA ENGINEERING COMPANY
INTERNATIONAL L.P., a limited partnership organized and existing
under the laws of the State of Delaware ("Harza LP"), RESOURCE
DEVELOPMENT CONSULTANTS, A LIMITED LIABILITY COMPANY, a limited
liability company organized and existing under the laws of the
State of Wyoming ("RDC Wyoming"), RDC OF NEPAL, an exempted
company with limited liability organized and existing under the
laws of the Cayman Islands ("RDC of Nepal"), SOALTEE ENTERPRISES
PRIVATE LTD., a private company organized and existing under the
laws of Nepal ("Soaltee Enterprises"), SOALTEE HOTEL LTD., a
public company organized and existing under the laws of Nepal
("Soaltee Hotel"), SURYA ENTERPRISES PRIVATE LTD., a private
company organized and existing under the laws of Nepal ("Surya"),
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD, a private limited
company organized and existing under the laws of Nepal ("HIPC",
and together with Panda, Harza LP, Harza LLC, HIPC, Panda of
Nepal, Panda Bhote Koshi, RDC Wyoming, RDC of Nepal, Soaltee
Enterprises, Soaltee Hotel and Surya, the "Sponsors"), DEG-
DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH, a company
organized and existing under the laws of the Federal Republic of
Germany ("DEG"), and INTERNATIONAL FINANCE CORPORATION, an
international organization organized and existing by virtue of
the Articles of Agreement among its member countries ("IFC")(both
DEG and IFC hereinafter being collectively referred to as the
"Lenders").
PRELIMINARY STATEMENTS:
The Company has been granted the right to build, own,
and operate a 36 MW (nominal net) hydroelectric power plant in
the Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant
pursuant to that certain IFC Investment Agreement dated as of the
Closing Date (the "IFC Investment Agreement").
DEG is willing to provide financing for the power plant
pursuant to that certain DEG Investment Agreement dated as of the
Closing Date (the "DEG Investment Agreement," and together with
the IFC Investment Agreement, the "Investment Agreement").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
The Investment Agreement, requires, inter alia, as a
condition precedent to the obligations of each of the Lenders
thereunder, the execution of this Agreement to provide for
certain covenants and agreements of the Sponsors in support of
the project and such financing.
In consideration of the Lenders entering into the
Investment Agreement, and to induce each of the Lenders to make
disbursements thereunder, the Sponsors and the Company have
agreed to enter into this Agreement and be bound by all covenants
and obligations provided for herein.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1.
DEFINITIONS
For all purposes of this Agreement, (i) capitalized
terms not otherwise defined herein shall have the meanings set
forth in Schedule A to the General Conditions and (ii) the
principles of construction set forth in Schedule A to the General
Conditions shall apply.
ARTICLE 2.
SHARE RETENTION
Section 2.1 Restriction on Transfers.
(a) From the date hereof until the Project Completion Date:
(i) Soaltee Enterprises, Soaltee Hotel
and Surya (the "HIPC Shareholders") shall at
all times own in the aggregate 100.0% of the
total shares of HIPC, of which at least 3.0%
of such 100.0% shall be owned by Soaltee
Hotel; provided, however, that the HIPC
Shareholders may from time to time Transfer
among the HIPC Shareholders an amount of
shares of HIPC not to exceed five percent
(5%) of the total shares of HIPC and provided
further that Soaltee Hotel shall at all times
own at least 3% of the total shares of HIPC.
(ii) Panda and/or a substitute
acceptable to the Lenders shall have the
right to effect a Transfer of shares held by
it from time to time in Panda of Nepal;
provided, however, that Panda and/or such
substitute must at all times own
(beneficially through Panda's and/or such
substitute's ownership interest in Panda of
Nepal) at least fifty-one percent (51%) of
the total Shares of the Company and provided
further that if such Transfer of shares is
not effected in connection with a Public
Offering, the Lenders shall have the right to
approve any proposed transferee. For
purposes of this Section 2.1, Public Offering
shall mean any underwritten public offering
of equity securities or shares in Panda of
Nepal on a firm commitment basis in
accordance with applicable securities
regulations of any stock exchange.
(iii) Harza LP and RDC Wyoming shall
at all times own one hundred percent (100%)
of the total shares of RDC of Nepal.
(iv) Each of HIPC, Panda of Nepal and
RDC of Nepal shall not effect any Transfer of
Shares held by it, except (A) for the
creation of the Lien in favor of the Trustee
for the benefit of the Lenders pursuant to
its Share Pledge Agreement, and (B) that HIPC
may, up to one and one half (1-1/2) years
from the date hereof, Transfer an amount of
Shares not to exceed five percent (5%) of the
total Shares of the Company to Panda of Nepal
and/or RDC of Nepal; provided, however, that
in the case of clause (B) RDC of Nepal shall
purchase a minimum of one-half of the Shares
being Transferred by HIPC.
(b) From the Project Completion Date until five (5)
years thereafter (or, if earlier, the Termination Date), Panda
and/or a substitute acceptable to the Lenders (beneficially
through Panda's and/or such substitute's ownership interest in
Panda of Nepal), the HIPC Shareholders (beneficially through
their ownership interests in HIPC), and Harza LP and Harza LLC
(beneficially through their ownership interests in RDC of Nepal),
in the aggregate, must at all times own at least fifty-one
percent (51%) of the total Shares of the Company. Panda and/or a
substitute acceptable to the Lenders (beneficially through
Panda's and/or such substitute's ownership interest in Panda of
Nepal) must at all times during such period own at least thirty
percent (30%) of the total Shares of the Company. If the HIPC
Shareholders own (beneficially through their ownership interests
in HIPC) any of the aforesaid fifty-one percent (51%) of the
total Shares of the Company, then Soaltee Hotel must retain at
least the same percentage of the aggregate HIPC Shareholder
ownership (beneficially through its ownership interest in HIPC)
of the Shares in the Company which Soaltee Hotel currently
maintains.
(c) At all times after the expiration of such five (5)
year period following the Project Completion Date and until the
Termination Date, Panda and/or a substitute acceptable to the
Lenders (beneficially through Panda's and/or such substitute's
ownership interest in Panda of Nepal), must own at least thirty
percent (30%) of the total Shares of the Company. For purposes
of this Section 2.1, Termination Date shall mean the last date on
which the following occurs: (x) payment in full of all
Obligations has been made, and all obligations of the Lenders
under the Loan Documents have terminated or expired, and (y) a
period of one hundred twenty (120) days (or such other period as
may be applicable under applicable bankruptcy, insolvency or
similar laws) has elapsed since the condition set out in
clause (x) is satisfied without any court determining that the
Company is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to the Lenders or the Trustee by the Company will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters.
(d) For the avoidance of doubt and by way of example,
if Panda and/or a substitute acceptable to the Lenders were to
own fifty percent (50%) of the shares in Panda of Nepal, and
Panda of Nepal were to own fifty percent (50%) of the Shares of
the Company, then, for purposes of this Section 2.1, Panda and/or
such substitute would own (beneficially through Panda's and/or
such substitute's ownership interest in Panda of Nepal) twenty-
five percent (25%) of the total Shares of the Company.
Section 2.2 Share Registry; Legends on Shares;
Notice of Transfers. The Company shall (i) to the extent
permitted by law, record in the share registry of the Company the
restrictions on Transfer of the Shares set forth in Section 2.1
and in the Company's governing documents and shall note such
restrictions on Transfers on the stock certificate(s) for Shares
issued by the Company, (ii) to the extent permitted by law, not
register any Transfer of Shares to any Person if the result of
such Transfer would contravene the provisions of Section 2.1, and
(iii) promptly give notice to the Lenders of any request received
by the Company to effect any Transfer of Shares held or owned by
any of the Sponsors, together with details of such request.
ARTICLE 3.
DEFICIENCY FINANCING
Section 3.1 Notice of Deficiency. If at any time
and from time to time prior to the Project Completion Date, a
Project Funds Shortfall exists, either of the Lenders may issue a
Deficiency Notice to the Company and the Sponsors specifying the
amount of such Deficiency. In addition, in support of Panda's
Deficiency funding obligations hereunder, either of the Lenders
may issue a Deficiency Notice to Bankers Trust Company, as the
trustee for the Issuer Equity Distribution Fund and the Company
Equity Distribution Fund specifying the amount of such
Deficiency.
Section 3.2 Deficiency Fundings.
(a) Each Sponsor hereby agrees that each Deficiency
shall be funded by the Sponsors on the following pro rata basis:
(i) RDC of Nepal, jointly and severally with Harza LP, RDC
Wyoming and Harza LLC, shall be responsible for funding 5.56% of
any Deficiency, (ii) Panda of Nepal, jointly and severally with
Panda and Panda Bhote Koshi, shall be responsible for funding
83.33% of any Deficiency, and (iii) HIPC, jointly and severally
with Soaltee Enterprises, Soaltee Hotel and Surya, shall be
responsible for funding 11.11% of any Deficiency, provided that
if HIPC Transfers any of its Shares in the Company to Panda of
Nepal and/or RDC of Nepal as permitted under Section 2.1(a)(iv)
hereof, or if Shares in the Company are issued to Panda of Nepal
or RDC of Nepal pursuant, respectively, to Sections 4.2(a)(ii)
and 4.3(a)(ii) hereof, the foregoing percentages shall be
adjusted to equal the percentages of the total Shares of the
Company owned by each of Panda of Nepal, RDC of Nepal and HIPC
calculated by dividing the total number of Shares of the Company
owned by each of Panda of Nepal, RDC of Nepal and HIPC
immediately following the Transfer by the total number of Shares
of the Company owned by Panda of Nepal, RDC of Nepal and HIPC in
the aggregate. The percentages specified under this Section 3.2
to be applicable to each Sponsor, as aforesaid and as adjusted,
as applicable, based on the proviso contained in the preceding
sentence, are referred to herein with respect to such Sponsor as
its "Sponsor Share." Each Deficiency to be funded hereunder
shall be in the form of (x) a Deficiency Subscription in
accordance with the provisions of this Article 3, or (y) with the
consent of the Lenders, by Deficiency Loans in accordance with
the provisions of, and subject to the terms contained in this
Article 3 and Exhibit A hereto.
(b) Upon issuance to Panda and Bankers Trust Company,
as the trustee for the Issuer Equity Distribution Fund and the
Company Equity Distribution Fund by either of the Lenders of any
Deficiency Notice from time to time, Panda shall (i) subject to
Section 4.7(a)(i) and 4.7(b) of the Panda Global Energy
Indenture, cause Panda Global Energy to submit one or more Panda
Global Energy Officer's Certificates to Bankers Trust Company, as
trustee under the Panda Global Energy Indenture, pursuant to
Section 4.7(a)(ii) of the Panda Global Energy Indenture,
authorizing the transfer of monies on deposit in the Issuer
Equity Distribution Fund to the Deficiency Sub-Account, and (ii)
subject to Sections 4.5(a)(i) and 4.5(b) of the Panda Global
Holdings Indenture, cause Panda Global Holdings to submit one or
more Panda Global Holdings Officer's Certificates to Bankers
Trust Company, as trustee under the Panda Global Holdings
Indenture, pursuant to Section 4.5(a)(ii) of the Panda Global
Holdings Indenture, authorizing the transfer of monies on deposit
in the Company Equity Distribution Fund to the Deficiency Sub-
Account, up to an aggregate amount equal to the lesser of
(x) Panda's Sponsor Share of the amount of the Deficiency and
(y) Panda's Sponsor Share of ten million Dollars ($10,000,000),
and upon receipt of such Panda Global Energy Officer's
Certificates and Panda Global Holdings Officer's Certificates,
Bankers Trust Company shall transfer from time to time up to such
amount to the Deficiency Sub-Account. In the event that the
Senior Secured Notes issued under the Panda Global Energy
Indenture and the Panda Global Holdings Indenture are repaid
prior to the Project Completion Date or the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund are
otherwise no longer in place, Panda shall deliver to the Trustee
an irrevocable standby letter of credit issued in favor of the
Trustee by an Approved Bank in an amount at least equal to the
lesser of (i) Panda's Sponsor Share of the amount of the
Deficiency and (ii) Panda's Sponsor Share of ten million Dollars
($10,000,000), and in form and substance satisfactory to the
Lenders (including, without limitation, evidence satisfactory to
the Lenders that the issuer thereof has no recourse against the
Company or any of its assets) (the "Panda Letter of Credit"). In
the event that the Panda Letter of Credit is in an amount less
than Panda's Sponsor Share of ten million Dollars ($10,000,000)
and any further Deficiency Notice is delivered from time to time,
the Panda Letter of Credit shall be increased such that it is at
all times in an amount at least equal to Panda's Sponsor Share of
the Deficiency existing from time to time.
Section 3.3 Deficiency Subscriptions.
(a) If the Sponsors elect to, or if the Lenders
require the Sponsors to, make a Deficiency Subscription to fund a
Deficiency, the Sponsors shall, within seven (7) Business Days of
receipt of the Deficiency Notice, provide notice to the Company
and the other shareholders of the Company of such election or
requirement. The Company agrees to take all actions (corporate
or otherwise) necessary to authorize and offer for subscription
to its shareholders, during the Offering Period, a number of
Shares at a purchase price of not less than Ten Dollars
(US$10.00) per Share, payable in cash, that will enable the
Company to receive a net subscription price equal to the amount
of the relevant Deficiency, subject to Section 3.4 hereof. Each
Sponsor hereby agrees to subscribe and pay, at a purchase price
of not less than Ten Dollars ($10.00) per Share, for its Sponsor
Share of such Shares within fifteen (15) days following the
Offering Period; it being understood and agreed that (i) RDC of
Nepal shall be jointly and severally obligated with Harza LP, RDC
Wyoming and Harza LLC, (ii) Panda of Nepal shall be jointly and
severally obligated with Panda and Panda Bhote Koshi, and (iii)
HIPC shall be jointly and severally obligated with Soaltee
Enterprises, Soaltee Hotel and Surya for the portion or portions
of any Deficiency as provided in this Section 3.3(a) or in
Section 3.3(b) hereof. The Company agrees to issue and deliver
all such Shares against payment therefor.
(b) Deficiency Loans. If the Sponsors elect to make
Deficiency Loans to fund the Deficiency, and the Lenders consent
to such election, such Deficiency Loans shall be provided to the
Company, subject to Section 3.4 hereof, within the Offering
Period in U.S. Dollars (or such other currency as may be approved
by the Lenders) in the form of unsecured loans subordinated in
payment, liquidation and enforcement of remedies to the Loans, as
evidenced by written instruments in form and substance
satisfactory to the Lenders, on the terms and conditions
(including subordination provisions) set forth in Exhibit A
hereto. All such written instruments evidencing the Deficiency
Loans shall be delivered to the Trustee and the Lenders and held
until (x) payment in full of all Obligations has been made, and
all obligations of the Lenders under the Loan Documents have
terminated or expired, and (y) a period of one hundred twenty
(120) days (or such other period as may be applicable under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (x) is satisfied without
any court determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters.
(c) Application of Deficiency Fundings.
(i) The Company shall apply the
proceeds of any Deficiency Subscription or
Deficiency Loan in accordance with the
Investment Agreement and the Trust and
Retention Agreement.
(ii) On the Business Day immediately
following the Commercial Operation Date, the
balance remaining, if any, of any proceeds of
any Deficiency Loan or Deficiency
Subscription on deposit in the Construction
Sub-Account shall be applied pursuant to
Section 4.7(d) of the Trust and Retention
Agreement. Notwithstanding any such
application, the Lenders shall maintain the
right to issue a Deficiency Notice (and the
Sponsors shall be bound thereby) in respect
of any future Project Funds Shortfall at any
time thereafter in accordance with the terms
of this Agreement. On the Business Day
immediately following the Project Completion
Date, the balance remaining, if any, of any
proceeds of any Deficiency Loan or Deficiency
Subscription on deposit in the Construction
Sub-Account shall be applied pursuant to
Section 4.7(d) of the Trust and Retention
Agreement.
(iii) On the Business Day
immediately following the Project Completion
Date, after making any payments required
pursuant to the last sentence of
Section 3.3(c)(ii) hereof, the balance
remaining, if any, of all amounts paid
pursuant to Section 2.1(a) or 2.1(b) of the
Subscription Agreements and loan and equity
disbursements made pursuant to the Investment
Agreement on deposit in the Construction Sub-
Account shall be applied pursuant to
Section 4.7(d) of the Trust and Retention
Agreement.
(iv) Prior to the Project Completion
Date, amounts then deposited in the
Deficiency Sub-Account pursuant to
Section 3.2(b) hereof shall be transferred to
Panda provided that (i) Panda has delivered
to the Trustee an irrevocable standby letter
of credit issued in favor of the Trustee by
an Approved Bank in the amount to be
transferred to Panda and in form and
substance satisfactory to the Lenders
(including, without limitation, evidence
satisfactory to the Lenders that the issuer
thereof has no recourse against the Company
or any of its assets) (the "Panda Project
Completion Letter of Credit") and, (ii) to
the extent the Panda Project Completion
Letter of Credit is at such time not issued
in the maximum amount which may be required
by Section 3.2(b) hereof (i.e., Panda's
Sponsor Share of ten million Dollars
($10,000,000)), Panda shall have made
arrangements satisfactory to the Lenders
whereby (x) the face amount of the Panda
Project Completion Letter of Credit shall be
increased up to the maximum amount which may
be required by Section 3.2(b) hereof as cash
flow is generated by the Panda Projects or
(y) the Deficiency Sub-Account shall continue
to be funded by monies transferred from the
Issuer Equity Distribution Fund and the
Company Equity Distribution Fund up to the
maximum amount which may be required by
Section 3.2(b) hereof.
(v) On the Business Day immediately
following the Project Completion Date, the
balance remaining, if any, in the Deficiency
Sub-Account shall be transferred to Panda and
the Panda Project Completion Letter of Credit
shall be delivered to Panda if and to the
extent such letter of credit has not been
drawn upon in full.
Section 3.4 Maximum Liability. Notwithstanding any
provision of this Agreement or any other Principal Document to
the contrary, the aggregate amount of Deficiency Loans and
Deficiency Subscriptions to be provided by the Sponsors pursuant
to this Article 3, together with other amounts expended by the
Sponsors to comply with other obligations under this Agreement
(other than under Sections 4.2, 4.3 and 4.4 and Article 7 of this
Agreement), shall not exceed ten million Dollars ($10,000,000),
it being expressly acknowledged and agreed that any amounts
returned to the Sponsors in accordance with Section 3.3(c)(ii),
3.3(c)(iv) hereof or Section 4.7(d) of the Trust and Retention
Agreement shall not be credited toward (and thus not reduce) the
aforesaid ten million Dollar ($10,000,000) maximum liability. It
is understood and agreed that (i) RDC of Nepal shall be jointly
and severally obligated with Harza LP, RDC Wyoming and Harza LLC,
(ii) Panda of Nepal shall be jointly and severally obligated with
Panda and Panda Bhote Koshi, and (iii) HIPC shall be jointly and
severally obligated with Soaltee Enterprises, Soaltee Hotel and
Surya for the funding of the portion or portions of any
Deficiency as provided in Sections 3.2(a)(i), 3.2(a)(ii) and
3.2(a)(iii), respectively.
Section 3.5 Terms of Obligations. The obligation of
each Sponsor under this Article 3 shall commence upon the initial
Disbursement under the Investment Agreement and shall terminate
for such Sponsor upon the earliest to occur of the following four
events: (i) with respect to such Sponsor, (x) the payment in full
of the maximum liability of such Sponsor specified in Section 3.4
hereof, and (y) a period of one hundred twenty (120) days (or
such other period as may be applicable under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (i) (x) is satisfied without any
court determining that the Sponsor is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Sponsor will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters; (ii) the date on which (x) the payment in full by HMGN
of the Purchase Price (as defined in the Project Agreement)
pursuant to Section 6 of the Project Agreement and receipt
thereof by the Lenders and (y) a period of one hundred twenty
(120) days (or such other period as may be applicable under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (ii) (x) is satisfied
without any court determining that HMGN is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made by HMGN will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters; (iii) (x) payment in
full of all Obligations has been made, and all obligations of the
Lenders under the Loan Documents have terminated or expired, and
(y) a period of one hundred twenty (120) days (or such other
period as may be applicable under applicable bankruptcy,
insolvency or similar laws) has elapsed since the condition set
out in clause (iii) (x) is satisfied without any court
determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters; or (iv) the occurrence of the Project Completion Date.
ARTICLE 4.
ADDITIONAL COVENANTS
Section 4.1 Sponsors' Covenants.
(a) Each Sponsor hereby agrees (i) not to abandon or
agree to abandon the Project at any time from the date hereof
until (x) payment in full of all Obligations has been made, and
all obligations of the Lenders under the Loan Documents have
terminated or expired, and (y) a period of one hundred twenty
(120) days (or such other period as may be applicable under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (x) is satisfied without
any court determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters; (ii) to use its best efforts to cause the Commercial
Operation Date to occur by December 31, 1999; (iii) to vote its
Shares so as to direct or cause the Company to timely perform its
obligations under the Principal Documents, and (iv) if either of
the Lenders shall have exercised remedies upon an Event of
Default and for so long as such Sponsor continues to hold voting
rights in respect of its Shares after such Event of Default, to
exercise such voting rights as directed by either Lender.
(b) Each Sponsor hereby further covenants and agrees
that it shall not authorize or permit the commencement of any
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or the
Company or its debts or the debts of the Company under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it or the
Company or any substantial part of its or the Company's property
or to consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or
other proceeding commenced against it or the Company, or to make
a general assignment for the benefit of its creditors or the
creditors of the Company. Each Sponsor agrees not to commence or
join with any other Person (other than the Lenders) in commencing
any proceeding against the Company under any bankruptcy,
reorganization, liquidation or insolvency law or statute now or
hereafter in effect in any jurisdiction.
(c) Each of the Sponsors hereby acknowledges and
agrees that the rights of such Sponsor to receive any payments
from the Company on account of Indebtedness incurred by the
Company to the Sponsor, or arising out of or in connection with
the Sponsor's interest in the Company or its rights under this
Agreement, shall be payable by the Company only from funds
available to the Company in the Holding Account or the Nepal
Holding Account (and not otherwise committed by the Company).
Each Sponsor agrees that any distributions made by the Company to
such Sponsor in its capacity, directly or indirectly, as a
shareholder of, or lender to, the Company with funds other than
funds available to the Company in the Holding Account or the
Nepal Holding Account shall be restored to the Company by such
Sponsor by deposit into an account designated by the Lenders,
promptly upon demand by the Lenders or the Company or upon such
Sponsor becoming aware of receipt of such noncomplying
distribution.
(d) Each of Panda and Harza LP hereby further
covenants and agrees that, from the date hereof until the Project
Completion Date, it shall furnish to each of the Lenders its
Financial Statements for the most recent Quarter.
(e) Each of Panda and Harza LP hereby further
covenants and agrees that after the date hereof, it shall furnish
to each of the Lenders its Annual Financial Statements for the
most recent Fiscal Year.
Section 4.2 Panda Guarantee.
(a) Panda hereby unconditionally and irrevocably
guarantees, to and for the benefit of the Lenders and the
Trustee:
(i) payment and performance of all
obligations and liabilities of Panda of Nepal
under the Shareholders' Agreement, including,
without limitation, the obligations to buy IFC's
shares in the Company as provided in
Section 3.5(b) thereof, and all obligations and
liabilities of Panda of Nepal under the
Subscription Agreement between Panda of Nepal and
the Company, except the obligations and
liabilities of Panda of Nepal under Sections
2.1(a), (c) and (d) thereof and Section 3.2
thereof, insofar as such Section 3.2 relates to
the provisions of such Sections 2.1(a), (c) and
(d) (collectively, the "Panda Guaranteed
Obligations"); and
(ii) payment and performance of all
obligations and liabilities of HIPC under Sections
2.1(a) and (c) of the Subscription Agreement
between HIPC and the Company and Section 3.2 (to
the extent that Section 3.2 relates to the
provisions of such Sections 2.1(a) and (c)) of the
Subscription Agreement between HIPC and the
Company (collectively, the "Panda-HIPC Guaranteed
Obligations"); provided, however, that Panda's
maximum liability under this Section 4.2(a)(ii)
shall not exceed one million one hundred seventy-
nine thousand eight hundred Dollars ($1,179,800).
In the event that Panda is required to pay any of
HIPC's obligations pursuant to the guarantee
contained in this Section 4.2(a)(ii), all of the
shares in the Company corresponding to such
payment that otherwise would have been issued in
favor of HIPC shall instead be issued in favor of
Panda of Nepal.
The obligations of Panda under this Section 4.2 are
irrevocable, absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of any
Principal Document or any other agreement or instrument referred
to herein or therein, or any substitution, release or exchange of
any other guarantee of or security for the Panda Guaranteed
Obligations or the Panda-HIPC Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of
Panda hereunder shall be absolute and unconditional under any and
all circumstances. The obligations of Panda under this
Section 4.2 shall not be subject to any abatement, reduction,
limitation, impairment, termination, set-off, defense,
withholding, counterclaim or recoupment whatsoever or any right
of Panda of Nepal or HIPC to any of the same, and shall not be
released or discharged until the later of (i) the date on which
(x) payment in full of all Obligations has been made, and all
obligations of the Lenders under the Loan Documents have
terminated or expired, and (y) a period of one hundred twenty
(120) days (or such other period as may be applicable under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (x) is satisfied without
any court determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters or (ii) the date on which the obligations of Panda of
Nepal to purchase the applicable IFC's shares in the Company
pursuant to Section 3.5(b) of the Shareholders' Agreement have
been satisfied and the outside time by which such obligations to
buy IFC's shares in the Company could exist pursuant to such
Section 3.5(b) has passed. Without limiting the generality of
the foregoing, it is agreed that the occurrence of any one or
more of the following (without notice to Panda) shall not alter
or impair the liability of Panda hereunder, which shall remain
absolute and unconditional as described above:
(A) at any time or from time to
time, the time for any performance of or
compliance by any Person with the Panda
Guaranteed Obligations or the Panda-HIPC
Guaranteed Obligations shall be extended, or
such performance or compliance shall be
waived;
(B) any of the acts mentioned in
any of the provisions of any of the Principal
Documents or any other agreement or
instrument referred to herein or therein
shall be done or omitted by any Person;
(C) the maturity of the Panda
Guaranteed Obligations or the Panda-HIPC
Guaranteed Obligations shall be accelerated,
or the Panda Guaranteed Obligations or the
Panda-HIPC Guaranteed Obligations shall be
modified, supplemented or amended in any
respect, or any right under any Principal
Document or any other agreement or instrument
referred to herein or therein shall be waived
or any other guarantee of the Panda
Guaranteed Obligations or the Panda-HIPC
Guaranteed Obligations or any security
therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(D) any Lien granted to, or in
favor of, the Trustee or any other Person as
security for the Panda Guaranteed Obligations
or the Panda-HIPC Guaranteed Obligations
shall fail to be created or perfected or have
the priority contemplated therefor;
(E) the bankruptcy or insolvency
of the Company, Panda of Nepal, HIPC or any
other Person or any reorganization,
arrangement, compromise, composition or plan
affecting the Company, Panda of Nepal, HIPC
or any other Person shall occur; or
(F) this Agreement or any other
agreement referred to herein shall be
rejected in any bankruptcy, insolvency or
similar proceeding (nothing herein being an
admission that any obligation hereunder or
thereunder is properly classifiable as an
executory obligation).
(b) To the fullest extent permitted by applicable law,
Panda hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement
that the Trustee, the Lenders or any other Person exhaust any
right, power or remedy or proceed against any other Person under
any Principal Document or any other agreement or instrument
referred to herein or therein, or against any other Person or
against any collateral under any other guarantee of, or security
for, the Panda Guaranteed Obligations or the Panda-HIPC
Guaranteed Obligations.
(c) The obligations of Panda shall be automatically
reinstated if, and to the extent that, for any reason any payment
by or on behalf of Panda in respect of the Panda Guaranteed
Obligations or the Panda-HIPC Guaranteed Obligations is rescinded
or must be otherwise restored by the Trustee, the Lenders or any
other Person, whether as a result of any proceedings under
bankruptcy, insolvency or similar laws, reorganization or
otherwise.
(d) Until payment and satisfaction in full of the Panda
Guaranteed Obligations, the Panda-HIPC Guaranteed Obligations and
all Obligations and the expiration or termination of the
Commitment, Panda shall not exercise any claim, right or remedy
that it may now have or may hereafter acquire against Panda of
Nepal, HIPC or the Company arising under or in connection with
this Agreement, including, without limitation, any claim, right
or remedy of subrogation, contribution, reimbursement,
exoneration, indemnification or participation arising under
contract, by law or otherwise in any claim, right or remedy of
the Trustee, the Lenders or any other Person against the Company,
Panda of Nepal or HIPC or any other Person or any Security. If,
notwithstanding the preceding sentence, any such amount shall be
paid to Panda at any time when the Obligations and Commitment
shall not have been paid in full, expired or terminated (as
applicable), such amount shall be held by Panda, in trust for the
Trustee and the Lenders, segregated from other funds of Panda,
and be turned over to the Trustee in the exact form received by
Panda (duly endorsed by Panda to the Trustee, if required), to be
applied against the Obligations, whether matured or unmatured, in
accordance with the Investment Agreement and the other Loan
Documents.
(e) Each of Panda of Nepal, HIPC and Panda agrees that, as
between Panda and the Trustee, the obligations of Panda under
this Section 4.2 may become, or may be declared to be, forthwith
due and payable as provided herein notwithstanding any stay,
injunction or other prohibition preventing such declaration (or
such obligations from becoming automatically due and payable) as
against Panda of Nepal or HIPC and that, in the event of such
declaration (or such obligations becoming automatically due and
payable), such obligations (whether or not due and payable by
Panda) shall forthwith become due and payable by Panda for
purposes of this Section 4.2.
(f) The guarantees in this Section 4.2 are continuing
guarantees and shall apply to any Panda Guaranteed Obligations or
Panda-HIPC Guaranteed Obligations whenever arising. The
obligations of Panda of Nepal, HIPC and Panda hereunder shall
remain unchanged and in full force and effect in accordance with
the terms hereof notwithstanding any transfer of any interest
(whether direct or indirect) in the Company, Panda, Panda of
Nepal or HIPC.
Section 4.3 Harza LP, RDC Wyoming and Harza LLC Guarantee.
(a) Harza LP, RDC Wyoming and Harza LLC hereby jointly and
severally unconditionally and irrevocably guarantee, to and for
the benefit of the Lenders and the Trustee:
(i) payment and performance of all
obligations and liabilities of RDC of Nepal under
the Shareholders' Agreement, including, without
limitation, the obligations to buy IFC's shares in
the Company as provided in Section 3.5(b) thereof,
and all obligations and liabilities of RDC of
Nepal under the Subscription Agreement between RDC
of Nepal and the Company, except the obligations
and liabilities of RDC of Nepal under Sections
2.1(a), (c) and (d) thereof and Section 3.2
thereof, insofar as such Section 3.2 relates to
the provisions of such Sections 2.1(a), (c) and
(d) (collectively, the "RDC Guaranteed
Obligations"); and
(ii) payment and performance of all
obligations and liabilities of HIPC under Sections
2.1(a) and (c) of the Subscription Agreement
between HIPC and the Company and Section 3.2 (to
the extent that Section 3.2 relates to the
provisions of such Sections 2.1(a) and (c)) of the
Subscription Agreement between HIPC and the
Company (collectively, the "Harza-HIPC Guaranteed
Obligations"); provided, however, that the maximum
collective liability of Harza LP, RDC Wyoming and
Harza LLC under this Section 4.3(a)(ii) shall not
exceed two hundred ninety-four thousand nine
hundred fifty Dollars ($294,950). In the event
that Harza LP, RDC Wyoming and Harza LLC are
collectively required to pay any of HIPC's
obligations pursuant to the guarantee contained in
this Section 4.3(a)(ii), all of the shares in the
Company corresponding to such payment that would
have been issued in favor of HIPC shall instead be
issued in favor of RDC of Nepal.
The obligations of each of Harza LP, RDC Wyoming and
Harza LLC under this Section 4.3 are irrevocable, absolute and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any Principal Document or any
other agreement or instrument referred to herein or therein, or
any substitution, release or exchange of any other guarantee of
or security for the RDC Guaranteed Obligations or the Harza-HIPC
Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, it being the intent of this
Section 4.3 that the obligations of each of Harza LP, RDC Wyoming
and Harza LLC hereunder shall be absolute and unconditional under
any and all circumstances. The obligations of each of Harza LP,
RDC Wyoming and Harza LLC under this Section 4.3 shall not be
subject to any abatement, reduction, limitation, impairment,
termination, setoff, defense, withholding, counterclaim or
recoupment whatsoever or any right of RDC of Nepal or HIPC to any
of the same, and shall not be released or discharged until the
later of (i) the date on which (x) payment in full of all
Obligations has been made, and all obligations of the Lenders
under the Loan Documents have terminated or expired, and (y) a
period of one hundred twenty (120) days (or such other period as
may be applicable under applicable bankruptcy, insolvency or
similar laws) has elapsed since the condition set out in clause
(x) is satisfied without any court determining that the Company
is insolvent or, if such determination is made within that time,
the Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters or (ii) the date on which the
obligations of RDC of Nepal to purchase the applicable IFC's
shares in the Company pursuant to Section 3.5(b) of the
Shareholders' Agreement have been satisfied and the outside time
by which such obligations to buy IFC's shares in the Company
could exist pursuant to such Section 3.5(b) has passed. Without
limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following (without notice to
any of Harza LP, RDC Wyoming or Harza LLC) shall not alter or
impair the liability of any of Harza LP, RDC Wyoming or Harza LLC
hereunder, which shall remain absolute and unconditional as
described above:
(A) at any time or from time to
time, the time for any performance of or
compliance by any Person with the RDC
Guaranteed Obligations or the Harza-HIPC
Guaranteed Obligations shall be extended, or
such performance or compliance shall be
waived;
(B) any of the acts mentioned in
any of the provisions of any of the Principal
Documents or any other agreement or
instrument referred to herein or therein
shall be done or omitted by any Person;
(C) the maturity of the RDC
Guaranteed Obligations or the Harza-HIPC
Guaranteed Obligations shall be accelerated,
or the RDC Guaranteed Obligations or Harza-
HIPC Guaranteed the Obligations shall be
modified, supplemented or amended in any
respect, or any right under any Principal
Document or any other agreement or instrument
referred to herein or therein shall be waived
or any other guarantee of the RDC Guaranteed
Obligations or Harza-HIPC Guaranteed
Obligations or any security therefor shall be
released or exchanged in whole or in part or
otherwise dealt with;
(D) any Lien granted to, or in
favor of, the Trustee or any other Person as
security for the RDC Guaranteed Obligations
or the Harza-HIPC Guaranteed Obligations
shall fail to be created or perfected or have
the priority contemplated therefor;
(E) the bankruptcy or insolvency
of the Company, RDC of Nepal, HIPC or any
other Person or any reorganization,
arrangement, compromise, composition or plan
affecting the Company, RDC of Nepal, HIPC or
any other Person shall occur; or
(F) this Agreement or any other
agreement referred to herein shall be
rejected in any bankruptcy, insolvency or
similar proceeding (nothing herein being an
admission that any obligation hereunder or
thereunder is properly classifiable as an
executory obligation).
(b) To the fullest extent permitted by applicable law, each
of Harza LP, RDC Wyoming and Harza LLC hereby expressly waives
diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Trustee, the
Lenders or any other Person exhaust any right, power or remedy or
proceed against any other Person under any Principal Document or
any other agreement or instrument referred to herein or therein,
or against any other Person or against any collateral under any
other guarantee of, or security for, the RDC Guaranteed
Obligations.
(c) The obligations of each of Harza LP, RDC Wyoming and
Harza LLC shall be automatically reinstated if, and to the extent
that, for any reason any payment by or on behalf of any of Harza
LP, RDC Wyoming or Harza LLC in respect of the RDC Guaranteed
Obligations or the Harza-HIPC Guaranteed Obligations is rescinded
or must be otherwise restored by the Trustee, the Lenders or any
other Person, whether as a result of any proceedings under
bankruptcy, insolvency or similar laws, reorganization or
otherwise.
(d) Until payment and satisfaction in full of the RDC
Guaranteed Obligations, the Harza-HIPC Guaranteed Obligations and
all Obligations and the expiration or termination of the
Commitment, none of Harza LP, RDC Wyoming or Harza LLC shall
exercise any claim, right or remedy that it may now have or may
hereafter acquire against RDC of Nepal, HIPC or the Company
arising under or in connection with this Agreement, including,
without limitation, any claim, right or remedy of subrogation,
contribution, reimbursement, exoneration, indemnification or
participation arising under contract, by law or otherwise in any
claim, right or remedy of the Trustee, the Lenders or any other
Person against the Company, RDC of Nepal, or HIPC or any other
Person or any Security. If, notwithstanding the preceding
sentence, any such amount shall be paid to Harza LP, RDC Wyoming
and/or Harza LLC (as the case may be) at any time when the
Obligations and Commitment shall not have been paid in full,
expired or terminated (as applicable), such amount shall be held
by Harza LP, RDC Wyoming and/or Harza LLC (as the case may be),
in trust for the Trustee and the Lenders, segregated from other
funds of Harza LP, RDC Wyoming and/or Harza LLC (as the case may
be), and be turned over to the Trustee in the exact form received
by Harza LP, RDC Wyoming and/or Harza LLC (as the case may be)
(duly endorsed by Harza LP, RDC Wyoming and/or Harza LLC (as the
case may be) to the Trustee, if required), to be applied against
the Obligations, whether matured or unmatured, in accordance with
the Investment Agreement and the other Loan Documents.
(e) Each of RDC of Nepal, Harza LP, RDC Wyoming, Harza LLC
and HIPC agrees that, as between Harza LP, RDC Wyoming and Harza
LLC and the Trustee, the obligations of Harza LP, RDC Wyoming and
Harza LLC under this Section 4.3 may become, or may be declared
to be, forthwith due and payable as provided herein
notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming
automatically due and payable) as against RDC of Nepal or HIPC
and that, in the event of such declaration (or such obligations
becoming automatically due and payable), such obligations
(whether or not due and payable by Harza LP, RDC Wyoming and
Harza LLC) shall forthwith become due and payable by Harza LP,
RDC Wyoming and Harza LLC for purposes of this Section 4.3.
(f) The guarantees in this Section 4.3 are continuing
guarantees and shall apply to any RDC Guaranteed Obligations or
Harza-HIPC Guaranteed Obligations whenever arising. The
obligations of RDC of Nepal, HIPC, Harza LP, RDC Wyoming and
Harza LLC hereunder shall remain unchanged and in full force and
effect in accordance with the terms hereof notwithstanding any
transfer of any interest (whether direct or indirect) in the
Company, Harza LP, RDC Wyoming, Harza LLC, RDC of Nepal or HIPC.
Section 4.4 Soaltee Enterprises, Soaltee Hotel and Surya Guarantee.
(a) Soaltee Enterprises, Soaltee Hotel and Surya hereby
jointly and severally unconditionally and irrevocably guarantee,
to and for the benefit of the Lenders and the Trustee:
(i) payment and performance of all
obligations and liabilities of HIPC under the
Shareholders' Agreement, including, without
limitation, the obligations to buy IFC's shares in
the Company as provided in Section 3.5(b) thereof,
and all obligations and liabilities of HIPC under
the Subscription Agreement between HIPC and the
Company, except (other than as provided in Section
4.4(a)(ii) below) the obligations and liabilities
of HIPC under Sections 2.1(a) and (c) thereof and
Section 3.2 thereof, insofar as such Section 3.2
relates to the provisions of such Sections 2.1(a)
and (c) (collectively, the "HIPC Guaranteed
Obligations").
(ii) payment and performance of all
obligations and liabilities of HIPC under Sections
2.1(a) and (c) of the Subscription Agreement
between HIPC and the Company and Section 3.2 (to
the extent that Section 3.2 relates to the
provisions of such Sections 2.1(a) and (c)) of the
Subscription Agreement between HIPC and the
Company (collectively, the "Soaltee-HIPC
Guaranteed Obligations"); provided, however, that
the maximum collective liability of Soaltee
Enterprises, Soaltee Hotel and Surya under this
Section 4.4(a)(ii) shall not exceed one hundred
ninety two thousand one hundred and thirty two
Dollars ($192,132).
The obligations of each of Soaltee Enterprises, Soaltee
Hotel and Surya under this Section 4.4 are irrevocable, absolute
and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any Principal Document
or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other
guarantee of or security for the HIPC Guaranteed Obligations or
the Soaltee-HIPC Guaranteed Obligations, and, to the fullest
extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor, it
being the intent of this Section 4.4 that the obligations of each
of Soaltee Enterprises, Soaltee Hotel and Surya hereunder shall
be absolute and unconditional under any and all circumstances.
The obligations of each of Soaltee Enterprises, Soaltee Hotel and
Surya under this Section 4.4 shall not be subject to any
abatement, reduction, limitation, impairment, termination,
setoff, defense, withholding, counterclaim or recoupment
whatsoever or any right of HIPC to any of the same, and shall not
be released or discharged until the later of (i) the date on
which (x) payment in full of all Obligations has been made, and
all obligations of the Lenders under the Loan Documents have
terminated or expired, and (y) a period of one hundred twenty
(120) days (or such other period as may be applicable under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (x) is satisfied without
any court determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters or (ii) the date on which the obligations of HIPC to
purchase the applicable IFC's shares in the Company pursuant to
Section 3.5(b) of the Shareholders' Agreement have been satisfied
and the outside time by which such obligations to buy IFC's
shares in the Company could exist pursuant to such Section 3.5(b)
has passed. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following
(without notice to any of Soaltee Enterprises, Soaltee Hotel and
Surya) shall not alter or impair the liability of any of Soaltee
Enterprises, Soaltee Hotel or Surya hereunder, which shall remain
absolute and unconditional as described above:
(A) at any time or from time to time, the
time for any performance of or compliance by any
Person with the HIPC Guaranteed Obligations or the
Soaltee-HIPC Guaranteed Obligations shall be
extended, or such performance or compliance shall
be waived;
(B) any of the acts mentioned in any of the
provisions of any of the Principal Documents or
any other agreement or instrument referred to
herein or therein shall be done or omitted by any
Person;
(C) the maturity of the HIPC Guaranteed
Obligations or the Soaltee-HIPC Guaranteed
Obligations shall be accelerated, or the HIPC
Guaranteed Obligations or Soaltee-HIPC Guaranteed
Obligations shall be modified, supplemented or
amended in any respect, or any right under any
Principal Document or any other agreement or
instrument referred to herein or therein shall be
waived or any other guarantee of the HIPC
Guaranteed Obligations or the Soaltee Guaranteed
Obligations or any security therefor shall be
released or exchanged in whole or in part or
otherwise dealt with;
(D) any Lien granted to, or in favor of, the
Trustee or any other Person as security for the
HIPC Guaranteed Obligations or the Soaltee-HIPC
Guaranteed Obligations shall fail to be created or
perfected or have the priority contemplated
therefor;
(E) the bankruptcy or insolvency of the
Company, HIPC or any other Person or any
reorganization, arrangement, compromise,
composition or plan affecting the Company, HIPC or
any other Person shall occur; or
(F) this Agreement or any other agreement
referred to herein shall be rejected in any
bankruptcy, insolvency or similar proceeding
(nothing herein being an admission that any
obligation hereunder or thereunder is properly
classifiable as an executory obligation).
(b) To the fullest extent permitted by applicable law, each
of Soaltee Enterprises, Soaltee Hotel and Surya hereby expressly
waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Trustee, the
Lenders or any other Person exhaust any right, power or remedy or
proceed against any other Person under any Principal Document or
any other agreement or instrument referred to herein or therein,
or against any other Person or against any collateral under any
other guarantee of, or security for, the HIPC Guaranteed
Obligations or the Soaltee-HIPC Guaranteed Obligations.
(c) The obligations of each of Soaltee Enterprises, Soaltee
Hotel and Surya shall be automatically reinstated if, and to the
extent that, for any reason any payment by or on behalf of any of
Soaltee Enterprises, Soaltee Hotel or Surya in respect of the
HIPC Guaranteed Obligations is rescinded or must be otherwise
restored by the Trustee, the Lenders or any other Person, whether
as a result of any proceedings under bankruptcy, insolvency or
similar laws, reorganization or otherwise.
(d) Until payment and satisfaction in full of the HIPC
Guaranteed Obligations, the Soaltee-HIPC Guaranteed Obligations
and all Obligations and the expiration or termination of the
Commitment, none of Soaltee Enterprises, Soaltee Hotel or Surya
shall exercise any claim, right or remedy that it may now have or
may hereafter acquire against HIPC or the Company arising under
or in connection with this Agreement, including, without
limitation, any claim, right or remedy of subrogation,
contribution, reimbursement, exoneration, indemnification or
participation arising under contract, by law or otherwise in any
claim, right or remedy of the Trustee, the Lenders or any other
Person against the Company or HIPC or any other Person or any
Security. If, notwithstanding the preceding sentence, any such
amount shall be paid to any of Soaltee Enterprises, Soaltee Hotel
and/or Surya at any time when the Obligations and Commitment
shall not have been paid in full, expired or terminated (as
applicable), such amount shall be held by Soaltee Enterprises,
Soaltee Hotel and/or Surya (as the case may be) in trust for the
Trustee and the Lenders, segregated from other funds of Soaltee
Enterprises, Soaltee Hotel and/or Surya (as the case may be) and
be turned over to the Trustee in the exact form received by
Soaltee Enterprises, Soaltee Hotel and/or Surya (as the case may
be) (duly endorsed by Soaltee Enterprises, Soaltee Hotel and/or
Surya (as the case may be) to the Trustee, if required), to be
applied against the Obligations, whether matured or unmatured, in
accordance with the Investment Agreement and the other Loan
Documents.
(e) Each of HIPC, Soaltee Enterprises, Soaltee Hotel and
Surya agrees that, as among Soaltee Enterprises, Soaltee Hotel
and Surya and the Trustee, the obligations of Soaltee
Enterprises, Soaltee Hotel and Surya under this Section 4.4 may
become, or may be declared to be, forthwith due and payable as
provided herein notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against HIPC and that,
in the event of such declaration (or such obligations becoming
automatically due and payable), such obligations (whether or not
due and payable by Soaltee Enterprises, Soaltee Hotel or Surya)
shall forthwith become due and payable by Soaltee Enterprises,
Soaltee Hotel and Surya for purposes of this Section 4.4.
(f) The guarantees in this Section 4.4 are continuing
guarantees and shall apply to any HIPC Guaranteed Obligations or
Soaltee-HIPC Guaranteed Obligations whenever arising. The
obligations of HIPC, Soaltee Enterprises, Soaltee Hotel and Surya
hereunder shall remain unchanged and in full force and effect in
accordance with the terms hereof notwithstanding any transfer of
any interest (whether direct or indirect) in the Company, Soaltee
Enterprises, Soaltee Hotel, Surya, or HIPC.
ARTICLE 5.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations, Warranties and Covenants of
the Sponsors. Each of the Sponsors represents, warrants, and
covenants that:
(a) this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and legally binding
obligation, enforceable in accordance with its terms, except as
the enforceability thereof may be limited by applicable
bankruptcy, insolvency or other similar laws affecting
enforcement of creditors rights generally;
(b) the execution, delivery and performance of this
Agreement will not conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default
or require any consent under, any indenture, mortgage, agreement
or other instrument or arrangement to which it is a party or by
which it is bound, or violate any of the terms or provisions of
its articles of incorporation, by-laws or other governing
documents, or any judgment, decree or order or any law, statute,
rule or regulation applicable to it which would be reasonably
likely to constitute a Material Adverse Change;
(c) by the Financial Closing Date, it will have obtained
all consents, licenses and authorizations of all governmental
authorities required under applicable laws, regulations, decrees
or orders of or in any applicable jurisdiction (which may legally
be obtained as of such date) in connection with the execution,
delivery, performance, validity or enforceability of this
Agreement and, if applicable, the disbursement of any Deficiency
Subscription or Deficiency Loans or the making of any other
payments to the Company in accordance with this Agreement and
that such consents, licenses and authorizations will by such date
be in full force and effect;
(d) (i) the most recent audited statements and
unaudited "group" statements of financial
condition of each Sponsor, in each case
heretofore furnished to the Lenders, present
fairly the financial condition of each Sponsor
at the date of such statements and the results
of the operations of the relevant entity for the
relevant period. Such financial statements have
been prepared in accordance with U.S. GAAP, and
Nepalese accounting principles and practices
consistently applied in the case of HIPC. Since
the date of the most recent audited financials
of such Sponsor furnished to the Lenders, no
Material Adverse Change in respect of such
Sponsor has occurred; and
(ii) except as fully reflected in the
financial statements referred to in
Section 5.1(d)(i) hereof there are no
liabilities or obligations with respect to such
Sponsor of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and
whether or not due) for the period to which such
financial statements relate which, either
individually or in the aggregate, would be
material to such Sponsor. Such Sponsor does not
know of any reasonable basis for the assertion
against it of any liability or obligation of any
nature whatsoever for such relevant period that
is not fully reflected in the financial
statements referred to in Section 5.1(d)(i)
which, either individually or in the aggregate,
could constitute a Material Adverse Change;
(e) (i) each of Panda and Panda Bhote Koshi
represents and warrants to the Lenders that
(A) Panda owns beneficially and indirectly 100%
of the issued and outstanding shares of Panda of
Nepal, and (B) Panda Bhote Koshi owns 100% of
the issued and outstanding shares of Panda of
Nepal;
(ii) each of Harza LP and RDC Wyoming
represents and warrants to the Lenders that
Harza LP and RDC Wyoming each owns 50% and 50%,
respectively, of the issued and outstanding
shares of RDC of Nepal;
(iii) each of Soaltee Enterprises,
Soaltee Hotel and Surya represents and warrants
to the Lenders that each of Soaltee Enterprises,
Soaltee Hotel and Surya each owns .25%, 3.0% and
96.75%, respectively, of the issued and
outstanding shares of HIPC;
Section 5.2 Additional Representations, Warranties and
Covenants of Panda. Panda further represents, warrants and
covenants that:
(a) in the event either of the Lenders issues a Deficiency
Notice or a Guarantee Notice to Panda and Bankers Trust Company
in accordance with Section 3.1 or Article 7 hereof, Panda shall,
subject to Sections 4.7(a)(i) and 4.7(b) of the Panda Global
Energy Indenture and Sections 4.5(a)(i) and 4.5(b) of the Panda
Global Holdings Indenture, cause Panda Global Energy and Panda
Global Holdings, respectively, to issue Officer's Certificates to
Bankers Trust Company pursuant to Section 4.7(a)(ii) of the Panda
Global Energy Indenture and Section 4.5(a)(ii) of the Panda
Global Holdings Indenture, respectively, authorizing Bankers
Trust Company, as trustee for the Issuer Equity Distribution Fund
and the Company Equity Distribution Fund, to transfer monies in
such funds to either the Deficiency Sub-Account or the Cash Sub-
Account in accordance with Section 3.2(b) or Article 7 hereof,
as applicable;
(b) it has caused each of Panda Global Energy and Panda
Global Holdings to issue irrevocable instructions to Bankers
Trust Company, in the form of Exhibit B hereto authorizing and
requesting that in the event either of the Lenders issues a
Deficiency Notice or a Guarantee Notice to Panda and Bankers
Trust Company in accordance with Section 3.1 or Article 7 hereof,
Bankers Trust Company, as trustee for the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund will,
subject to Sections 4.7(a)(i) and 4.7(b) of the Panda Global
Energy Indenture and Sections 4.5(a)(i) and 4.5(b) of the Panda
Global Holdings Indenture, including, without limitation, receipt
of an Officer's Certificate as provided therein, transfer monies
in such funds, as directed by the Lenders, to either the
Deficiency Sub-Account or the Cash Sub-Account in accordance with
Section 3.2(b) or Article 7 hereof, as applicable;
(c) transfers from the Issuer Equity Distribution Fund and
the Company Equity Distribution Fund into either the Deficiency
Sub-Account or the Cash Sub-Account are permitted uses of such
funds pursuant to the loan documents relating to the Senior
Secured Notes, provided that the conditions set forth in Sections
4.7(a)(i) and 4.7(b) of the Panda Global Energy Indenture and
Sections 4.5(a)(i) and 4.5(b) of the Panda Global Holdings
Indenture, respectively, are satisfied. All other permitted uses
of such funds pursuant to the loan documents relating to the
Senior Secured Notes are specified in Exhibit C hereto;
(d) the documents delivered to each of the Lenders in
connection with the Panda Global Energy Indenture and the Panda
Global Holdings Indenture constitute all the relevant documents
in connection with the ability of Panda Global Energy and Panda
Global Holdings to transfer funds from the Issuer Equity
Distribution Fund or the Company Equity Distribution Fund, as the
case may be, to the Deficiency Sub-Account and the Cash Sub-
Account;
(e) upon issuance by the Trustee or either Lender to Panda
of a Deficiency Notice or a Guarantee Notice, Panda shall
thereafter not instruct and shall ensure that neither Panda
Global Energy nor Panda Global Holdings delivers to Bankers Trust
Company, as the trustee for the Issuer Equity Distribution Fund
and the Company Equity Distribution Fund, any Panda Global Energy
Officer's Certificate or Panda Global Holdings Officer's
Certificate that would result in a diversion of funds from the
Issuer Equity Distribution Fund or the Company Equity
Distribution Fund to a source other than any funding of the
Deficiency Sub-Account or the Cash Sub-Account, as the case may
be, which is contemplated hereunder;
(f) following issuance by the Trustee or either Lender to
Panda of a Deficiency Notice or a Guarantee Notice and until the
Project Completion Date, Panda shall deliver to each of the
Lenders copies of all Panda Global Energy Officer's Certificates
and Panda Global Holdings Officer's Certificates delivered to
Bankers Trust Company, as the trustee for the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund.
ARTICLE 6.
FURTHER ASSURANCE
Section 6.1 Additional Approvals. In the event that any
additional consents, licenses or authorizations may be required
in connection with the execution, delivery or performance by any
Sponsor, or the validity or enforceability, of this Agreement or
the disbursement of any Deficiency Subscription or Deficiency
Loan or the making of any other payment, each of the Sponsors and
the Company shall obtain all such consents, licenses or
authorizations so that on or before the disbursement of any
Deficiency Subscription or Deficiency Loan or the making of any
other payment, the Company may validly accept and the Sponsor may
validly make such Deficiency Subscription, Deficiency Loan or
other payment.
Section 6.2 Exercise of Rights. The Company agrees to
take all actions required to claim monies to which it is entitled
hereunder, in a due and expeditious manner. If the Company fails
to exercise any of its rights under this Agreement in a due and
expeditious manner, the Company and each Sponsor hereby agrees
that each of the Lenders shall have the right to enforce any such
right of the Company and claim all monies to which the Company is
entitled hereunder.
ARTICLE 7.
PANDA PERFORMANCE GUARANTEE
Section 7.1 Performance Guarantee.
(a) Panda hereby unconditionally and irrevocably
guarantees, to and for the benefit of the Lenders and the
Trustee, the due and punctual payment of all sums whatsoever due
and owing by the EPC Contractor under the EPC Contract up to an
amount equal to fifteen percent (15%) of the EPC contract price
as the same may be adjusted from time to time pursuant to Change
Order (as such term is defined in the EPC Contract) (the "EPC
Contract Price") plus one hundred fifty thousand Dollars
($150,000) (the "EPC Contractor Guaranteed Obligations") in
accordance with the terms and conditions set forth in this
Article 7.
(b) If at any time, and in accordance with the Performance
Guarantee, a written demand(s) has been issued for payment under
the Performance Guarantee (which written demand the Company shall
issue upon request by either of the Lenders or the Trustee) in
amounts equal to, in the aggregate, at least fifteen percent
(15%) of the EPC Contract Price and payments under the
Performance Guarantee have been made in amounts equal to, in the
aggregate, at least fifteen percent (15%) of the EPC Contract
Price, either of the Lenders may issue a notice to Panda and
Bankers Trust Company, as the trustee for the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund (the
"Guarantee Notice") and Panda shall (i) subject to Sections
4.7(a)(i) and 4.7(b) of the Panda Global Energy Indenture, cause
Panda Global Energy to submit one or more Panda Global Energy
Officer's Certificates to Bankers Trust Company, as trustee under
the Panda Global Energy Indenture, pursuant to Section 4.7(a)(ii)
of the Panda Global Energy Indenture, authorizing the transfer of
monies on deposit in the Issuer Equity Distribution Fund to the
Cash Sub-Account, and (ii) subject to Sections 4.5(a)(i) and
4.5(b) of the Panda Global Holdings Indenture, cause Panda Global
Holdings to submit one or more Panda Global Holdings Officer's
Certificates to Bankers Trust Company, as trustee under the Panda
Global Holdings Indenture, pursuant to Section 4.5(a)(ii) of the
Panda Global Energy Indenture, authorizing the transfer of monies
on deposit in the Company Equity Distribution Fund to the Cash
Sub-Account, up to an aggregate amount equal to fifteen percent
(15%) of the EPC Contract Price plus one hundred fifty thousand
Dollars ($150,000), and upon receipt of such Panda Global Energy
Officer's Certificates and Panda Global Holdings Officer's
Certificates, Bankers Trust Company shall transfer such amount to
the Cash Sub-Account. Notwithstanding the foregoing, (i) if
either of the Lenders has issued a Deficiency Notice to Bankers
Trust Company pursuant to Section 3.1(a) hereof at any time prior
to the issuance of a Guarantee Notice, Bankers Trust Company, as
trustee for the Issuer Equity Distribution Fund and the Company
Equity Distribution Fund shall be authorized to only deposit in
the Cash Sub-Account all funds remaining in the Issuer Equity
Distribution Fund or the Company Equity Distribution Fund from
time to time after the deposit of funds into the Deficiency Sub-
Account in accordance with Section 3.2(b) hereof, and (ii) if
either of the Lenders issues a Deficiency Notice at any time
after the issuance of a Guarantee Notice, the Lenders, at their
option at any time and from time to time, may direct the Trustee
to withdraw any funds previously deposited in the Cash Sub-
Account and deposit such funds in the Deficiency Sub-Account to
the extent that such Deficiency Sub-Account is not funded up to
the maximum amount required by Section 3.2(b) hereof. The
Company shall not have any rights of withdrawal of amounts
deposited in the Cash Sub-Account. In the event that the Senior
Secured Notes issued under the Panda Global Energy Indenture and
the Panda Global Holdings Indenture are repaid prior to Final
Acceptance or the Issuer Equity Distribution Fund and the Company
Equity Distribution Fund are otherwise no longer in place, Panda
shall deliver to the Trustee an irrevocable standby letter of
credit issued in favor of the Trustee by an Approved Bank in an
amount equal to fifteen percent (15%) of the EPC Contract Price
plus one hundred fifty thousand Dollars ($150,000), and in form
and substance satisfactory to the Lenders (including, without
limitation, evidence satisfactory to the Lenders that the issuer
thereof has no recourse against the Company or any of its assets)
(the "Panda Guarantee Letter of Credit").
(c) After the aggregate payment of an amount equal to
thirty-five percent (35%) of the EPC Contract Price under the
Performance Guarantee, Panda shall be obligated to deposit from
time to time in such of the Revenue Sub-Account, the Liquidated
Damages Sub-Account or the Construction Sub-Account as the
Lenders direct an amount equal to the amount then due and owing
by the EPC Contractor under the EPC Contract and which the EPC
Contractor has failed to pay, which amount shall not exceed in
the aggregate fifteen percent (15%) of the EPC Contract Price
plus one hundred fifty thousand Dollars ($150,000).
(d) If prior to Final Acceptance (as such term is defined
in the EPC Contract), (i) the requirements specified in the
Specified EPC Clauses (as hereinafter defined) shall have been
satisfied, (ii) as contemplated by any Deficiency Notice which
has then been issued, the Deficiency Sub-Account contains an
amount equal to the lesser of (x) Panda's Sponsor Share of the
amount of the Deficiency and (y) Panda's Sponsor Share of ten
million Dollars ($10,000,000), and (iii) the Lenders and the
Independent Engineer determine, in their reasonable discretion,
that the amount of funds in the Cash Sub-Account is in excess of
(A) the amount of remaining funds required to achieve Final
Acceptance less (B) the undrawn amount of the Performance
Guarantee and the available amounts of the Retainage (as defined
in the EPC Contract) (the aforesaid excess referred to herein as
the "Cash Sub-Account Excess"), the amount of such Cash Sub-
Account Excess shall be withdrawn from the Cash Sub-Account and
delivered to Panda; provided, however, that the Lenders and the
Independent Engineer shall have the right to re-evaluate, on a
quarterly basis, the amount specified in clauses (A) and (B) and
determine, in their reasonable discretion, whether any Cash Sub-
Account Excess exists at such time, and, to the extent no such
Cash Sub-Account Excess exists at such time, Panda shall cause,
to the extent provided in Section 3.2(b) hereof, funds to
continue to flow into the Cash Sub-Account in accordance with
Section 7.1(b) hereof and will not be delivered to Panda unless
and until there is again a Cash Sub-Account Excess. For purposes
hereof, "Specified EPC Clauses" shall mean all of the following:
items (i) through and including (x) and items (xii) and (xiii) of
the definition of First Unit Delivery contained in the EPC
Contract, items (ii) through and including (xi) and item (xvi) of
the definition of Second Unit Delivery contained in the EPC
Contract, and item (ii) of the definition of Final Acceptance
contained in the EPC Contract.
(e) Following Final Acceptance, the balance remaining, if
any, of all amounts in the Cash Sub-Account shall be transferred
to Panda; provided, however, that if a Deficiency Notice has been
issued and the Deficiency Sub-Account is not funded in an amount
equal to the lesser of (x) Panda's Sponsor Share of the amount of
the Deficiency and (y) Panda's Sponsor Share of ten million
Dollars ($10,000,000), then the balance remaining in the Cash Sub-
Account, if any, shall be deposited in the Deficiency Sub-Account
to the extent of such shortfall.
(f) The obligations of Panda under this Article 7 are
irrevocable, absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of any
Principal Document or any other agreement or instrument referred
to herein or therein, or any substitution, release or exchange of
any other guarantee of or security for the EPC Contractor
Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, it being the intent of this
Article 7 that the obligations of Panda hereunder shall be
absolute and unconditional under any and all circumstances. The
obligations of Panda under this Article 7 shall not be subject to
any abatement, reduction, limitation, impairment, termination,
set-off, defense, withholding, counterclaim or recoupment
whatsoever or any right of the Company to any of the same.
Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following (without
notice to Panda) shall not alter or impair the liability of Panda
hereunder, which shall remain absolute and unconditional as
described above:
(i) at any time or from time to time, the
time for any performance of or compliance by any
Person with the EPC Contractor Guaranteed
Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of
the provisions of any of the Principal Documents
or any other agreement or instrument referred to
herein or therein shall be done or omitted by
any Person;
(iii) the maturity of the EPC
Contractor Guaranteed Obligations shall be
accelerated, or the EPC Contractor Guaranteed
Obligations shall be modified, supplemented or
amended in any respect, or any right under any
Principal Document or any other agreement or
instrument referred to herein or therein shall
be waived or any other guarantee of the EPC
Contractor Guaranteed Obligations or any
security therefor shall be released or exchanged
in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of,
the Trustee or any other Person as security for
the EPC Contractor Guaranteed Obligations shall
fail to be created or perfected or have the
priority contemplated therefor;
(v) the bankruptcy or insolvency of the
Company or any other Person or any
reorganization, arrangement, compromise,
composition or plan affecting the Company or any
other Person shall occur; or
(vi) this Agreement or any other agreement
referred to herein shall be rejected in any
bankruptcy, insolvency or similar proceeding
(nothing herein being an admission that any
obligation hereunder or thereunder is properly
classifiable as an executory obligation).
(g) To the fullest extent permitted by applicable law,
Panda hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement
that the Trustee, the Lenders or any other Person exhaust any
right, power or remedy or proceed against any other Person under
any Principal Document or any other agreement or instrument
referred to herein or therein, or against any other Person or
against any collateral under any other guarantee of, or security
for, the EPC Contractor Guaranteed Obligations.
(h) The obligations of Panda shall be automatically
reinstated if, and to the extent that, for any reason any payment
by or on behalf of Panda in respect of the EPC Contractor
Guaranteed Obligations is rescinded or must be otherwise restored
by the Trustee, the Lenders or any other Person, whether as a
result of any proceedings under bankruptcy, insolvency or similar
laws, reorganization or otherwise.
(i) Until payment and satisfaction in full of the EPC
Contractor Guaranteed Obligations and all Obligations and the
expiration or termination of the Commitment, Panda shall not
exercise any claim, right or remedy that it may now have or may
hereafter acquire against the EPC Contractor or the Company
arising under or in connection with this Agreement, including,
without limitation, any claim, right or remedy of subrogation,
contribution, reimbursement, exoneration, indemnification or
participation arising under contract, by law or otherwise in any
claim, right or remedy of the Trustee, the Lenders or any other
Person against the Company or the EPC Contractor or any other
Person or any Security. If, notwithstanding the preceding
sentence, any such amount shall be paid to Panda at any time when
the Obligations and Commitment shall not have been paid in full,
expired or terminated (as applicable), such amount shall be held
by Panda, in trust for the Trustee and the Lenders, segregated
from other funds of Panda, and be turned over to the Trustee in
the exact form received by Panda (duly endorsed by Panda to the
Trustee, if required), to be applied against the Obligations,
whether matured or unmatured, in accordance with the Investment
Agreement and the other Loan Documents.
(j) The guarantee in this Article 7 is a continuing
guarantee and shall apply to any EPC Contractor Guaranteed
Obligations whenever arising. The obligations of Panda hereunder
shall remain unchanged and in full force and effect in accordance
with the terms hereof notwithstanding any transfer of any
interest (whether direct or indirect) in the Company or Panda.
ARTICLE 8.
MISCELLANEOUS
Section 8.1 Deficiency Notices; Guarantee Notices;
Funding Obligations; Etc.
(a) Only either Lender may issue and deliver to the
Company, a Sponsor, Panda or to Bankers Trust Company, as trustee
for the Issuer Equity Distribution Fund and the Company Equity
Distribution Fund a Deficiency Notice and to Bankers Trust
Company, as trustee for the Issuer Equity Distribution Fund and
the Company Equity Distribution Fund a Guarantee Notice
hereunder, and either Lender may do so on one or more occasions.
Each Sponsor and the Company agree that while it is the right of
either Lender to call for the provision of funds hereunder to
meet a Deficiency or an EPC Contractor Guaranteed Obligation,
neither Lender shall have any obligation to make such a call, nor
shall either Lender be liable to any party hereto for any action
taken or not taken by either Lender hereunder.
(b) The funds provided by each Sponsor in accordance with
the provisions of this Agreement shall be additional to any funds
that may be provided to the Company under any other agreement to
which such Sponsor is a party.
(c) The obligations of each Sponsor under Articles 2 and 4
of this Agreement shall remain in full force and effect until the
later of (i) the date on which (x) payment in full of all
Obligations has been made, and all obligations of the Lenders
under the Loan Documents have terminated or expired, and (y) a
period of one hundred twenty (120) days (or such other period as
may be applicable under applicable bankruptcy, insolvency or
similar laws) has elapsed since the condition set out in clause
(x) is satisfied without any court determining that the Company
is insolvent or, if such determination is made within that time,
the Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters or (ii) the date on which the
obligations to purchase the applicable IFC's shares in the
Company pursuant to Section 3.5(b) of the Shareholders' Agreement
have been satisfied and the outside time by which such
obligations to buy IFC's shares in the Company could exist
pursuant to such Section 3.5(b) has passed.
Section 8.2 No Waivers; Obligations Absolute.
(a) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver,
consent or other action in respect of any liability or obligation
under or in respect of, or of any of the terms, covenants or
conditions of, any Loan Document or any other Principal Document,
or any Security, shall in any way alter or affect any of the
obligations hereunder of the Company or any Sponsor (other than a
written waiver of any obligation hereunder executed by the
Lenders).
(b) (i) The obligations of each Sponsor under
this Agreement are absolute and unconditional and
shall not be affected by (x) any default by the
Company in the performance or observance of any of
its agreements or covenants in any Loan Document,
this Agreement or any other Principal Document,
(y) the bankruptcy, insolvency, winding up or
other similar proceeding of the Company or any of
the Sponsors, or (z) any other circumstance,
happening, condition or event whatsoever, whether
or not similar to any of the foregoing. The
obligations of each Sponsor under this Agreement
shall not be subject to any abatement, reduction,
limitation, impairment, termination, set-off,
defense, counterclaim or recoupment whatsoever or
any right to any thereof, and shall not be
released, discharged or in any way affected by any
reorganization, arrangement, compromise,
composition or plan affecting the Company or by
any lack of validity or enforceability of any Loan
Document or any document executed in connection
therewith, whether or not the Sponsors or the
Company shall have notice or knowledge of any of
the foregoing.
(ii) If the obligations of the Sponsors under
Articles 3 and 7 are unenforceable by reason of
the insolvency, bankruptcy or reorganization of
the Company, each Sponsor shall nonetheless pay
directly to the Trustee the amount of each
Deficiency determined in accordance with
Articles 3 and 7 for application by the Trustee in
accordance with the Trust and Retention Agreement.
(c) Each of the Sponsors and the Company hereby irrevocably
waives, to the extent that it may do so under applicable law, any
defense based on the adequacy of a remedy at law which may be
asserted as a bar to the remedy of specific performance in any
action brought against it.
(d) Each of the Sponsors hereby irrevocably waives, to the
extent it may do so under applicable law, any protection to which
it may be entitled under bankruptcy, insolvency or similar laws
of any jurisdiction in the event of a Company Bankruptcy or
insolvency. In the event a trustee in bankruptcy or the debtor-
in-possession takes any action (including without limitation the
institution of any action, suit or other proceeding) in a Company
Bankruptcy or insolvency for the purpose of enforcing the
obligations of the Sponsors under this Agreement, each Sponsor
hereby agrees, to the extent that it may do so under applicable
law, that it will not assert any defense, claim or counterclaim
denying liability thereunder on the basis that this Agreement is
an executory contract that cannot be assumed, assigned or
enforced. If a Company Bankruptcy shall occur, each Sponsor, to
the extent it may do so under applicable law, shall reconfirm its
pre-petition waiver of any protection to which it may be entitled
under any such laws and, to give effect to such waiver, each
Sponsor consents to the assumption and enforcement of each
provision of this Agreement by the debtor-in-possession or the
Company's trustee in bankruptcy, as the case may be.
(e) Notwithstanding anything to the contrary herein, but
subject to the provisions set forth in Exhibit A in the case of
Deficiency Loans, each Sponsor hereby irrevocably waives all
rights of subrogation which may have arisen or may hereafter
arise in connection with this Agreement to the claims of the
Lenders against the Company and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity or
any similar such right from the Company which may otherwise have
arisen in connection with this Agreement, until (x) payment in
full of all Obligations has been made, and all obligations of the
Lenders under the Loan Documents have terminated or expired, and
(y) a period of one hundred twenty (120) days (or such other
period as may be applicable under applicable bankruptcy,
insolvency or similar laws) has elapsed since the condition set
out in clause (x) is satisfied without any court determining that
the Company is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to the Lenders or the Trustee by the Company will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters.
Section 8.3 Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgement of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
For the Company:
Address: Bhote Koshi Power Company Private Limited
KHA-1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 011 977 1 270027
With a copy to:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For Panda:
Address: 4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
For Panda Bhote Koshi:
Address: c/o Maples & Calder
P. O. Box 309
Ugland House, South Church Street
Grand Cayman, Cayman Islands
British West Indies
Attention: Sharon Pierson
Facsimile: 809 949 8080
With a copy to:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For Harza LP:
Address: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For RDC Wyoming:
Address: c/o Harza Engineering Company International L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For HIPC:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Panda of Nepal:
Address: c/o Maples & Calder
P. O. Box 309
Ugland House, South Church Street
Grand Cayman, Cayman Islands
British West Indies
Attention: Sharon Pierson
Facsimile: 809 949 8080
With a copy to:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For Harza LLC:
Address: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For RDC of Nepal:
Address: c/o Maples & Calder
P.O. Box 309
Ugland House, South Church Street
Grand Cayman, Cayman Islands
British West Indies
Attention: Sharon Pierson
Facsimile: (809) 949-8080
With a copy to:
Address: c/o Harza Engineering Company International L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For Soaltee Enterprises:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Soaltee Hotel:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Surya:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For IFC:
Address: International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Power Department
Facsimile: (202) 974-4307
For DEG:
Address: DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49 221 4986-107
Section 8.4 Governing Law Submission to Jurisdiction;
Venue.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be
governed by the law of the State of New York without regard to
the conflicts of laws provisions thereof (other than Sections 5-
1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Company or
the Sponsors with respect to this Agreement or any Principal
Document to which the Company, any Sponsor or any Lender is a
party may be brought by IFC and/or DEG in the courts of the State
of New York in the Borough of Manhattan or of the United States
for the Southern District of New York and, by execution and
delivery of this Agreement, the Company and each Sponsor hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. The Company and each Sponsor agrees that a judgment in
any such action or proceeding shall be conclusive and binding
upon it, and may be enforced in any other jurisdiction, including
without limitation in Nepal, by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the
judgment. The Company and each of the Sponsors hereby
irrevocably designates, appoints and empowers CT Corporation
System with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Company
and each Sponsor agrees to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of
this provision satisfactory to the Lenders. The Company and each
Sponsor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it, at its address set forth
in Section 8.3, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of the
Lenders to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the
Company or any of the Sponsors in Nepal or in any other
jurisdiction.
(b) The Company and each Sponsor hereby irrevocably waives
any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which it is a party brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any action or
proceeding brought by any of the Lenders in any such court has
been brought in an inconvenient forum.
(c) The Company and each Sponsor acknowledges and agrees
that the activities contemplated by this Agreement are commercial
in nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 8.5 Successors or Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that, except in connection with a Transfer of
Shares permitted under Section 2.1, neither the Company nor any
Sponsor may assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Lenders. Upon
any assignment and transfer of rights and obligations made in
connection with a Transfer of Shares in accordance with
Section 2.1, the transferring Sponsor shall be released from the
obligation to perform all obligations pertaining to the Shares
which are so Transferred, to the extent the transferee expressly
assumes such obligations pursuant to an assumption agreement in
form and substance reasonably satisfactory to the Lenders.
Notwithstanding any of the foregoing, regardless of whether there
has been any Transfer of Shares, no Sponsor shall be released
from its obligations and liabilities set forth in Article 3 or
Article 7 hereof or Sections 4.2, 4.3 or 4.4 hereof. IFC may
transfer, assign or grant its rights hereunder in connection with
an assignment or transfer of all or any part of its interest in
its Commitment or the IFC Loans and DEG may transfer, assign or
grant its rights hereinunder in connection with an assignment or
transfer of all or any part of it its interest in its Commitment
or the DEG Loan.
Section 8.6 No Waiver; Remedies Cumulative. No failure
or delay on the part of either Lender in exercising any right,
power or privilege hereunder or under any other Loan Document,
and no course of dealing between the Company or any Sponsor and
either Lender, shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein
or provided in any other Loan Document are cumulative and not
exclusive of any rights, powers or remedies which either Lender
would otherwise have. No notice to or demand on the Company or
any Sponsor in any case shall entitle the Company or any Sponsor
to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of either
Lender to any other or further action in any circumstances
without notice or demand.
Section 8.7 Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but shall not
invalidate the remaining provisions of this Agreement or affect
such provision in any other jurisdiction.
Section 8.8 Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language, or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company, the Sponsor or the Lenders, as the
case may be, which translation shall be the governing version
between the Company, each Sponsor and the Lenders.
Section 8.9 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 8.10 Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by all of the parties hereto.
Section 8.11 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 8.12 Limitation on Recourse. Notwithstanding
anything to the contrary contained in this Agreement or in any
other Principal Document, the Lenders hereby acknowledge and
agree that no Sponsor shall have any liability to the Lenders or
the Trustee for the payment of any sums now or hereafter owing by
the Company, or any other obligation or liability of the Company,
under any Principal Document to which the Company is a party
except as expressly provided in this Agreement or the other
Principal Documents to which such Sponsor is a party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and acknowledged by their respective
officers or representatives hereunto duly authorized as of the
date first above written.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
PANDA ENERGY INTERNATIONAL, INC.
By:
Name:
Title:
HARZA ENGINEERING COMPANY INTERNATIONAL L.P.
By:
Name:
Title:
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.
By:
Name:
Title:
HARZA ENGINEERING COMPANY INTERNATIONAL,
A LIMITED LIABILITY COMPANY
By:
Name:
Title:
PANDA OF NEPAL
By:
Name:
Title:
RDC OF NEPAL
By:
Name:
Title:
PANDA BHOTE KOSHI
By:
Name:
Title:
RESOURCE DEVELOPMENT CONSULTANTS,
A LIMITED LIABILITY COMPANY
By:
Name:
Title:
SOALTEE ENTERPRISES PRIVATE LTD.
By:
Name:
Title:
SOALTEE HOTEL LTD.
By:
Name:
Title:
SURYA ENTERPRISES PRIVATE LTD.
By:
Name:
Title:
INTERNATIONAL FINANCE CORPORATION
By:
Name:
Title:
Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH
By:
Name:
Title:
Authorized Signatory
EXHIBIT A
Terms and Conditions of Deficiency Loans
Section 1. Interest Rate. Subject to the
provisions of Section 7 below, the principal amount of each
Deficiency Loan from time to time outstanding shall bear interest
at the rate of twelve percent (12%) per annum, and any interest
which is not payable due to the provisions of Section 7 shall
accumulate and be automatically deferred to the next following
Interest Payment Date. Any amount of interest so deferred shall
accrue interest at the rate specified herein. Subject to
Section 7, interest shall be paid in U.S. Dollars semi-annually
on each Interest Payment Date and shall accrue interest from day
to day and be prorated on the basis of a 360-day year for the
number of days in the relevant interest period.
Section 2. Repayment. Subject to the provisions of
Section 7, each Deficiency Loan shall be repaid in ten (10) equal
semi-annual installments on Interest Payment Dates, commencing on
the first Interest Payment Date following the expiration of the
date which is twelve months after the Project Completion Date,
and any repayment of principal which is not payable due to the
provisions of Section 7 shall be automatically deferred to the
next following date for repayment of principal.
Section 3. Prepayments. Neither the outstanding
principal amounts of Deficiency Loans nor the accrued interest
(or other amounts owing) thereon may be prepaid or paid (as
applicable), except with funds in the Holding Account or the
Nepal Holding Account, provided, that the outstanding principal
amounts of Deficiency Loans and the accrued interest (or other
amounts owing) thereon shall be prepaid or paid (as applicable)
on (x) the date which is thirty (30) days following the
prepayment or repayment of all Obligations and the termination or
expiration of all obligations of the Lenders under the Loan
Documents and (y) a period of one hundred twenty (120) days (or
such other period as may be applicable under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (x) is satisfied without any court
determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters.
Section 4. Payments. All payments of principal of
and interest on Deficiency Loans shall be made in U.S. Dollars,
subject to the provisions of Section 7, on the date when due in
immediately available funds at a bank specified by the Lenders
from time to time. Any payment by the Company shall be without
set-off, deduction or counterclaims of any nature. Whenever any
payment of principal of, or interest on, Deficiency Loans shall
be due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day.
Section 5. Taxes. Subject to Section 7, the
Company shall pay or cause to be paid all present and future
taxes, duties, fees and other charges of whatsoever nature, if
any, now or at any time hereafter levied or imposed by HMGN or by
any department, agency, political subdivision, taxing or other
authority thereof or therein or by any organization of which
Nepal is a member on or in connection with the payment of any
amounts hereunder, and all amounts due in respect of Deficiency
Loans shall be made without deduction for or on account of any
such taxes, duties, fees and other charges; provided, however,
that in the event the Company is prevented by operation of law or
otherwise from paying or causing to be paid such taxes, duties,
fees or other charges as aforesaid, the principal, or interest
due in respect of Deficiency Loans shall be increased to such
amount as may be necessary to yield and remit to the applicable
Sponsor the full amount it would have received had such payments
been made without deduction of such taxes, duties, fees or other
charges.
Section 6. Events of Default and Remedies.
(a) The Events of Default specified in Article 7 of
the General Conditions of the Investment Agreement are
incorporated by reference herein as if fully set forth herein,
provided that prior to the payment in full of all Obligations
owing to the Lenders under the Loan Documents and termination or
expiration of all obligations of the Lenders thereunder, the
Deficiency lenders may not declare an Event of Default or declare
the unpaid principal amount of any Deficiency Loans and interest
accrued thereon immediately due and payable as a result of any
Event of Default; provided that any delay or forbearance of its
right to declare the amount of its Deficiency Loans and interest
accrued thereon due and payable shall not constitute a waiver of
such rights as between the Deficiency lender and the Company
(subject to the provisions of Section 7).
(b) If an Event of Default specified in Article 7.1(k)
of the General Conditions shall have occurred, the unpaid
principal amount of Deficiency Loans made by each Deficiency
lender and the accrued interest thereon shall be automatically
converted to equity interests in the Company, and no Deficiency
lender thereafter shall have or shall exercise any rights or
remedies as a lender to or creditor of the Company.
Section 7. Subordination.
(a) Anything in this Agreement to the contrary
notwithstanding, the Deficiency lenders and the Company hereby
agree that all Deficiency Loans and interest thereon and all
other amounts payable in respect thereof are and shall be
subordinate, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full in cash
of all Obligations of the Company now or hereafter existing under
the Loan Documents, whether for principal, interest (including
without limitation Post-petition Interest), fees, expenses or
otherwise.
(b) No payment of principal, interest or any other
amount owing by the Company in respect of the Deficiency Loans
shall be made by the Company except from funds on deposit in the
Holding Account or the Nepal Holding Account.
(c) In the event of any liquidation, dissolution or
other proceeding for the winding-up of the Company, or in the
event of any proceeding for receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization or
arrangement with creditors, whether or not pursuant to the
bankruptcy or similar laws of any jurisdiction, or the sale of
all or substantially all of the assets or any other marshaling or
ranking or ordering by an administrator of the assets and
liabilities of the Company, the Deficiency lenders shall have no
rights or interest other than as equity participants in the
Company and (a) amounts due and owing with respect to the
Obligations under the Loan Documents shall first be paid in full
in cash to the Lenders before the Deficiency lenders shall be
entitled to receive any payment on account of its interests in
the Company, whether in cash, securities or other assets, and (b)
at the request of the Lenders, the Deficiency lenders will file
documents or instruments necessary or advisable to give effect to
these subordination provisions and will hold in trust for the
holders of the Obligations under the Loan Documents and pay over
to the Trustee, in the form received, to be applied to the
payment of the Obligations under the Loan Documents (including,
without limitation, Post-petition Interest), any and all cash,
securities or other assets received on account of their
interests, unless and until (x) payment in full of all
Obligations has been made, and all obligations of the Lenders
under the Loan Documents have terminated or expired, and (y) a
period of one hundred twenty (120) days (or such other period as
may be applicable under applicable bankruptcy, insolvency or
similar laws) has elapsed since the condition set out in clause
(x) is satisfied without any court determining that the Company
is insolvent or, if such determination is made within that time,
the Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters. In the event that the Deficiency
lenders shall fail to take such action requested by the Lenders,
IFC and/or DEG may, as attorney-in-fact for the Deficiency
lenders, take such action on behalf of the Deficiency lenders,
and the Deficiency lenders hereby appoint each of the Lenders as
attorney-in-fact for the Deficiency lenders to demand, sue for,
collect and receive any and all such cash, securities or other
assets and give acquittance therefor and to file any instrument
and to take such other action in the name of IFC and/or DEG or
in the name of the Deficiency lenders as IFC and/or DEG may deem
necessary or advisable for the enforcement of this Agreement; and
the Deficiency lenders will execute and deliver to each of the
Lenders such other and further powers of attorney or other
instruments as may be requested in order to accomplish the
foregoing. Anything in this Agreement to the contrary
notwithstanding, no payment or delivery shall be made to the
Deficiency lenders of securities or other obligations which are
issued upon any merger, consolidation, sale, lease, transfer or
other disposal by any corporation succeeding to the Company or
acquiring the Company's property and assets, unless such
securities or obligations are subordinate and junior at least to
the extent provided in this Agreement to the payment in full in
cash of all Obligations under the Loan Documents and to the
payment of any stock or obligations which are issued in exchange
or substitution for any such Obligations.
(d) The Deficiency lenders will not take any action,
or commence any action or proceeding against the Company, to
recover all or any part of the Deficiency Loans, or join with any
creditor in bringing any proceedings against the Company under
any bankruptcy or similar laws of any jurisdiction to recover all
or any part of the Deficiency Loans, unless and until (x) payment
in full of all Obligations has been made, and all obligations of
the Lenders under the Loan Documents have terminated or expired,
and (y) a period of one hundred twenty (120) days (or such other
period as may be applicable under applicable bankruptcy,
insolvency or similar laws) has elapsed since the condition set
out in clause (x) is satisfied without any court determining that
the Company is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to the Lenders or the Trustee by the Company will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters, except that, at the
request of the Lenders, the Deficiency lenders will join with the
Lenders in bringing proceedings against the Company under
bankruptcy, winding up or similar laws.
(e) In the event that any Deficiency lender shall
receive any payment, whether in cash, securities or other
property, on account of the Deficiency Loans which such
Deficiency lender is not entitled to receive under the provisions
of paragraphs (b), (c) or (d) hereof, such Deficiency lender will
hold any amount so received in trust for the Lenders and will
forthwith turn over such payment to the Trustee in the form
received to be applied to the payment of the Obligations under
the Loan Documents.
(f) Either Lender may, at any time and from time to
time, without the consent of or notice to the Deficiency lenders,
without incurring responsibility to the Deficiency lenders, and
without impairing or releasing any of the rights of the Lenders,
or any of the obligations of the Deficiency lenders, hereunder:
(i) Agree to change the amount, manner,
place or terms of payment or change or extend
the time of payment of or renew or alter any
Obligations under the Loan Documents or amend
the Loan Documents in any manner or enter
into or amend in any manner any other
agreements relating to such Obligations (but
not so as to restrict further the payment of
the Deficiency Loans);
(ii) Sell, exchange, release or
otherwise deal with any property by
whomsoever at any time pledged or mortgaged
to secure, or howsoever securing, such
Obligations;
(iii) Release anyone liable in any manner
for the payment or collection of such
Obligations;
(iv) Exercise or refrain from exercising
any rights against the Company and others
(including the Deficiency lenders); and
(v) Apply any sums by whomsoever paid
or howsoever realized to such Obligations.
(g) The Deficiency lenders and the Company shall mark
their books to reflect that the Deficiency Loans are subordinated
to the Obligations under the Loan Documents.
EXHIBIT B
Instructions to Bankers Trust Company
[Date]
Bankers Trust Company
4 Albany Street
New York, New York 10006
Attention: Corporate Trust Department
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Re: Upper Bhote Koshi Hydroelectric Project
Gentlemen:
We hereby irrevocably authorize and request that upon
delivery by International Finance Corporation ("IFC") or DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH ("DEG") to
Panda Energy International, Inc. ("Panda") and Bankers Trust
Company, as trustee for the Issuer Equity Distribution Fund and
the Company Equity Distribution Fund ("Bankers Trust") of a
Deficiency Notice or a Guarantee Notice pursuant to the Share
Retention and Project Funds Agreement among Bhote Koshi Power
Company Private Limited, Panda, IFC and DEG among others, and
subject to the requirements of Sections 4.7(a)(i) and 4.7(b) of
the Panda Global Energy Indenture and Sections 4.5(a)(i) and
4.5(b) of the Panda Global Holdings Indenture (including, without
limitation, receipt of an Officer's Certificate as provided
therein), Bankers Trust transfer monies in the Issuer Equity
Distribution Fund and the Company Equity Distribution Fund
pursuant to Section 4.7(a)(ii) of the Panda Global Energy
Indenture and Section 4.5(a)(ii) of the Panda Global Holdings
Indenture into such accounts and in such amounts as directed by
IFC or DEG. A copy of the Share Retention and Project Funds
Agreement is attached hereto.
This irrevocable instruction is intended to benefit,
and to be relied upon by, IFC, DEG and their respective
successors, assigns and participants.
Yours truly,
Panda Global Energy Company
Panda Global Holdings, Inc.
EXHIBIT C
Permitted Uses of Issuer Equity Distribution Fund and Company
Equity Distribution Fund
1. Under Section 4.7(a) of the Global Energy Indenture, the
Trustee is irrevocably authorized, from moneys then on
deposit in the Issuer Equity Distribution Fund, to pay any
deficiency in an Issuer Fund pursuant to Section 4.14 of the
Global Energy Indenture. Section 4.14(a) of the Global
Energy Indenture requires the Trustee, in the event on any
Payment Date with respect to the Senior Secured Notes, the
moneys available to the Issuer in the Senior Secured Notes
Interest Account are not sufficient to pay in full the
interest (including Liquidated Damages and Additional
Amounts, if any) with respect to the Senior Secured Notes,
to withdraw moneys from certain funds as set forth therein,
including the Issuer Equity Distribution Fund, and to notify
the Trustee under the Global Holdings Indenture (which is
also Bankers Trust Company) in order that such Trustee shall
provide moneys pursuant to the terms of the Global Holdings
Indenture and the Senior Secured Notes Guarantee, for the
correction of such deficiency. Section 4.14(b) of the
Global Energy Indenture requires the Trustee, in the event
on any Payment Date with respect to the Senior Secured
Notes, the moneys available to the Issuer in the Senior
Secured Notes Principal Account are not sufficient to pay in
full the principal and premium, if any, with respect to the
Senior Secured Notes, to withdraw moneys from certain funds
as set forth therein, including the Issuer Equity
Distribution Fund, and to notify the Trustee under the
Global Holdings Indenture in order that such Trustee shall
provide moneys pursuant to the terms of the Global Holdings
Indenture and the Senior Secured Notes Guarantee, for the
correction of such deficiency. Section 3.3 of the Global
Energy Indenture establishes a reserve fund designated the
"Senior Secured Notes Debt Service Reserve Fund," the
funding requirements for which and uses thereof are set
forth in Section 4.3 of the Global Energy Indenture.
2. Under Section 4.5(a) of the Global Holdings Indenture, the
Trustee is irrevocably authorized, from moneys then on
deposit in the Company Equity Distribution Fund, to pay any
deficiency in a fund pursuant to Section 4.7 of the Global
Holdings Indenture. Section 4.7 of the Global Holdings
Indenture requires the Trustee, in the event on any Payment
Date with respect to the Senior Secured Notes, the moneys
available to Panda Global Energy in the Issuer Funds are
insufficient to make a payment of principal, premium, if
any, or interest (including Liquidated Damages and
Additional Amounts, if any) with respect to the Senior
Secured Notes, to withdraw moneys from certain funds as set
forth therein, including the Company Equity Distribution
Fund. Section 3.3 of the Global Holdings Indenture
establishes a reserve fund designated the "Notes Guarantee
Service Reserve Fund," the requirements for which and uses
thereof are set forth in Section 4.3 of the Global Holdings
Indenture.
3. Under Section 7.25 of the Global Energy Indenture and the
Global Holdings Indenture, Panda Global Energy and Panda
Global Holdings, respectively, and their Subsidiaries are
permitted to make certain types of Investments, including,
without limitation, Investments in Permitted Projects
(including Permitted Projects which are not wholly owned by
Panda Global Energy or Panda Global Holdings, as the case
may be). The Indenture defines "Investments" to include,
among other things, direct or indirect loans, advances and
capital contributions. Under Section 7.14 of the Global
Energy Indenture and the Global Holdings Indenture, Panda
Global Energy and Panda Global Holdings, respectively, and
their Subsidiaries are permitted to make capital
expenditures as specified therein, including with respect to
the Luannan, Rosemary and Brandywine Facilities and in
connection with Permitted Projects. Under Section 7.24 of
the Global Energy Indenture and the Global Holdings
Indenture, Panda Global Energy and Panda Global Holdings,
respectively, and their Subsidiaries are permitted to engage
in transactions with Affiliates as specified therein,
including without limitation, the making of payments
pursuant to the Administrative Services Agreement and the
Development Services Agreement. Under Section 7.19 of the
Global Energy Indenture and the Global Holdings Indenture,
Panda Global Energy and Panda Global Holdings, respectively,
and their Subsidiaries are permitted to engage in sale and
leaseback transactions as specified therein. Under Section
7.15 of the Global Energy Indenture and the Global Holdings
Indenture, Panda Global Energy and Panda Global Holdings,
respectively, and their Subsidiaries are permitted to
develop, construct, own, operate and finance Permitted
Projects. Under Section 7.12 of the Global Energy Indenture
and the Global Holdings Indenture, respectively, Panda
Global Energy and Panda Global Holdings, respectively, and
their Subsidiaries are permitted to incur certain
Indebtedness as specified therein. Pursuant to Section
4.7(a)(ii) of the Global Energy Indenture and Section
4.5(a)(ii) of the Global Holdings Indenture, respectively,
funds in the Issuer Equity Distribution Fund and the Company
Equity Distribution Fund may be used for any of the
foregoing purposes.
EXHIBIT NO. 148
EQUITY SUBSCRIPTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
HIMAL INTERNATIONAL POWER CORPORATION LTD.
and
WILMINGTON TRUST COMPANY
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment 2
Section 2.2. Method of Payment 3
ARTICLE 3
COVENANTS
Section 3.1. HIPC Covenants 3
Section 3.2. Indemnification 4
Section 3.3. Obligations Absolute 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties 5
Section 4.2. Further Assurances 6
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to Jurisdiction
and Venue; Sovereign Immunity 6
Section 5.2. Notices 7
Section 5.3. Benefit of Agreement 8
Section 5.4. No Waiver; Remedies Cumulative 8
Section 5.5. Severability 8
Section 5.6. Documents 8
Section 5.7. Counterparts 8
Section 5.8. Headings Descriptive 9
Section 5.9. Amendment or Waiver 9
Section 5.10. Limitation of Liability 9
EQUITY SUBSCRIPTION AGREEMENT
EQUITY SUBSCRIPTION AGREEMENT, dated as of the Closing Date
(this "Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE
LIMITED, a private limited liability company registered under the
Nepalese Company Act 2021 (the "Company"), HIMAL INTERNATIONAL
POWER CORPORATION LTD., a corporation organized and existing
under the laws of Nepal ("HIPC") and WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trustee"), on behalf of and
for the benefit of IFC.
PRELIMINARY STATEMENTS
The Company was granted the right to build, own and operate
a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant,
pursuant to that certain IFC Investment Agreement between the
Company and IFC (the "IFC Investment Agreement"), but only if
HIPC enters into this Agreement to provide for the subscription
for shares of the Company as set forth herein.
DEG is willing to provide financing for the power plant,
pursuant to that certain DEG Investment Agreement between the
Company and DEG (the "DEG Investment Agreement," and together
with the IFC Investment Agreement, the "Investment Agreement"),
but only if HIPC enters into this Agreement to provide for the
subscription for shares of the Company as set forth herein. (IFC
and DEG are hereinafter referred to collectively as the "Lenders"
and individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into.
HIPC will benefit from the making of the aforesaid loans by
IFC and DEG.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions, and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment.
(a) (i) As of the Financial Closing Date, HIPC's
total equity commitment to the Project is two
million nine hundred forty nine thousand five
hundred Dollars ($2,949,500). As of the date
hereof, HIPC is the legal and beneficial owner of
zero (0) shares of the share capital of the
Company, par value Rs. 100 per share.
(ii) The Company agrees to issue and sell to
HIPC, and HIPC agrees to purchase, one hundred
twenty-eight thousand two hundred sixty-two shares
(128,262) of the share capital of the Company, par
value Rs. 100 per share, for a total purchase
price of one million two hundred eighty-two
thousand six hundred eighteen Dollars ($1,282,618)
(the "Initial Share Amount"). HIPC shall pay such
Initial Share Amount in full prior to the initial
Disbursements under the Investment Agreement and
prior to the initial subscription and disbursement
under the IFC Subscription. The parties
acknowledge that, to the extent that the Initial
Share Amount exceeds HIPC's pro-rata share of the
total outstanding equity prior to the initial
Disbursement under the Investment Agreement and
prior to the initial subscription and disbursement
under the IFC Subscription and the same results in
the aggregate equity payments of all shareholders
(other than IFC) exceeding the pro rata equity
funding requirements applicable to the initial
Disbursement under the Investment Agreement and
the initial subscription and disbursement under
the IFC Subscription, such excess can be factored
in connection with satisfying its the requirement
of funding equity pro rata with subsequent
Disbursements and subsequent subscriptions and
disbursements under the IFC Subscription.
(iii) HIPC represents and warrants that,
by the Financial Closing Date one hundred twenty-
eight thousand two hundred sixty-two (128,262)
shares for a total purchase price of one million
two hundred eighty-two thousand six hundred
eighteen Dollars ($1,282,618) of the Initial Share
Amount shall be paid to the Company.
(iv) The Company further agrees to issue and
sell to HIPC, and HIPC further agrees to purchase,
one hundred sixty-six thousand six hundred eighty-
eight (166,688) additional shares of the share
capital of the Company, par value Rs. 100 per
share, for an additional purchase price of one
million six hundred sixty-six thousand eight
hundred eighty-two Dollars ($1,666,882). Such
amount shall be paid in installments (each, a
"Subscription Amount Payment"), pro rata to the
proceeds of the Loans prior to the receipt by the
Company of such proceeds of the Loans.
(v) The Company shall deliver to HIPC
certificates representing the Subscribed Shares in
a manner and at such times, dates, and places to
be agreed upon by the parties hereto.
(b) If and to the extent that a Project Funds Shortfall
exists at any time, HIPC shall pay to the Company, on such date
or dates as the Company, the Trustee or either of the Lenders
shall specify in a written notice or written notices to HIPC,
such additional subscription amounts as are required pursuant to
the Share Retention and Project Funds Agreement (but in the event
of any conflict between a notice given by the Company and a
notice given by either of the Lenders or the Trustee, the notice
given by such Lender or the Trustee shall prevail).
(c) Notwithstanding paragraphs (a) and (b), at the option
of the Trustee or the Lenders following the occurrence and during
the continuation of an Event of Default, HIPC shall pay to the
Company the amount by which the Subscription Amount Payments
theretofore made by HIPC is less than two million nine hundred
forty nine thousand five hundred Dollars ($2,949,500), and such
payment shall be made by HIPC on such date as the Company, either
of the Lenders or the Trustee shall specify in a written notice
to HIPC (but in the event of any conflict between a notice given
by the Company and a notice given by any such Lender or the
Trustee, the notice given by such Lender or the Trustee shall
prevail).
Section 2.2. Method of Payment. HIPC shall pay the
Subscription Amount Payments no later than 11:00 a.m.
(Wilmington, Delaware time) in U.S. Dollars in immediately
available funds to the Trustee, for deposit in the Construction
Sub-Account (in the case of the Subscription Amount Payments made
under Section 2.1(a) hereof), or, if so directed by the Trustee,
in the Debt Payment Sub-Account (in the case of payments made
under Section 2.1(b) hereof), or to such other person or address
or account as the Trustee may from time to time specify in
writing to HIPC, without offset, abatement, withholding or
reduction of any kind. All such payments shall be applied in the
manner required under the Investment Agreement and the Trust and
Retention Agreement.
ARTICLE 3
COVENANTS
Section 3.1. HIPC Covenants.
(a) HIPC hereby covenants and agrees that, for so long as
it shall have any obligations hereunder and except as permitted
under Section 3.1(b) hereof, it shall at all times preserve and
maintain in full force and effect its existence as a company
under the laws of Nepal; and
(b) it shall not merge into or consolidate with any other
Person, change its form of organization or the scope or nature of
its business, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets; provided, however, that nothing herein shall prevent HIPC
from encumbering, or transferring an interest in, its Shares
pursuant to its Share Pledge Agreement or otherwise to the extent
such encumbrance or transfer does not result in a Default or an
Event of Default under any Loan Document.
Section 3.2. Indemnification. HIPC shall defend,
indemnify and hold harmless the Company, the Trustee and each of
the Lenders from and against any and all costs, expenses,
liabilities, losses, damages, injunctions, suits, actions, fines,
penalties, claims and demands, of every kind or nature, including
attorney's fees and court costs, which are occasioned by or
result from any failure by HIPC to timely perform any of the
terms, agreements or covenants to be performed hereunder.
Section 3.3. Obligations Absolute.
(a) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver,
consent or other action in respect of any liability or obligation
under or in respect of, or of any of the terms, covenants or
conditions of, the Investment Agreement or any other Principal
Document, or any Security, shall in any way alter or affect any
of the obligations hereunder of the Company or HIPC.
(b) (i) The obligations of HIPC under this
Agreement are absolute and unconditional and shall
not be affected by (x) any default by the Company
in the performance or observance of any of its
agreements or covenants in any Loan Document, this
Agreement or any other Principal Document, (y) the
bankruptcy, insolvency, winding up or other
similar proceeding of the Company, HIPC or any
other Person, or (z) any other circumstance,
happening, condition or event whatsoever, whether
or not similar to any of the foregoing. The
obligations of HIPC under this Agreement shall not
be subject to any abatement, reduction,
limitation, impairment, termination, set-off,
defense, counterclaim or recoupment whatsoever or
any right to any thereof, and shall not be
released, discharged or in any way affected by any
reorganization, arrangement, compromise,
composition or plan affecting the Company or by
any lack of validity or enforceability of the
Investment Agreement or any document executed in
connection therewith, whether or not HIPC or the
Company shall have notice or knowledge of any of
the foregoing.
(ii) If the obligations of HIPC hereunder are
unenforceable by reason of the insolvency,
bankruptcy or reorganization of the Company or any
other Person, HIPC shall nonetheless pay any
amounts due hereunder directly to the Trustee.
(c) Each of HIPC and the Company hereby irrevocably waives,
to the extent that it may do so under applicable law, any defense
based on the adequacy of a remedy at law which may be asserted as
a bar to the remedy of specific performance in any action brought
against it.
(d) HIPC hereby irrevocably waives, to the extent it may do
so under applicable law, any protection to which it may be
entitled under bankruptcy, insolvency or similar laws of any
jurisdiction in the event of a Company Bankruptcy. In the event
a trustee in bankruptcy or the debtor-in-possession takes any
action (including without limitation the institution of any
action, suit or other proceeding) in a Company Bankruptcy for the
purpose of enforcing the obligations of HIPC under this
Agreement, HIPC hereby agrees, to the extent that it may do so
under applicable law, that it will not assert any defense, claim
or counterclaim denying liability thereunder on the basis that
this Agreement is an executory contract that cannot be assumed,
assigned or enforced. If a Company Bankruptcy shall occur, HIPC,
to the extent it may do so under applicable law, shall reconfirm
its pre-petition waiver of any protection to which it may be
entitled to under any such laws and, to give effect to such
waiver, HIPC consents to the assumption and enforcement of each
provision of this Agreement by the debtor-in-possession or the
Company's trustee in bankruptcy, as the case may be.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties.
(a) HIPC and Company Representations and Warranties. HIPC
hereby represents and warrants, and the Company hereby represents
and warrants, solely as to itself, that as of the date hereof:
(i) this Agreement has been duly authorized,
executed and delivered by it and constitutes its
valid and legally binding obligation;
(ii) the execution, delivery and performance
of this Agreement will not conflict with or result
in a breach of any of the terms, conditions or
provisions of, or constitute a default or require
any consent under, any indenture, mortgage,
agreement or other instrument or arrangement to
which it is a party or by which it is bound, or
violate any of the terms or provisions of its
articles of incorporation, by-laws or other
governing documents, or any judgment, decree or
order or any law, statute, rule or regulation
applicable to it; and
(iii) it has obtained all consents,
licenses and authorizations of all governmental
authorities required under applicable laws,
regulations, decrees or orders of or in any
applicable jurisdiction (which may legally be
obtained as of the date hereof) in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement or the making of
any other payments to the Company in accordance
with this Agreement, and that such consents,
licenses and authorizations are in full force and
effect.
(b) Company Representations and Warranties. The Company
hereby represents and warrants that as of the date hereof:
(i) it is a company duly organized, validly
existing and in good standing under the laws of
the jurisdiction of its organization;
(ii) after giving effect to the terms of this
Agreement and the other Subscription Agreements
(A) seven hundred forty-one thousand five hundred
eighty-seven (741,587) shares of the Company will
be issued and outstanding on the Financial Closing
Date, (B) all shares of the Company will have been
duly authorized and validly issued, (C) no
subscription, warrant, option, convertible
security or other right (contingent or otherwise)
to purchase or acquire any shares of the share
capital of the Company will be authorized or
outstanding, other than pursuant to the Loan
Documents, (D) there will not exist any commitment
of the Company to issue any subscription, warrant,
option, convertible security or other such right
or to issue or distribute to holders of shares of
the Company any evidence of indebtedness or assets
of the Company, (E) the Company will have no
obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of the
Company or any interest therein or to pay any
dividend or make any other distribution in respect
thereof other than pursuant to the Loan Documents,
and (F) all shares of the Company are and will be
identical in respect of rights and priorities.
Section 4.2. Further Assurances. In the event that any
additional consents, licenses or authorizations may be required
in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the making of any payment
in relation hereto, HIPC and the Company shall obtain all such
consents, licenses or authorizations and shall take such action
as shall be required of it in order to comply with the terms
hereof.
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to
Jurisdiction and Venue; Sovereign Immunity.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be
governed by the laws of the State of New York without regard to
the conflicts of laws provisions thereof (other than Sections 5-
1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Company or
HIPC with respect to this Agreement may be brought in the courts
of the State of New York in the Borough of Manhattan or of the
United States for the Southern District of New York and, by
execution and delivery of this Agreement, each of the Company and
HIPC hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of the Company and HIPC agrees that a
judgment in any such action or proceeding shall be conclusive and
binding upon it, and may be enforced in any other jurisdiction,
including without limitation in Nepal, by a suit upon such
judgment, a certified copy of which shall be conclusive evidence
of the judgment. Each of the Company and HIPC hereby irrevocably
designates, appoints and empowers CT Corporation System, with
offices on the date hereof at 1633 Broadway, New York, New York
10019, as its designee, appointee and agent to receive, accept
and acknowledge for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices
and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, each of the Company
and HIPC agrees to designate a new designee, appointee and agent
in New York City. Each of the Company and HIPC further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth below, such
service to become effective ten (10) days after such mailing.
Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company or HIPC in
Nepal or in any other jurisdiction.
(b) Each of the Company and HIPC hereby irrevocably waives
any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which the Company or HIPC is a party brought in the
courts referred to in paragraph (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such
court that any action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) HIPC acknowledges and agrees that the activities
contemplated by this Agreement are commercial in nature rather
than governmental or public, and therefore acknowledges and
agrees that the right of immunity does not and will not arise
with respect to such activities or in any legal action or
proceeding arising out of or relating to this Agreement in
respect of itself and its properties.
Section 5.2. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when transmitted by facsimile to the number
specified below, upon acknowledgement of receipt by the
recipient, or (c) when sent by overnight courier service, the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor. Any party may from time to time designate by written
notice to the other parties another address to which notices are
to be sent.
For the Company: Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
with a copy to:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 977-1-27-0027
For HIPC:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Wilmington Trust Company:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 5.3. Benefit of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that none of the parties may assign or
transfer any of its rights or obligations hereunder without the
prior written consent of the Lenders.
Section 5.4. No Waiver; Remedies Cumulative. No failure
or delay on the part of the Company in exercising any right,
power on privilege hereunder, and no course of dealing between
the Company and HIPC, shall impair any such right, power or
privilege or operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder. The rights,
powers and remedies herein are cumulative and not exclusive of
any rights, powers or remedies which the Company would otherwise
have. No notice to or demand on HIPC in any case shall entitle
HIPC to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Company
to any other or further action in any circumstances without
notice or demand.
Section 5.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 5.6. Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company or HIPC, as the case may be, which
translation shall be the governing version between the Company
and HIPC.
Section 5.7. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 5.8. Headings Descriptive. The headings of the
Articles of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 5.9. Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by each of the parties hereto.
Section 5.10. Limitation of Liability. Wilmington Trust
Company in acting hereunder is acting not in its individual
capacity but solely as Trustee and shall be entitled to the
rights, protections and immunities, if any, of the Trustee under
the Trust and Retention Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered by their proper and duly
authorized officers of the day and year first written above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
HIMAL INTERNATIONAL POWER CORPORATION LTD.
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
Name:
Title:
EXHIBIT NO. 149
EQUITY SUBSCRIPTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
PANDA OF NEPAL
and
WILMINGTON TRUST COMPANY
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment 2
Section 2.2. Method of Payment 3
ARTICLE 3
COVENANTS
Section 3.1. Panda of Nepal Covenants 3
Section 3.2. Indemnification 4
Section 3.3. Obligations Absolute 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties 5
Section 4.2. Further Assurances 6
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to Jurisdiction
and Venue; Sovereign Immunity 6
Section 5.2. Notices 7
Section 5.3. Benefit of Agreement 8
Section 5.4. No Waiver; Remedies Cumulative 9
Section 5.5. Severability 9
Section 5.6. Documents 9
Section 5.7. Counterparts 9
Section 5.8. Headings Descriptive 9
Section 5.9. Amendment or Waiver 9
Section 5.10. Limitation of Liability 9
EQUITY SUBSCRIPTION AGREEMENT
EQUITY SUBSCRIPTION AGREEMENT, dated as of the Closing Date
(this "Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE
LIMITED, a private limited liability company registered under the
Nepalese Company Act 2021 (the "Company"), PANDA OF NEPAL, an
exempted company with limited liability organized and existing
under the laws of the Cayman Islands ("Panda of Nepal") and
WILMINGTON TRUST COMPANY, a Delaware banking corporation (the
"Trustee"), on behalf of and for the benefit of IFC.
PRELIMINARY STATEMENTS
The Company was granted the right to build, own and operate
a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant,
pursuant to that certain IFC Investment Agreement between the
Company and IFC (the "IFC Investment Agreement"), but only if
Panda of Nepal enters into this Agreement to provide for the
subscription for shares of the Company as set forth herein.
DEG is willing to provide financing for the power plant,
pursuant to that certain DEG Investment Agreement between the
Company and DEG (the "DEG Investment Agreement," and together
with the IFC Investment Agreement, the "Investment Agreement"),
but only if Panda of Nepal enters into this Agreement to provide
for the subscription for shares of the Company as set forth
herein. (IFC and DEG are hereinafter referred to collectively as
the "Lenders" and individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into.
Panda of Nepal will benefit from the making of the aforesaid
loans by IFC and DEG.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions, and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment.
(a) (i) As of the Financial Closing Date, Panda
of Nepal's total equity commitment to the Project
is twenty two million one hundred twenty one
thousand two hundred fifty Dollars ($22,121,250).
As of the date hereof, Panda of Nepal is the legal
and beneficial owner of zero (0) shares of the
share capital of the Company, par value Rs. 100
per share.
(ii) The Company agrees to issue and sell to
Panda of Nepal, and Panda of Nepal agrees to
purchase, five hundred seventy-four thousand nine
hundred ninety-two (574,992) shares of the share
capital of the Company, par value Rs. 100 per
share, for a total purchase price of five million
seven hundred forty-nine thousand nine hundred
twenty-five Dollars ($5,749,925) (the "Initial
Share Amount"). Panda of Nepal shall pay such
Initial Share Amount in full prior to the initial
Disbursements under the Investment Agreement and
prior to the initial subscription and disbursement
under the IFC Subscription.
(iii) Panda of Nepal represents and
warrants that, by the Financial Closing Date five
hundred seventy four thousand nine hundred ninety
two (574,992) shares for a total purchase price of
five million seven hundred forty nine thousand
nine hundred twenty five Dollars ($5,749,925) of
the Initial Share Amount shall be paid to the
Company.
(iv) The Company further agrees to issue and
sell to Panda of Nepal, and Panda of Nepal further
agrees to purchase, one million six hundred thirty
seven thousand one hundred thirty three
(1,637,133) additional shares of the share capital
of the Company, par value Rs. 100 per share, for
an additional purchase price of sixteen million
three hundred seventy one thousand three hundred
twenty five Dollars ($16,371,325). Such amount
shall be paid in installments (each, a
"Subscription Amount Payment"), pro rata to the
proceeds of the Loans prior to the receipt by the
Company of such proceeds of the Loans.
(v) The Company shall deliver to Panda of
Nepal certificates representing the Subscribed
Shares in a manner and at such times, dates, and
places to be agreed upon by the parties hereto.
(b) If and to the extent that a Project Funds Shortfall
exists at any time, Panda of Nepal shall pay to the Company, on
such date or dates as the Company, the Trustee or either of the
Lenders shall specify in a written notice or written notices to
Panda of Nepal, such additional subscription amounts as are
required pursuant to the Share Retention and Project Funds
Agreement (but in the event of any conflict between a notice
given by the Company and a notice given by either of the Lenders
or the Trustee, the notice given by any such Lender or the
Trustee shall prevail).
(c) Notwithstanding paragraphs (a) and (b), at the option
of the Trustee or the Lenders following the occurrence and during
the continuation of an Event of Default, Panda of Nepal shall pay
to the Company the amount by which the Subscription Amount
Payments theretofore made by Panda of Nepal is less than twenty
two million one hundred twenty one thousand two hundred fifty
Dollars ($22,121,250), and such payment shall be made by Panda of
Nepal on such date as the Company, either of the Lenders or the
Trustee shall specify in a written notice to Panda of Nepal (but
in the event of any conflict between a notice given by the
Company and a notice given by any such Lender or the Trustee, the
notice given by such Lender or the Trustee shall prevail).
(d) Panda of Nepal will cause Panda Bhote Koshi Company to
deliver on behalf of Panda of Nepal on or prior to the Financial
Closing Date an Equity Letter of Credit issued in favor of the
Trustee, and in an amount equal to sixteen million three hundred
seventy one thousand three hundred twenty five Dollars
($16,371,325) (such Dollar amount to equal the Subscription
Amount minus the Initial Share Amount). The stated amount of the
Equity Letter of Credit shall be reduced by the amount of each
Subscription Amount Payment made in accordance with
Section 2.1(a)(iv) hereof. The Equity Letter of Credit shall
remain outstanding, and in full force and effect, until the
Trustee or the Lenders have notified in writing the issuing bank
that Panda of Nepal has made Subscription Amount Payments equal
to twenty two million one hundred twenty one thousand two hundred
fifty Dollars ($22,121,250) or that Panda of Nepal's obligations
under this Article 2 have expired. In the event Panda of Nepal
fails to make any Subscription Amount Payment or other payment as
and when required hereunder, the Trustee or either of the Lenders
shall be entitled to demand payment under the Equity Letter of
Credit of an amount equal to such payment. Additionally, if the
Trustee or the Lenders have received a notice from the issuing
bank that the Equity Letter of Credit will be terminated or will
not be renewed or extended, then either of the Lenders or the
Trustee may, at any time after receiving the aforesaid notice,
draw upon the Equity Letter of Credit in an amount equal to the
full amount of the Equity Letter of Credit.
Section 2.2. Method of Payment. Panda of Nepal shall pay
the Subscription Amount Payments no later than 11:00 a.m.
(Wilmington, Delaware time) in U.S. Dollars in immediately
available funds to the Trustee, for deposit in the Construction
Sub-Account (in the case of the Subscription Amount Payments made
under Section 2.1(a) hereof), or, if so directed by the Trustee,
in the Debt Payment Sub-Account (in the case of payments made
under Section 2.1(b) hereof), or to such other person or address
or account as the Trustee may from time to time specify in
writing to Panda of Nepal, without offset, abatement, withholding
or reduction of any kind. All such payments shall be applied in
the manner required under the Investment Agreement and the Trust
and Retention Agreement.
ARTICLE 3
COVENANTS
Section 3.1. Panda of Nepal Covenants.
(a) Panda of Nepal hereby covenants and agrees that, for so
long as it shall have any obligations hereunder and except as
permitted under Section 3.1(b) hereof, it shall at all times
preserve and maintain in full force and effect its existence as a
company under the laws of the Cayman Islands; and
(b) it shall not merge into or consolidate with any other
Person, change its form of organization or the scope or nature of
its business, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets; provided, however, that nothing herein shall prevent
Panda of Nepal from encumbering, or transferring an interest in,
its Shares pursuant to its Share Pledge Agreement or otherwise to
the extent such encumbrance or transfer does not result in a
Default or an Event of Default under any Loan Document.
Section 3.2. Indemnification. Panda of Nepal shall
defend, indemnify and hold harmless the Company, the Trustee and
each of the Lenders from and against any and all costs, expenses,
liabilities, losses, damages, injunctions, suits, actions, fines,
penalties, claims and demands, of every kind or nature, including
attorney's fees and court costs, which are occasioned by or
result from any failure by Panda of Nepal to timely perform any
of the terms, agreements or covenants to be performed hereunder.
Section 3.3. Obligations Absolute.
(a) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver,
consent or other action in respect of any liability or obligation
under or in respect of, or of any of the terms, covenants or
conditions of, the Investment Agreement or any other Principal
Document, or any Security, shall in any way alter or affect any
of the obligations hereunder of the Company or Panda of Nepal.
(b) (i) The obligations of Panda of Nepal under
this Agreement are absolute and unconditional and
shall not be affected by (x) any default by the
Company in the performance or observance of any of
its agreements or covenants in any Loan Document,
this Agreement or any other Principal Document,
(y) the bankruptcy, insolvency, winding up or
other similar proceeding of the Company, Panda of
Nepal or any other Person, or (z) any other
circumstance, happening, condition or event
whatsoever, whether or not similar to any of the
foregoing. The obligations of Panda of Nepal
under this Agreement shall not be subject to any
abatement, reduction, limitation, impairment,
termination, set-off, defense, counterclaim or
recoupment whatsoever or any right to any thereof,
and shall not be released, discharged or in any
way affected by any reorganization, arrangement,
compromise, composition or plan affecting the
Company or by any lack of validity or
enforceability of the Investment Agreement or any
document executed in connection therewith, whether
or not Panda of Nepal or the Company shall have
notice or knowledge of any of the foregoing.
(ii) If the obligations of Panda of Nepal
hereunder are unenforceable by reason of the
insolvency, bankruptcy or reorganization of the
Company or any other Person, Panda of Nepal shall
nonetheless pay any amounts due hereunder directly
to the Trustee.
(c) Notwithstanding paragraphs (a) and (b) above, receipt
of an amount drawn on the Equity Letter of Credit shall
constitute satisfaction of Panda of Nepal's obligation to pay a
Subscription Amount Payment, to the extent of the amount so
received.
(d) Each of Panda of Nepal and the Company hereby
irrevocably waives, to the extent that it may do so under
applicable law, any defense based on the adequacy of a remedy at
law which may be asserted as a bar to the remedy of specific
performance in any action brought against it.
(e) Panda of Nepal hereby irrevocably waives, to the extent
it may do so under applicable law, any protection to which it may
be entitled under bankruptcy, insolvency or similar laws of any
jurisdiction in the event of a Company Bankruptcy. In the event
a trustee in bankruptcy or the debtor-in-possession takes any
action (including without limitation the institution of any
action, suit or other proceeding) in a Company Bankruptcy for the
purpose of enforcing the obligations of Panda of Nepal under this
Agreement, Panda of Nepal hereby agrees, to the extent that it
may do so under applicable law, that it will not assert any
defense, claim or counterclaim denying liability thereunder on
the basis that this Agreement is an executory contract that
cannot be assumed, assigned or enforced. If a Company Bankruptcy
shall occur, Panda of Nepal, to the extent it may do so under
applicable law, shall reconfirm its pre-petition waiver of any
protection to which it may be entitled to under any such laws
and, to give effect to such waiver, Panda of Nepal consents to
the assumption and enforcement of each provision of this
Agreement by the debtor-in-possession or the Company's trustee in
bankruptcy, as the case may be.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties.
(a) Panda of Nepal and Company Representations and
Warranties. Panda of Nepal hereby represents and warrants, and
the Company hereby represents and warrants, solely as to itself,
that as of the date hereof:
(i) this Agreement has been duly authorized,
executed and delivered by it and constitutes its
valid and legally binding obligation;
(ii) the execution, delivery and performance
of this Agreement will not conflict with or result
in a breach of any of the terms, conditions or
provisions of, or constitute a default or require
any consent under, any indenture, mortgage,
agreement or other instrument or arrangement to
which it is a party or by which it is bound, or
violate any of the terms or provisions of its
articles of incorporation, by-laws or other
governing documents, or any judgment, decree or
order or any law, statute, rule or regulation
applicable to it; and
(iii) it has obtained all consents,
licenses and authorizations of all governmental
authorities required under applicable laws,
regulations, decrees or orders of or in any
applicable jurisdiction (which may legally be
obtained as of the date hereof) in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement or the making of
any other payments to the Company in accordance
with this Agreement, and that such consents,
licenses and authorizations are in full force and
effect.
(b) Company Representations and Warranties. The Company
hereby represents and warrants that as of the date hereof:
(i) it is a company duly organized, validly
existing and in good standing under the laws of
the jurisdiction of its organization;
(ii) after giving effect to the terms of this
Agreement and the other Subscription Agreements
(A) seven hundred forty-one thousand five hundred
eighty-seven (741,587) shares of the Company will
be issued and outstanding on the Financial Closing
Date, (B) all shares of the Company will have been
duly authorized and validly issued, (C) no
subscription, warrant, option, convertible
security or other right (contingent or otherwise)
to purchase or acquire any shares of the share
capital of the Company will be authorized or
outstanding, other than pursuant to the Loan
Documents, (D) there will not exist any commitment
of the Company to issue any subscription, warrant,
option, convertible security or other such right
or to issue or distribute to holders of shares of
the Company any evidence of indebtedness or assets
of the Company, (E) the Company will have no
obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of the
Company or any interest therein or to pay any
dividend or make any other distribution in respect
thereof other than pursuant to the Loan Documents,
and (F) all shares of the Company are and will be
identical in respect of rights and priorities.
Section 4.2. Further Assurances. In the event that any
additional consents, licenses or authorizations may be required
in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the making of any payment
in relation hereto, Panda of Nepal and the Company shall obtain
all such consents, licenses or authorizations and shall take such
action as shall be required of it in order to comply with the
terms hereof.
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to
Jurisdiction and Venue; Sovereign Immunity.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be
governed by the laws of the State of New York without regard to
the conflicts of laws provisions thereof (other than Sections 5-
1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Company or
Panda of Nepal with respect to this Agreement may be brought in
the courts of the State of New York in the Borough of Manhattan
or of the United States for the Southern District of New York
and, by execution and delivery of this Agreement, each of the
Company and Panda of Nepal hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the Company
and Panda of Nepal agrees that a judgment in any such action or
proceeding shall be conclusive and binding upon it, and may be
enforced in any other jurisdiction, including without limitation
in Nepal, by a suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. Each of the
Company and Panda of Nepal hereby irrevocably designates,
appoints and empowers CT Corporation System, with offices on the
date hereof at 1633 Broadway, New York, New York 10019, as its
designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which
may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be
available to act as such, each of the Company and Panda of Nepal
agrees to designate a new designee, appointee and agent in New
York City. Each of the Company and Panda of Nepal further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth below, such
service to become effective ten (10) days after such mailing.
Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company or Panda of
Nepal in Nepal or in any other jurisdiction.
(b) Each of the Company and Panda of Nepal hereby
irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement
or any other Principal Document to which the Company or Panda of
Nepal is a party brought in the courts referred to in paragraph
(a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any action or proceeding
brought in any such court has been brought in an inconvenient
forum.
(c) Panda of Nepal acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 5.2. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when transmitted by facsimile to the number
specified below, upon acknowledgement of receipt by the
recipient, or (c) when sent by overnight courier service, the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor. Any party may from time to time designate by written
notice to the other parties another address to which notices are
to be sent.
For the Company: Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
with a copy to:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 977-1-27-0027
For Panda of Nepal:
Address: c/o Maples and Calder
P.O. Box 309
Ugland House
Smith Church Street
Grand Cayman
Cayman Islands, R.W.I.
Attention: Sharon Pierson
Facsimile: (809) 949-8080
For Wilmington Trust Company:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 5.3. Benefit of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that none of the parties may assign or
transfer any of its rights or obligations hereunder without the
prior written consent of the Lenders.
Section 5.4. No Waiver; Remedies Cumulative. No failure
or delay on the part of the Company in exercising any right,
power on privilege hereunder, and no course of dealing between
the Company and Panda of Nepal, shall impair any such right,
power or privilege or operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The
rights, powers and remedies herein are cumulative and not
exclusive of any rights, powers or remedies which the Company
would otherwise have. No notice to or demand on Panda of Nepal
in any case shall entitle Panda of Nepal to any other or further
notice or demand in similar or other circumstances or constitute
a waiver of the rights of the Company to any other or further
action in any circumstances without notice or demand.
Section 5.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 5.6. Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company or Panda of Nepal, as the case may
be, which translation shall be the governing version between the
Company and Panda of Nepal.
Section 5.7. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 5.8. Headings Descriptive. The headings of the
Articles of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 5.9. Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by each of the parties hereto.
Section 5.10. Limitation of Liability. Wilmington Trust
Company in acting hereunder is acting not in its individual
capacity but solely as Trustee and shall be entitled to the
rights, protections and immunities, if any, of the Trustee under
the Trust and Retention Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered by their proper and duly
authorized officers of the day and year first written above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
PANDA OF NEPAL
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
Name:
Title:
EXHIBIT NO. 150
EQUITY SUBSCRIPTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
RDC OF NEPAL
and
WILMINGTON TRUST COMPANY
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment 2
Section 2.2. Method of Payment 3
ARTICLE 3
COVENANTS
Section 3.1. RDC of Nepal Covenants 3
Section 3.2. Indemnification 4
Section 3.3. Obligations Absolute 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties 5
Section 4.2. Further Assurances 6
ARTICLE 5
MISCELLANEOUS
Section 5.1.Governing Law; Consent to Jurisdiction
and Venue; Sovereign Immunity 6
Section 5.2. Notices 7
Section 5.3. Benefit of Agreement 8
Section 5.4. No Waiver; Remedies Cumulative 9
Section 5.5. Severability 9
Section 5.6. Documents 9
Section 5.7. Counterparts 9
Section 5.8. Headings Descriptive 9
Section 5.9. Amendment or Waiver 9
Section 5.10 Limitation of Liability 9
EQUITY SUBSCRIPTION AGREEMENT
EQUITY SUBSCRIPTION AGREEMENT, dated as of the Closing Date
(this "Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE
LIMITED, a private limited liability company registered under the
Nepalese Company Act 2021 (the "Company"), RDC OF NEPAL, an
exempted company with limited liability organized and existing
under the laws of the Cayman Islands ("RDC of Nepal") and
WILMINGTON TRUST COMPANY, a Delaware banking corporation (the
"Trustee"), on behalf of and for the benefit of IFC.
PRELIMINARY STATEMENTS
The Company was granted the right to build, own and operate
a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant,
pursuant to that certain IFC Investment Agreement between the
Company and IFC (the "IFC Investment Agreement"), but only if RDC
of Nepal enters into this Agreement to provide for the
subscription for shares of the Company as set forth herein.
DEG is willing to provide financing for the power plant,
pursuant to that certain DEG Investment Agreement between the
Company and DEG (the "DEG Investment Agreement," and together
with the IFC Investment Agreement, the "Investment Agreement"),
but only if RDC of Nepal enters into this Agreement to provide
for the subscription for shares of the Company as set forth
herein. (IFC and DEG are hereinafter referred to collectively as
the "Lenders" and individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into.
RDC of Nepal will benefit from the making of the aforesaid
loans by IFC and DEG.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions, and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment.
(a) (i) As of the Financial Closing Date, RDC of
Nepal's total equity commitment to the Project is
one million four hundred seventy-four thousand
seven hundred fifty Dollars ($1,474,750). As of
the date hereof, RDC of Nepal is the legal and
beneficial owner of zero (0) shares of the share
capital of the Company, par value Rs. 100 per
share.
(ii) The Company agrees to issue and sell to
RDC of Nepal, and RDC of Nepal agrees to purchase,
thirty-eight thousand three hundred thirty-three
(38,333) shares of the share capital of the
Company, par value Rs. 100 per share, for a total
purchase price of three hundred eighty-three
thousand three hundred twenty-eight Dollars
($383,328) (the "Initial Share Amount"). RDC of
Nepal shall pay such Initial Share Amount in full
prior to the initial Disbursements under the
Investment Agreement and prior to the initial
subscription and disbursement under the IFC
Subscription.
(iii) RDC of Nepal represents and
warrants that, by the Financial Closing Date
thirty eight thousand three hundred thirty three
(38,333) shares for a total purchase price of
three hundred eighty three thousand three hundred
twenty eight Dollars ($383,328) of the Initial
Share Amount shall be paid to the Company.
(iv) The Company further agrees to issue and
sell to RDC of Nepal, and RDC of Nepal further
agrees to purchase one hundred nine thousand one
hundred forty two (109,142) additional shares of
the share capital of the Company, par value
Rs. 100 per share, for an additional purchase
price of one million ninety one thousand four
hundred twenty two Dollars ($1,091,422). Such
amount shall be paid in installments (each, a
"Subscription Amount Payment"), pro rata to the
proceeds of the Loans prior to the receipt by the
Company of such proceeds of the Loans.
(v) The Company shall deliver to RDC of
Nepal certificates representing the Subscribed
Shares in a manner and at such times, dates, and
places to be agreed upon by the parties hereto.
(b) If and to the extent that a Project Funds Shortfall
exists at any time, RDC of Nepal shall pay to the Company, on
such date or dates as the Company, the Trustee or either of the
Lenders specify in a written notice or written notices to RDC of
Nepal, such additional subscription amounts as are required
pursuant to the Share Retention and Project Funds Agreement (but
in the event of any conflict between a notice given by the
Company and a notice given by either of the Lenders or the
Trustee, the notice given by such Lender or the Trustee shall
prevail).
(c) Notwithstanding paragraphs (a) and (b), at the option
of the Trustee or the Lenders following the occurrence and during
the continuation of an Event of Default, RDC of Nepal shall pay
to the Company the amount by which the Subscription Amount
Payments theretofore made by RDC of Nepal is less than one
million four hundred seventy four thousand seven hundred fifty
Dollars ($1,474,750), and such payment shall be made by RDC of
Nepal on such date as the Company, either of the Lenders or the
Trustee shall specify in a written notice to RDC of Nepal (but in
the event of any conflict between a notice given by the Company
and a notice given by any such Lender or the Trustee, the notice
given by such Lender or the Trustee shall prevail).
(d) RDC of Nepal will deliver on or prior to the Financial
Closing Date an Equity Letter of Credit issued in favor of the
Trustee, and in an amount equal to one million ninety one
thousand four hundred twenty two Dollars ($1,091,422) (such
Dollar amount to equal the Subscription Amount minus the Initial
Share Amount). The stated amount of the Equity Letter of Credit
shall be reduced by the amount of each Subscription Amount
Payment made in accordance with Section 2.1(a)(iv) hereof. The
Equity Letter of Credit shall remain outstanding, and in full
force and effect, until the Trustee or the Lenders have notified
in writing the issuing bank that RDC of Nepal has made
Subscription Amount Payments equal to one million four hundred
seventy four thousand seven hundred fifty Dollars ($1,474,750) or
that RDC of Nepal's obligations under this Article 2 have
expired. In the event RDC of Nepal fails to make any
Subscription Amount Payment or other payment as and when required
hereunder, the Trustee or either of the Lenders shall be entitled
to demand payment under the Equity Letter of Credit of an amount
equal to such payment. Additionally, if the Trustee or the
Lenders have received a notice from the issuing bank that the
Equity Letter of Credit will be terminated or will not be renewed
or extended, then either of the Lenders or the Trustee may, at
any time after receiving the aforesaid notice, draw upon the
Equity Letter of Credit in an amount equal to the full amount of
the Equity Letter of Credit.
Section 2.2. Method of Payment. RDC of Nepal shall pay
the Subscription Amount Payments no later than 11:00 a.m.
(Wilmington, Delaware time) in U.S. Dollars in immediately
available funds to the Trustee, for deposit in the Construction
Sub-Account (in the case of the Subscription Amount Payments made
under Section 2.1(a) hereof), or, if so directed by the Trustee,
in the Debt Payment Sub-Account (in the case of payments made
under Section 2.1(b) hereof), or to such other person or address
or account as the Trustee may from time to time specify in
writing to RDC of Nepal, without offset, abatement, withholding
or reduction of any kind. All such payments shall be applied in
the manner required under the Investment Agreement and the Trust
and Retention Agreement.
ARTICLE 3
COVENANTS
Section 3.1. RDC of Nepal Covenants.
(a) RDC of Nepal hereby covenants and agrees that, for so
long as it shall have any obligations hereunder and except as
permitted under Section 3.1(b) hereof, it shall at all times
preserve and maintain in full force and effect its existence as a
company under the laws of the Cayman Islands; and
(b) it shall not merge into or consolidate with any other
Person, change its form of organization or the scope or nature of
its business, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets; provided, however, that nothing herein shall prevent RDC
of Nepal from encumbering, or transferring an interest in, its
Shares pursuant to its Share Pledge Agreement or otherwise to the
extent such encumbrance or transfer does not result in a Default
or an Event of Default under any Loan Document.
Section 3.2. Indemnification. RDC of Nepal shall defend,
indemnify and hold harmless the Company, the Trustee and each of
the Lenders from and against any and all costs, expenses,
liabilities, losses, damages, injunctions, suits, actions, fines,
penalties, claims and demands, of every kind or nature, including
attorney's fees and court costs, which are occasioned by or
result from any failure by RDC of Nepal to timely perform any of
the terms, agreements or covenants to be performed hereunder.
Section 3.3. Obligations Absolute.
(a) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver,
consent or other action in respect of any liability or obligation
under or in respect of, or of any of the terms, covenants or
conditions of, the Investment Agreement or any other Principal
Document, or any Security, shall in any way alter or affect any
of the obligations hereunder of the Company or RDC of Nepal.
(b) (i) The obligations of RDC of Nepal under
this Agreement are absolute and unconditional and
shall not be affected by (x) any default by the
Company in the performance or observance of any of
its agreements or covenants in any Loan Document,
this Agreement or any other Principal Document,
(y) the bankruptcy, insolvency, winding up or
other similar proceeding of the Company, RDC of
Nepal or any other Person, or (z) any other
circumstance, happening, condition or event
whatsoever, whether or not similar to any of the
foregoing. The obligations of RDC of Nepal under
this Agreement shall not be subject to any
abatement, reduction, limitation, impairment,
termination, set-off, defense, counterclaim or
recoupment whatsoever or any right to any thereof,
and shall not be released, discharged or in any
way affected by any reorganization, arrangement,
compromise, composition or plan affecting the
Company or by any lack of validity or
enforceability of the Investment Agreement or any
document executed in connection therewith, whether
or not RDC of Nepal or the Company shall have
notice or knowledge of any of the foregoing.
(ii) If the obligations of RDC of Nepal
hereunder are unenforceable by reason of the
insolvency, bankruptcy or reorganization of the
Company or any other Person, RDC of Nepal shall
nonetheless pay any amounts due hereunder directly
to the Trustee.
(c) Notwithstanding paragraphs (a) and (b) above, receipt
of an amount drawn on the Equity Letter of Credit shall
constitute satisfaction of RDC of Nepal's obligation to pay a
Subscription Amount Payment, to the extent of the amount so
received.
(d) Each of RDC of Nepal and the Company hereby irrevocably
waives, to the extent that it may do so under applicable law, any
defense based on the adequacy of a remedy at law which may be
asserted as a bar to the remedy of specific performance in any
action brought against it.
(e) RDC of Nepal hereby irrevocably waives, to the extent
it may do so under applicable law, any protection to which it may
be entitled under bankruptcy, insolvency or similar laws of any
jurisdiction in the event of a Company Bankruptcy. In the event
a trustee in bankruptcy or the debtor-in-possession takes any
action (including, without limitation, the institution of any
action, suit or other proceeding) in a Company Bankruptcy for the
purpose of enforcing the obligations of RDC of Nepal under this
Agreement, RDC of Nepal hereby agrees, to the extent that it may
do so under applicable law, that it will not assert any defense,
claim or counterclaim denying liability thereunder on the basis
that this Agreement is an executory contract that cannot be
assumed, assigned or enforced. If a Company Bankruptcy shall
occur, RDC of Nepal, to the extent it may do so under applicable
law, shall reconfirm its pre-petition waiver of any protection to
which it may be entitled to under any such laws and, to give
effect to such waiver, RDC of Nepal consents to the assumption
and enforcement of each provision of this Agreement by the debtor-
in-possession or the Company's trustee in bankruptcy, as the case
may be.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties.
(a) RDC of Nepal and Company Representations and
Warranties. RDC of Nepal hereby represents and warrants, and the
Company hereby represents and warrants, solely as to itself, that
as of the date hereof:
(i) this Agreement has been duly authorized,
executed and delivered by it and constitutes its
valid and legally binding obligation;
(ii) the execution, delivery and performance
of this Agreement will not conflict with or result
in a breach of any of the terms, conditions or
provisions of, or constitute a default or require
any consent under, any indenture, mortgage,
agreement or other instrument or arrangement to
which it is a party or by which it is bound, or
violate any of the terms or provisions of its
articles of incorporation, by-laws or other
governing documents, or any judgment, decree or
order or any law, statute, rule or regulation
applicable to it; and
(iii) it has obtained all consents,
licenses and authorizations of all governmental
authorities required under applicable laws,
regulations, decrees or orders of or in any
applicable jurisdiction (which may legally be
obtained as of the date hereof) in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement or the making of
any other payments to the Company in accordance
with this Agreement, and that such consents,
licenses and authorizations are in full force and
effect.
(b) Company Representations and Warranties. The Company
hereby represents and warrants that as of the date hereof:
(i) it is a company duly organized, validly
existing and in good standing under the laws of
the jurisdiction of its organization;
(ii) after giving effect to the terms of this
Agreement and the other Subscription Agreements
(A) seven hundred forty-one thousand five hundred
eighty-seven (741,587) shares of the Company will
be issued and outstanding on the Financial Closing
Date, (B) all shares of the Company will have been
duly authorized and validly issued, (C) no
subscription, warrant, option, convertible
security or other right (contingent or otherwise)
to purchase or acquire any shares of the share
capital of the Company will be authorized or
outstanding, other than pursuant to the Loan
Documents, (D) there will not exist any commitment
of the Company to issue any subscription, warrant,
option, convertible security or other such right
or to issue or distribute to holders of shares of
the Company any evidence of indebtedness or assets
of the Company, (E) the Company will have no
obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of the
Company or any interest therein or to pay any
dividend or make any other distribution in respect
thereof other than pursuant to the Loan Documents,
and (F) all shares of the Company are and will be
identical in respect of rights and priorities.
Section 4.2. Further Assurances. In the event that any
additional consents, licenses or authorizations may be required
in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the making of any payment
in relation hereto, RDC of Nepal and the Company shall obtain all
such consents, licenses or authorizations and shall take such
action as shall be required of it in order to comply with the
terms hereof.
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to
Jurisdiction and Venue; Sovereign Immunity.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be
governed by the laws of the State of New York without regard to
the conflicts of laws provisions thereof (other than Sections 5-
1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Company or
RDC of Nepal with respect to this Agreement may be brought in the
courts of the State of New York in the Borough of Manhattan or of
the United States for the Southern District of New York and, by
execution and delivery of this Agreement, each of the Company and
RDC of Nepal hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Each of the Company and RDC of Nepal
agrees that a judgment in any such action or proceeding shall be
conclusive and binding upon it, and may be enforced in any other
jurisdiction, including without limitation in Nepal, by a suit
upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. Each of the Company and RDC of Nepal
hereby irrevocably designates, appoints and empowers CT
Corporation System, with offices on the date hereof at 1633
Broadway, New York, New York 10019, as its designee, appointee
and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act
as such, each of the Company and RDC of Nepal agrees to designate
a new designee, appointee and agent in New York City. Each of
the Company and RDC of Nepal further irrevocably consents to the
service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it, at its
address set forth below, such service to become effective ten
(10) days after such mailing. Nothing herein shall affect the
right of any party to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed
against the Company or RDC of Nepal in Nepal or in any other
jurisdiction.
(b) Each of the Company and RDC of Nepal hereby irrevocably
waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other
Principal Document to which the Company or RDC of Nepal is a
party brought in the courts referred to in paragraph (a) above
and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) RDC of Nepal acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 5.2. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when transmitted by facsimile to the number
specified below, upon acknowledgement of receipt by the
recipient, or (c) when sent by overnight courier service, the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor. Any party may from time to time designate by written
notice to the other parties another address to which notices are
to be sent.
For the Company: Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
with a copy to:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 977-1-27-0027
For RDC of Nepal:
Address: c/o Maples and Calder
P.O. Box 309
Ugland House
Smith Church Street
Grand Cayman
Cayman Islands, R.W.I.
Attention: Sharon Pierson
Facsimile: (809) 949-8080
with a copy to:
c/o Harza Engineering Company International L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For Wilmington Trust Company:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 5.3. Benefit of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that none of the parties may assign or
transfer any of its rights or obligations hereunder without the
prior written consent of the Lenders.
Section 5.4. No Waiver; Remedies Cumulative. No failure
or delay on the part of the Company in exercising any right,
power on privilege hereunder, and no course of dealing between
the Company and RDC of Nepal, shall impair any such right, power
or privilege or operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder. The rights,
powers and remedies herein are cumulative and not exclusive of
any rights, powers or remedies which the Company would otherwise
have. No notice to or demand on RDC of Nepal in any case shall
entitle RDC of Nepal to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
rights of the Company to any other or further action in any
circumstances without notice or demand.
Section 5.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 5.6. Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company or RDC of Nepal, as the case may
be, which translation shall be the governing version between the
Company and RDC of Nepal.
Section 5.7. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 5.8. Headings Descriptive. The headings of the
Articles of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 5.9. Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by each of the parties hereto.
Section 5.10. Limitation of Liability. Wilmington Trust
Company in acting hereunder is acting not in its individual
capacity but solely as Trustee and shall be entitled to the
rights, protections and immunities, if any, of the Trustee under
the Trust and Retention Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered by their proper and duly
authorized officers of the day and year first written above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
RDC OF NEPAL
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
Name:
Title:
ANNEX A
International Swap Dealers Association, Inc.
May 1989 Addendum to Schedule to
Interest Rate and Currency Exchange Agreement
Interest Rate Caps, Collars and Floors
(1) As used in this Agreement or in a Confirmation (i)
"Rate Protection Transaction" will mean any Swap Transaction that
is identified in the related Confirmation as a Rate Protection
Transaction, Rate Cap Transaction, Rate Floor Transaction or Rate
Collar Transaction and (ii) "Specified Swap" means,
notwithstanding Section 14 of this Agreement but subject to Part
1 of this Schedule, any rate swap, rate cap, rate floor, rate
collar, currency exchange transaction, forward rate agreement or
other exchange or rate protection transaction, or any combination
of such transactions or agreements or any option with respect to
any such transaction now existing or hereafter entered into
between one party to this Agreement (or any applicable Specified
Entity) and the other party to this Agreement (or any applicable
Specified Entity).
(2) Notwithstanding anything to the contrary in this
Agreement or in any Interest Rate and Currency Exchange
Definitions published by the International Swap Dealers
Association, Inc. and incorporated in any Confirmation, the
following provisions will apply with respect to a Rate Protection
Transaction:
(a) the Floating Rate applicable to any Calculation Period will
be (i) with respect to a Floating Rate Payer for which a Cap Rate
is specified, the excess, if any, of the Floating Rate calculated
as provided in this Agreement (without reference to this
paragraph 2(a)) over the Cap Rate and (ii) with respect to a
Floating Rate Payer for which a Floor Rate is specified, the
excess, if any, of the Floor Rate over the Floating Rate
calculated as provided in this Agreement (without reference to
this paragraph 2(a)):
(b) "Cap Rate" means, in respect of any Calculation Period, the
per annum rate specified as such for that Calculation Period, and
(c) "Floor Rate" means, in respect of any Calculation Period,
the per annum rate specified as such for that Calculation Period.
(3) For purposes of the determination of a Market Quotation
for a Terminated Transaction in respect of which a party ("X")
had, immediately prior to the designation or occurrence of the
relevant Early Termination Date, no future payment obligation,
whether absolute or contingent, under Section 2(a)(i) of this
Agreement with respect to the Terminated transaction, (i) the
quotations obtained from Reference Market-makers shall be such as
to preserve the economic equivalent of the payment obligations of
the party ("Y") that had, immediately prior to the designation or
occurrence of the relevant Early Termination Date, future payment
obligations, whether absolute or contingent, under Section
2(a)(i) of this Agreement with respect to the Terminated
Transaction and (ii) if X is making the determination such
amounts shall be expressed as positive amounts and if Y is making
the determination such amounts shall be expressed as negative
amounts.
(4) Notwithstanding the terms of Sections 5 and 6 of this
Agreement, if at any time and so long as one of the parties to
this Agreement ("X") shall have satisfied in full all its payment
obligations under Section 2(a)(i) of this Agreement and shall at
the time have no future payment obligations, whether absolute or
contingent, under such Section, then unless the other party ("Y")
is required pursuant to appropriate proceedings to return to X or
otherwise returns to X upon demand of X any portion of any such
payment, (a) the occurrence of an event described in Section 5(a)
of this Agreement with respect to X or any Specified Entity of X
shall not constitute an Event of Default or a Potential Event of
Default with respect to X as the Defaulting Party and (b) Y shall
be entitled to designate an Early Termination Date pursuant to
Section 6 of this Agreement only as a result of the occurrence of
a Termination Event set forth in (i) either Section 5(b)(i) or
5(b)(ii) of this Agreement with respect to Y as the Affected
Party or (ii) Section 5(b)(iii) of this Agreement with respect to
Y as the Burdened Party.
ANNEX B
International Swap Dealers Association, Inc.
July 1990 Addendum to Schedule to
Interest Rate Swap Agreement
Options
(1) As used in this Agreement or in any Confirmation. "Option"
means any Rate Swap Transaction that is identified in the related
Confirmation as an Option and provides for the grant by Seller to
Buyer of (i) the right to cause an underlying Rate Swap
Transaction, the terms of which are identified in that
Confirmation (an "Underlying Rate Swap Transaction"), to become
effective, (ii) the right to cause Seller to pay Buyer pursuant
to Section 2(a) of this Agreement the Cash Settlement Amount, if
any, in respect of the Underlying Rate Swap Transaction on the
Cash Settlement Payment Date, (iii) the right to cause the
Optional Termination Date to become the Termination Date of the
related Rate Swap Transaction that is identified in that
Confirmation (a "Related Rate Swap Transaction") or (iv) any of
the right or rights specified in the related Confirmation. An
Option may provide for the grant of one or more of the foregoing
rights, all of which can be identified in a single Confirmation.
(2) The following capitalized terms, if used in relation to an
Option, have the respective meanings specified in or pursuant to
the related Confirmation (or elsewhere in this Agreement):
"Buyer", "Seller", "Option Premium", "Option Premium Payment
Date", "Cash Settlement Payment Date", "Cash Settlement Amount",
"Optional Termination Date", "Exercise Terms" and "Option
Exercise Period".
(3) The following provisions will apply with respect to an Option:
(a) Buyer will pay Seller pursuant to Section 2(a) of this
Agreement the Option Premium, if any, on the Option Premium
Payment Date or Dates.
(b) On the terms set forth in this Agreement (including the
related Confirmation), Seller grants to Buyer pursuant to the
Option, (I) if "Physical Settlement" is specified to be
applicable to the Option, the right to cause the Underlying Rate
Swap Transaction to become effective, (ii) if "Cash Settlement"
is specified to be applicable to the Option, the right to cause
Seller to pay Buyer pursuant to Section 2(a) of this Agreement
the Cash Settlement Amount, if any, in respect of the Underlying
Rate Swap Transaction on the Cash Settlement Payment Date or
(iii) if "Optional Termination" is specified to be applicable to
the Option, the right to cause the Optional Termination Date to
become the Termination Date of the Related Rate Swap Transaction.
The Underlying Rate Swap Transaction, if any, shall not become
effective unless (i) "Physical Settlement" is specified to be
applicable to the Option and (ii) the right to cause that
Underlying Rate Swap Transaction to become effective has been
exercised.
(c) Buyer may exercise the right or rights granted pursuant to
the Option only by delivering irrevocable notice (a "Notice of
Exercise") to Seller (which, notwithstanding any other provision
of this Agreement or the Code, may be delivered orally (including
by telephone)). The Notice of Exercise must become effective
during the Option Exercise Period and must include the Exercise
Terms, if any.
(d) Buyer will, if "Written Confirmation" is specified to be
applicable to the Option or upon demand from Seller (which
notwithstanding any other provision of this Agreement or the
Code, may be delivered orally (including by telephone)), (i)
execute a written confirmation confirming the substance of the
Notice of Exercise and deliver the same to Seller or (ii) issue a
telex to Seller setting forth the substance of the Notice of
Exercise. Buyer shall cause such executed written confirmation
or telex to be received by Seller within one Local Banking Day
following the date that the Notice of Exercise or Seller's
demand, as the case may be, becomes effective. If not received
within such time, Buyer will be deemed to have satisfied its
obligations under the immediately preceding sentence at the time
that such executed written confirmation or telex becomes
effective.
(e) Any notice or communication given, and permitted to be
given, orally (including by telephone) in connection with the
Option will be effective when actually received by the recipient.
(4) For purposes of the determination of a Market Quotation
for a Terminated Transaction that is identified as an Option, the
quotations obtained from Reference Market-makers shall take into
account, as of the relevant Early Termination Date, the economic
equivalent of the right or rights granted pursuant to that Option
which are or may become exercisable.
(5) Notwithstanding the terms of Sections 5 and 6 of this
Agreement and Section 11.6 of the Code, if at any time and so
long as the parties to this Agreement ("X") shall have satisfied
in full all its payment obligations under Section 2(a) of this
Agreement and shall at the time have no future payment
obligations, whether absolute or contingent, under such Section,
then unless the other party ("Y") is required pursuant to
appropriate proceedings to return to X or otherwise returns to X
upon demand of X any portion of any such payment, (a) the
occurrence of an event described in Section 5(a) of this
Agreement with respect to X or any Specified Entity of X shall
not constitute an Event of Default or Potential Event of Default
with respect to X as the Defaulting Party and (b) Y shall be
entitled to designate an Early Termination Date pursuant in (I)
either Section 5(b)(i) or 5(b)(ii) of this Agreement with respect
to Y as the Affected Party or (ii) Section 5(b)(iii) of this
Agreement with respect to Y as the Burdened Party. For purposes
of this Agreement. "Potential Event of Default" means an event
that with the giving of notice or lapse of time (or both) would
become an Event of Default.
EXHIBIT NO. 10.151
SHAREHOLDERS' AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED,
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.,
PANDA OF NEPAL,
RDC OF NEPAL,
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
INDEX
Page No.
ARTICLE 1
Definitions
Section 1.1 Definitions 1
Section 1.2 Principles of Construction 3
ARTICLE 2
The Company
Section 2.1 Shareholding of the Company and the Sponsor
Shareholders. 4
Section 2.2 Ownership Free and Clear 5
Section 2.3 Boards of Directors 5
Section 2.4 Charter Documents; Other Actions 6
Section 2.5 Indemnification of Directors 8
Section 2.6 Dividend Policy 8
ARTICLE 3
Transfer of Shares
Section 3.1 Transferability of Shares 9
Section 3.2 HMGN Buyout 9
Section 3.3 Tag-Along Rights 10
Section 3.4 Legend 11
Section 3.5 Registration and Other Rights 11
ARTICLE 4
Miscellaneous
Section 4.1 No Inconsistent Agreements 14
Section 4.2 Recapitalization Exchanges, Etc 15
Section 4.3 Remedies 15
Section 4.4 Notices 15
Section 4.5 Benefit of Agreement 17
Section 4.6 No Waiver; Remedies Cumulative 17
Section 4.7 Documents 17
Section 4.8 Governing Law 17
Section 4.9 Counterparts; Integration 18
Section 4.10 Heading Descriptive 18
Section 4.11 Amendment or Waiver 18
Section 4.12 Severability 18
Section 4.13 Termination 18
Section 4.14 Expenses 18
Section 4.15 Joint Venture Agreement 18
EXHIBIT A
CERTIFICATE OF REGISTRATION OF THE COMPANY A-1
EXHIBIT B
MEMORANDUM AND ARTICLES OF ASSOCIATION,
as amended and as in effect, of the Company B-1
EXHIBIT C
REGISTRATION RIGHTS C-1
Section 1 Piggy-Back Rights C-1
Section 2 Indemnification C-2
Section 3 Restriction on Sale by the Company and
Sponsor Shareholders C-3
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and
entered into as of the Closing Date among BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED, a private limited liability company
organized and existing under the Nepalese Company Act, 2021 (the
"Company"), HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD., a
corporation organized and existing under the laws of Nepal
("HIPC"), PANDA OF NEPAL, a corporation organized and existing
under the laws of the Cayman Islands ("Panda of Nepal"), RDC OF
NEPAL, an exempted company with limited liability organized and
existing under the laws of the Cayman Islands ("RDC of Nepal"),
and INTERNATIONAL FINANCE CORPORATION, an international
organization established by Articles of Agreement among its
member countries ("IFC"). Each of HIPC, Panda of Nepal, RDC of
Nepal and IFC and any other Person who shall become a party to or
agree to be bound by the terms of this Agreement after the date
hereof and who shall own Shares directly in the Company is
sometimes hereinafter referred to individually as a "Shareholder"
and collectively as "Shareholders."
W I T N E S S E T H:
WHEREAS, IFC has entered into a certain IFC Investment
Agreement dated as of the Closing Date between the Company and
IFC (the "IFC Investment Agreement");
WHEREAS, the Company, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions"); and;
WHEREAS, it is a condition of the subscriptions and
disbursements under the IFC Investment Agreement that the parties
hereto shall have entered into this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. For all purposes of this
Agreement, capitalized terms used but not otherwise defined
herein shall have the meanings set forth in Schedule A to the
General Conditions. In addition, the following terms as used
herein have the following meanings:
"Accounting Firm" means an accounting firm to be mutually
agreed upon by the Lenders and the Company;
"Buyout" has the meaning set forth in Section 3.2;
"Change of Control" means, in respect of the Company, the
occurrence of one or more of the following
events: (i) an event or a series of events
occurs by which any Person or group of
Persons acting in concert (other than one or
more of the Sponsor Shareholders) shall have
become the beneficial owner (within the
meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of shares
of the Company, representing a majority of
the combined voting power of the outstanding
shares of the Company ordinarily having the
right to vote in the elections of directors
or (ii) directors nominated or elected by a
Person or a group of Persons acting in
concert (other than one or more of the
Sponsor Shareholders) shall constitute a
majority of the board of directors of the
Company or (iii) any direct or indirect sale,
lease, exchange or other transfer (in one
transaction or a series of related
transactions) of all, or substantially all,
of the assets of the Company to any Person or
group of Persons; provided, however, that
none of the events set forth in the preceding
clauses shall constitute a "Change of
Control" if caused directly by creditors
exercising remedies pursuant to any of the
Loan Documents;
"Charter Documents" means, with respect to any Person, (i) the
Certificate of Incorporation of such Person
and (ii) the Memorandum and Articles of
Association of such Person, as amended and as
in effect on the date of this Agreement;
copies of the Charter Documents of the
Company are attached hereto as Exhibits A and
B;
"Company" has the meaning set forth in the first
paragraph of this Agreement;
"Harza LP" means Harza Engineering Company
International L.P., a limited partnership
organized and existing under the laws of the
State of Delaware;
"Harza LLC" means Harza Engineering Company
International, a limited liability company, a
limited liability company organized and
existing under the laws of the State of
Wyoming;
"HIPC Shareholders" means Soaltee Enterprises, Soaltee Hotel
and Surya.
"IFC Nominee" has the meaning set forth in Section 2.3(b);
"Indemnitees" has the meaning set forth in Section 2.5;
"Issuer Offering" has the meaning set forth in Section 1(a) of
Exhibit C hereto;
"Joint Venture
Agreement" shall mean the Amended and Restated
Joint Venture Agreement among Himal
International Power Corporation Pvt. Ltd.,
Panda of Nepal, RDC of Nepal and
International Finance Corporation dated as of
the Closing Date;
"Panda" means Panda Energy International, Inc.,
a corporation organized and existing under
the laws of the State of Texas;
"Piggy-Back
Registration" has the meaning set forth in Section
1(a) of Exhibit C hereto;
"Public Offering" means any underwritten public offering of
equity securities or shares in the Company on
a firm commitment basis in accordance with
applicable securities regulations of any
stock exchange;
"Shareholder" has the meaning set forth in the first
paragraph hereof;
"Shareholder
Offering" has the meaning set forth in Section
1(a) of Exhibit C hereto;
"Sponsor" has the meaning set forth in the IFC
Investment Agreement;
"Sponsor
Shareholder" means, each of HIPC, Panda of Nepal and
RDC of Nepal and any transferees or assignees
thereof; provided, however, that HIPC, Panda
of Nepal and RDC of Nepal may only transfer
or assign shares in the Company or rights or
obligations hereunder to the extent and
subject to the conditions provided in
Section 4.6 hereof, and provided further that
IFC (or its assignees or designees) shall in
no event be a Sponsor Shareholder;
"Sponsor Transfer" has the meaning set forth in Section 3.3(a);
"Soaltee Enterprises" means Soaltee Enterprises Private Ltd.,
a private company organized and existing
under the laws of Nepal;
"Soaltee Hotel" means Soaltee Hotel Ltd., a public company
organized and existing under the laws of
Nepal;
"Surya" means Surya Enterprises Private Ltd., a
private company organized and existing under
the laws of Nepal;
"Tag-Along Notice" has the meaning set forth in Section 3.3(b);
"Transfer" means, with respect to any security or
shares, any direct or indirect transfer,
sale, assignment, pledge, hypothecation,
encumbrance or other disposition by any
Person of such security or shares (other than
the pledge of shares in the Company or any
other shares to IFC or the Trustee for the
benefit of the Lenders pursuant to the Share
Pledge Agreements);
"Transferring Sponsor
Shareholder" has the meaning set forth in Section 3.3(a).
Section 1.2 Principles of Construction. For all purposes
of this Agreement, the principles of construction set forth in
Schedule A to the General Conditions shall apply.
ARTICLE 2
The Company
Section 2.1 Shareholding of the Company and the Sponsor
Shareholders.
(a) Shareholding of the Company. The Company represents
and warrants that, as of the date hereof, the total amount of
issued, fully paid up and outstanding Shares, which is the only
class of shares authorized by its Charter Documents as of the
date hereof, is owned of record as follows:
Name Percentage of Share
Ownership
Panda of Nepal 75 %
RDC of Nepal 5 %
Himal International Power Corporation Pvt. Ltd. 10 %
International Finance Corporation 10 %
(b) Shareholding of Panda of Nepal. Panda of Nepal
represents and warrants that, as of the date hereof, the total
amount of issued, fully paid up and outstanding shares of Panda
of Nepal, which is the only class of shares authorized by its
Charter Documents as of the date hereof, is owned of record as
follows:
Name Percentage of Share
Ownership
Panda Bhote Koshi 100 %
(c) Shareholding of RDC of Nepal. RDC of Nepal represents
and warrants that, as of the date hereof, the total amount of
issued, fully paid up and outstanding shares of RDC of Nepal,
which is the only class of shares authorized by its Charter
Documents as of the date hereof, is owned of record as follows:
Name Percentage of Share
Ownership
Resource Development Consultants,
a limited liability company 50 %
Harza Engineering Company International L.P. 50 %
(d) Shareholding of HIPC. HIPC represents and warrants
that, as of the date hereof, the total amount of issued, fully
paid up and outstanding shares of HIPC, which is the only class
of shares authorized by its Charter Documents as of the date
hereof, is owned of record as follows:
Name Percentage of Share
Ownership
Soaltee Hotel Ltd. 3.00%
Surya Enterprises Private Ltd. 96.75%
Soaltee Enterprises Private Ltd. 0.25%
(e) It is expressly acknowledged and agreed that IFC's
subscription obligations shall be subject to the terms and
conditions of the IFC Investment Agreement.
(f) Each subscription and payment by the Sponsor
Shareholders in respect of Shares shall be made at such time as
may be determined by the Company.
The Company agrees with IFC that the Company will require
subscriptions and payments at such times as may be necessary to
ensure that the Company is able to fulfill the condition
contained in Section 3.5(i) of the General Conditions and
Article 2 of the Subscription Agreements so as to enable it to
utilize the Loans and IFC Subscription made available to it under
the Investment Agreement in order to continue to finance in a
timely manner the procurement, supply, construction and
installation of the Plant.
Section 2.2 Ownership Free and Clear. As of the date
hereof, each of the Company, and each of the Sponsor
Shareholders, represents and warrants to IFC, as to itself, that
no Person other than the respective Shareholders identified in
Section 2.1 hereof (and as so identified, limited to the shares
set forth adjacent to such shareholder's name), has any right,
title or interest in or to the shares described in Section 2.1
hereof, and that such shares have not been pledged, hypothecated
or encumbered by such shareholder (other than pursuant to the
Security Documents).
As of the date hereof, and deemed repeated and made by the
Company and each of the Sponsor Shareholders as of each date of
subscription and purchase of shares in the Company by each of the
Sponsor Shareholders, each of the Sponsor Shareholders represents
and warrants to IFC, as to itself, that no other Person has any
right, title or interest in or to the shares described in Section
2.1(b), (c) and (d), as the case may be, subscribed by it, and
that such shares have not been pledged, hypothecated or otherwise
encumbered by such Sponsor Shareholders (other than pursuant to
the Security Documents); and the Company represents and warrants
to IFC that it has no notice of any factual information to the
contrary. As of the date hereof, and deemed repeated and made by
the Company and each of the Sponsor Shareholders as of each date
of subscription and purchase of shares in the Company by each of
the Sponsor Shareholders, the Company and each of the Sponsor
Shareholders represents and warrants that, except for the rights
under this Agreement, the Investment Agreement or the Security
Documents, no options, warrants or rights to purchase shares in
the Company or securities or shares convertible into or
exchangeable for, any class of shares in the share capital of the
Company have been issued by it or are outstanding.
Section 2.3 Boards of Directors
(a) As provided in Section 17.2 of the Company's Articles
of Association, IFC shall have the right to appoint one (1)
Director. IFC shall have such other rights in connection
therewith (including, without limitation, the right to remove and
reappoint Directors and the right to appoint an alternate
Director) as may be provided in the Company's Articles of
Association or the Joint Venture Agreement or may otherwise be
available under applicable law.
(b) If and for so long as IFC owns five percent (5%) or
more of the Shares of the Company, to the extent a vote of the
Shareholders is legally required to appoint a Director, each of
the Sponsor Shareholders agrees to vote (whether directly or by
proxy) a sufficient number of shares of the Company owned or held
of record by it at any general or extraordinary meeting of the
shareholders of the Company called for the purpose of electing
Directors, and agrees to take all actions otherwise necessary, to
ensure the election of the Director nominated by IFC (the "IFC
Nominee") to the Company's Board of Directors. If an IFC Nominee
resigns, dies or otherwise is rendered unable to fulfill his
obligation as a Director of the Company, then, to the extent the
vote of remaining Directors is required to fill such vacancy,
each of the Sponsor Shareholders shall cause each remaining
Director who was a nominee of such Sponsor Shareholder to, and
such Director shall, vote to fill such vacancy with a person then
nominated by IFC to be the IFC Nominee on the Board of Directors
of the Company. Nothing contained herein shall require a
Director to take any action which is illegal under applicable
law.
(c) Each Sponsor Shareholder hereby agrees that, at any
time (if at all) that it is then entitled to vote for the
election or removal of an IFC Nominee or a Director appointed by
IFC, it will not vote in favor of the removal of such IFC Nominee
or Director unless such removal shall be (i) at the request of
IFC or (ii) for Cause as hereinafter defined. For the purposes
of this Section 2.3(b), "Cause" shall mean (A) the continued
failure by a Director substantially to perform his duties as a
Director of the Company (as relevant), the engaging by a Director
in conduct which is demonstrably and materially injurious to the
Company (as relevant) or the Director's conviction of any crime
constituting a felony or (B) the disqualification of such
Director to serve as a Director under applicable Nepalese law.
Section 2.4 Charter Documents; Other Actions.
(a) The Company represents and warrants that, as of the
date hereof, Exhibits A and B set forth accurate and complete
copies of its Charter Documents and the Joint Venture Agreement
as in full force and effect on the date hereof.
(b) The Company covenants that it will act in accordance
with its Charter Documents and the Joint Venture Agreement.
(c) So long as IFC owns five percent (5%) or more of the
Shares of the Company (but provided that the outside date by
which IFC may possibly put Shares pursuant to Section 3.5(b)
hereof has not occurred), then except as otherwise prohibited by
applicable law, the Company shall not, and each Sponsor
Shareholder shall ensure that the Company shall not, take any
action regarding the following matters without either the
affirmative vote of the IFC Nominee on the Board of Directors of
the Company or the affirmative vote of IFC at a meeting of the
Shareholders of the Company:
(i) any material amendment of the Charter
Documents of the Company or the Joint Venture
Agreement, unless expressly permitted by this
Agreement,
(ii) any merger, consolidation,
recapitalization or other reorganization of the
Company with or into any other Person,
(iii) the taking of any corporate or
other action by the Company for the (A)
commencement of a voluntary winding up under any
applicable bankruptcy, insolvency or similar law
now or hereafter in effect, (B) consent to the
entry of any order for relief in winding up by a
court or under the supervision of a court under
any such law, (C) consent to the appointment or
taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or
similar official of the Company or of any
substantial part of the property of the Company or
(D) making by the Company of a general assignment
for the benefit of creditors,
(iv) any sale, lease, exchange, transfer,
pledge, contribution to a joint venture or other
disposition of assets resulting in the diminution
of assets or other properties, or the incurrence
or exposure, contingently or directly, of
liability, which individually or in the aggregate
would materially impair the ability of the Company
to construct, own and operate the Plant in
accordance with the scope of the Project,
(v) any transaction between the Company and
any Affiliate, any officer or director of the
Company or any Shareholder (or any Affiliate of
any of them), except future arm's length
transactions and except the performance of the
Principal Documents, as applicable, in accordance
with the terms thereof,
(vi) any change in the Company's line of
business from the Project,
(vii) any change in any of the Sponsor
Shareholders' line of business from the holding of
shares in the Company and matters related thereto,
(viii) the entering into of any contract
which individually provides for aggregate payments
in excess of $10,000 or together with all other
contracts provides for aggregate payments in
excess of $100,000 and which is not in the
ordinary course of business or is on terms less
favorable to the Company than those available in
arm's length transactions between unrelated
parties, or
(ix) any expansion of the Project,
(x) for such time that any portion of the
IFC Loans is outstanding or during which IFC has
any commitment with respect to the IFC Loans, the
appointment of a replacement firm of Auditors in
the event the firm then engaged resigns its
engagement or such engagement is proposed to be
terminated by the Company,
(xi) except as required by the Share
Retention and Project Funds Agreement, any (A)
increase or reduction in the authorized share
capital of the Company, or (B) issuance, sale or
reduction by the Company of share capital or
securities convertible into, exchangeable for or
otherwise granting the right to acquire share
capital (including options, warrants and other
rights), and
(xii) any creation, grant, incurrence or
sufferance of any Liens other than as permitted by
the Investment Agreement (except that the
affirmative vote of the IFC Nominee on the Board
of Directors or the affirmative vote of IFC at a
meeting of Shareholders shall not be required for
the creation of a Lien in connection with the
refinancing of the Loans);
provided, that in the event IFC is entitled to nominate an IFC
Nominee as a Director of the Company, but has not nominated such
a Director as of the time of a meeting of the Board of Directors
called to consider any of the foregoing matters, the affirmative
vote of a Director who is an IFC Nominee shall not be required in
order for any of such actions to be validly taken by the Board of
Directors, but the affirmative vote of IFC as a Shareholder will
nonetheless be required in all events for the Company to take any
of the actions described above in this Section 2.4(c).
(d) With respect to clause (ix) of Section 2.4 (pertaining
to expansion of the Project), in the event that IFC, in its
capacity as a Shareholder, casts a negative vote but all other
necessary votes and corporate action have been taken to enable
the Company to take the action specified in said clause (ix) were
it not for the negative vote of IFC (in its capacity as a
Shareholder), then the Company may give notice to IFC that,
unless IFC changes its negative vote to an affirmative vote, the
Company, if and to the extent permitted by applicable law, will
elect to purchase IFC's Shares (the "Election Notice"). If,
within thirty (30) days after IFC receives the Election Notice
(such thirty (30) day period referred to herein as the "Initial
Thirty Day Period"), IFC changes the aforesaid negative vote to
an affirmative vote, then the Company shall not have the right to
purchase IFC's Shares. If, within the Initial Thirty Day Period,
IFC does not change the aforesaid negative vote to an affirmative
vote, then the Company, if and to the extent permitted by
applicable law, shall have the right, which must be exercised (if
at all) within sixty (60) days after the expiration of the
Initial Thirty Day Period, to purchase all (but not less than
all) of IFC's Shares at a purchase price per share that will
provide to IFC a return on equity calculated on the same basis as
the calculation provided in Section 3.5(b)(3) hereof. It is
expressly acknowledged and agreed that IFC's failure to approve
any expansion of the Project in IFC's capacity as a lender shall
not trigger any rights of the Company to purchase IFC's Shares as
set forth in this Section 2.4(d). In the event the Company is
not legally permitted to purchase the Shares or if the
Shareholders (other than IFC) so decide even if the Company is
legally permitted to purchase the Shares, the right of the
Company contemplated in this Section 2.4(d) to purchase all of
IFC's Shares may be exercised by the Shareholders (other than
IFC), pro rata to their then existing holdings of Shares or in
such other proportion as they may agree.
(e) Each Shareholder shall be permitted, at its own expense
(if acting then solely in its capacity as a Shareholder), to
visit during regular business hours any of the premises where the
business of the Company is conducted and to have access to its
books of account and records.
Section 2.5 Indemnification of Directors. Each Person
and each of its officers, directors, agents, nominees, designees
and employees (collectively, such Person and such others, the
"Indemnitees") who was or is at any time a party or is threatened
to be made a party to, or is involved in, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
Indemnitee is or was a Director of the Company, or acted or is
acting on behalf, or at the request or direction, of such
Director, shall be indemnified and held harmless by the Company
to the fullest extent permitted by applicable law, except to the
extent that any loss or expense incurred by such Indemnitee is
determined by a court of competent jurisdiction to have directly
and solely resulted from such Indemnitee's gross negligence or
willful misconduct. The right to indemnification conferred in
this Section 2.5 shall also include the payment by the Company of
expenses incurred in connection with any such action, suit or
proceeding in advance of its final disposition to the fullest
extent permitted by applicable law (except as aforesaid). The
obligations of the Company under this Section 2.5 shall survive
the termination of (i) any Person's role or status as a Director
of the Company or (ii) this Agreement.
Section 2.6 Dividend Policy. It is the Shareholders'
intention that the Company declare and pay semi-annual dividends
to the extent, and in the amounts, permitted by Section 6.3 of
the General Conditions and any other applicable provisions of the
Loan Documents, subject to and in accordance with the Company's
determination of prudent and sound business practices in relation
to the other needs or uses of capital for the construction,
ownership and operation of the Plant and subject to applicable
law.
ARTICLE 3
Transfer of Shares
Section 3.1 Transferability of Shares.
(a) (i) No Sponsor Shareholder shall (whether in
a single transaction or in a series of
transactions) Transfer any shares in the Company
directly or indirectly owned by it (beneficially
or otherwise) if, after giving effect to such
Transfer, a Change of Control of the Company would
occur, unless prior to such Transfer, the proposed
transferee of such shares enters into an agreement
in form and substance satisfactory to IFC whereby
such transferee covenants and agrees to be bound
to this Agreement to the same extent as a Sponsor
Shareholder; provided, however, that the entering
into of such agreement by such transferee shall
not be deemed to cure or otherwise waive the
occurrence of such Change of Control, and shall
not prejudice or impair the right of IFC to
exercise its option, and the obligation of each
Sponsor Shareholder to perform its obligations,
pursuant to Section 3.5(b) hereof upon the
occurrence thereof; and provided further that no
such agreement shall be required of Panda of Nepal
and/or RDC of Nepal in connection with any
Transfer by HIPC of Shares pursuant to Section
2.1(a)(iv) of the Share Retention and Project
Funds Agreement, it being acknowledged and agreed
that Panda of Nepal and RDC of Nepal, as parties
hereto, are bound to this Agreement.
(ii) None of Panda, Harza LLC, Harza LP,
Soaltee Enterprises, Soaltee Hotel or Surya shall
(whether in a single transaction or a series of
transactions) Transfer any shares in any of Panda
of Nepal, RDC of Nepal or HIPC, as the case may
be, directly or indirectly owned by it
(beneficially or otherwise) if, after giving
effect to such Transfer, any of the provisions of
Article 2 of the Share Retention and Project Funds
Agreement would be violated (regardless of whether
any of the Loans are outstanding or any commitment
remains with respect thereto).
(b) No provision of this Agreement shall be construed to
permit any Sponsor Shareholder or any of Panda, Harza LLC, Harza
LP, Soaltee Enterprises, Soaltee Hotel or Surya to Transfer any
of its shares in the Company, Panda of Nepal, RDC of Nepal or
HIPC, as the case may be, directly or indirectly owned by it
(beneficially or otherwise) in violation or contravention of any
provision of the Share Retention and Project Funds Agreement, the
Investment Agreement or any other Loan Document, from time to
time and as in effect, which provisions may prohibit, limit or
otherwise restrict the Transfer of any such shares, it being
acknowledged and agreed that in the event of any conflict between
those provisions and any provisions of this Agreement, such
provisions of the Share Retention and Project Funds Agreement,
the Investment Agreement and other Loan Documents shall control.
Section 3.2 HMGN Buyout. If HMGN shall purchase all of
the Company's right, title and interest in and to the Project
pursuant to the terms of Section 6 of the Project Agreement (a
"Buyout"), each Sponsor Shareholder shall, promptly following
receipt by the Company, the Trustee or the Agent, as applicable,
of the proceeds of the Buyout, cause the Company, in all events
subject to the provisions of the Loan Documents (including the
prepayment of all outstanding Obligations), to (i) declare and
pay as promptly as practicable a dividend in the maximum amount
permitted by applicable law, (x) to IFC in the event the Buyout
results from the Company's intentional or grossly negligent
actions as more particularly set forth in Sections 6.2(a) and (b)
of the Project Agreement and (y) otherwise to all Shareholders,
and (ii) immediately following payment of any dividend referred
to in clause (i) above, wind up the Company's operations,
liquidate and distribute proceeds and amounts therefrom in
accordance with applicable law and subject to the provisions of
the applicable Loan Documents and the Project Agreement.
Section 3.3 Tag-Along Rights.
(a) No Sponsor Shareholder shall Transfer any shares in the
Company other than for cash in an arm's length transaction in
accordance with this Agreement, the Share Retention and Project
Funds Agreement, the Investment Agreement, and the other Loan
Documents. If, at any time, any Sponsor Shareholder (a
"Transferring Sponsor Shareholder") proposes to Transfer shares
in the Company to any proposed transferee in any transaction or
series of related or similar transactions (such proposed Transfer
by a Transferring Sponsor Shareholder, a "Sponsor Transfer"),
such Transferring Sponsor Shareholder shall afford IFC the
opportunity to participate proportionately in such Sponsor
Transfer in accordance with this Section 3.3.
(b) IFC shall have the right to Transfer, at the same price
and upon identical terms and conditions as such proposed Sponsor
Transfer, such percentage of IFC's shares in the Company as shall
equal the following percentage: the percentage of the Company
being Transferred by the Transferring Sponsor Shareholder
multiplied by the quotient of 100 divided by 90. Thus, for
example, if RDC of Nepal Transfers five percent (5%) of the total
shares in the Company and IFC owns one hundred (100) shares in
the Company, IFC would be entitled to sell on account thereof the
following number of shares in the Company: (5% x 100/90) of 100
shares, which equals 5.56 shares. At the time of any such
proposed Sponsor Transfer, such Transferring Sponsor Shareholder
shall give notice to IFC of its right to sell shares in the
Company hereunder (a "Tag-Along Notice"), which notice shall
identify the proposed purchaser and state the number of shares in
the Company proposed to be Transferred in such Sponsor Transfer,
the proposed offering price and any other material terms and
conditions of the proposed Sponsor Transfer. The Tag-Along
Notice shall also contain a true and correct copy of any offer to
the Transferring Sponsor Shareholder by the proposed purchaser to
purchase such shares in the Company.
(c) Within forty-five (45) calendar days after the date of
delivery of a Tag-Along Notice, IFC may elect to participate in
such Sponsor Transfer pursuant to the terms and conditions of
such Tag-Along Notice by delivery of a notice to the Transferring
Sponsor Shareholder. IFC shall not be required to make any
representations and warranties to any Person in connection with
such Transfer except as to the existence of its legal title in,
and the absence of security interests created by IFC in, IFC's
shares in the Company and the authority for and the validity and
binding effect, against IFC, of any normal and customary
agreements entered into by IFC in connection with such Transfer.
(d) Notwithstanding anything to the contrary contained in
Section 3.3(a), (b) or (c), the provisions of such sections shall
not apply to the Transfer by HIPC of an amount of Shares of the
Company not to exceed five percent (5%) to Panda of Nepal and/or
RDC of Nepal in accordance with Section 2.1(a)(iv) of the Share
Retention and Project Funds Agreement. This Section 3.3(d) shall
not apply to a Transfer by a transferee or assignee of HIPC with
respect to such Shares.
Section 3.4 Legend. Each of the Company and the Sponsor
Shareholders agrees that each certificate representing shares in
the Company issued to the Sponsor Shareholder or any certificates
issued in exchange for or in replacement of any similarly
legended certificates, shall bear, to the extent permitted by
applicable law the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER SET FORTH IN (i) THE SHARE
RETENTION AND PROJECT FUNDS AGREEMENT DATED AS OF THE
CLOSING DATE, AND (ii) THE SHAREHOLDERS' AGREEMENT
DATED AS OF THE CLOSING DATE, COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY."
Section 3.5 Registration and Other Rights.
(a) The Company and each Sponsor Shareholder hereby grant
to IFC the registration and other rights set forth in Exhibit C
hereto, which is incorporated by reference herein as if fully set
forth herein. In furtherance of the foregoing (but not in
limitation thereof), each of the Company and each Sponsor
Shareholder agrees that, in connection with any Public Offering,
IFC shall have the right to approve, in advance of their use, all
terms and provisions that describe, refer to or make
representations with respect to IFC.
(b) Put Option.
(1) In the event that:
(A) on or before the Ten Year
Anniversary, any Sponsor shall have breached
any of its material obligations under the
Share Retention and Project Funds Agreement
and such breach shall not have been cured
within ten (10) days following its
occurrence; or
(B) on or before the Ten Year
Anniversary, the Company shall have
materially amended or altered its Charter
Documents (other than to increase its
authorized share capital) or the Joint
Venture Agreement without the prior written
consent of IFC; or
(C) on or before the Ten Year
Anniversary, the Company shall not have (i)
listed all outstanding shares of the Company
and all of IFC's shares in the Company and
(ii) registered fifty percent (50%) of all
outstanding shares of the Company, with such
registration including all of IFC's shares in
the Company, or such higher amount as
required by law, on the Nepal Stock Exchange
or another stock exchange, such as the Bombay
Stock Exchange, the Hong Kong Stock Exchange,
the Jakarta Stock Exchange, the Singapore
Stock Exchange and the Kuala Lumpur Stock
Exchange (if such registration is required
for listing by the rules applicable to such
other stock exchange), reasonably acceptable
to IFC; or
(D) on or before the Ten Year
Anniversary, a Change of Control specified in
Section 3.1(a)(i) shall have occurred and
such breach shall not have been cured within
ten (10) days following its occurrence, or
there shall have occurred a breach of the
obligations under Article 2 of the Share
Retention and Project Funds Agreement and
such breach shall have not have been cured
within ten (10) days following its
occurrence; or
(E) on or before the Ten Year
Anniversary, Panda sells or transfers its
direct or indirect beneficial ownership
interest in the Company; Harza LP and/or
Harza LLC sell or transfer their direct or
indirect beneficial ownership interest in the
Company; or any or all of the HIPC
Shareholders sell or transfer their direct or
indirect beneficial ownership interest in the
Company (except for any transfer expressly
permitted by Section 3.3(d), as to which this
Section 3.5(b)(1)(E) shall not apply),
then (i) the Company agrees (with respect to clauses (B) and (C)
above) that, if and to the extent permitted by law, it shall, at
the option of IFC (which option, in the case of clause (B), shall
expire two hundred seventy (270) days after IFC has received
written notice from the Company or a Sponsor Shareholder that the
events specified in such clause which trigger the option have
occurred; and in the case of clause (C), shall expire two hundred
seventy (270) days after IFC has received written notice from the
Company or a Sponsor Shareholder that the events specified in
such clause which trigger the option have occurred), purchase
some or all (at IFC's option) of IFC's shares in the Company;
provided, however, that the failure of the Company or a Sponsor
Shareholder to deliver any of the aforesaid notices (or any other
notices under this Section 3.5(b)) to IFC shall not preclude IFC
from exercising its option to put its shares to the Company upon
the occurrence of the event specified in any applicable clause
under this Section 3.5(b) which triggers the option, and
provided, further, that the Company may purchase such shares of
IFC only with funds available to the Company for the distribution
of dividends pursuant to the Investment Agreement, and (ii) each
of Panda of Nepal, RDC of Nepal, and HIPC agrees (with respect to
clauses (D) and (E) above) that it shall, at the option of IFC
(which option, in the case of clause (D), shall expire two
hundred seventy (270) days after IFC has received written notice
from the Company or a Sponsor Shareholder that the events
specified in such clause which trigger the option have occurred;
and in the case of clause (E), shall expire forty-five (45) days
after IFC has received written notice from the Company or a
Sponsor Shareholder that the events specified in such clause
which trigger the option have occurred), purchase some or all (at
IFC's option) of IFC's shares in the Company; provided, however,
that in the case of clause (E), Panda of Nepal, RDC of Nepal, or
HIPC (as the case may be) shall only be required to purchase such
percentage of IFC's shares in the Company as shall equal the
following percentage: the percentage of the Company being
Transferred beneficially, directly or indirectly, by Panda, Harza
LP and Harza LLC, or the HIPC Shareholders (as the case may be)
multiplied by the quotient of 100 divided by 90; it being
understood that with respect to clause (E), Panda of Nepal shall
only be obligated to purchase IFC's shares in the event of a
direct or indirect Transfer by Panda, RDC of Nepal shall only be
obligated to purchase IFC's shares in the case of a direct or
indirect Transfer by Harza LP and/or Harza LLC, and HIPC shall
only be obligated to purchase IFC's shares in the case of a
direct or indirect Transfer by any of the HIPC Shareholders)
(except for any transfer expressly permitted by Section 3.3(d));
and provided further, that in the case of a Transfer by Panda
under clause (E), Panda of Nepal shall not be required on account
thereof to purchase IFC's shares to the extent the Transfer by
Panda involves shares which are not required to keep Panda's
beneficial ownership in the Company above fifty-one percent (51%)
of the total ownership interest in the Company; and provided
further, that in the case of clause (D), each Sponsor Shareholder
shall only be required to purchase its Sponsor Share of IFC's
shares in the Company, and (iii) with respect to clause (A),
Panda of Nepal, RDC of Nepal or HIPC, whichever has breached (or
has had a direct or indirect parent Sponsor breach) the material
obligation under the Share Retention and Project Funds Agreement,
agrees that it shall, at the option of IFC (which option, in the
case of said clause (A), shall expire two hundred seventy (270)
days after IFC has received written notice from the Company or
the breaching Sponsor Shareholder that the events specified in
such clause which trigger the option have occurred), purchase
such percentage of IFC's shares in the Company as shall equal the
following percentage: the percentage of the Company owned by the
breaching Sponsor Shareholder multiplied by the quotient of 100
divided by 90. Thus, for example with respect to clause (A), if
RDC of Nepal is the breaching Sponsor Shareholder and owns five
percent (5%) of the total shares in the Company and IFC owns one
hundred (100) shares in the Company, IFC would be entitled to
sell on account of the breach by RDC of Nepal under clause (A)
the following number of shares in the Company: (5% x 100/90) of
100 shares, which equals 5.56 shares. Furthermore, for example
with respect to clause (E), if Panda were to own fifty percent
(50%) of the total shares in Panda of Nepal, and Panda of Nepal
were to own fifty percent (50%) of the Shares in the Company, and
Panda were to Transfer to an entity (the "Panda Transferee")
which is not owned by Panda fifty percent (50%) of Panda's shares
in Panda of Nepal (thereby resulting in a Transfer by Panda of a
twelve and one-half percent (12.5%) indirect beneficial ownership
interest in the Company) and IFC owns one hundred (100) shares in
the Company, IFC would have the option to sell to Panda of Nepal
on account of the Transfer by Panda under clause (E) the
following number of shares in the Company: (12.5% x 100/90) of
100 shares, which equals 13.89 shares.
(2) In the event the Company is not legally
permitted to purchase, does not have sufficient
funds which would otherwise be available for
distribution of dividends, or otherwise fails to
purchase, IFC's shares in the Company in
connection with clause (B) or (C) of
Section 3.5(b)(1) within sixty (60) days after IFC
has given notice of its exercise of its option to
put such shares to the Company, then each Sponsor
Shareholder agrees that it shall, at the option of
IFC, purchase its Sponsor Share of IFC's shares in
the Company.
(3) Any purchase of IFC's shares in the
Company by the Company or by any Sponsor
Shareholder in connection with clause (1)(A), (B),
(C), or (D) of Section 3.5(b)(1) or in connection
with Section 3.5(b)(2) shall be at a price per
share that will provide a return on equity, taking
into account dividends paid and any prior return
of capital, for IFC of twelve percent (12%) per
annum calculated for the period from the date on
which IFC acquired its shares through the date on
which IFC's shares are purchased and measured in
constant Dollars by adjusting all Dollar amounts
by the rate of change during the foregoing
calculation period in the U.S. Consumer Price
Index for all urban consumers.
(4) In the event any Sponsor Shareholder is
required to purchase IFC's shares in the Company
pursuant to clause (E) of Section 3.5(b)(1), the
parties shall in good faith promptly attempt to
reach mutual agreement on the price to be paid for
such IFC shares (the "Purchase Price"). If the
parties are unable to mutually agree on the
Purchase Price within thirty (30) days after IFC
has given notice of its option to put the IFC
shares in the Company to the Sponsor Shareholders
(the "Put Notice"), the parties shall in good
faith promptly attempt to reach mutual agreement
on an appraiser to determine the Purchase Price.
If the parties are unable to mutually agree on an
appraiser within fifteen (15) days, the parties
shall request that the Secretary General of the
Permanent Court of Arbitration at The Hague
appoint such appraiser. The appraiser shall be
directed to make his valuation within thirty (30)
days after his appointment and the Purchase Price
shall be the Purchase Price determined by such
appraiser. The appraiser appointed pursuant to
this clause (4) shall be an independent certified
public accountant or investment banker with at
least ten (10) years' experience in valuing
independent power projects and shall not be a
present employee or agent of, or consultant or
counsel to, any party to any Principal Document or
any affiliate of any such party. The valuation of
the Purchase Price shall be in writing. The
expenses of the appraiser appointed pursuant to
this clause (4) shall be borne by the Company.
(i) IFC shall not exercise its
option to put its shares in the Company to
the Company or to the Sponsor Shareholders in
the case of clause (C) above in the event
that IFC has foreclosed upon the Project
pursuant to the Investment Agreement and the
Security Documents.
(ii) IFC hereby agrees that it
will, at the written request of the Company
but at no cost or expense to IFC, reasonably
cooperate with the Company to establish a
holding company for the purpose of the
listing of the Shares; provided, however,
that the foregoing shall not require IFC to
take any action which it, in its good faith
judgment, believes (A) may impair its
security interest or other Lien on any
Collateral or (B) is contrary to applicable
law.
ARTICLE 4
Miscellaneous
Section 4.1 No Inconsistent Agreements. Each Sponsor and
the Company represents and warrants to IFC that none of them or
their Affiliates has entered, and each Sponsor and the Company
agrees with IFC that, without IFC's consent, none of them or
their Affiliates will hereafter enter, into any agreement with
respect to the shares in the Company or securities of the Company
that is inconsistent with the rights granted to any of the
Shareholders in this Agreement.
The Company represents and warrants to each Shareholder that it
has not entered into any agreement (other than this Agreement)
with respect to any of its debt or equity securities granting to
any Person rights similar to those described in Exhibit C.
Section 4.2 Recapitalization Exchanges, Etc. In the
event that any share capital or other securities or shares are
issued in respect of, in exchange for, or in substitution of, any
Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or
complete liquidation, bonus shares, split-up, sale of assets,
distribution to shareholders or combination of the Shares or any
other change in capital structure of the Company (including the
increase in authorized capital thereof), appropriate adjustments
shall be made with respect to the relevant provisions of this
Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties
hereto under this Agreement and the term "Shares," as used
herein, and references herein to shares in the Company shall be
deemed to include shares of such share capital or other
securities or shares, as appropriate.
Section 4.3 Remedies. Each of the Company and the
Sponsor Shareholders acknowledges and agrees that in the event of
any breach of this Agreement by any one of them, IFC would be
irreparably harmed and could not be made whole solely by monetary
damages. Each of the Company and the Sponsor Shareholders
accordingly agrees (i) to waive the defense that in any action
for specific performance a remedy at law would be adequate, and
(ii) that IFC, in addition to any other remedy to which it may be
entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement in any action instituted
in the Courts of the State of New York in the Borough of
Manhattan or of the United States District Court for the Southern
District of New York or in any court of competent jurisdiction in
Nepal or elsewhere. Each of the Company and the Sponsor
Shareholders irrevocably submits to the nonexclusive jurisdiction
of any State or Federal court sitting in New York City over any
suit, action or proceeding arising out of or relating to this
Agreement. Each of the Company and the Sponsor Shareholders
waives, to the fullest extent permitted by law, any objection it
may now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding has been brought
in an inconvenient forum. Each of the Company and the Sponsor
Shareholders agrees that a final judgment in any such suit,
action or proceeding brought in any such court shall be
conclusive and binding upon it and may be enforced in any other
courts to the jurisdiction of which it is or may be subject, by
suit upon such judgment or by any other procedure applicable in
that jurisdiction. Each of the Company and the Sponsor
Shareholders hereby irrevocably designates, appoints and empowers
CT Corporation System, with offices on the date hereof at
1633 Broadway, New York, New York 10019, as its designee,
appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and
all legal process, summons, notices and documents which may be
served in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act
as such, the Company and each of the Sponsor Shareholders agrees
to designate a new designee, appointee and agent in New York
City. The Company and each of the Sponsor Shareholders further
irrevocably consents to the service of process in any such action
or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it, at its address set forth
below, such service to become effective fifteen (15) days after
such mailing. Nothing herein shall affect the right of any party
to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the
Company or the Sponsors in Nepal or in any other jurisdiction.
Section 4.4 Notices. Each communication given pursuant
to or in accordance with the provisions of this Agreement shall
be made by facsimile transmission or telex, courier or otherwise
in writing. Each communication or document to be delivered to
any party under this Agreement shall be sent to that party at the
facsimile number or telex number or address, and marked for the
attention of the Person (if any), from time to time designated by
that party to IFC (or, in the case of IFC, by it to each other
party) for the purpose of this Agreement. Notice shall be deemed
to have been given (a) (i) when sent by overnight courier
service, on the Business Day following the date of delivery to
such courier service, or such later day as demonstrated by a bona
fide receipt therefor or (ii) in the case of deliveries by
courier service to Nepal or the Cayman Islands, on the seventh
(7th) day following the date of delivery to such courier service,
or such later date as demonstrated by a bona fide receipt
therefor, (b) when presented personally, or (c) when transmitted
by facsimile, upon receipt of confirmation. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
For the Company:
Address: c/o Panda Energy International Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
For HIPC:
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Panda of Nepal:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For RDC of Nepal:
Address: c/o Harza Engineering Company International L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For IFC:
Address: International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Power Department
Facsimile: (202) 974-4307
Section 4.5 Benefit of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted
assigns and the Indemnities referred to in Section 2.5; provided,
however, that none of the Sponsor Shareholders nor the Company
may assign or transfer any of its respective rights or
obligations hereunder without the prior written consent of IFC
except as expressly permitted herein, in the Investment
Agreement, the Share Retention and Project Funds Agreement and
the other Loan Documents. At its election, IFC may transfer,
assign or grant its rights hereunder in connection with a
Transfer of any or all of its then owned shares in the Company,
and in connection therewith, each Sponsor Shareholder and the
Company agree to and shall join in a written acknowledgement that
all such rights extend in favor of such IFC transferee; provided,
however, that any such IFC transferee shall not have the
following special rights hereunder which extend in favor of IFC
but not to any of the other Sponsor Shareholders: the right to
affirmatively approve certain actions as set forth in Section 2.4
hereof, the tag-along rights as set forth in Section 3.3 hereof,
and the registration rights and the put option set forth in
Section 3.5 hereof. Any assignee of rights or obligations, or
both as applicable, of any Sponsor Shareholder hereunder will be
required by the assignor and each other Sponsor Shareholder to
enter into an agreement (acceptable in form and substance to IFC)
to be bound by the terms of this Agreement.
Section 4.6 No Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in exercising any right,
power or privilege hereunder and no course of dealing between the
parties hereto shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The
rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers and remedies
which the parties hereto would otherwise have. No notice to or
demand on any party hereto in any case shall entitle any party
hereto to any other or further notice or demand in similar or
other circumstances (other than as specifically required pursuant
to the provisions of this Agreement) or constitute a waiver of
the rights of any party hereto to any other or further action in
any circumstances without notice or demand.
Section 4.7 Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified as to
accuracy and completeness by a representative of the Company,
which translation, subject to its acceptance by IFC, shall be the
governing version among the Sponsors, the Company and IFC.
Section 4.8 Governing Law. This Agreement and the rights
and obligations of the parties hereunder shall be construed in
accordance with and be governed by the law of the State of New
York without regard to the conflicts of laws provisions thereof
(other than Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York), save and except (for avoidance of
doubt), the application of the Nepalese Company Act, 2053 as it
may or shall apply to the powers of the Company and the internal
management of its affairs.
Section 4.9 Counterparts; Integration. This Agreement
may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A
set of counterparts executed by all the parties hereto shall be
lodged with the Company. This Agreement (together with the
Memorandum of Association and the Articles of Association and the
Joint Venture Agreement) constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof.
Section 4.10 Heading Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 4.11 Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing signed by all of the
parties hereto.
Section 4.12 Severability. If any provision hereof is
invalid or unenforceable in any jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions
of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
Section 4.13 Termination. This Agreement shall terminate
upon the earliest of (i) the purchase of all of the shares in the
Company of IFC pursuant to the exercise by IFC of the put option
or options granted pursuant to Section 3.5(b) hereof, and (ii)
the date of consummation of a Full Transfer which does not
include the transfer by IFC of its rights under this Agreement.
For the purposes of this Section 4.13, a Full Transfer means a
Transfer of all (but not less than all) of its then owned shares
in the Company; provided, however, that any indemnities provided
hereunder for the benefit of IFC or the Trustee shall survive any
termination.
Section 4.14 Expenses. Without in any way limiting the
generality of the Investment Agreement, the Company agrees to pay
to IFC or as IFC may direct all fees and expenses of IFC
(including legal and other) incurred in connection with this
Agreement.
Section 4.15 Joint Venture Agreement. The parties hereto
acknowledge and agree that nothing contained in the Joint Venture
Agreement or the Company's Memorandum of Association or Articles
of Association is intended to diminish in any way the rights of
IFC under this Agreement or the obligations of any of the Sponsor
Shareholders or the Company under this Agreement. In the event,
however, that anything contained in the Joint Venture Agreement
or such Memorandum of Association or Articles of Association
would at any time so diminish the rights of IFC under this
Agreement or the obligations of any of the Sponsor Shareholders
or the Company under this Agreement, the Sponsor Shareholders and
the Company shall promptly amend the Joint Venture Agreement and
such Memorandum of Association and Articles of Association in
order to eliminate the aforesaid diminishment in rights and
obligations under this Agreement, to the extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the date first above written.
ATTESTATION OF WITNESSES:
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Name: By:
Occupation: Name:
Address: Title:
HIMAL INTERNATIONAL POWER CORPORATION
PVT. LTD.
Name: By:
Occupation: Name:
Address: Title:
PANDA OF NEPAL
Name: By:
Occupation: Name:
Address: Title:
RDC OF NEPAL
Name: By:
Occupation: Name:
Address: Title:
INTERNATIONAL FINANCE CORPORATION
Name: By:
Occupation: Name:
Address: Title:
EXHIBIT A
CERTIFICATE OF REGISTRATION OF THE COMPANY
EXHIBIT B
MEMORANDUM AND ARTICLES OF ASSOCIATION,
as amended and as in effect, of the Company
EXHIBIT C
REGISTRATION RIGHTS
Section 1. Piggy-Back Rights.
If at any time the Company or any Sponsor Shareholder
proposes to make a Public Offering, the Company or such Sponsor
Shareholder, as applicable, shall give written notice to IFC of
such proposed Public Offering as soon as practicable but in no
event less than sixty (60) calendar days prior to any proposed
filing with applicable regulatory authorities in connection with
such proposed Public Offering (a "Piggy-Back Registration"). IFC
shall have the opportunity to sell in such proposed Public
Offering, and register with applicable regulatory authorities,
such number of shares in the Company as hereinafter provided. A
Public Offering in which the Company offers shares is sometimes
hereinafter referred to as an "Issuer Offering" and a Public
Offering in which the Company does not offer shares is sometimes
hereinafter referred to as a "Shareholder Offering." The Company
or such Sponsor Shareholder shall cause the managing underwriter
or underwriters of the proposed Public Offering to include in
such Public Offering the shares requested to be included by IFC
on the same terms and conditions as the Company's or such Sponsor
Shareholder's shares in the Company. IFC may withdraw its
request for inclusion of shares in the proposed Public Offering
at any time prior to ten (10) days before the commencement of the
Public Offering by giving written notice to the Company of its
request to withdraw. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective
under applicable law, provided that the Company shall reimburse
IFC for all reasonable out-of-pocket expenses (including legal
fees and expenses) incurred prior to such withdrawal.
(a) Number of Shares and Apportionment in an Issuer
Offering. In an Issuer Offering, IFC may include such number of
shares in the Company as it may request. If the managing
underwriter of such Issuer Offering shall inform the Company and
the holders of shares requesting such registration by letter of
its opinion that the number of shares requested to be included in
such registration exceeds the number which can be sold in such
Issuer Offering or that the inclusion would adversely affect the
marketing of the securities to be sold by the Company therein,
then the Company may include all securities proposed by the
Company to be sold for its own account and may decrease the
number of shares so proposed and so requested to be included in
such Public Offering to the extent necessary to reduce the number
of shares to be included in the registration to the level
recommended by the managing underwriter. In the event of such a
reduction, the number of shares to be sold by Sponsor
Shareholders and IFC shall be reduced (including to zero) on a
pro rata basis in relation to the number of shares proposed to be
offered for sale by each of them.
(b) Number and Apportionment of Shares in Shareholder
Offerings. In a Shareholder Offering, IFC may include a number
of shares in the Company equal to or less than the number
(rounded upward to the nearest whole number) determined by
multiplying the number of shares in the Company then owned by IFC
by a fraction (i) the numerator of which is the number of shares
in the Company owned by Sponsor Shareholders requested to be
included in such Shareholder Offering and (ii) the denominator of
which is the total number of shares in the Company then owned by
all Sponsor Shareholders. If the managing underwriter of such
Shareholder Offering shall inform the holders of shares
requesting such registration by letter of its opinion that the
number of shares requested to be included in such registration
exceeds the number which can be sold in such Shareholder
Offering, the number of shares so proposed and so requested to be
included in such Public Offering shall be decreased to the extent
necessary to reduce the number of shares to be included in the
registration to the level recommended by the managing
underwriter. In the event of such a reduction, the number of
shares to be sold by Sponsor Shareholders and IFC shall be
reduced on a pro rata basis in relation to the number of shares
proposed to be offered for sale by each of them.
(c) To the extent consistent with the tax objectives of the
Sponsor Shareholders, the Company will use all reasonable efforts
to cause all shares included in the Piggy-Back Registration to be
listed on the Nepalese stock exchange or another stock exchange,
such as the Bombay Stock Exchange, the Hong Kong Stock Exchange,
the Jakarta Stock Exchange, the Singapore Stock Exchange and the
Kuala Lumpur Stock Exchange, reasonably acceptable to IFC.
(d) In connection with any Piggy-Back Registration, each
Sponsor Shareholder selling in the Public Offering shall pay all
out-of-pocket expenses (including fees and disbursements of its
counsel) incurred by it (including underwriting discounts and
commissions applicable to its sold Shares). The Company will pay
all other expenses of the Public Offering, including, without
limitation, all registration, filing and National Association of
Securities Dealers, Inc. (or similar body) fees, all fees and
expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of
counsel for IFC, the Company and of the Company's independent
accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such
performance and compliance and premiums and other costs of
policies of insurance obtained by the Company against liabilities
arising out of the Public Offering.
Section 2. Indemnification.
(a) The Company (and each of Panda of Nepal, RDC of Nepal
and HIPC with respect to its own statements or other actions)
agree to indemnify and hold harmless IFC, its officers,
directors, employees and agents, and each Person, if any, who
controls IFC (each, an "Indemnified Party") from and against any
loss, claim, damage or liability and any action in respect
thereof to which such Indemnified Party may become subject under
applicable securities laws or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or
prospectus relating to the shares in the Company (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or arises
out of, or is based upon, any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
shall reimburse each Indemnified Party for any legal and other
expenses reasonably incurred by that Indemnified Party in
investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action; provided however,
none of the Company, Panda of Nepal, RDC of Nepal or HIPC shall
have any indemnification obligations pursuant hereto to the
extent that any such loss, claim, damage or liability, or such
action, suffered or incurred by the Indemnified Party is
determined by a court of competent jurisdiction to have directly
and solely resulted from such Indemnified Party's gross
negligence or willful misconduct.
(b) If the indemnification provided for in paragraph (a)
above is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to therein, then
the Company (and each of Panda of Nepal, RDC of Nepal and HIPC
with respect to its own statements or other actions)
(collectively, the "Indemnifying Party"), in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Indemnifying Party
on the one hand and the Indemnified Party on the other, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and of the Indemnified Party in connection
with statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Section 3. Restriction on Sale by the Company and Sponsor
Shareholders. Each of the Company and the Sponsor Shareholders
agrees not to effect any sale or distribution of any shares in
the Company, or any shares or securities similar to shares in the
Company, or any shares or securities convertible into or
exchangeable or exercisable for shares in the Company, during the
fourteen (14) calendar days prior to, and during the 180-day
period beginning on, the later of (x) the effective date of any
registration statement (except as part of such registration
statement) and (y) the commencement of a public distribution of
shares in the Company, except shares included in the Public
Offering.
EXHIBIT NO. 10.152
EXECUTION COPY
SHAREHOLDERS AGREEMENT
by and among
PANDA BHOTE KOSHI,
a Cayman Islands exempted company,
PANDA OF NEPAL,
a Cayman Islands exempted company
and
PANDA GLOBAL ENERGY COMPANY
and
MCNIC NEPAL LIMITED,
as the Shareholders of Panda Bhote Koshi,
dated as of
December 18, 1997
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 2
SECTION 1.01 DEFINITIONS 2
SECTION 1.02 ADDITIONAL DEFINED TERMS 15
ARTICLE II ORGANIZATION, CAPITALIZATION AND
CERTAIN FINANCIAL OBLIGATIONS 16
SECTION 2.01 ORGANIZATIONAL DOCUMENTS
AND FILINGS 16
SECTION 2.02 PARTIES AND SHAREHOLDERS 16
SECTION 2.03 INCONSISTENCIES BETWEEN THIS
AGREEMENT AND THE COMPANY
ORGANIZATIONAL DOCUMENTS
OR THE PON ORGANIZATIONAL
DOCUMENTS 17
SECTION 2.04 PERFORMANCE BY THE COMPANY
AND PANDA OF NEPAL 18
SECTION 2.05 PRINCIPAL PLACE OF BUSINESS 18
SECTION 2.06 OTHER ACTIVITIES OF THE SHAREHOLDERS 19
SECTION 2.07 CAPITAL CONTRIBUTIONS BY
THE CLASS A SHAREHOLDER 19
SECTION 2.08 CAPITAL CONTRIBUTION BY
CLASS B SHAREHOLDER 20
SECTION 2.09 MANNER OF MAKING CAPITAL
CONTRIBUTION FOR CLASS B
SHAREHOLDERS 20
SECTION 2.10 ADDITIONAL FINANCIAL OBLIGATIONS
OF CLASS B SHAREHOLDER 21
SECTION 2.11 ADDITIONAL FINANCIAL OBLIGATIONS
OF CLASS A SHAREHOLDER 25
SECTION 2.12 GUARANTEES 28
SECTION 2.13 RIGHTS OF LENDERS 29
ARTICLE III DISTRIBUTIONS, MANAGEMENT
AND ADMINISTRATION 29
SECTION 3.01 BOARD OF DIRECTORS; ELECTION; TERM 29
SECTION 3.02 OFFICERS OF THE COMPANY 33
SECTION 3.03 BOARD OF DIRECTORS OF PANDA
OF NEPAL; ELECTION; TERM 35
SECTION 3.04 OFFICERS OF PANDA OF NEPAL 41
SECTION 3.05 DIRECTORS OF BKPC 43
SECTION 3.06 MEETINGS OF BOARDS OF DIRECTORS 45
SECTION 3.07 CONTRACTS FOR SERVICES WITH
AFFILIATES 45
SECTION 3.08 DISTRIBUTABLE CASH FLOW 46
SECTION 3.09 DISTRIBUTABLE PERCENTAGES;
DISTRIBUTIONS 46
SECTION 3.10 ACCOUNTING, RECORDKEEPING
AND REPORTING 47
SECTION 3.11 MEETINGS OF SHAREHOLDERS
AND VOTING REQUIREMENTS 52
ARTICLE IV PROFITS, LOSSES AND TAX MATTERS 54
SECTION 4.01 SHARING OF PROFITS AND LOSSES 54
SECTION 4.02 COMPLIANCE WITH U.S. INTERNAL
REVENUE CODE 54
SECTION 4.03 TAX MATTERS PARTNER 55
SECTION 4.04 DISSOLUTION AND LIQUIDATION 57
ARTICLE V TRANSFER AND ASSIGNMENT 58
SECTION 5.01 RESTRICTIONS ON TRANSFER 58
SECTION 5.02 RIGHT OF FIRST NEGOTIATION
REGARDING DISPOSAL OF SHARES 62
SECTION 5.03 LIABILITY OF TRANSFEROR 65
SECTION 5.04 EXPENSES IN CONNECTION
WITH TRANSFERS 65
SECTION 5.05 COLLATERAL ASSIGNMENT 65
ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS 66
SECTION 6.01 PANDA GLOBAL REPRESENTATIONS AND
WARRANTIES 66
SECTION 6.02 MCNIC NEPAL REPRESENTATIONS
AND WARRANTIES 77
SECTION 6.03 FURTHER ASSURANCES 78
SECTION 6.04 NO PARTNERSHIP 79
SECTION 6.05 PURPOSES OF THE COMPANY
AND PANDA OF NEPAL 79
ARTICLE VII INDEMNITY 80
SECTION 7.01 INDEMNITY 80
ARTICLE VIII CONFIDENTIALITY 83
SECTION 8.01 CONFIDENTIALITY 83
ARTICLE IX DEFAULTS AND REMEDIES 85
SECTION 9.01 DEFAULTS 85
SECTION 9.02 ACTIONS UPON DEFAULT 85
ARTICLE X GOVERNING LAWS AND COMPLIANCE 85
SECTION 10.01 GOVERNING LAW 85
SECTION 10.02 COMPLIANCE WITH LAWS 86
ARTICLE XI MISCELLANEOUS 87
SECTION 11.01 EFFECT OF CEASING TO OWN SHARES 87
SECTION 11.02 HEADINGS 87
SECTION 11.03 ARBITRATION 87
SECTION 11.04 IMPASSE; BUY-SELL AGREEMENT 90
SECTION 11.05 ENTIRE AGREEMENT 95
SECTION 11.06 AMENDMENT 95
SECTION 11.07 WAIVERS 95
SECTION 11.08 SEVERABILITY 95
SECTION 11.09 EFFECTIVENESS 96
SECTION 11.10 NO THIRD PARTY BENEFICIARIES 96
SECTION 11.11 NOTICES 96
SECTION 11.12 ASSIGNMENT 98
SECTION 11.13 SURVIVAL OF REPRESENTATIONS
AND WARRANTIES 99
SECTION 11.14 EXPENSES 99
SECTION 11.15 COMPUTATION OF TIME PERIODS 99
SECTION 11.16 EXECUTION IN COUNTERPARTS 99
SECTION 11.17 COVENANT OF GOOD FAITH AND
FAIR DEALING 100
Exhibit A Form of MCNIC Guarantee
Exhibit B Form of Panda Guarantee
Exhibit C Example of Class B Flip Date Determination
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (the "Agreement")
dated as of December 18, 1997, made by and among PANDA BHOTE
KOSHI, a Cayman Islands exempted company (the "Company"),
PANDA OF NEPAL, a Cayman Islands exempted company ("Panda of
Nepal"), PANDA GLOBAL ENERGY COMPANY, a Cayman Islands
exempted company ("Panda Global"), and MCNIC NEPAL LIMITED,
a Cayman Islands exempted company ("MCNIC Nepal"), said
Panda Global and MCNIC Nepal as the shareholders of the
Company (Panda Global and MCNIC Nepal and their successors
and permitted assigns being herein referred to collectively
as the "Shareholders," and the Shareholders, the Company and
Panda of Nepal being herein collectively referred to as the
"Parties").
W I T N E S S E T H
WHEREAS, the Company is the owner of 100% of the
issued and outstanding shares of Panda of Nepal;
WHEREAS, Panda of Nepal is the owner of 75% of the
issued and outstanding shares of Bhote Koshi Power Company
Private Limited, a private limited liability company
organized under the laws of Nepal ("BKPC"), which, in turn,
owns a 36MW hydroelectric power project being developed and
constructed in the Sindhupalchok District in Nepal; and
WHEREAS, the Parties desire to set forth herein
their mutual agreements as to the rights and obligations of
the Shareholders with respect to the organization,
capitalization, management and operation of the Company,
Panda of Nepal and BKPC and related matters.
NOW THEREFORE, for and in consideration of the
foregoing premises and the mutual covenants and agreements
hereinafter set forth, the Parties, intending to be legally
bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. The terms set
out below shall have the following meanings throughout this
Agreement:
(a) "Act" shall mean the Companies Law of the
Cayman Islands and any statutory modification thereof.
(b) "Affiliate" shall mean, with respect to any
Person, any entity which directly or indirectly through one
or more intermediaries controls, is controlled by, or is
under common control with such Person. For purposes of this
definition, the term "control" shall mean ownership of more
than 50% of the outstanding voting securities of an entity.
(c) "Affiliate Contract" shall mean any contract
or other agreement between the Company, Panda of Nepal or
BKPC, on the one hand, and any Shareholder or Affiliate of a
Shareholder, on the other hand, or which benefits directly
or indirectly any Shareholder or Affiliate of a Shareholder
(other than the Company, Panda of Nepal or BKPC and
excluding benefits available to all Shareholders generally).
(d) "Agreement" shall mean this Shareholders
Agreement dated as of December 18, 1997, made by and among
the Company, Panda of Nepal, Panda Global and MCNIC Nepal.
(e) "Annual Budget" shall mean each annual budget
for the Company, Panda of Nepal or BKPC, as the case may be,
adopted pursuant to the procedures described in Sections
3.01(d) or 3.03(d).
(f) "BKPC" shall mean Bhote Koshi Power Company
Private Limited, a private limited liability company
organized under the laws of Nepal.
(g) "BKPC Board of Directors" shall mean the
governing body of BKPC under the laws of Nepal.
(h) "BKPC Director" shall mean a member of the
BKPC Board of Directors.
(i) "BKPC Shareholders Agreement" shall mean the
Shareholders Agreement dated as of the Closing Date among
BKPC, HIPC, Panda of Nepal, RDC of Nepal and IFC.
(j) "Board of Directors" shall mean the governing
body of the Company under the Act.
(k) "Business Day" shall mean, except to the
extent expressly provided otherwise, a day when banks are
open for business in New York, New York, Grand Cayman,
Cayman Islands, and, for the purpose of determining the due
date of a payment, a day on which banks are open for
business in the cities required to effect such payment.
(l) "Capital Account" shall mean an account
maintained for each Shareholder in accordance with Section
4.02.
(m) "Capital Contribution" means the amount of
cash contributed by a Shareholder to the capital of the
Company.
(n) "Class A Shareholder" shall mean Panda Global
and any successor and permitted assignee or transferee
thereof.
(o) "Class A Shares" shall mean the ordinary
limited liability shares of the Company designated in the
Company Organizational Documents as the "Class A Shares."
(p) "Class B Flip Date" shall mean the first day
of the month after the Class B Shareholder has received
distributions of Distributable Cash Flow in amounts that
will provide the Class B Shareholder an internal rate of
return equal to 20% on its Equity Contributions. The rate
of return on the Class B Shareholder's Equity Contributions
and the resulting Class B Flip Date shall be determined
based on the example set forth in Exhibit C hereto.
(q) "Class B Shareholder" shall mean MCNIC Nepal
and any successor and permitted assignee or transferee
thereof.
(r) "Class B Shares" shall mean the ordinary
limited liability shares of the Company designated in the
Company Organizational Documents as the "Class B Shares."
(s) "Closing Date" shall mean December 12, 1997.
(t) "Company" shall mean Panda Bhote Koshi, an
exempted company with limited liability organized and
existing under the laws of the Cayman Islands.
(u) "Company Organizational Documents" shall mean
the Amended and Restated Memorandum of Association and the
Amended and Restated Articles of Association of the Company,
to be adopted promptly following the date hereof, as the
same may be further amended from time to time hereafter in
accordance with the applicable provisions hereof and
thereof.
(v) "Deficiency" shall mean any Project Funds
Shortfall.
(w) "Deficiency Loan" shall mean any subordinated
loan made to fund a Deficiency in accordance with Article 3
of the Share Retention and Project Funds Agreement.
(x) "DEG" shall mean DEG-Deutsche Investitions-
und Entwicklungsgesellschaft mbH, a company organized under
the laws of the Federal Republic of Germany.
(y) "DEG Investment Agreement" shall mean the DEG
Investment Agreement between BKPC and DEG dated as of the
Closing Date and shall include the DEG Special Conditions
and the General Conditions.
(z) "DEG Loans" shall mean the loans to be funded
pursuant to the DEG Investment Agreement.
(aa) "DEG Special Conditions" shall mean the
Special Conditions between BKPC and DEG dated as of the
Closing Date.
(bb) "Director" shall mean a member of the Board
of Directors of the Company.
(cc) "Distributable Cash Flow" shall mean (i) all
cash distributions received by the Company from Panda of
Nepal and (ii) all cash distributions received by Panda of
Nepal from BKPC.
(dd) "Distributable Percentage" shall mean:
(i) with respect to all Equity
Contributions except those made pursuant to
Sections 2.10(a)(iv) and 2.11(a)(iii), prior
to the Class B Flip Date: 85% of
Distributable Cash Flow to the Class B
Shareholder and 15% of Distributable Cash
Flow to the Class A Shareholder, and after
the Class B Flip Date shall mean 10% of
Distributable Cash Flow to the Class B
Shareholder and 90% of Distributable Cash
Flow to the Class A Shareholder; and
(ii) with respect to all Equity
Contributions made pursuant to Sections
2.10(a)(iv) and 2.11(a)(iii), 50% of
Distributable Cash Flow to the Class A
Shareholder and 50% of Distributable Cash
Flow to the Class B Shareholder.
(ee) "EPC Contract" shall mean the Amended and
Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project,
dated as of December 19, 1996, between BKPC and the EPC
Contractor, together with all change orders executed
thereunder on or prior to the Closing Date.
(ff) "EPC Contractor" shall mean China Gezhouba
Construction Group Corporation for Water Resources and
Hydropower, a corporation organized and existing under the
laws of the People's Republic of China.
(gg) "Equity Contributions" shall mean the
aggregate amount of Capital Contributions contributed to the
Company by the Class A Shareholder and the Class B
Shareholder pursuant to Sections 2.07, 2.08, 2.10 and 2.11
or otherwise.
(hh) "Equity Letter of Credit" shall mean the
Equity Letter of Credit issued by First Chicago NBD
Corporation in favor of the Trustee and any successor
thereto.
(ii) "Equity Subscription Agreement" shall mean
the Equity Subscription Agreement among BKPC, Panda of Nepal
and the Trustee dated as of the Closing Date.
(jj) "Financial Closing Date" shall mean the date
on which the Lenders make an initial Disbursement pursuant
to the Investment Agreement.
(kk) "Financing Documents" shall mean the
Investment Agreement, the Share Retention and Project Funds
Agreement, the Equity Subscription Agreement, the Panda of
Nepal Share Pledge Agreement, the Panda Bhote Koshi Share
Pledge Agreement, the BKPC Shareholders Agreement, and the
Harza Side Letter.
(ll) "Financing Plan" shall mean the Financing
Plan attached as Schedule 2.2(a) to the IFC Special
Conditions and the DEG Special Conditions.
(mm) "Fiscal Year" shall mean the accounting year
of the Company and Panda of Nepal commencing each year on
January 1 and ending on the following December 31, or such
other accounting year as the Company or Panda of Nepal may
from time to time adopt. For BKPC "Fiscal Year" shall mean
the accounting year as may be adopted by BKPC from time to
time.
(nn) "General Conditions" shall mean the
Investment Agreement General Conditions among BKPC, IFC and
DEG dated as of the Closing Date.
(oo) "Government Approval" shall mean any
authorization, consent, approval, license, ruling, permit,
certification, filing for registration (that is not merely a
routine informational filing) or exemption by or with any
Governmental Authority.
(pp) "Governmental Authority" shall mean the
Government of the Cayman Islands or any department or
political subdivision thereof, the Government of Nepal or
any department or political subdivision thereof, and any
entity, body or authority of any of the foregoing exercising
executive, legislative, judicial, regulatory or
administrative functions relating to government.
(qq) "Harza Engineering Company International"
shall mean Harza Engineering Company International, a
limited liability company, a limited liability company
organized and existing under the laws of the State of
Wyoming.
(rr) "Harza Engineering Company International
L.P." shall mean Harza Engineering Company International
L.P., a limited partnership organized and existing under the
laws of the State of Delaware.
(ss) "Harza Side Letter" shall mean the letter
agreement dated December 18, 1997 between Harza Engineering
Company International and Panda of Nepal concerning the
possible purchase of shares in BKPC from HIPC.
(tt) "HIPC" shall mean Himal International Power
Corporation Pvt. Ltd., a private limited company organized
and existing under the laws of Nepal.
(uu) "IFC" shall mean International Finance
Corporation, an international organization established by
articles of agreement among its shareholder countries.
(vv) "IFC Investment Agreement" shall mean the
Investment Agreement between BKPC and IFC dated as of the
Closing Date and shall include the IFC Special Conditions
and the General Conditions.
(ww) "IFC Loans" shall mean the loans to be funded
pursuant to the IFC Investment Agreement.
(xx) "IFC Special Conditions" shall mean the
Special Conditions between BKPC and the IFC dated as of the
Closing Date.
(yy) "Impasse" shall have the meaning set forth in
Section 11.04.
(zz) "Insurance Proceeds" shall mean any insurance
proceeds received under any insurance policy maintained by
BKPC or by the EPC Contractor or Harza Engineering Company
International L.P. in respect of the Project (other than
proceeds payable under third party liability policies).
(aaa) "Investment Agreement" shall mean and
include the IFC Investment Agreement and the DEG Investment
Agreement.
(bbb) "IRC" shall mean the U.S. Internal
Revenue Code of 1986, as amended from time to time, and any
successor statute thereto.
(ccc) "Lenders" shall mean IFC and DEG.
(ddd) "Liquidated Damages Proceeds" shall mean
any liquidated damages paid by or on behalf of the EPC
Contractor under the EPC Contract.
(eee) "Loans" shall mean and include the IFC
Loans and the DEG Loans.
(fff) "Loan Documents" shall mean the
Investment Agreement and the security documents under the
Investment Agreement.
(ggg) "MCNIC Consent" shall mean the
Assignment, Consent and Agreement dated as of December 18,
1997 among Panda Global, Panda, the Company, Panda of Nepal,
MCNIC, MCNIC Nepal, BKPC, DEG, IFC and the Trustee.
(hhh) "MCNIC" shall mean MCN Investment
Corporation, a Michigan corporation.
(iii) "MCNIC Nepal" shall mean MCNIC Nepal
Limited, an exempted company with limited liability
organized and existing under the laws of the Cayman Islands.
(jjj) "NEA" shall mean Nepal Electricity
Authority.
(kkk) "Panda" shall mean Panda Energy
International, Inc., a Texas corporation.
(lll) "Panda Bhote Koshi Share Pledge
Agreement" shall mean the Share Pledge Agreement dated as of
the Closing Date among Panda Bhote Koshi, the Trustee, as
Pledgee, and BKPC.
(mmm) "Panda Global" shall mean Panda Global
Energy Company, an exempted company with limited liability
organized and existing under the laws of the Cayman Islands.
(nnn) "Panda of Nepal" shall mean Panda of
Nepal, an exempted company with limited liability organized
and existing under the laws of the Cayman Islands.
(ooo) "Panda of Nepal Share Pledge Agreement"
shall mean the Share Pledge Agreement dated as of the
Closing Date among Panda of Nepal, as Pledgor, the Trustee,
as Pledgee, and BKPC.
(ppp) "Parties" shall mean collectively the
Shareholders, the Company and Panda of Nepal.
(qqq) "Permitted Transferee" shall mean any
Affiliate of a transferring Shareholder.
(rrr) "Person" shall mean any individual,
partnership, joint venture, company, corporation, limited
liability company, limited duration company, limited life
company, association, trust or other enterprise or a
government including any agency thereof.
(sss) "PON Board of Directors" shall mean the
governing body of Panda of Nepal under the Act.
(ttt) "PON Director" shall mean a member of
the PON Board of Directors.
(uuu) "PON Organizational Documents" shall
mean the Amended and Restated Memorandum of Association and
the Amended and Restated Articles of Association of Panda of
Nepal, to be adopted promptly following the date hereof, as
the same may be further amended from time to time hereafter
in accordance with the applicable provisions hereof and
thereof.
(vvv) "Project" shall mean the real, personal
and mixed property comprising a 36 MW hydroelectric power
generating facility located in the Sindhupalchok District in
Nepal being developed and constructed by BKPC.
(www) "Project Completion" shall mean that the
requirements provided for under "Project Completion" in the
Investment Agreement have been met in full.
(xxx) "Project Completion Date" shall mean the
date on which the requirements for Project Completion have
been met in full.
(yyy) "Project Contracts" shall mean the
"Principal Documents" as defined in Schedule A to the
Investment Agreement as in effect as of the Closing Date.
(zzz) "Project Funds Shortfall" shall mean, at
any point in time on or before the Project Completion Date,
in the reasonable judgment of either Lender, the amount by
which Project Costs (as such term is defined in the
Investment Agreement) or principal, interest, fees, and
other amounts payable under the Loan Documents exceed funds
then available to BKPC from the sources described in the
Financing Plan or the EPC Contract or from other sources (on
terms and subject to conditions acceptable to the Lenders).
For the avoidance of doubt, funds, including, without
limitation, Insurance Proceeds and Liquidated Damages
Proceeds, shall not be deemed available to BKPC until such
funds have been received by BKPC.
(aaaa)"Projections" shall mean the Base Case
Financial Projection with respect to the Project delivered
to the Lenders on December 11, 1997 pursuant to the
Investment Agreement.
(bbbb)"Resource Development Consultants" shall mean
Resource Development Consultants, a limited liability
company, a limited liability company organized and existing
under the laws of the State of Wyoming.
(cccc)"RDC of Nepal" shall mean RDC of Nepal, an
exempted company with limited liability organized and
existing under the laws of the Cayman Islands.
(dddd)"Shares" means the Class A Shares and the
Class B Shares.
(eeee)"Shareholder" shall mean Panda Global and
MCNIC Nepal and each Person that becomes a Shareholder
hereafter pursuant to the provisions of this Agreement. A
Shareholder that Transfers all of its interest in the
Company in accordance with the procedures of the Company
Organizational Documents and Article V hereof shall no
longer be considered a Shareholder.
(ffff)"Share Pledge Agreement" shall mean each of
the Share Pledge Agreements, dated as of the Closing Date,
among each of Harza Engineering Company International, L.P.,
HIPC, Soaltee Enterprises Private Ltd., Soaltee Hotel Ltd.,
Surya Enterprises Private Ltd., Resource Development
Consultants, Panda of Nepal, RDC of Nepal and the Company,
each as Pledgor, the Trustee, as Pledgee, and BKPC.
(gggg)"Share Retention and Project Funds Agreement"
shall mean the Share Retention and Project Funds Agreement
among BKPC, Panda, Harza Engineering Company International,
Harza Engineering Company International, L.P., HIPC, Soaltee
Enterprises Private Ltd., Soaltee Hotel Ltd., Surya
Enterprises Private Ltd., Resource Development Consultants,
Panda of Nepal, RDC of Nepal, the Company, IFC and DEG dated
as of the Closing Date.
(hhhh)"Soaltee Enterprises Private Ltd." shall mean
Soaltee Enterprises Private Ltd., a private company
organized and existing under the laws of Nepal.
(iiii)"Soaltee Hotel Ltd." shall mean Soaltee Hotel
Ltd., a public company organized and existing under the laws
of Nepal.
(jjjj)"Surya Enterprises Private Ltd." shall mean
Surya Enterprises Private Ltd., a private company organized
and existing under the laws of Nepal.
(kkkk)"Transfer" shall mean the sale, assignment,
transfer, pledge, hypothecation or other disposition of a
legal or beneficial interest in any Shares, whether
voluntarily or involuntarily, including pursuant to the
exercise of remedies under a mortgage, pledge or similar
security device.
(llll)"Trustee" shall mean Wilmington Trust
Company, a Delaware banking corporation.
(mmmm)"U.S. Dollars" and "$" shall mean the lawful
currency of the United States of America.
Section 1.02 References to Sections. References
to particular Sections shall mean the Sections of this
Agreement, unless the reference specifically refers to a
section of another agreement or document.
ARTICLE II
ORGANIZATION, CAPITALIZATION AND CERTAIN FINANCIAL
OBLIGATIONS
Section 2.01 Organizational Documents and
Filings. The Company, Panda Global and Panda of Nepal
represent and covenant to MCNIC Nepal that (a) promptly
following the date hereof the Company Organizational
Documents and the PON Organizational Documents shall be duly
adopted by the Company and Panda of Nepal, respectively, and
(b) the Company Organizational Documents and the PON
Organizational Documents will be filed promptly thereafter
with the Registrar of Companies of the Cayman Islands in
accordance with the Act. In addition, the Company, Panda of
Nepal and the Shareholders, as the case may be, shall cause
to be executed, filed and published all such certificates,
notices, statements or other instruments, and amendments
thereto under the laws of the Cayman Islands and all other
applicable jurisdictions, as the Board of Directors may deem
necessary or advisable from time to time for the operation
of the Company and as the PON Board of Directors may deem
necessary or advisable from time to time for the operation
of Panda of Nepal, respectively.
Section 2.02 Parties and Shareholders. No
Person shall be entered in the Register of Members of the
Company, or become the holder of any Share, through
issuance, Transfer of Shares or otherwise, unless such
Person shall have first signed a counterpart of this
Agreement or a commitment to be bound by the terms and
conditions of this Agreement in accordance with Section
5.01(b). The Company and the Board of Directors shall deal
only with Persons so named or admitted as Shareholders;
provided, however, that any distribution by the Company to
the Person properly shown on the Company's records as a
Shareholder or his legal representative or the assignee of
the right to receive Shareholder distributions as herein
provided, shall relieve the Company and the Board of
Directors of all liability to any other Person who may be
interested in such distribution by reason of any other event
or circumstances.
Section 2.03 Inconsistencies Between this
Agreement and the Company Organizational Documents or the
PON Organizational Documents. If a provision of this
Agreement contradicts a provision of the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, the terms of this Agreement
shall prevail and (a) a general meeting of shareholders of
the Company or Panda of Nepal, as the case may be, shall be
held within thirty (30) calendar days of discovery of such
inconsistency or as soon thereafter as is practicable for
the purpose of adopting any amendment to the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, that may be required to
reconcile such inconsistency to the extent such amendments
are permitted by the Act, and (b) adopt such amendments.
Notwithstanding the foregoing, unless otherwise required by
the Act this Agreement shall still prevail over any such
inconsistency, whether or not such inconsistency is
corrected in the Company Organizational Documents or the PON
Organizational Documents, as the case may be, in the manner
prescribed in this Section 2.03.
Section 2.04 Performance by the Company and
Panda of Nepal. The Shareholders shall cause the Company,
the Company shall cause Panda of Nepal, and Panda of Nepal
shall cause the BKPC directors appointed by the Shareholders
to perform each of their respective obligations under this
Agreement, and the Shareholders shall cause their designated
members of the boards of directors of the Company, Panda of
Nepal and BKPC, as the case may be, to act in accordance
herewith and in a manner which causes the Company, Panda of
Nepal and such BKPC directors, as the case may be, to
perform each of their obligations under this Agreement. In
addition, Panda of Nepal shall use its best efforts as a
shareholder of BKPC to cause BKPC to act in accordance with
the provisions of this Agreement.
Section 2.05 Principal Place of Business. The
principal office and place of business of the Company and
Panda of Nepal shall be located at Ugland House (c/o Maples
and Calder), South Church Street, Grand Cayman, Cayman
Islands, British West Indies. The principal office and
place of business may be changed from time to time, and
other offices and places of business may be established from
time to time, by the Board of Directors or the PON Board of
Directors, as the case may be, with notice to the
Shareholders, the Company and Panda of Nepal. The Company
and Panda of Nepal shall maintain a registered office in the
Cayman Islands to the extent required by the Act.
Section 2.06 Other Activities of the
Shareholders. Except as otherwise expressly provided in
this Agreement, each of the Shareholders and their
Affiliates, at any time and from time to time, may engage in
and possess interests in other business ventures of any and
every type and description, independently or with others,
whether such ventures are competitive with the Company,
Panda of Nepal or BKPC, or otherwise. Without limiting any
other remedies available under this Agreement or at law for
the breach of other provisions of this Agreement, neither
the Company nor Panda of Nepal nor any Shareholder shall
solely by virtue of this Agreement have any right, title or
interest in or to such ventures or to the income or profits
derived therefrom, nor shall engaging in such activities
constitute a breach of a Shareholder's obligations hereunder
or under the Company Organizational Documents or the PON
Organizational Documents.
Section 2.07 Capital Contributions by the Class
A Shareholder. The Class A Shareholder agrees to contribute
to the capital of the Company on the Financial Closing Date
the sum of $2,000,000, and will receive for such
contribution a total of 100 Class A Shares. The Class A
Shareholder may be required to contribute additional capital
to the Company as provided in Section 2.11 but shall receive
no further Shares for such additional contributions.
Section 2.08 Capital Contributions by the Class
B Shareholder. The Class B Shareholder agrees to contribute
to the capital of the Company, in the manner provided in
Section 2.09, an amount equal to the "total equity
commitment to the Project" of Panda of Nepal as set forth in
Section 2.1(a)(1) of the Equity Subscription Agreement less
$2,000,000, but not to exceed in any event $20,121,250, and
shall receive for such contribution and the delivery of the
letter of credit required by Section 2.10(a)(iii) below a
total of 100 Class B Shares. The Class B Shareholder may be
required to contribute additional capital to the Company as
provided in Section 2.10 but shall receive no further Shares
for such additional contributions.
Section 2.09 Manner of Making Capital
Contributions for Class B Shareholder. The Capital
Contributions described in Section 2.08 shall be paid to the
Company in installments as necessary to fund Panda of
Nepal's portion of the equity of BKPC (other than equity
funded with the Capital Contributions made by the Class A
Shareholder on the Financial Closing Date pursuant to
Section 2.07) as required by the Equity Subscription
Agreement. Each installment shall be paid to the Company no
later than five (5) Business Days prior to the date on which
an installment of Loans is to be disbursed to BKPC.
Immediately following the receipt by the Company of such
capital contributions, the Company shall contribute such
amounts to Panda of Nepal, and Panda of Nepal shall
contribute such amounts to the capital of BKPC.
Section 2.10 Additional Financial Obligations of
Class B Shareholder.
(a) In addition to its obligations to contribute
capital to the Company pursuant to Section 2.08, the Class B
Shareholder shall have the following financial obligations:
(i) In the event of a Deficiency (as
determined in accordance with Article 3 of the Share
Retention and Project Funds Agreement), the Class B
Shareholder shall contribute to the Company an amount
equal to 85% of the aggregate amount of Panda of
Nepal's share of the Deficiency; provided, however,
that the Class B Shareholder shall in no event be
obligated to contribute more than $7,100,000 (plus 85%
of any additional Deficiency associated with any shares
of BKPC purchased by Panda of Nepal from HIPC, as
described below in sub-paragraph (v), but not to exceed
$361,000) in additional Capital Contributions pursuant
to this Section 2.10(a)(i). The proceeds of such
Capital Contribution shall, in turn, be loaned or
contributed to Panda of Nepal, and Panda of Nepal
shall, in turn, loan such amounts to BKPC as a
Deficiency Loan or make an equity contribution to BKPC
in accordance with the Share Retention and Project
Funds Agreement. If such amounts are loaned by the
Company to Panda of Nepal, the terms and conditions of
any such loan shall be the same as the terms and
conditions for Deficiency Loans as set forth in Exhibit
A to the Share Retention and Project Funds Agreement.
(ii) In the event payment is required to be
made by the Class A Shareholder (or an Affiliate of the
Class A Shareholder, including, without limitation,
Panda) pursuant to Section 7.1 of the Share Retention
and Project Funds Agreement relating to the guarantee
by Panda of an amount of EPC Contractor Guaranteed
Obligations (as defined therein) up to 15% of the EPC
Contract Price (as defined therein), plus $150,000, the
Class B Shareholder shall contribute to the Company an
amount equal to 85% of any such amount; provided,
however the Class B Shareholder shall in no event be
obligated to contribute more than $6,035,850 pursuant
to this Section 2.10(a)(ii).
(iii) The Class B Shareholder shall provide
a letter of credit in favor of the Lenders in an amount
equal to the Class B Shareholder's unfunded equity
commitment to the Company, but not to exceed
$20,121,250 less the amount of equity contributions
previously made by the Class B Shareholder pursuant to
this Agreement. Said letter of credit shall comply
with the requirements of the Equity Subscription
Agreement. Amounts drawn under such letter of credit
will be treated as Capital Contributions made by the
Class B Shareholder under Section 2.08 above.
(iv) The Class B Shareholder shall
contribute to the capital of the Company an amount
equal to 50% of the obligations of Panda of Nepal under
Section 3.5(b) of the BKPC Shareholders Agreement.
Such amount shall, in turn, be loaned or contributed by
the Company to the capital of Panda of Nepal, and Panda
of Nepal shall use such amount to meet its obligations
under Section 3.5(b) of the BKPC Shareholders
Agreement.
(v) In the event that Panda of Nepal is
required to purchase an interest of up to 4.0% in BKPC
presently held by HIPC as required under the Share
Retention and Project Funds Agreement, the Class B
Shareholder shall contribute to the Company an amount
equal to 85% of the total amount required for Panda of
Nepal to purchase such shares; provided, however, that
the Class B Shareholder shall in no event be obligated
to contribute more than $1,005,000 pursuant to this
Section 2.10(a)(v). Such amount shall, in turn, be
loaned or contributed to the capital of Panda of Nepal.
The capital contribution described in this subparagraph
(v) shall be proportionately reduced to the extent that
RDC of Nepal or any Affiliate thereof purchases BKPC
shares presently held by HIPC pursuant to the terms of
the Harza Side Letter.
(vi) In the event of any financial
requirements in connection with the development and
construction of the Project in addition to those
provided for in the Financing Documents or described
above, upon the request of the Class B Shareholder the
Shareholders shall promptly meet to discuss the ways in
which such additional financial requirements may be
met.
(b) For the purposes of Section 2.10(a)(i), (ii),
(v) and (vi), the portion of cash distributions from Panda
of Nepal, if any, to the Company that relate to the Capital
Contributions made by the Class B Shareholder pursuant to
such Sections shall be distributed pursuant to clause (i) of
the definition of "Distributable Percentage" in Section
1.01(dd). The portion of cash distributions from Panda of
Nepal, if any, to the Company that relate to Capital
Contributions made by the Class B Shareholder pursuant to
Section 2.10(a)(iv) shall be distributed pursuant to clause
(ii) of the definition of "Distributable Percentage" in
Section 1.01(dd). All Capital Contributions contributed by
the Class B Shareholder to the Company pursuant to Section
2.10(a)(i), (ii), (v) and (vi) shall be included as "Equity
Contributions" for purposes of determining the Class B Flip
Date.
(c) The Class B Shareholder shall be given
written notice by the Company of any obligation to make a
Capital Contribution or post a letter of credit pursuant to
this Section 2.10, which notice shall be provided a
sufficient amount of time prior to the date on which such
contribution or letter of credit is required to be made or
posted, as the case may be, in order to comply with the
requirements under the Financing Documents. The failure to
give such notice at any particular time shall not nullify or
change the obligation of the Class B Shareholder to make a
capital contribution or post a letter of credit as required
hereunder at any other time, provided that notice as
provided herein is given.
Section 2.11 Additional Financial Obligations of
Class A Shareholder.
(a) In addition to its obligations to contribute
capital to the Company pursuant to Section 2.07, the Class A
Shareholder shall have the following financial obligations:
(i) In the event of a Deficiency (as
determined in accordance with Article 3 of the Share
Retention and Project Funds Agreement), the Class A
Shareholder shall contribute to the Company an amount
equal to 15% of the aggregate amount of the Deficiency
plus any remaining portion of the Deficiency for which
the Class B Shareholder is not obligated to contribute
capital pursuant to Section 2.10(a)(i). The proceeds
of such Capital Contribution shall, in turn, be loaned
or contributed to Panda of Nepal, and Panda of Nepal
shall, in turn, loan such amounts to BKPC as a
Deficiency Loan or make an equity contribution to BKPC
in accordance with the Share Retention and Project
Funds Agreement. If such amounts are loaned by the
Company to Panda of Nepal, the terms and conditions of
any such loan shall be the same as the terms and
conditions for Deficiency Loans set forth in Exhibit A
to the Share Retention and Project Funds Agreement.
(ii) In the event payment is required to be
made by the Class A Shareholder (or an Affiliate of the
Class A Shareholder, including, without limitation,
Panda) pursuant to Section 7.1 of the Share Retention
and Project Funds Agreement relating to the guarantee
by Panda of an amount of EPC Contractor Guaranteed
Obligations (as defined therein) up to 15% of the EPC
Contract Price (as defined therein), plus $150,000, the
Class A Shareholder agrees to contribute to the Company
an amount equal to 15% of any such payment plus any
remaining portion of such payment for which the Class B
Shareholder is not obligated to contribute capital
pursuant to Section 2.10(a)(ii).
(iii) The Class A Shareholder shall
contribute to the capital of the Company an amount
equal to 50% of the obligations of Panda of Nepal under
Section 3.5(b) of the BKPC Shareholders Agreement. Such
amount shall, in turn, be loaned or contributed by the
Company to the capital of Panda of Nepal, and Panda of
Nepal shall use such amount to meet its obligations
under Section 3.5(b) of the BKPC Shareholders
Agreement.
(iv) In the event that Panda of Nepal is
required to purchase an interest of up to 4.0% in BKPC
presently held by HIPC as required under the Share
Retention and Project Funds Agreement, the Class A
Shareholder shall contribute to the Company an amount
equal to 15% of the total amount required for Panda of
Nepal to purchase such shares, plus any remaining
portion of such amount for which the Class B
Shareholder is not obligated to contribute capital
pursuant to Section 2.10(a)(v), and the Company shall
contribute or loan such amount to Panda of Nepal. The
capital described in this subparagraph (iv) shall be
proportionately reduced to the extent that RDC of Nepal
or any Affiliate thereof purchases BKPC shares
presently held by HIPC pursuant to the terms of the
Harza Side Letter.
(v) In the event of any financial
requirements in connection with the development and
construction of the Project in addition to those
provided for in the Financing Documents or described
above, upon the request of the Class A Shareholder the
Shareholders shall promptly meet to discuss the ways in
which such additional financial requirements may be
met.
(b) For the purposes of Section 2.11(a)(i), (ii),
(iv) and (v), the portion of cash distributions from Panda
of Nepal, if any, to the Company that relate to the Capital
Contributions made by the Class A Shareholder pursuant to
such Sections shall be distributed pursuant to clause (i) of
the definition of "Distributable Percentage" in Section
1.01(dd). The portion of cash distributions from Panda of
Nepal, if any, to the Company that relate to Capital
Contributions made by the Class A Shareholder pursuant to
Section 2.11(a)(iii) shall be distributed pursuant to clause
(ii) of the definition of "Distributable Percentage" in
Section 1.01(dd).
(c) Notwithstanding any other provision of this
Agreement, the Class A Shareholder may at any time elect,
through written notice to the Class B Shareholder at the
time of a notice given pursuant to Section 2.10(d), to
increase its percentage of any Capital Contribution made
pursuant to this Section 2.11. Notwithstanding that the
Class A Shareholder makes such an election with respect to
one or more particular Capital Contributions, the
Distributable Percentage applicable to distributions
relating to such particular Capital Contribution shall
remain as provided in Section 2.11(b) and shall not be
adjusted to reflect the greater percentage rate elected by
the Class A Shareholder with respect to such particular
Capital Contribution and the corresponding lesser percentage
rate with respect to the particular Capital Contribution by
the Class B Shareholder. In the event that, pursuant to
this Section 2.11(c), the Class A Shareholder elects to fund
a greater percentage of a particular Capital Contribution
than would otherwise be required by this Agreement, the
particular Capital Contribution required of the Class B
Shareholder at such time shall be correspondingly reduced.
(d) The Class A Shareholder shall be given
written notice by the Company of any obligation to make a
Capital Contribution or post a letter of credit pursuant to
this Section 2.11 a sufficient amount of time prior to the
date on which such contribution or letter of credit is
required to be made or posted, as the case may be, in order
to comply with the requirements under the Financing
Documents. The failure to give such notice at any
particular time shall not nullify or change the obligation
of the Class A Shareholder to make a capital contribution or
post a letter of credit as required hereunder at any other
time, provided that notice as provided herein is given.
Section 2.12 Guarantees.
(a) Contemporaneous with the execution of this
Agreement, the Class B Shareholder shall provide the Class A
Shareholder and Panda with the guarantee of MCNIC, in the
form of Exhibit A hereto, guaranteeing to the Class A
Shareholder and Panda the full and complete performance by
the Class B Shareholder (including any Permitted Transferee
thereof) of all the obligations of, and the accuracy of the
representations and warranties of, the Class B Shareholder
hereunder.
(b) Contemporaneous with the execution of this
Agreement the Class A Shareholder shall provide the Class B
Shareholder and MCNIC with the guarantee of Panda, in the
form of Exhibit B hereto, guaranteeing to the Class B
Shareholder and MCNIC the full and complete performance by
the Class A Shareholder of all the obligations of, and the
accuracy of the representations and warranties of, the Class
A Shareholder (including any Permitted Transferee thereof)
hereunder.
Section 2.13 Rights of Lenders. All rights and
obligations of the Parties under this Agreement shall be
subject to the rights of the Lenders under the MCNIC
Consent.
ARTICLE III
DISTRIBUTIONS, MANAGEMENT AND ADMINISTRATION
Section 3.01 Board of Directors; Election; Term.
(a) The Company shall have a Board of Directors
consisting of four (4) members. The Class A Shareholder
shall be entitled to appoint two (2) of the four (4)
Directors prior to the occurrence of the Class B Flip Date
and shall be entitled to appoint three (3) of the four (4)
Directors thereafter. The Class B Shareholder shall be
entitled to appoint two (2) of the four (4) Directors prior
to the occurrence of the Class B Flip Date and shall be
entitled to appoint one (1) of the four Directors
thereafter. The Shareholders agree to vote in favor of
electing such Directors at the annual general meeting of
shareholders of the Company called for such purpose or at
any other meeting of shareholders at which directors are to
be elected, or in favor of removal or replacement of any
such Director if requested by the appointing Shareholder.
Such actions may be taken by unanimous consent of the
Shareholders without a meeting.
(b) Each Director shall serve a two-year (2)
term; provided that the term of one (1) of the Directors
appointed by the Class B Shareholder shall terminate on the
Class B Flip Date. The Class B Shareholder shall designate
which of its two (2) Directors shall be subject to the
preceding sentence. The Class A Shareholder shall be
entitled to appoint a third Director to replace the outgoing
Director designated by the Class B Shareholder within thirty
(30) days after the Class B Flip Date. This newly-appointed
Director shall serve the remainder of the outgoing
Director's term. There shall be no limit to the number of
terms a Director may serve. A director may be removed only
with the consent of the Shareholder which appointed such
director.
(c) The overall management and direction of the
Company shall be exercised by the Board of Directors and,
except as expressly provided herein, in the Company
Organizational Documents or under the Act, the Shareholders
shall not be required to vote on, approve or consent to any
action of the Company. Except as authorized by the Board of
Directors or as set forth in this Agreement, no Shareholder
shall have any right or authority to take any action on
behalf of the Company, or to bind or commit the Company with
respect to third parties. All decisions of the Board of
Directors shall be by majority vote, with each Director
having one (1) vote, except to the extent a decision is
required to be by the unanimous vote of the Directors as
hereinafter provided.
(d) Without limiting anything set forth in
Section 3.01(c), the following matters shall require the
majority vote of the Board of Directors:
(i) the appointment of the officers of the
Company;
(ii) the appointment of the directors of
Panda of Nepal, subject to the provisions of Section
3.03; and
(iii) the approval of the Annual Budget for
the Company.
(e) The following matters shall require unanimous
vote of the Board of Directors:
(i) any issuance by the Company of
additional shares;
(ii) any increase in the authorized capital
of the Company;
(iii) the incurrence by the Company of any
indebtedness other than as provided for in this
Agreement;
(iv) any transaction involving the merger,
consolidation or reorganization of the Company or the
sale of all or substantially all of the assets of the
Company;
(v) any transaction involving the entry by
the Company into any partnership, profit-sharing or
royalty agreement or other similar arrangement whereby
the Company's income or profits are, or may be, shared
with any other Person;
(vi) the filing by the Company of any
voluntary petition of bankruptcy or insolvency;
(vii) any loan, advance, capital contribution
to or investment in the stock or other securities or
evidences of indebtedness of or interests in any Person
other than as provided for in this Agreement or
required in the Financing Documents as in effect on the
date hereof;
(viii) any transaction involving a sale,
transfer, pledge (other than in connection with the
Financing Documents), or other disposition of the
Company's shares in Panda of Nepal;
(ix) the initiation, settlement or compromise
by the Company of any arbitration, litigation or other
legal or administrative proceeding, or the settlement
or compromise of any threatened claim, involving an
amount in excess of $50,000;
(x) any amendment to the Company
Organizational Documents;
(xi) any decision to cause the Company to
enter into or conduct any business other than the
ownership of shares of Panda of Nepal and activities
related or incidental thereto including, without
limitation, any activity required under the Financing
Documents;
(xii) any decision with respect to the
entering into, or amendment of, any Affiliate Contract;
(xiii) the remuneration, if any, to be paid to
officers and directors of the Company and to Affiliates
for services performed (unless approved in the Annual
Budget); and
(xiv) any decision with respect to the
liquidation or winding up of the Company.
Section 3.02 Officers of the Company.
(a) The Company shall have the following
officers: a President; a Vice President, Treasurer and
Chief Tax Officer; a Secretary; and one or more Assistant
Secretaries. Each officer shall serve until the next annual
general meeting of Shareholders unless prior thereto such
officer dies, becomes incapacitated, resigns or is removed
from office. An officer may be removed only with the
consent of the Shareholder which appointed such officer.
(b) The President and the Secretary (which
offices may be held by the same individual) and each
Assistant Secretary, if any, of the Company shall be
nominated by the Class A Shareholder and shall be subject to
the approval of the Board of Directors. In addition,
following the occurrence of the Class B Flip Date, the Vice
President, Treasurer and Chief Tax Officer of the Company
shall also be nominated by the Class A Shareholder and shall
be subject to the approval of the Board of Directors. The
Class B Shareholder agrees to instruct the Directors
appointed by it to vote in favor of the nominees for such
officer positions who are nominated by the Class A
Shareholder, or in favor of removal or replacement of any
such officer if requested by the nominating Shareholder.
(c) Prior to the occurrence of the Class B Flip
Date, the Vice President, Treasurer and Chief Tax Officer of
the Company shall be nominated by the Class B Shareholder
and shall be subject to the approval of the Board of
Directors. The Class A Shareholder agrees to instruct the
Directors appointed by it to vote in favor of the nominee
for such officer position who is nominated by the Class B
Shareholder, or in favor of removal or replacement of such
officer if requested by the nominating Shareholder.
(d) The President of the Company shall have the
rights and responsibilities to manage the day-to-day
operations and affairs of the Company, subject to the Annual
Budget and the overall direction of the Board of Directors.
(e) The Vice-President, Treasurer and Chief Tax
Officer of the Company shall have the rights and
responsibilities to oversee the Annual Budget and the
Company's books and accounting records, manage the Company's
tax returns and tax elections, assist in determining
Distributable Cash Flow pursuant to Section 3.08, and assist
in achieving the Company's compliance with the requirements
in Section 3.10 and Article IV, as well as any other duties
assigned by the President, and may utilize the services of a
qualified accounting firm approved by the Board of Directors
(which shall initially be Deloitte & Touche LLP) to assist
in the performance of such responsibilities.
(f) The Secretary of the Company shall have the
rights and responsibilities to maintain the Company's
minutes, records, communications and other administrative
duties as assigned by the President. The Secretary may be
assisted by one or more Assistant Secretaries, if such are
approved by the Board of Directors, each of whose duties
shall be assigned by the Secretary.
Section 3.03 Board of Directors of Panda of
Nepal; Election; Term. (a) The PON Board of Directors
shall consist of four (4) members. The Class A Shareholder
shall be entitled to appoint two (2) of the four (4)
directors prior to the occurrence of the Class B Flip Date
and shall be entitled to appoint three (3) of the four (4)
directors thereafter. The Class B Shareholder shall be
entitled to appoint two (2) of the four directors prior to
the occurrence of the Class B Flip Date and shall be
entitled to appoint one (1) of the four (4) directors
thereafter. The Shareholders agree to cause the shares of
Panda of Nepal to be voted to elect such directors at the
annual general meeting of Panda of Nepal shareholders called
for such purpose or at any other meeting of shareholders at
which directors are to be elected. Such action may be taken
by unanimous consent of the Panda of Nepal shareholders
without a meeting. The Shareholders agree to cause the
shares of Panda of Nepal to be voted in favor of removal or
replacement of any such director if requested by the
nominating Shareholder.
(b) Each director of Panda of Nepal shall serve a
two-year (2) term; provided that the term of one (1) of the
directors nominated by the Class B Shareholder shall
terminate on the Class B Flip Date. The Class B Shareholder
shall designate which of the two (2) directors it nominates
shall be subject to the preceding sentence. The Class A
Shareholder shall be entitled to nominate a third director
to replace the outgoing director within thirty (30) days
after the Class B Flip Date. This newly-appointed director
shall serve the remainder of the outgoing director's term.
There shall be no limit to the number of terms a Panda of
Nepal director may serve. A Panda of Nepal director may be
removed only with the consent of the Shareholder which
appointed such director.
(c) The overall management and direction of Panda
of Nepal shall be exercised by the PON Board of Directors
and, except as expressly provided herein, in the PON
Organizational Documents, or under the Act, the shareholders
of Panda of Nepal shall not be required to vote on, approve
or consent to any actions of Panda of Nepal. All decisions
of the PON Board of Directors shall be by majority vote,
with each director having one (1) vote, except to the extent
a decision is required to be by the unanimous vote of the
PON Board of Directors as hereinafter provided. A PON
director shall not be bound by an instruction from the
Company, as the shareholder of Panda of Nepal, but shall be
free to vote as directed by the Shareholder which has
appointed such director.
(d) Without limiting anything set forth in
Section 3.03(c), the following matters shall require the
majority vote of the PON Board of Directors:
(i) the appointment of officers of Panda of
Nepal;
(ii) the appointment of directors of BKPC
that are entitled to be appointed by Panda of Nepal,
subject to the provisions of Section 3.05;
(iii) the approval of the Annual Budget for
Panda of Nepal; and
(iv) any instruction to the directors on the
BKPC Board of Directors appointed by Panda of Nepal as
to how to vote on a particular matter brought before
said board (including approval of the Annual Budget for
BKPC), except as otherwise provided in Section
3.03(e)(xv).
(e) The following matters shall require unanimous
vote of the PON Board of Directors:
(i) any issuance by Panda of Nepal of
additional shares of stock;
(ii) any increase in the authorized capital
of Panda of Nepal;
(iii) the incurrence by Panda of Nepal of any
indebtedness other than as provided for in this
Agreement;
(iv) any transaction involving the merger,
consolidation or reorganization of Panda of Nepal or
the sale of all or substantially all of the assets of
Panda of Nepal;
(v) any transaction involving the entry by
Panda of Nepal into any partnership, profit-sharing or
royalty agreement or other similar arrangement whereby
Panda of Nepal's income or profits are, or may be,
shared with any other Person;
(vi) the filing by Panda of Nepal of any
voluntary petition of bankruptcy or insolvency;
(vii) any loan, advance, capital contribution
to or investment in the stock or other securities or
evidences of indebtedness of or interests in any
Person, other than as provided for in this Agreement or
required in the Financing Documents as in effect on the
date hereof;
(viii)any transaction involving a sale,
transfer, pledge (other than in connection with the
Financing Documents), or other disposition of Panda of
Nepal's shares in BKPC;
(ix) the initiation, settlement or compromise
by Panda of Nepal of any arbitration, litigation or
other legal or administrative proceeding, or the
settlement or compromise of any threatened claim,
involving an amount in excess of $50,000;
(x) any amendment to the PON Organizational
Documents;
(xi) any decision to cause Panda of Nepal to
enter into or conduct any business other than the
ownership of shares of BKPC and activities related or
incidental thereto including, without limitation, any
activity required under the Financing Documents;
(xii) any decision with respect to the
entering into, or amendment of, any Affiliate Contract;
(xiii) the remuneration, if any, to be paid to
officers and directors of Panda of Nepal and to
Affiliates for services performed (unless approved in
the Annual Budget);
(xiv) any decision with respect to the
liquidation or winding up of Panda of Nepal; and
(xv) any instruction to the directors on the
BKPC Board of Directors appointed by Panda of Nepal as
to how to vote on a particular matter brought before
said board if it is a matter described in the following
clauses (A) through (M):
(A) any issuance by BKPC of additional
shares of stock except in connection with capital
contributions provided for in this Agreement or the
Financing Documents as in effect on the date hereof;
(B) any increase in the authorized capital
of BKPC except in connection with capital contributions
provided for in this Agreement or the Financing
Documents as in effect on the date hereof;
(C) the incurrence by BKPC of any
indebtedness other than as provided for in this
Agreement or the Financing Documents as in effect on
the date hereof;
(D) any transaction involving the merger,
consolidation or reorganization of BKPC or the sale of
all or substantially all of the assets of BKPC;
(E) any transaction involving the entry by
BKPC into any partnership, profit-sharing or royalty
agreement or other similar arrangement whereby BKPC's
income or profits are, or may be, shared with any other
Person;
(F) the filing by BKPC of any voluntary
petition of bankruptcy or insolvency;
(G) any loan, advance, capital contribution
to or investment in the stock or other securities or
evidences of indebtedness of or interests in any
Person, other than as provided for in this Agreement or
required in the Financing Documents as in effect on the
date hereof;
(H) the initiation, settlement or compromise
by BKPC of any arbitration, litigation or other legal
or administrative proceeding, or the settlement or
compromise of any threatened claim, involving an amount
in excess of $50,000;
(I) any amendment to the BKPC Organizational
Documents;
(J) any decision to cause BKPC to enter into
or conduct any business other than the ownership of the
Project and activities related or incidental thereto
including, without limitation, any activity required
under the Financing Documents;
(K) any decision with respect to the
entering into, or amendment of, any Affiliate Contract;
(L) the remuneration, if any, to be paid to
officers and directors of BKPC and to Affiliates for
services performed (unless approved in the Annual
Budget); and
(M) any decision with respect to the
liquidation or winding up of BKPC.
Section 3.04 Officers of Panda of Nepal.
(a) Panda of Nepal shall have the following
officers: a President; a Vice President, Treasurer and
Chief Tax Officer; a Secretary; and one or more Assistant
Secretaries. Each officer shall serve until the next annual
general meeting of Shareholders unless prior thereto such
officer dies, becomes incapacitated, resigns or is removed
from office. An officer may be removed only with the
consent of the Shareholder which appointed such officer.
(b) The President and the Secretary (which
offices may be held by the same individual) and each
Assistant Secretary, if any, of Panda of Nepal shall be
nominated by the Class A Shareholder and shall be subject to
the approval of the PON Board of Directors. In addition,
following the occurrence of the Class B Flip Date, the Vice
President, Treasurer and Chief Tax Officer of Panda of Nepal
shall also be nominated by the Class A Shareholder and shall
be subject to the approval of the PON Board of Directors.
The Class B Shareholder agrees to cause the directors
nominated by it to vote in favor of the nominees for such
officer positions who are nominated by the Class A
Shareholder, or in favor of removal or replacement of any
such officer if requested by the nominating Shareholder.
(c) Prior to the occurrence of the Class B Flip
Date, the Vice President, Treasurer and Chief Tax Officer of
Panda of Nepal shall be nominated by the Class B Shareholder
and shall be subject to the approval of the PON Board of
Directors. The Class A Shareholder agrees to cause the
directors nominated by it to vote in favor of the nominee
for such officer position who is nominated by the Class B
Shareholder, or in favor of removal or replacement of such
officer if requested by the nominating Shareholder.
(d) The President of Panda of Nepal shall have
the rights and responsibilities to manage the day-to-day
operations and affairs of Panda of Nepal, subject to the
Annual Budget and the overall direction of the PON Board of
Directors.
(e) The Vice-President, Treasurer and Chief Tax
Officer of Panda of Nepal shall have the rights and
responsibilities to oversee the Annual Budget and Panda of
Nepal's books and accounting records, manage Panda of
Nepal's tax returns and tax elections, and assist in
determining Distributable Cash Flow pursuant to Section 3.08
and in achieving Panda of Nepal's compliance with the
requirements in Article IV as well as any other duties
assigned by the President, and may utilize the services of a
qualified accounting firm approved by the Board of Directors
(which shall initially be Deloitte & Touche LLP) to assist
in the performance of such responsibilities.
(f) The Secretary of Panda of Nepal shall have
the rights and responsibilities to maintain Panda of Nepal's
minutes, records, communications and other administrative
duties as assigned by the President. The Secretary may be
assisted by one or more Assistant Secretaries, if such are
approved by the PON Board of Directors, each of whose duties
shall be assigned by the Secretary.
Section 3.05 Directors of BKPC.
(a) The Class A Shareholder shall be entitled to
appoint two (2) of the four (4) directors which Panda of
Nepal is entitled to appoint on the BKPC Board of Directors
prior to the occurrence of the Class B Flip Date and shall
be entitled to appoint three (3) of such four (4) directors
thereafter. The Class B Shareholder shall be entitled to
appoint two (2) of the four (4) directors of BKPC which
Panda of Nepal is entitled to appoint prior to the
occurrence of the Class B Flip Date and shall be entitled to
appoint one (1) BKPC director thereafter.
(b) Panda of Nepal, as a shareholder of BKPC
shall take all steps necessary to assure that the directors
appointed by the Shareholders pursuant to Section 3.05(a)
are elected to the BKPC Board of Directors and are removed
or replaced if requested by the appointing Shareholder.
(c) Subject to their fiduciary duties under
applicable law, each of the directors on the BKPC Board of
Directors appointed pursuant to Section 3.05(a) shall vote
in meetings of the BKPC Board of Directors only as
instructed by the PON Board of Directors; provided, however,
that after the Class B Flip Date the BKPC director appointed
by the Class B Shareholder may also elect to abstain in his
sole discretion. Failure to comply with this requirement on
the basis of fiduciary duty shall not excuse a breach of
such requirement. Without limiting the foregoing, each of
the directors on the BKPC Board of Directors appointed
pursuant to Section 3.05(a) shall vote in favor of the
officers of BKPC nominated by the directors on the BKPC
Board of Directors appointed by the Class A Shareholder, and
in favor of removal or replacement of any such officers if
requested by such directors. Notwithstanding the foregoing,
the directors on the BKPC Board of Directors appointed
pursuant to Section 3.05(a) may vote on any matter brought
before the BKPC Board of Directors for which an instruction
has not been given by the PON Board of Directors if all of
the directors appointed by the Shareholders present at the
meeting agree to vote in the same manner (i.e.,
affirmatively, negatively or abstention) on such matter.
(d) It is acknowledged and agreed by the
Shareholders that Panda will have administrative and general
day-to-day and operational control of BKPC and the Project,
subject to the overall direction of the BKPC Board of
Directors, and will appoint the project manager, site
manager and other necessary administrative personnel for the
Project.
Section 3.06 Meetings of Boards of Directors.
The Parties shall cooperate in good faith to schedule
meetings of the boards of directors of the Company, Panda of
Nepal and BKPC at times when and at places where the members
of such boards of directors can reasonably be expected to
attend. The Shareholders will use good faith efforts to
cause directors appointed by them to attend each meeting of
the respective boards of directors of the Company, Panda of
Nepal and BKPC in person or, if permitted by applicable law,
through an alternate representative or proxy.
Section 3.07 Contracts for Services with
Affiliates. The Company, Panda of Nepal and BKPC may from
time to time hereafter enter into one or more Affiliate
Contracts for the procurement by the Company, Panda of Nepal
or BKPC, as the case may be, of services that are necessary
or appropriate for the proper functioning of the Company,
Panda of Nepal or BKPC, as the case may be; provided, that
any such Affiliate Contracts shall first be approved by the
board of directors of the company wishing to enter into said
contract in accordance with Section 3.01(e)(xii), or
3.03(e)(xii) or 3.03(e)(xv)(K), as the case may be.
Section 3.08 Distributable Cash Flow. As soon as
practicable following the end of each month, an amount equal
to the amount of the Distributable Cash Flow for said month,
less any amounts necessary to pay administrative expenses of
Panda of Nepal or the Company, as the case may be (such
amounts to be consistent with the Annual Budget for such
company or as otherwise approved by the board of directors
of such company), shall be distributed to the Company (in
the case of Distributable Cash Flow of Panda of Nepal) or to
the Shareholders (in the case of Distributable Cash Flow of
the Company). Shareholders may provide the Company with
wiring instructions for distributions and the Company shall
make distributions pursuant to such wiring instructions.
Distributions shall be made in U.S. Dollars. Subject to
reasonable working capital requirements, the BKPC Annual
Budget and the requirements of the Financing Documents and
applicable law, the Shareholders agree to cause the
directors and officers appointed by them and their directors
at BKPC to seek to promptly distribute cash flow available
for distribution at BKPC to the shareholders of BKPC.
Section 3.09 Distributable Percentages;
Distributions. Distributions of Distributable Cash Flow
from the Company shall be made according to the
Distributable Percentage applicable to each Shareholder with
respect to such distribution.
Section 3.10 Accounting, Recordkeeping and
Reporting.
(a) The books and records of the Company and
Panda of Nepal shall be kept in accordance with generally
accepted accounting principles in the Cayman Islands,
consistently applied, and in accordance with generally
accepted accounting principles in the United States,
consistently applied. The Shareholders shall cause the
books and records of BKPC to be kept in accordance with
generally accepted accounting principles in the United
States, consistently applied.
(b) The accounts of the Company and Panda of
Nepal shall be audited by independent public accountants of
international reputation whose retention by the Company
shall be agreed upon by the Board of Directors or the PON
Board of Directors, as applicable. The Shareholders agree
that Deloitte & Touche LLP shall initially be appointed as
the auditors of the Company and Panda of Nepal. The
Shareholders shall cause the accounts of BKPC to be audited
by independent public accountants licensed to do business in
the Kingdom of Nepal whose retention by BKPC shall be agreed
upon by the BKPC Board of Directors. The Shareholders agree
that T. R. Upadhya & Company shall initially be appointed as
the auditors of BKPC.
(c) The books of account of the Company and Panda
of Nepal shall be kept and maintained at the principal
office of the Company or Panda of Nepal, as applicable, or
at such other place outside of the United States as the
Board of Directors or the PON Board of Directors, as the
case may be, shall determine. The Shareholders shall cause
the books of account of BKPC to be kept and maintained at
the principal office of BKPC in the Kingdom of Nepal or such
other place outside of the United States as the BKPC Board
of Directors shall determine.
(d) As soon as practicably available but, in any
event, within one hundred twenty (120) days after the close
of each Fiscal Year the Company shall cause to be prepared
and shall deliver to the Shareholders:
(i) a profit and loss statement and a
statement of changes in financial position for such
Fiscal Year, a balance sheet and a statement of each
Shareholder's capital account as of the end of such
Fiscal Year, together with a report thereon of the
Company's independent public accountants; and
(ii) a statement showing the computation of
the Distributable Cash Flow for the Fiscal Year.
(e) As soon as practicably available but, in any
event, within sixty (60) days after the close of each
quarterly accounting period in each Fiscal Year, the Company
shall furnish to all Shareholders:
(i) complete unaudited statements of
financial condition of the Company as at the end of
such quarterly period, and with related statements of
income and retained earnings and statements of changes
in cash flow for such quarterly period and for the
elapsed portion of the Fiscal Year ending on the last
day of such quarterly period, in each case setting
forth comparative figures for the related periods in
the prior Fiscal Year, all of which shall be in
agreement with the Company's books of account, subject
to normal year-end audit adjustments, and certified by
an authorized officer of the Company; and
(ii) a statement of all financial
transactions in such quarterly period between the
Company and any Affiliate, including a certification
that such transactions were on ordinary commercial
terms negotiated on an arms-length basis.
(f) As soon as available, but, in any event,
within one hundred twenty (120) days after the close of the
Fiscal Year for Panda of Nepal or BKPC, as the case may be,
Panda of Nepal shall deliver to the Shareholders:
(i) statements of financial condition of
each of Panda of Nepal and BKPC, approved by the boards
of directors of such companies as applicable, as of the
end of such Fiscal Year with the related statements of
income and retained earnings, statements of changes in
cash flow for such Fiscal Year, in each case with
supporting schedules and setting forth comparative
figures for such Fiscal Year and certified by each such
company's independent public accountants (all such
statements being in agreement with the relevant
company's books of account and prepared in accordance
with U.S. GAAP consistently applied);
(ii) a statement of BKPC's independent public
accountants setting forth all transactions between BKPC
or Panda of Nepal, as the case may be, and any
Affiliate during such Fiscal Year;
(iii)to the extent provided to the Lenders, a
report of BKPC's independent public accountants'
stating that in the course of their regular audit of
the financial statements of BKPC, they obtained no
knowledge of any Default or Event of Default (as such
terms are defined in the Investment Agreement) which
has occurred and is continuing or, if in the opinion of
said accountants such a Default or Event of Default has
occurred and is continuing, a statement as to the
nature thereof; and
(iv) a copy of any "management letter" or
other similar communication received by the company
from the company's independent public accountants in
relation to the company's financial, accounting and
other systems, management and accounts.
(g) As soon as practicably available but, in any
event, within sixty (60) days after the close of each
quarterly accounting period in each Fiscal Year, the
Company shall furnish to all Shareholders:
(i) complete unaudited statements of
financial condition of each of Panda of Nepal and BKPC
as at the end of such quarterly period, and with
related statements of income and retained earnings and
statements of changes in cash flow for such quarterly
period and for the elapsed portion of the Fiscal Year
ending on the last day of such quarterly period, in
each case setting forth comparative figures for the
related periods in the prior Fiscal Year, all of which
shall be in agreement with the applicable company's
books of account, subject to normal year-end audit
adjustments, and certified by an authorized officer of
the applicable company; and
(ii) a statement of all financial
transactions in such quarterly period between BKPC or
Panda of Nepal, as the case may be, and any Affiliate;
and
(iii)any other statements or reports prepared
by the auditors of BKPC and Panda of Nepal and provided
to the Lenders.
(h) Each Shareholder shall have the right, upon
reasonable notice, to inspect, copy and audit the books,
records and financial statements of the Company and of Panda
of Nepal, and the computation of Distributable Cash Flow.
The Shareholders shall authorize and instruct their
appointed directors to the PON Board of Directors and their
appointees to the BKPC Board of Directors to provide to the
Shareholders access to the books, records and financial
statements of BKPC for the same purpose, and access to
BKPC's auditors for purposes of discussing their interim and
final audit results, and to cause BKPC to prepare and
deliver such additional reports as either Shareholder may
from time to time reasonably request, including but not
limited to:
(i) monthly reports including: a balance sheet
and statement of capital as of the last day of such
month; statements of income and cash flows for such
month; actual-to-plan income comparisons for such
month; appropriate statistical information for such
month; and a written explanation of key drivers of
earnings and variances; and
(ii) annually, by September 1 of each year, a
three-year forecast by month for the subsequent three
calendar years, and, quarterly, updates of such
forecast.
Section 3.11 Meetings of Shareholders and Voting
Requirements.
(a) An annual general meeting of the Shareholders
of the Company and an annual meeting of the shareholders of
Panda of Nepal, shall be held in every calendar year at such
time and place as may be determined by the board of
directors or the shareholders of each of such companies, but
under no circumstances shall such meetings be held in the
United States. Provided that if no other time and place is
prescribed by the board of directors or the shareholders of
such companies, the annual general meeting of each of the
Company and Panda of Nepal shall be held at the registered
office of the Company or Panda of Nepal as applicable, on
the second Wednesday in December of each year commencing at
ten o'clock in the morning in the case of the Company and
twelve o'clock noon in the case of Panda of Nepal; provided
further, that not more than fifteen months shall be allowed
to elapse between any two such annual general meetings.
Extraordinary general meetings of the shareholders of the
Company and Panda of Nepal, respectively, may be held at
such times and places as shall be determined by such
shareholders. Meetings may be called by any shareholder
holding at least ten percent (10%) of all issued and
outstanding Shares of any class of stock. No meeting of
shareholders of the Company and Panda of Nepal,
respectively, may be held unless not less than ten (10)
business days' prior notice has been given to each
shareholder of such company, unless all shareholders of such
company waive notice or approve a shorter notice period.
Notices of meetings of shareholders of each such company
shall be deemed properly given if transmitted in the same
manner as is authorized for any notice under this Agreement.
If any shareholder is unable to be present in person for any
extraordinary general meeting of each company, that
shareholder may participate in the meeting by telephone
conference call or by nominating a proxy to represent such
shareholder at the meeting, except as otherwise provided in
the Company Organizational Documents or the PON
Organizational Documents, as the case may be. Any action
required to be taken at an extraordinary general meeting of
shareholders of the Company or Panda of Nepal may be taken
by unanimous consent of such shareholders without a meeting.
(b) All decisions required to be taken by the
Shareholders under the Company Organizational Documents and
by the shareholders of Panda of Nepal under the PON
Organizational Documents, as the case may be, or under this
Agreement shall require the affirmative vote of shareholders
holding a majority of the issued and outstanding shares of
each class of stock (voting separately as a class) of such
company, except in the case of a decision requiring a
greater percentage affirmative vote as provided in the
Company Organizational Documents or the PON Organizational
Documents, as the case may be, or under the Act, in which
case such decisions shall require the affirmative vote of
such greater percentage of each class of stock (voting
separately as a class) of such company or with respect to a
decision made pursuant to a unanimous consent without a
meeting as provided in Section 3.11(a).
ARTICLE IV
PROFITS, LOSSES AND TAX MATTERS
Section 4.01 Sharing of Profits and Losses. For
U.S. tax purposes and for financial accounting purposes, any
income, gain, deductions (including depreciation), losses
and credits (including any tax payments) of the Company (or
items thereof) shall be allocated to the Shareholders on the
basis of their respective Distributable Percentages;
provided, however, at such time as either Shareholder has
been allocated aggregate depreciation deductions equal to
its Capital Contributions, all subsequent depreciation
deductions shall be allocated to the other Shareholder until
it has also been allocated aggregate depreciation deductions
equal to its Capital Contributions.
Section 4.02 Compliance with U.S. Internal
Revenue Code. For purposes of Section 4.01, the provisions
of this Agreement concerning U.S. tax matters shall be
interpreted and applied in accordance with the provisions of
the IRC and the Regulations promulgated thereunder by the
U.S. Treasury Department. The minimum gain chargeback
provisions of Treasury Regulations section 1.704-2(f), the
partner nonrecourse debt minimum gain provisions of Treasury
Regulations section 1.704-2(i)(4), and the qualified income
offset provision of Treasury Regulations section 1.704-
1(b)(2) shall be considered to be part of this Agreement. A
separate capital account shall be maintained for each
Shareholder in accordance with Treasury Regulations section
1.704-1(b). If any Shareholder contributes appreciated or
depreciated property to the Company or for any other reason
the tax basis of property differs from its book basis for
purposes of maintaining the Shareholders' capital accounts,
allocations of tax items to Shareholders shall be adjusted
as required by IRC Section 704(c) and Treasury Regulations
1.704-3(d). If there are any "partner nonrecourse
deductions" (within the meaning of Treasury Regulations
section 1.704-2(i)(1)), then these shall be allocated to the
Shareholder that bears the economic risk of loss for the
"partner nonrecourse liability" (within the meaning of
Treasury Regulations section 1.704-2(b)(4)) to which the
deductions are attributable.
Section 4.03 Tax Matters Partner.
(a) For purposes of all dealings with the U.S.
Internal Revenue Service, the Company and Panda of Nepal
shall nominate the Class B Shareholder to serve as "Tax
Matters Partner" (as that term is defined in the IRC) prior
to the Class B Flip Date and shall nominate the Class A
Shareholder to serve as "Tax Matters Partner" (as such term
is defined in the IRC) following the Class B Flip Date.
(b) The Tax Matters Partner shall provide the
Class A Shareholder and the Class B Shareholder with
information as and when necessary to comply with the
requirements under the IRC.
(c) The Tax Matters Partner shall cooperate with
the other Shareholder and, for other than routine
correspondence and communications, shall promptly provide
the other Shareholder with copies of notices or other
materials from, and inform the other Shareholder of
discussions with, the Internal Revenue Service and shall
provide the other Shareholder with notice of all scheduled
administrative proceedings or audits, including meetings
with Internal Revenue Service agents, technical advice
conferences and appellate hearings as soon as possible after
receiving notice of the scheduling of proceedings. Each of
the Shareholders shall be entitled to participate at its own
expense in any such administrative proceedings or audits.
(d) The Tax Matters Partner shall consult with
the Shareholders before agreeing to extend the period of
limitations for a request for an administrative adjustment
of partnership items after a return has been filed and shall
agree to such extension if either the Tax Matters Partner or
any Shareholder believes that such extension is desirable,
and shall obtain the prior consent of each Shareholder prior
to entering into any settlement agreement with the Internal
Revenue Service or the U.S. Department of the Treasury with
respect to the Company's items of income, gain, loss or
deduction which purports to bind any Shareholder other than
the Tax Matters Partner, which consent may not be
unreasonably withheld.
(e) The Company shall make a valid and timely
election under Section 754 of the IRC.
Section 4.04 Dissolution and Liquidation..
(a) Upon dissolution of the Company, the Board of
Directors shall proceed to wind up the affairs of the
Company and liquidate the remaining property and assets of
the Company. The proceeds of such liquidation shall be
applied in the following order of priority:
(i) first, to the expenses of such
liquidation;
(ii) second, to the debts and liabilities of
the Company to third parties, if any, in order of
priority provided by law;
(iii) third, a reasonable reserve shall be set
up to provide for any contingent or unforeseen
liabilities or obligations of the Company to third
parties (to be held and disbursed, at the discretion of
the Board of Directors, by an escrow agent selected by
the Board of Directors) and at the expiration of such
period as the Board of Directors may deem advisable,
the balance remaining in such reserve shall be
distributed as provided herein;
(iv) fourth, to repayment of all Shareholder
loans and any other debts of the Company to the
Shareholders;
(v) fifth, to the repayment of the
Shareholders' respective positive Capital Accounts in
the ratio of the positive Capital Account balance of
each to the aggregate of the Capital Account balances
of all Shareholders; and
(vi) sixth, the remaining assets of the
Company, if any, shall be distributed to the
Shareholders on the basis of their respective
Distributable Percentages.
(b) Immediately prior to any liquidating
distributions, the Company will be treated as if it sold all
its assets for fair market value and any gain for U.S. tax
purposes will be allocated to the Capital Accounts of the
Shareholders pursuant to their Distributable Percentages.
ARTICLE V
TRANSFER AND ASSIGNMENT
Section 5.01 Restrictions on Transfer.
(a) No Shareholder may Transfer all or any part
of its Shares unless prior thereto, the Shareholder
intending to make such Transfer has received the consent of
the other Shareholder or Shareholders holding at least 51%
of the aggregate Shares of each Class of Shares held by such
other Shareholder or Shareholders, such consent not to be
unreasonably withheld or delayed. Notwithstanding the
foregoing, the consent of the other Shareholders shall not
be required in the case of a Transfer to a Permitted
Transferee; provided, in the case of such a Transfer the
remaining provisions of this Section 5.01 shall be complied
with.
(b) No permitted Transfer of any Shares shall be
valid and effective until the transferee of such Shares has
executed an instrument in writing agreeing to become a party
to this Agreement and to be bound by all the terms and
conditions hereof. The Shareholders agree to take any
actions (including the voting of their Shares) that may from
time to time be necessary in order to effect all of the
restrictions on the Transfer of Shares set forth herein.
For this purpose, the Company and the Shareholders undertake
to place a legend on all Share certificates stating as
follows:
"The Shares represented by this Certificate are
subject to certain restrictions established under
the Companies Law of the Cayman Islands, as
amended from time to time (the "Act"), the terms
of the Amended and Restated Memorandum of
Association of Panda Bhote Koshi (the "Company")
dated December 18, 1997, as amended from time to
time (the "Memorandum of Association"), the terms
of the Amended and Restated Articles of
Association of the Company dated December 18,
1997, as amended from time to time (the "Articles
of Association"), and the Shareholders Agreement
dated as of December 18, 1997, as amended,
modified or supplemented from time to time (the
"Agreement"). A copy of each of the Memorandum of
Association, the Articles of Association and the
Agreement are on file at the offices of the
Company and the Memorandum of Association and the
Articles of Association have been filed with the
Registrar of Companies of the Government of the
Cayman Islands, and will be furnished to any
prospective purchaser on request. The Act, the
Memorandum of Association, the Articles of
Association and the Agreement provide, among other
things, for certain restrictions on the transfer
of the Shares represented by this Certificate, and
any purported transfer in violation of these
restrictions will not be registered by the Company
and shall be null and void ab initio. By
acceptance of this Certificate, each holder hereof
agrees to be bound by the provisions of the Act,
the Memorandum of Association, the Articles of
Association and the Agreement.
The Shares represented by this Certificate have
not been registered under the Securities Act of
1933 of the United States of America, as amended,
modified or supplemented, or any securities law of
any state of the United States of America and may
not be transferred, sold or otherwise disposed of
in the absence of such registration or an
exemption therefrom."
(c) No Transfer shall be made if such Transfer
would be (i) in violation of applicable law, including
without limitation the Act and applicable securities laws,
(ii) in violation of any of the provisions of the Company
Organizational Documents, or (iii) in violation of the terms
of, or in any manner that would rise to a default under, the
Financing Documents. In addition, no Transfer shall be made
or permitted if (x) a Transfer would result in the Company's
ceasing to be an "exempt wholesale generator" (an "EWG")
within the meaning of the U.S. Public Utility Holding
Company Act of 1935, as amended, supplemented or replaced
from time to time, if the Company then qualifies as an EWG;
or (y) a Transfer would cause the Company to be terminated
within the meaning of IRC Section 708 assuming that the
Company is treated as a partnership for United States income
tax purposes, unless this provision is waived by the
Shareholders.
(d) Notwithstanding any other provisions of this
Agreement (except that Section 5.01(d)(ii) shall not be
applicable to any transaction described in Section 5.02):
(i) No Transfer shall be effected if such
Transfer would violate the terms of the MCNIC Consent; and
(ii) from the date hereof and at all times
prior to the termination of this Agreement, Panda, directly
or indirectly, shall own at least fifty-one percent (51%) of
the Class A Shares and MCNIC, directly or indirectly, shall
own at least fifty-one percent (51%) of the Class B Shares
unless prior written consent for any Transfer by a
Shareholder is obtained from the other Shareholder. Such
consent may be withheld for any reason. Notwithstanding
anything to the contrary provided in this subparagraph (ii),
the provisions of this subparagraph (ii) shall be deemed
satisfied if all of the Class A Shares are acquired by the
Class B Shareholder or all of the Class B Shares are
acquired by the Class A Shareholder whether pursuant to a
buy-sell transaction which complies with Section 11.04 or
otherwise.
Section 5.02 Right of First Negotiation Regarding
Disposal of Shares. Except in the case of the circumstances
described in Section 11.04 (in which case the provisions of
Section 11.04 shall apply and not this Section 5.02), if any
Shareholder wishes to dispose of any of such Shareholder's
Shares, or otherwise effect any other form of Transfer,
whether voluntary or involuntary, such as, but not limited
to, the execution of a final judgment or assignment for the
benefit of creditors, with respect to such Shares, such
Shareholder shall comply with the following conditions
precedent in order that said disposition or other transfer
of such Shares shall be valid:
(a) The Shareholder desiring to dispose of or
otherwise transfer any Shares ("Seller") shall first offer
to sell the Shares ("Offered Shares") to the other
Shareholders ("Offeree"), by transmitting to the Offeree and
the Company a written notice which shall state the terms of
the proposed sale, including the price for the Offered
Shares, which terms shall not require the Seller to provide
representations or warranties, covenants or indemnities of
any kind whatsoever except with respect to title, due
authorization, absence of conflicts and enforceability of
such agreement ("Sale Notice").
(b) The Offeree shall have the right to offer to
buy all, but not less than all, of said Shares at the price
stated in the Sale Notice in a written notice provided to
the Seller within thirty (30) days of the Offeree's receipt
of the Sale Notice (the "Offeree's Price").
(c) The Seller shall have thirty (30) days to
accept or reject the Offeree's offer, if any, to purchase
the Offered Shares. If the Seller accepts the Offeree's
offer, the closing of such sale shall be within ninety (90)
days of such acceptance if prior to the Project Completion
Date or within sixty (60) days if such acceptance occurs
thereafter.
(d) If the Offeree makes no offer to purchase all
of the Offered Shares, then the consent requirements of
Section 5.01 shall be deemed satisfied and, subject to the
share retention requirements of the MCNIC Consent, the
Seller shall be free to sell the Offered Shares within one
hundred eighty (180) days from the date of the Sale Notice
to any person at not less than the Offeree's Price and on no
more favorable terms and conditions than those contained in
the Seller's original written offer; provided that the
Seller may make representations and warranties to such other
parties covering matters that are customary for a seller in
similar transactions, even if said representations and
warranties and indemnities are more extensive than those
contained in Seller's original written offer. If the Seller
shall be unable within said period to sell the Offered
Shares at a price that is equal to or higher than the
Offeree's price stated in Offeree's original offer and if it
should desire to sell at a lower price or under amended
terms and conditions (other than changes in the
representations and warranties and indemnities provided for
above), it shall be required to reoffer said Offered Shares
to the Offeree in accordance with this Section and comply
with the provisions of Section 5.01.
(e) Failure of the Offeree Shareholder to
purchase any Shares in accordance with the foregoing and a
subsequent sale of such Shares to any other person shall
not, as to any future sale or transfer, discharge any such
Shares from any of the restrictions herein contained. It is
the intent of the Shareholders that all restrictions hereby
imposed on the sale or transfer of Shares shall apply to all
Shares thereof, whenever, howsoever, or by whomsoever
acquired, in the hands of all holders or owners, whether
original parties or subsequent purchasers or transferees and
whether acquired through the voluntary or involuntary act of
a Shareholder or by operation of law.
(f) Any Transfer to which this Article applies in
violation hereof shall not be recognized by the Company and
shall be considered null and void ab initio. Any Transfer
in violation of the Company Organizational Documents also
shall not be recognized by the Company and shall be
considered null and void. No Transfer shall be effective
for any purpose unless and until recorded on the Company's
books.
Section 5.03 Liability of Transferor. In the
event that any Shareholder Transfers all or any portion of
its Shares in a transaction permitted under this Article,
such Shareholder shall cause the transferee to execute one
or more instruments pursuant to which the transferee adopts
and agrees to be bound as a party to this Agreement and
until the transferee executes said instrument(s), the
transferor shall remain fully liable for the acts, omissions
or defaults of the transferee with respect to such Shares
and the provisions of this Agreement, as if the transferor
were still a party hereto. No Transfer shall relieve the
transferor of responsibility for its own acts, omissions or
defaults.
Section 5.04 Expenses in Connection With
Transfers. Each Shareholder shall reimburse the Company for
all reasonable expenses incurred by the Company in
connection with any Transfer proposed by such Shareholder.
Section 5.05 Collateral Assignment.
Notwithstanding any other provision of this Agreement, each
of the Parties consents to a collateral assignment to the
Lenders of all of the Class A Shareholder's rights hereunder
pursuant to the MCNIC Consent.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01 Panda Global Representations and
Warranties. Panda Global represents and warrants to MCNIC
Nepal, as of the date hereof, as follows:
(a) Panda Global is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands. Panda Global has all requisite
power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by
Panda Global of this Agreement have been authorized by all
necessary action on the part of Panda Global, and do not and
will not: (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of Panda Global or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to Panda
Global; (iii) violate the organizational documents of Panda
Global; (iv) violate any permit, concession, grant,
franchise, license or other governmental authorization,
approval, judgment, order or decree, or any mortgage,
agreement, deed of trust, indenture or any other instrument
to which Panda Global is a party or by which Panda Global or
any of its properties or assets are bound or which is
otherwise applicable to Panda Global; or (v) create or
impose any liens, mortgages, pledges, claims, security
interests, charges or encumbrances or obligations to create
a lien, charge, pledge or mortgage (collectively, "Liens"),
except for Liens which would not, individually or in the
aggregate, have a material adverse effect on the financial
condition or prospects or business of Panda Global.
(c) This Agreement is the legal and binding
obligation of Panda Global, enforceable in accordance with
its terms against Panda Global; and any other document
required by this Agreement to be delivered by Panda Global,
when duly executed and delivered by Panda Global, will be
the legal and binding obligation of Panda Global enforceable
in accordance with its terms against Panda Global, except to
the extent enforceability is limited by general principles
of equity.
(d) There is no litigation pending or, to the
best of Panda Global's knowledge, threatened to which Panda
Global is a party which, if adversely determined, would have
a material adverse effect on the financial condition or
prospects or business of the Company.
(e) All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of Panda Global in a manner that could give rise to any
valid claim against the Company, Panda of Nepal or any
Shareholder for any brokerage or finder's commission, fee or
similar compensation.
(f) The Company is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands. The Company has all requisite
power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(g) The execution, delivery and performance by
the Company of this Agreement have been authorized by all
necessary action on the part of the Company, and do not and
will not: (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of the Company or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to the Company;
(iii) violate the organizational documents of the Company;
(iv) violate any permit, concession, grant, franchise,
license or other governmental authorization, approval,
judgment, order or decree, or any mortgage, agreement, deed
of trust, indenture or any other instrument to which the
Company is a party or by which the Company or any of its
properties or assets are bound or which is otherwise
applicable to the Company; or (v) create or impose any
liens, mortgages, pledges, claims, security interests,
charges or encumbrances or obligations to create any Lien,
except for Liens which would not, individually or in the
aggregate, have a material adverse effect on the financial
condition or prospects or business of the Company.
(h) This Agreement is the legal and binding
obligation of the Company, enforceable in accordance with
its terms against the Company; and any other document
required by this Agreement to be delivered by the Company,
when duly executed and delivered by the Company, will be the
legal and binding obligation of the Company enforceable in
accordance with its terms against the Company, except to the
extent enforceability is limited by general principles of
equity.
(i) There is no litigation pending or, to the
best of the Company's knowledge, threatened to which the
Company is a party which, if adversely determined, would
have a material adverse effect on the financial condition or
prospects or business of the Company.
(j) All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of the Company in a manner that could give rise to any valid
claim against the Company, Panda of Nepal or any Shareholder
for any brokerage or finder's commission, fee or similar
compensation.
(k) Panda of Nepal is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands. Panda of Nepal has all
requisite power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(l) The execution, delivery and performance by
Panda of Nepal of this Agreement have been authorized by all
necessary action on the part of Panda of Nepal, and do not
and will not: (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of Panda of Nepal or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to Panda of
Nepal; (iii) violate the organizational documents of Panda
of Nepal; (iv) violate any permit, concession, grant,
franchise, license or other governmental authorization,
approval, judgment, order or decree, or any mortgage,
agreement, deed of trust, indenture or any other instrument
to which Panda of Nepal is a party or by which Panda of
Nepal or any of its properties or assets are bound or which
is otherwise applicable to Panda of Nepal; or (v) create or
impose any liens, mortgages, pledges, claims, security
interests, charges or encumbrances or obligations to create
any Liens, except for Liens which would not, individually or
in the aggregate, have a material adverse effect on the
financial condition or prospects or business of Panda of
Nepal.
(m) This Agreement is the legal and binding
obligation of Panda of Nepal, enforceable in accordance with
its terms against Panda of Nepal; and any other document
required by this Agreement to be delivered by Panda of
Nepal, when duly executed and delivered by Panda of Nepal,
will be the legal and binding obligation of Panda of Nepal
enforceable in accordance with its terms against Panda of
Nepal, except to the extent enforceability is limited by
general principles of equity.
(n) There is no litigation pending or, to the
best of Panda of Nepal's knowledge, threatened to which
Panda of Nepal is a party which, if adversely determined,
would have a material adverse effect on the financial
condition or prospects or business of the Company or Panda
of Nepal.
(o) All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of Panda of Nepal in a manner that could give rise to any
valid claim against the Company, Panda of Nepal or any
Shareholder for any brokerage or finder's commission, fee or
similar compensation.
(p) On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate of
Panda Global attaching accurate and complete copies of the
Company organizational documents as currently in effect,
accurate and complete copies of the Panda of Nepal
organizational documents as currently in effect, and
accurate and complete copies of the BKPC Organizational
Documents as currently in effect.
(q) On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate of
Panda Global attaching accurate and complete copies of the
Amended and Restated Joint Venture Agreement (as described
in the Investment Agreement) dated as of the Closing Date
and the BKPC Shareholders' Agreement (as defined in the
Investment Agreement) dated as of the Closing Date.
(r) All Government Approvals which are required
to be obtained prior to the date hereof by the Company, by
Panda of Nepal and by BKPC have been obtained, and all other
Government Approvals not presently obtained that are
required to be obtained by the Company, by Panda of Nepal
and by BKPC in order to carry out the transactions
contemplated by this Agreement and the Project Contracts are
expected to be obtained in due course, and such Government
Approvals obtained are not, and such Government Approvals to
be obtained are not expected to be, subject to any condition
or limitation which would materially adversely affect the
value of the Shares, the Company, Panda of Nepal, BKPC or
the Project.
(s) On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate which
sets forth an accurate and complete list of the authorized,
issued and outstanding stock of each of the Company, Panda
of Nepal and BKPC.
(t) All of the Shares, when issued by the Company
in accordance with this Agreement, will be (i) duly and
validly issued and fully paid, and (ii) free from any Lien
or other third party claim or interest, subject to the
rights of the Lenders under the MCNIC Consent. All of the
outstanding shares of Panda of Nepal and BKPC (except for
shares to be issued to IFC) (i) have been duly and validly
issued and fully paid, and (ii) are free from any Lien or
other third party claim or interest, except for the rights
of the Lenders pursuant to the Financing Documents and the
other Loan Documents.
(u) The Company has good and valid title to all
of the authorized and issued shares of Panda of Nepal, and
with respect to all of the authorized shares of BKPC to be
issued ("BKPC Shares"), Panda of Nepal will as of the
Financial Closing Date have good and valid title to seventy-
five (75%) of the BKPC Shares, subject to the pledge of such
BKPC Shares to the Lenders pursuant to the Financing
Documents.
(v) Except as provided in this Agreement, the
Company Organizational Documents, the MCNIC Consent and the
Financing Documents, there are no agreements of any kind
which grant any warrants, options, or stock rights of any
kind with respect to the Company's shares, or which
otherwise affect the rights or obligations of the
Shareholders (as shareholders) or of the Directors of the
Company (as directors).
(w) Except as provided in this Agreement, the PON
Organizational Documents, and the Financing Documents, and
the security documents other than the Financing Documents
referenced in the Investment Agreement, there are no
agreements of any kind which grant any warrants, options, or
stock rights of any kind with respect to the shares of Panda
of Nepal, or which otherwise affect the rights or
obligations of the shareholders of Panda of Nepal (as
shareholders) or of the Directors of Panda of Nepal (as
directors).
(x) Except as provided in this Agreement, the
BKPC Organizational Documents, the Financing Documents and
the other Loan Documents, there are no agreements of any
kind which grant any warrants, options, or stock rights of
any kind with respect to the shares of BKPC, or which
otherwise affect the rights or obligations of the
shareholders of BKPC (as shareholders) or of the Directors
of BKPC (as directors).
(y) There is no action, suit or proceeding before
or by any Governmental Authority or any arbitration
proceeding before any body now pending against BKPC, Panda
of Nepal or the Company or any of the directors or officers
of any of them, or, to the best knowledge of such directors
and officers, threatened against or affecting the Project,
BKPC, Panda of Nepal or the Company, or any of the directors
or officers of any of them.
(z) Accurate and complete copies in all material
respects of all Project Contracts as of the Closing Date
have been furnished by Panda Global to MCNIC Nepal.
Promptly following the Financial Closing Date Panda Global
shall provide to MCNIC Nepal a listing and accurate and
complete copies of the final versions of all Project
Contracts.
(aa) Neither Panda Global, the Company, Panda of
Nepal or BKPC is in default under the terms of any Project
Contract, and to the best knowledge of the officers of each
of them, no other party to any Project Contract is in
default thereunder.
(bb) On or before the date hereof Panda Global
shall provide an officer's certificate which identifies all
officers and directors of each of the Company, Panda of
Nepal and BKPC, none of whom currently receives any
compensation from those companies for such services.
(cc) As of the date hereof, the Company is unaware
of any circumstances or conditions that could reasonably be
expected to require the Class B Shareholder to make any
financial contribution to the Company in excess of the
$20,121,250 contribution referred to in Section 2.08, except
for the potential for capital contributions required under
Section 2.10(a)(v) if the acquisition of an equity interest
in BKPC from HIPC occurs.
(dd) Panda Global has furnished to the Class B
Shareholder all information and documentation that would be
material to the evaluation of the transactions contemplated
by this Agreement and the development of the Project. To the
best knowledge of the officers and representatives of Panda
Global and Panda Energy International, Inc., who have
participated in the negotiation of this Agreement, there
exist no materially adverse circumstances regarding the
Company, Panda of Nepal, BKPC or the Project that are not
disclosed in the documents and information furnished by or
on behalf of Panda Global to the Class B Shareholder. No
document or other writing furnished by or on behalf of Panda
Global to the Class B Shareholder with respect to the
Company, Panda of Nepal, BKPC or the Project (except to the
extent superseded by a subsequent document), when taken as a
whole, contains any untrue statement of a material fact or
omits to state a material fact necessary to make such
information not misleading in any material respect.
(ee) Each of the Company, Panda of Nepal and BKPC
is a transparent entity for U.S. income tax purposes.
(ff) The Projections have been provided to MCNIC
Nepal and are, to the best knowledge of the officers and
directors of Panda Global, reasonable in light of pertinent
circumstances and the underlying assumptions used in
preparing the Projections. THE PROJECTIONS ARE BASED UPON A
VARIETY OF ASSUMPTIONS INVOLVING JUDGMENTS WITH RESPECT TO,
AMONG OTHER THINGS, FUTURE ECONOMIC, FINANCIAL, POLITICAL,
COMPETITIVE AND REGULATORY CONDITIONS, ALL OF WHICH ARE
BEYOND THE CONTROL OF PANDA GLOBAL. ACCORDINGLY, THERE CAN
BE NO ASSURANCE THAT THE RESULTS INDICATED IN THE
PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY
MATERIALLY FROM THE PROJECTIONS. IN LIGHT OF THE
UNCERTAINTIES INHERENT IN ESTIMATES OF THIS TYPE, THE
PROVISION OF SUCH PROJECTIONS SHOULD NOT BE REGARDED AS A
REPRESENTATION BY PANDA GLOBAL, OR ANY AFFILIATE THEREOF,
THAT ACTUAL RESULTS WILL MEET OR EXCEED THE PROJECTIONS.
(gg) Each of the Project Contracts to which BKPC,
Panda of Nepal or the Company is a party is enforceable
against BKPC, Panda of Nepal or the Company, as the case may
be, in accordance with its terms and, to the best knowledge
of the officers and directors of Panda Global, each of such
Project Contracts is enforceable against each of the other
parties thereto in accordance with its terms.
(hh) The Company owns all of the issued and
outstanding shares of Panda of Nepal, and owns no other
assets. As of the Financial Closing Date, Panda of Nepal
will own 75% of the issued and outstanding shares of BKPC,
and will own no other assets. The Company and Panda of
Nepal have no liabilities except pursuant to the Financing
Documents, the Loan Documents, and the MCNIC Consent. BKPC
has all material contract and real estate rights necessary
for the construction, use and operation of the Project.
BKPC has no material liabilities except under the Project
Contracts or as otherwise provided for in the Project Costs
as identified in Schedule 2.2(b) to the IFC Special
Conditions and the DEG Special Conditions.
Section 6.02 MCNIC Nepal Representations and
Warranties. MCNIC Nepal represents and warrants to Panda
Global as of the date hereof, as follows:
(a) MCNIC Nepal is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands. MCNIC Nepal has all requisite
power and authority to own, lease and operate its
properties, carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by
MCNIC Nepal of this Agreement and the other documents
referenced herein to which MCNIC Nepal is or is to be a
party have been authorized by all necessary action on the
part of MCNIC Nepal, and do not and will not: (i) require
any authorization, consent or approval that has not been
given or obtained from (x) the owners of MCNIC Nepal or (y)
any governmental authority; (ii) violate any law, rule,
regulation, order, or decree presently in effect and having
applicability to MCNIC Nepal; (iii) violate the
organizational documents of MCNIC Nepal; (iv) violate any
permit, concession, grant, franchise, license or other
governmental authorization, approval, judgment, order or
decree, or any mortgage, agreement, deed of trust, indenture
or any other instrument to which MCNIC Nepal is a party or
by which MCNIC Nepal or any of its properties or assets are
bound or which is otherwise applicable to MCNIC Nepal; or
(v) create or impose any Liens, except Liens which would
not, individually or in the aggregate, have a material
adverse effect on the financial condition or prospects or
business of MCNIC Nepal.
(c) This Agreement is the legal and binding
obligation of MCNIC Nepal, enforceable in accordance with
its terms against MCNIC Nepal; and any other document
required by this Agreement to be delivered by MCNIC Nepal,
when duly executed and delivered by MCNIC Nepal, will be the
legal and binding obligation of MCNIC Nepal, enforceable in
accordance with its terms against MCNIC Nepal, except to the
extent enforceability is limited by general principles of
equity.
(d) There is no litigation pending or, to the
best of MCNIC Nepal's knowledge, threatened to which MCNIC
Nepal is a party which, if adversely determined, would have
a material adverse effect on the financial condition or
prospects or business of the Company.
(e) All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of MCNIC Nepal in a manner that could give rise to any valid
claim against the Company, Panda of Nepal or any Shareholder
for any brokerage or finder's commission, fee or similar
compensation.
Section 6.03 Further Assurances. Each Party
hereby undertakes with each other Party to procure the doing
of all acts, matters and things, the execution or signature
of all other and further deeds or documents, and the
obtaining of any Government Approvals as are necessary or
desirable in order to carry out the purposes of this
Agreement and to give full effect to the transactions
contemplated by this Agreement.
Section 6.04 No Partnership. Each Shareholder
agrees that there is no partnership or other relationship
which such Shareholder has or has had in the overall
business or affairs or assets of any other Shareholder or
its Affiliates. No Shareholder is the agent of any other
Shareholder for any purpose hereof, and no Shareholder is
authorized to take any action on behalf of any other
Shareholder, except as expressly set forth herein.
Section 6.05 Purposes of the Company and Panda of
Nepal.
(a) The Parties agree that the Company shall be a
special purpose, exempted company with limited liability
organized and existing under the laws of the Cayman Islands
whose sole purpose shall be the holding of shares of Panda
of Nepal and all matters incidental thereto (including,
without limitation, those matters required under the
Financing Documents) and shall undertake no other activities
except as authorized by the unanimous vote of the Board of
Directors.
(b) The Parties agree that Panda of Nepal shall
be a special purpose, exempted company with limited
liability organized and existing under the laws of the
Cayman Islands whose sole purpose shall be the holding of
shares of BKPC and all matters incidental thereto
(including, without limitation, those matters required under
the Financing Documents) and shall undertake no other
activities except as authorized by the unanimous vote the
PON Board of Directors.
(c) BKPC will not carry on any business other
than in connection with the completion and operation of the
Project and will take no action whether by acquisition or
otherwise which would constitute or result in any material
alteration to the nature of that business except as
authorized by the unanimous vote of the PON Board of
Directors.
ARTICLE VII
INDEMNITY
Section 7.01 Indemnity.
(a) Each Shareholder shall indemnify and hold
harmless each other Shareholder, and the officers,
directors, employees, agents and representatives of such
other Shareholder, from and against any and all costs,
losses, claims, damages and liabilities, including
reasonable attorneys' fees, incurred by it, arising out of
(i) the gross negligence or willful misconduct of the
indemnifying Shareholder or its representatives in
connection with the transactions contemplated by this
Agreement, (ii) any breach by the indemnifying Shareholder
of any material obligation or covenant set forth in this
Agreement, and (iii) any material breach of or material
inaccuracy in any representation or warranty of the
indemnifying Shareholder set forth in this Agreement or in
any officer's certificate provided by such indemnifying
Shareholder pursuant to this Agreement.
(b) Each Shareholder and its Affiliates and their
officers, directors, employees, agents and representatives
shall be indemnified by the Company to the fullest extent
permitted by law for any third-party liabilities to which
they may become subject arising out of their participation
in the Company; provided that no such Person shall be
indemnified for any act or omission that constitutes gross
negligence or willful misconduct on such Person's part or
that violates the terms of this Agreement.
(c) A Person entitled to indemnification
hereunder shall herein be referred to as an "Indemnitee". A
party obligated to indemnify an Indemnitee hereunder shall
herein be referred to as an "Indemnitor".
(d) Promptly after receipt by an Indemnitee of a
notice of any claim or the commencement of any action, or
upon discovery of any facts which an Indemnitee believes may
give rise to a claim for indemnification from an Indemnitor
hereunder, such Indemnitee shall, if a claim in respect
thereof is to be made against an Indemnitor under this
Article VII, notify such Indemnitor in writing in reasonable
detail of the claim or the commencement of such action.
(e) If any such claim shall be asserted or
brought against such Indemnitee, it shall notify such
Indemnitor thereof, and the Indemnitor shall be entitled to
participate therein, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee, and to
settle or compromise such claim or action; provided that if
the Indemnitee has elected to be represented by separate
counsel pursuant to the proviso to the following sentence,
such settlement or compromise shall be effected only with
the consent of the Indemnitee, which consent shall not be
unreasonably withheld. After notice to the Indemnitee of
the Indemnitor's election to assume the defense of such
claim or action, the Indemnitor shall not be liable to the
Indemnitee under this Article VII for any legal or other
expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided that the
Indemnitee shall have the right to employ counsel to
represent it if, in the Indemnitee's reasonable judgment, it
is advisable for the Indemnitee to be represented by
separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Indemnitee. If
the Indemnitor does not elect to assume the defense of such
claim or action, the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with
respect thereto, and unless the Indemnitor fails to
acknowledge its indemnity obligations hereunder, the
Indemnitee shall not settle or compromise any such claim or
action without the consent of the Indemnitor, which consent
shall not be unreasonably withheld. The Parties agree to
render to each other such assistance as may reasonably be
requested in order to insure the proper and adequate defense
of any such claim or proceeding.
ARTICLE VIII
CONFIDENTIALITY
Section 8.01 Confidentiality.
(a) Subject to subsection 8.01(b), each Party
undertakes that neither such Party nor its Affiliates,
agents or nominees will reveal to any third party any
information concerning the organization, business, finances,
transactions or affairs of the Company, Panda of Nepal,
BKPC, any Shareholder (except with regard to itself if the
Party in question is a Shareholder), or any Shareholder's
Affiliates (except with regard to its own Affiliates if the
Party in question is a Shareholder), agents or nominees, or
any information related to this Agreement, and that such
Party shall not use any such information in a manner which
may directly or indirectly injure the Company, Panda of
Nepal, BKPC, any Shareholder (except with regard to itself
if the Party in question is a Shareholder), or any
Shareholder's Affiliates (except with regard to its own
Affiliates if the Party in question is a Shareholder),
agents or nominees. This restriction shall cease to be
binding (w) in respect of information which has become
available as a matter of public record through no act or
omission of the disclosing Party, its Affiliates, agents or
nominees, (x) to the extent such information was in the
possession of the disclosing Party, its Affiliates, agents
or nominees prior to its earliest receipt from any other
Party, (y) in connection with information disclosed to
lenders or potential lenders to any Shareholder or any
Affiliate of a Shareholder or to investors or potential
investors in any Shareholder or an Affiliate of a
Shareholder; prior to such disclosure, provided, in the case
of (y), that such lenders, potential lenders, investors or
potential investors shall have executed, prior to such
disclosure, a confidentiality agreement applicable to such
information, or (z) as may be contained in any report,
statement or testimony required to be submitted to any
municipal, state or national regulatory body having or
claiming to have jurisdiction over the disclosing Party, or
as may be otherwise required by law, regulation, court order
or other governmental authority, including without
limitation in filings with the Securities and Exchange
Commission, or as may be required in response to any summons
or subpoena or in connection with any litigation.
(b) In the course of an offer to a third party to
sell any Shares, a Shareholder may disclose information
concerning the Company, Panda of Nepal and BKPC to such
third party; provided; that:
(i) the Shareholder promptly informs the
Company of the substance of all information disclosed;
and
(ii) no such information shall be disclosed
to the third party unless the third party has first
supplied to the Company an undertaking of
confidentiality in writing on the same terms as Section
8.01(a) hereof.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01 Defaults. If any Party commits a
material breach of its obligations under this Agreement,
such Party shall for the purposes hereof be deemed a
"Defaulting Party."
Section 9.02 Actions Upon Default. Each Party
other than the "Defaulting Party" shall for the purposes
hereof be deemed "Non-Defaulting Party", and any Non-
Defaulting Party may serve a notice on the Defaulting Party
specifying the event of default (the "Default Notice") and
the Defaulting Party shall have thirty (30) days after the
receipt of the Default Notice within which to remedy the
event of default. During such thirty (30) day period the
Parties shall use their best efforts to resolve the matter
to their mutual satisfaction. If at the end of such thirty
(30) day period, the Defaulting Party has not remedied the
default or the matter has not otherwise been settled to the
satisfaction of each Non-Defaulting Party, any Non-
Defaulting Party may refer the matter to arbitration
pursuant to Section 11.03.
ARTICLE X
GOVERNING LAWS AND COMPLIANCE
Section 10.01 Governing Law. This Agreement
shall be deemed made and prepared and shall be construed and
interpreted in accordance with the internal laws of the
State of New York, without regard to principles of conflicts-
of-law thereof which may require the application of the law
of another jurisdiction (other than Sections 5-1401 and 5-
1402 of the General Obligations Law of the State of New
York.)
Section 10.02 Compliance with Laws. In the
performance of their obligations under this agreement, the
Parties shall, and shall cause their respective directors,
officers, employees and agents to, comply strictly with all
applicable laws, regulations and orders of the Cayman
Islands and other applicable jurisdictions. The Parties
hereby acknowledge and agree that certain laws of the United
States of America, including the U.S. Foreign Corrupt
Practices Act, prohibit, among other things, the direct or
indirect payment of money or anything of value to any
government official, political party, or candidate for
political office for the purpose of obtaining or retaining
business. Each Party hereby covenants to each other Party
that in the performance of its obligations hereunder or
otherwise in connection with the Project, such Party will
not make any payment proscribed by such laws. Panda Global
represents and warrants to MCNIC Nepal that none of Panda
Global, the Company or Panda of Nepal, or any representative
of any of them, has made any payment proscribed by such
laws. MCNIC Nepal represents and warrants to Panda Global
that neither it nor any of its representatives has made any
payment proscribed by such laws.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Effect of Ceasing to Own Shares.
If any Shareholder ceases to own any Shares in the Company,
such Shareholder shall forthwith cease to be a party to this
Agreement (without prejudice to any rights or obligations
then existing or accruing and on the basis that such
Shareholder's obligations under Article VII (Indemnity, in
respect of the period in which it owned Shares), Article
VIII (Confidentiality), Section 11.03 (Arbitration) and
Section 10.01 (Governing Law) shall continue to apply and
this Agreement shall be construed accordingly.
Section 11.02 Headings. The headings of this
Agreement are for reference only and shall not be deemed to
form part of the text.
Section 11.03 Arbitration.
(a) Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, if unable
to be resolved by the Parties, shall be finally settled by
arbitration under the Rules of the American Arbitration
Association ("AAA"), by one or more arbitrators appointed in
accordance with said Rules, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. The arbitration shall be
conducted in the English language and shall take place in
Washington, D.C.
(b) Except as otherwise set forth herein, if
there are only two Parties to the dispute or controversy,
the arbitration shall be conducted by three arbitrators.
The party initiating arbitration (the "Claimant") shall
appoint its arbitrator in its request for arbitration (the
"Request"). The other party (the "Respondent") shall
appoint its arbitrator within thirty (30) days of receipt of
the Request and shall notify the Claimant of such
appointment in writing. If the Respondent fails to appoint
an arbitrator within such thirty (30) day period, the AAA
shall appoint an arbitrator on its behalf in accordance with
the Rules. Otherwise, the two arbitrators appointed by the
parties shall appoint a third neutral arbitrator within
thirty (30) days after the Respondent has notified Claimant
of the appointment of the Respondent's arbitrator. When the
arbitrators appointed by the Claimant and Respondent have
appointed a third arbitrator and the third arbitrator has
accepted the appointment, the two arbitrators shall promptly
notify the parties of the appointment of the third
arbitrator. If the two arbitrators appointed by the parties
fail or are unable to so appoint a third arbitrator or to so
notify the parties, or if the Parties agree to use a sole
arbitrator, then the appointment of the third arbitrator or
the sole arbitrator, as the case may be, shall be made by
the AAA, which shall promptly notify the parties of such
appointment. The third arbitrator shall act as chair of any
three-arbitrator panel.
(c) If the dispute or controversy involves more
than two Parties, the arbitration shall be conducted by
three arbitrators in accordance with the AAA Rules.
(d) The arbitral award shall be in writing and,
unless all the Parties agree otherwise, shall state the
reasons upon which it is based. The award shall be final
and binding on the Parties. The award may include an award
of costs, including reasonable attorneys' fees and
disbursements. Judgment upon the award may be entered by
any court having jurisdiction thereof or having jurisdiction
over the Shareholders or their assets.
(e) By execution and delivery of this Agreement
each Party hereby accepts and consents to the jurisdiction
of the aforesaid arbitration panel and, solely for purposes
of the enforcement of an arbitral award under this Section
11.03, to the jurisdiction of any court of competent
jurisdiction, for itself and in respect of its property, and
waives in respect of both itself and its property any
defense it may have as to or based on jurisdiction, improper
venue or inconvenient forum. Each Party hereby irrevocably
consents to the service of any process or other papers by
the use of any of the methods and to the addresses set for
the giving of notices in Section 11.10. Nothing herein
shall affect the right of any Party to serve such process or
papers in any other manner permitted by law.
Section 11.04 Impasse; Buy-Sell Agreement.
(a) For the purposes hereof, an "Impasse" shall
mean a matter:
(i) which is brought before the Board of
Directors of the Company or the board of directors of
Panda of Nepal, as the case may be, for a vote at any
time prior to the Class B Flip Date and results in a
deadlocked vote of such board of directors; and
(ii) which in the good faith judgment of a
Shareholder could reasonably be expected to have a
material adverse effect upon a Shareholder, the
Company, Panda of Nepal or BKPC.
(b) For the purposes hereof, a "Qualified
Appraiser" shall mean an independent appraiser that:
(i) is not then performing services or does
not then have any other business relationship (whether
as an officer, director, employee, agent, consultant,
investor, lender, contractor, subcontractor or
otherwise) with any Shareholder or any Affiliate of any
Shareholder; and
(ii) is an investment banker, member in an
engineering or consulting firm, or certified public
accountant, in each case with prior experience in the
valuation of independent power projects.
(c) In the event of an Impasse, it is agreed by
the Shareholders that senior officers of each of the
Shareholders shall promptly meet and in good faith attempt
to resolve the Impasse.
(d) At any time within ninety (90) days following
the thirty-first (31st) day after the occurrence of the
Impasse, any Shareholder (the "Notice Shareholder") may give
written notice to the other Shareholder (the "Respondent
Shareholder") of the Notice Shareholder's desire for
appraisals of the fair market value of both the Class A
Shares and the Class B Shares on a separate basis (the
"Appraisal Notice"). For the purposes hereof, "fair market
value" shall be determined by the appraisers appointed
pursuant to this Section 11.04 using the discounted cash
flow methodology and a discount rate consistent with that
used in the valuation of similar projects at the time in
question.
(e) The Notice Shareholder shall, in the
Appraisal Notice, appoint a Qualified Appraiser to serve as
an appraiser. The Respondent Shareholder shall appoint a
Qualified Appraiser to serve as an appraiser within fifteen
(15) days of receipt of the Appraisal Notice and shall
notify the Notice Shareholder of such appointment in
writing. If the Respondent Shareholder fails to appoint a
Qualified Appraiser within such fifteen (15) day period, the
appraiser appointed by the Notice Shareholder shall be the
sole appraiser. Otherwise, if two Qualified Appraisers have
been appointed, the two appraisers shall appoint a third
Qualified Appraiser within fifteen (15) days after the
Respondent Shareholder has notified the Notice Shareholder
of the appointment of the Respondent Shareholder's Qualified
Appraiser. If a third appraiser has not been appointed
within said fifteen (15) days, then either Shareholder may
request that the AAA appoint such third appraiser. When the
third appraiser has accepted the appointment, the two
appraisers shall promptly notify the Shareholders, in
writing, of the appointment of the third appraiser.
(f) Within thirty (30) days following the
acceptance by the third appraiser of the appointment, each
of the appraisers shall separately establish the fair market
value for all of the Class A Shares (the "Class A Buy-Sell
Purchase Price") and the fair market value for all of the
Class B Shares (the "Class B Buy-Sell Purchase Price") and
shall provide a report thereof to each Shareholder and the
Company or Panda of Nepal (depending on which company's
board of directors had the Impasse). For purposes of
establishing the definitive Class A Buy-Sell Purchase Price
and the definitive Class B Buy-Sell Purchase Price for the
buy-sell procedures set forth below, the highest and lowest
appraisals received from the three appraisers for each of
the Class A Shares and the Class B Shares (regardless of if
such highest and lowest appraisals are rendered by different
appraisers) shall be disregarded, and the remaining
appraisals of the Class A Shares and the Class B Shares
shall be used as the "Definitive Class A Buy-Sell Purchase
Price" and the "Definitive Class B Buy-Sell Purchase Price."
(g) At any time during the one hundred eighty
(180) day period following determination of the Definitive
Class A Buy-Sell Purchase Price and the Definitive Class B
Buy-Sell Purchase Price and notification thereof to each
Shareholder and the Company or Panda of Nepal, as the case
may be, either Shareholder (the "Initiating Shareholder")
may give written notice (the "Initiating Notice") to the
other Shareholder (the "Responding Shareholder") of (i) the
Initiating Shareholder's offer to purchase all, but not less
than all, of the Responding Shareholder's Shares at a stated
price, or (ii) its offer to sell all, but not less than all,
of the Shares of the Initiating Shareholder to the
Responding Shareholder for a stated price (the offer made
being referred to herein as the "Initial Offer").
(h) The Responding Shareholder shall then have
fifteen (15) days in which to accept or reject the Initial
Offer.
(i) If the Responding Shareholder either rejects
the Initial Offer or fails to accept the Initial Offer
within fifteen (15) days after its receipt of the Initiating
Notice, the Responding Shareholder will be deemed to have
made a counteroffer (the "Counteroffer") to the Initiating
Shareholder to effect the purchase or sale of Shares which
is the opposite of the transaction offered in the Initial
Offer (e.g., if the Initial Offer contained an offer by
Shareholder A to purchase all of Shareholder B's Class B
Shares, the Counteroffer will be deemed to contain an offer
by Shareholder B to purchase all of Shareholders A's Class A
Shares). If the Initial Offer contained an offer to either
purchase or sell Class A Shares, the Counteroffer will be
deemed to have included a price equal to the price contained
in the Initial Offer multiplied by the ratio equal to the
Definitive Class B Buy-Sell Purchase Price divided by the
Definitive Class A Buy-Sell Purchase Price. If the Initial
Offer contained an offer to either purchase or sell Class B
Shares, the Counteroffer will be deemed to have included a
price equal to the price contained in the Initial Offer
multiplied by the ratio equal to the Definitive Class A Buy-
Sell Purchase Price divided by the Definitive Class B Buy-
Sell Purchase Price. The Responding Shareholder's
Counteroffer will be deemed to have been immediately
accepted by the Initiating Shareholder.
(j) Following the actual or deemed acceptance of
one of the offers made pursuant to Section 11.04(g) or
Section 11.04(i), as applicable, the Shareholders shall have
sixty (60) days in which to complete the sale of the Shares
of the Initiating Shareholder to the Responding Shareholder
or the sale of the Shares of the Responding Shareholder to
the Initiating Shareholder, as the case may be. If at any
time prior to the consummation of the sale the Shareholders
resolve the Impasse, neither Shareholder shall thereafter be
obligated to complete the sale.
(k) In the event of a sale of Shares under the
terms of this Section 11.04, the selling Shareholder shall
warrant title to all Shares being sold free from liens or
other encumbrances and shall make such other representations
and warranties as are customary in transactions involving
the sale of stock. The purchase price for such Shares shall
be paid in immediately available funds to such account as
shall be specified by the selling Shareholder.
(l) The decision of any Shareholder to undertake
any of the processes established by this Section 11.04 shall
be based on the approval of a majority in interest of the
Shareholders of the relevant class of Shares, if the Shares
of such class are held by more than one (1) Shareholder.
Such decision shall be binding on all Shareholders holding
Shares of such class.
(m) The provisions of subsections (d)-(k) of this
Section 11.04 shall be ineffective until such time as
consummation of the buy-sell arrangement described therein
is permitted under the MCNIC Consent.
Section 11.05 Entire Agreement. This Agreement
constitutes the entire agreement among the Parties and
supersedes all prior agreements and undertakings, oral or
written, among them or between any of them with respect to
the subject matter hereof.
Section 11.06 Amendment. No amendment,
modification, waiver, change or addition hereto shall be
effective or binding on any Party unless the same is in
writing and signed by all Parties.
Section 11.07 Waivers. Any waiver, express or
implied, by any Party of any right hereunder or of any
failure to perform or breach hereof by any other Party shall
not constitute or be deemed a waiver of any other right
hereunder or of any other failure to perform or breach
hereof by any Party, whether of a similar or dissimilar
nature, unless the waiver is in writing and signed by each
Party.
Section 11.08 Severability. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of its other
provisions. Following the determination that any provision
of this Agreement is unenforceable, the Parties shall
negotiate in good faith a new provision that, as far as
legally possible, most nearly reflects the intent of the
Parties and that restores this Agreement as nearly as
possible to its original intent and effect.
Section 11.09 Effectiveness. This Agreement
shall take effect as of the date hereof and, except as
provided herein, shall remain binding on each Shareholder
and its permitted assigns for as long as such Shareholder
owns any Shares in the Company and, to the extent provided
in Section 11.01, thereafter, unless this Agreement is
sooner terminated by the unanimous consent of the Parties.
Section 11.10 No Third Party Beneficiaries. This
Agreement is solely for the benefit of the Parties and their
respective successors and permitted assigns, and this
Agreement shall not otherwise be deemed to confer upon or
give to any other third party any right, claim, cause of
action, or other interest herein.
Section 11.11 Notices. Any notice to be given
hereunder shall be in writing and shall be delivered by hand
(including without limitation by express courier against
written receipt) or sent by telex or prepaid first class
registered mail or (where subsequently confirmed by letter)
by facsimile copy to the persons and address specific below
(or such other person or address as a Party may previously
have notified all other Parties in writing for the purpose).
A notice shall be deemed to have been served when delivered
by hand at that address or received by telex or facsimile
copy, or, if sent by registered mail as aforesaid, on the
date delivered. The names and addresses for the service of
notices referred to in this Section are:
Panda Global Energy Company
Panda Bhote Koshi
Panda of Nepal
c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Fax: (345) 949-8080
with a copy to:
Panda Energy International, Inc.
Attn: General Counsel
Suite 1001
4100 Spring Valley Road
Dallas, Texas 75244
Fax: (972) 980-6815
MCNIC Nepal Limited
c/o Maples & Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Fax: (345) 949-8080
with a copy to:
MCNIC Investment Corporation
Office of the General Counsel
500 Griswold, 10th Floor
Detroit, Michigan 48226
Fax: (313) 965-0009
Section 11.12 Assignment. The provisions of this
Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective heirs,
successors and permitted assigns, whether so expressed or
not. No transferee shall derive any rights under this
Agreement unless and until such transferee has executed and
delivered to the other Parties an assignment and assumption
agreement whereby such transferee becomes bound by the terms
of this Agreement. Notwithstanding the foregoing, neither
this Agreement nor any rights or obligations hereunder may
be assigned by any Shareholder except in compliance with the
restrictions on Transfer set forth in this Agreement and in
accordance with applicable law and the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, or in connection with the
MCNIC Consent.
Section 11.13 Survival of Representations and
Warranties. All representations and warranties contained in
this Agreement or made in writing by or on behalf of any
Party in connection with the transactions contemplated by
this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transaction
contemplated hereby.
Section 11.14 Expenses. Except as otherwise
specifically agreed in writing, each of the Parties shall be
responsible for and pay all expenses, costs and fees
incurred or assumed by such Party in connection with the
preparation, negotiation and execution of this Agreement,
compliance herewith and the consummation of the transactions
contemplated hereby.
Section 11.15 Computation of Time Periods. In
the event that the running of time for any action hereunder
would result in the final day for such action being a
Saturday, Sunday, or legal holiday in the State of New York,
the final date for such action shall be the next day
thereafter which is not a Saturday, Sunday, or legal holiday
in the State of New York; provided, if the action in
question requires action by any Person in the Cayman
Islands, the final date for such action shall be the next
day thereafter which is also not a legal holiday in the
Cayman Islands.
Section 11.16 Execution in Counterparts. This
Agreement may be executed in one or more counterparts and by
one or more parties to any counterpart, each of which shall
be deemed an original and all of which together shall
constitute one and the same agreement.
Section 11.17 Covenant of Good Faith and Fair
Dealing. Each Party convenants with each other Party to
deal fairly and in good faith in connection with all matters
undertaken or required to be undertaken by such Party under
this Agreement.
IN WITNESS WHEREOF, the undersigned Parties have
entered into this Agreement as of the day and year first
above written.
PANDA BHOTE KOSHI
By:
Name:
Title:
PANDA OF NEPAL
By:
Name:
Title:
PANDA GLOBAL ENERGY COMPANY
By:
Name:
Title:
MCNIC NEPAL LIMITED
By:
Name:
Title:
[EXHIBIT A: See stand alone Exhibit Number 10.68.01 to this filing]
[EXHIBIT B: See stand alone Exhibit Number 10.68.02 to this filing]
Exhibit C
Panda Bhote Koshi
Internal Rate of Return Example
<TABLE>
<CAPTION>
Panda of Nepal MCNIC MCNIC Share
Semi-Annual Share of of Semi-Annual MCNIC MCNIC Net MCNIC Rate
Date Distributions Distributions Distributions Contributions Cash Flows of Return
<C> <C> <C> <C> <C> <C> <C>
Dec-97 (3,749,925) (3,749,925) N/A
Mar-98 (1,697,957) (1,697,957) N/A
Jul-98 (2,259,637) (2,259,637) N/A
Nov-98 (1,405,851) (1,405,851) N/A
Mar-99 (2,655,806) (2,655,806) N/A
Jul-99 (2,244,031) (2,244,031) N/A
Dec-99 (6,108,043) (6,108,043) N/A
Mar-00 - N/A
Sep-00 5,159,492 85% 4,385,568 4,385,568 less than 0%
Mar-01 2,797,107 85% 2,377,541 2,377,541 less than 0%
Sep-01 2,154,553 85% 1,831,370 1,831,370 less than 0%
Mar-02 2,276,635 85% 1,935,140 1,935,140 less than 0%
Sep-02 2,398,718 85% 2,038,910 2,038,910 less than 0%
Mar-03 2,526,679 85% 2,147,677 2,147,677 less than 0%
Sep-03 2,654,639 85% 2,256,443 2,256,443 less than 0%
Mar-04 2,754,960 85% 2,341,716 2,341,716 less than 0%
Sep-04 2,855,281 85% 2,426,989 2,426,989 2.27%
Mar-05 2,958,565 85% 2,514,780 2,514,780 5.20%
Sep-05 3,061,849 85% 2,602,571 2,602,571 7.63%
Mar-06 3,168,188 85% 2,692,960 2,692,960 9.66%
Sep-06 3,274,527 85% 2,783,348 2,783,348 11.39%
Mar-07 3,384,016 85% 2,876,414 2,876,414 12.85%
Sep-07 3,493,505 85% 2,969,479 2,969,479 14.10%
Mar-08 3,881,866 85% 3,299,586 3,299,586 15.26%
Sep-08 4,270,227 85% 3,629,693 3,629,693 16.31%
Mar-09 4,645,208 85% 3,948,427 3,948,427 17.27%
Sep-09 5,020,189 85% 4,267,160 4,267,160 18.12%
Mar-10 5,139,720 85% 4,368,762 4,368,762 18.86%
Sep-10 5,259,252 85% 4,470,364 4,470,364 19.49%
Mar-11 6,134,214 85% 5,214,081 (FLIP DATE) 5,214,081 20.11%
Sep-11 7,009,175 10% 700,918 700,918 20.18%
Mar-12 7,842,050 10% 784,205 784,205 20.25%
Sep-12 8,674,925 10% 867,493 867,493 20.33%
Mar-13 8,805,450 10% 880,545 880,545 20.39%
Sep-13 8,935,976 10% 893,598 893,598 20.46%
Mar-14 9,070,391 10% 907,039 907,039 20.51%
Sep-14 9,204,807 10% 920,481 920,481 20.56%
Mar-15 7,980,481 10% 798,048 798,048 20.60%
Sep-15 6,756,155 10% 675,616 675,616 20.63%
Mar-16 6,855,036 10% 685,504 685,504 20.66%
Sep-16 6,953,918 10% 695,392 695,392 20.69%
Mar-17 7,055,608 10% 705,561 705,561 20.71%
Sep-17 7,157,299 10% 715,730 715,730 20.73%
Mar-18 7,261,893 10% 726,189 726,189 20.75%
Sep-18 7,366,487 10% 736,649 736,649 20.77%
Mar-19 7,474,081 10% 747,408 747,408 20.79%
Sep-19 7,581,676 10% 758,168 758,168 20.80%
Mar-20 7,692,368 10% 769,237 769,237 20.82%
Sep-20 7,803,061 10% 780,306 780,306 20.83%
Mar-21 7,916,954 10% 791,695 791,695 20.84%
Sep-21 8,030,846 10% 803,085 803,085 20.85%
Mar-22 8,148,042 10% 814,804 814,804 20.86%
Sep-22 8,265,239 10% 826,524 826,524 20.87%
Mar-23 8,385,845 10% 838,584 838,584 20.88%
Sep-23 8,506,451 10% 850,645 850,645 20.89%
Mar-24 8,630,576 10% 863,058 863,058 20.90%
Sep-24 8,754,701 10% 875,470 875,470 20.91%
Mar-25 21,628,407 10% 2,162,841 2,162,841 20.92%
Sep-25 51,753,168 10% 5,175,317 5,175,317 20.95%
</TABLE>
EXHIBIT NO. 10.152.01
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (this "Agreement"), is
executed as of December 18, 1997.
WHEREAS, MCNIC Nepal Limited, a Cayman Islands
exempted company ("MCNIC Nepal") is a wholly-owned
subsidiary of MCN Investment Corporation, a Michigan
corporation (MCNIC); and
WHEREAS, simultaneously with the execution hereof,
MCNIC Nepal, Panda Bhote Koshi, a Cayman Islands exempted
company (the "Company"), Panda Global Energy Company, a
Cayman Islands exempted company ("Panda Global"), and Panda
of Nepal, a Cayman Islands exempted company ("Panda of
Nepal") will enter into a Shareholders Agreement dated as of
December 18, 1997 (the "Shareholders Agreement") in which
MCNIC Nepal and Panda Global agree to purchase all of the
Shares in the Company; and
WHEREAS, MCNIC desires to enter into this
Agreement in order to assist MCNIC Nepal in its purchase of
certain Shares of the Company; and
NOW, THEREFORE, in order to assist MCNIC Nepal in
purchasing certain shares of the Company, MCNIC hereby
covenants and agrees as follows:
Section 1. DEFINITIONS. Capitalized terms used
and not otherwise defined in this Agreement have the
meanings given to those terms in the Shareholders Agreement.
Notwithstanding the foregoing, when used in this Agreement
the term "Obligations" shall mean all of the obligations and
liabilities of the Class B Shareholder under the
Shareholders Agreement as the same may from time to time be
amended, modified, substituted, extended or renewed
(including but not limited to any liabilities arising from
inaccurate representations and warranties and
indemnification obligations).
Section 2. GUARANTEE Subject to the provisions
hereof, MCNIC hereby irrevocably and unconditionally
guarantees to the Class A Shareholder and Panda Energy
International, Inc., a Texas corporation ("PEII") the
performance by MCNIC Nepal of any and all of its Obligations
as the Class B Shareholder under, and the payment in full of
all liabilities of MCNIC Nepal to PEII or Panda Global
arising under, the Shareholders Agreement in accordance with
the terms thereof. In the event of a Transfer of the Class
B Shares to a Permitted Transferee, this Guarantee shall
extend to all of the Obligations of such Permitted
Transferee, and all references herein to "MCNIC Nepal" shall
mean and include any Permitted Transferee.
Section 3. ABSOLUTE, UNCONDITIONAL AND CONTINUING
OBLIGATION.
(a) This Agreement is an absolute, unconditional and
continuing agreement of MCNIC to perform or pay each and
every Obligation irrespective of (i) the validity, legality,
genuineness, regularity or enforceability of the Obligations
or any other agreement or instrument relating thereto,
(ii) the bankruptcy or insolvency of MCNIC Nepal or the
dissolution or liquidation of MCNIC Nepal or the discharge
of MCNIC Nepal's obligations in bankruptcy, (iii) any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of the terms of or rights of
MCNIC Nepal with respect to any such agreement, (iv) any
assignment, amendment, modification or termination of or any
change in the term, manner or place of payment of, or any
other term of, all or any part of the Obligations, or any
other agreement or instrument relating thereto, (v) any
exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the
Obligations or any failure of any such collateral to satisfy
in full all the Obligations, (vi) any failure to pay any
taxes that may be payable with respect to the payment of
such obligation by MCNIC or MCNIC Nepal, or any failure to
obtain any authorization or approval from or other action
by, or to notify or file with, any government agency or
regulatory body required in connection with the payment of
such obligation by MCNIC or MCNIC Nepal, (vii) any merger
or consolidation of MCNIC Nepal or MCNIC into or with any
other Person or any sale, lease or transfer of any of the
assets of MCNIC Nepal or MCNIC to any other Person, or any
change in the name, stock ownership, membership,
constitution or place of formation of MCNIC Nepal or MCNIC,
or any change of MCNIC Nepal or MCNIC into another form of
business entity, (viii) the termination of the legal
existence of MCNIC Nepal, or MCNIC, or the termination of
any legal obligation of MCNIC Nepal to discharge the
Obligations undertaken or purported to be undertaken by it
or on its behalf (other than to the extent of payment of the
Obligations by or on behalf of MCNIC Nepal), (ix) the
inability to recover any of the moneys included in the
Obligations in full from MCNIC Nepal by operation of law or
for any other reason, (x) any impossibility or
impracticality of performance, illegality, force majeure or
any action or nonaction of government, (xi) the transfer,
assignment, subletting or mortgaging or the purported
transfer, assignment, subletting or mortgaging of all or any
part of the interest of MCNIC Nepal, in any of the Project,
the Obligations, this Agreement or any other agreement or
instrument relating thereto, (xii) any failure, neglect or
omission on the part of MCNIC Nepal, the Class A
Shareholder, the Lenders or any other Person to give MCNIC
notice of the occurrence of any Default or Event of Default,
or to realize upon any obligation or liability of MCNIC
Nepal, or to provide for any insurance on the Project, or to
establish or maintain the priority or perfection of any
interest in the collateral, (xiii) any defect in the
compliance with specifications, conditions, design,
operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use
of the Project by any Person for any reason whatsoever
(including, without limitation, any governmental prohibition
or restriction, condemnation, requisition, seizure or any
other act on the part of any governmental or military
authority, or any act of God or the public enemy) regardless
of the duration thereof, or (xiv) any other circumstance
that might otherwise constitute a legal or equitable defense
available to or resulting in the discharge of a surety or
guarantor or any other circumstance, event or happening
whatsoever, whether foreseen or unforeseen and whether
similar or dissimilar to anything referred to above in this
Section 3(a).
(b) Notwithstanding anything to the contrary contained
herein, this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment
of any of the Obligations by or on behalf of MCNIC Nepal or
MCNIC is rescinded or must otherwise be returned by any
Person upon the insolvency, bankruptcy or reorganization of
MCNIC Nepal, or MCNIC otherwise, all as though such payment
had not been made. The obligations of MCNIC under this
Agreement shall not be subject to reduction, termination or
other impairment by reason of any set-off, recoupment,
counterclaim or defense or for any other reason, other than
to the extent of payments of the Obligations by or on behalf
of MCNIC Nepal.
(c) This Agreement shall be in addition to any other
guaranty or other security for the Obligations and shall not
be prejudiced or rendered unenforceable by the invalidity of
any such other guaranty or security.
(d) The obligations of MCNIC set forth herein
constitute the full recourse obligations of MCNIC
enforceable against it to the full extent of all its assets
and properties, notwithstanding any provision in the
Shareholders Agreement or any other agreement or instrument
relating thereto limiting the liability of MCNIC Nepal.
Section 4. SUBROGATION. MCNIC agrees not to
exercise, and hereby waives, any right against MCNIC Nepal
for repayment of any amount hereunder that MCNIC may acquire
by way of subrogation under this Agreement, by any payment
hereunder or otherwise until the Obligations have been paid
in full.
Section 5. SETOFF AND COUNTERCLAIM. MCNIC hereby
waives any defense of setoff or counterclaim against MCNIC
Nepal arising from or out of any agreement to which MCNIC
Nepal and MCNIC or any affiliate of MCNIC are parties.
Section 6. AMENDMENT AND ASSIGNMENT OF THIS
AGREEMENT. No term or provision of this Agreement may be
amended, modified, altered, waived or supplemented except in
a writing signed by MCNIC and consented to in writing by the
Class A Shareholder and PEII. MCNIC may not assign any of
its obligations and duties hereunder except with the prior
written consent of the Class A Shareholder and PEII (any
such consent shall not release MCNIC from any of its
obligations and duties hereunder).
Section 7. NO WAIVER; CONSENT.
(a) Except as to applicable statutes of limitation, no
delay of MCNIC Nepal in the exercise of, or failure to
exercise, any right hereunder or under any other agreement
shall operate as a waiver of such right, a waiver of any
other right or a release of MCNIC from any obligation
hereunder nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
(b) MCNIC hereby consents to the renewal, compromise,
extension, acceleration or other changes in the time of
payment of or other changes in the terms of the Obligations,
or any part thereof or any changes or modifications to the
terms of the Shareholders Agreement.
Section 8. CONTINUING OBLIGATION. The
obligations of MCNIC under this Agreement shall (i) continue
in full force and effect until the Obligations have been
indefeasibly settled in full in accordance with the terms of
the Shareholders Agreement, (ii) be binding on MCNIC, its
permitted successors and assigns and (iii) inure to the
benefit of and be enforceable by PEII and the Class A
Shareholder and their respective transferees, successors and
assigns.
Section 9. COSTS OF ENFORCEMENT. MCNIC agrees to
pay any and all reasonable costs and expenses of the Class A
Shareholder and PEII (including the reasonable fees and
disbursements of legal counsel) incurred in enforcing any
right under this Agreement.
Section 10. NOTICE. Any notice, request,
instruction, correspondence or other document to be given
hereunder by any party to another (herein collectively
called "Notice") shall be in writing and delivered
personally or by a nationally recognized overnight courier
service or mailed by registered mail, postage prepaid and
return receipt requested, or by telegram or facsimile, as
follows:
To MCNIC Nepal:
MCNIC Nepal Limited
c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Attention: Sharon Pierson
Facsimile: (345) 949-8080
To MCNIC:
MCN Investment Corporation
Office of the General Counsel
500 Griswold, 10th Floor
Detroit, Michigan 48226
Facsimile: (313) 965-0009
Notice given by personal delivery, courier service
or registered mail shall be effective upon actual receipt.
Notice given by telegram or facsimile shall be effective
upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the
recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may
change any address to which Notice is to be given to it by
giving notice as provided above of such change of address.
Section 11. MISCELLANEOUS. THIS AGREEMENT SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-
1401 AND 5-1402 OF THE GENERAL OBLIGATION LAW OF THE STATE
OF NEW YORK). This Agreement supersedes all prior
agreements and understandings relating to the subject matter
hereof. The headings in this Agreement are for purposes of
reference only and shall not affect the meaning hereof.
IN WITNESS WHEREOF, this Guarantee Agreement has
been executed by MCNIC through its duly authorized officer
as of the date first written above.
MCN INVESTMENT CORPORATION
By_______________________________
Name:
Title:
EXHIBIT NO. 10.152.02
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (this "Agreement"), is
executed as of December 18, 1997.
WHEREAS, Panda Bhote Koshi, a Cayman Islands
exempted company (the "Company") is a subsidiary of Panda
Global Energy Company, a Cayman Islands exempted company
("Panda Global"); and
WHEREAS, Panda Global is a wholly-owned subsidiary
of Panda Global Holdings, Inc., a Delaware corporation
("Panda Holding"); and
WHEREAS, Panda Holding is a wholly-owned
subsidiary of Panda Energy International, Inc., a Texas
corporation ("PEII"); and
WHEREAS, simultaneously with the execution hereof,
MCNIC Nepal Limited, a Cayman Islands exempted company
("MCNIC Nepal"), the Company, Panda Global, and Panda of
Nepal, a Cayman Islands exempted company ("Panda of Nepal")
will enter into a Shareholders Agreement dated as of
December 18, 1997 (the "Shareholders Agreement") in which
MCNIC Nepal and Panda Global agree to purchase all of the
Shares in the Company; and
WHEREAS, PEII desires to enter into this Agreement
in order to assist Panda Global in its purchase of certain
Shares of the Company; and
NOW, THEREFORE, in order to assist Panda Global in
purchasing certain shares of the Company, PEII hereby
covenants and agrees as follows:
Section 1. DEFINITIONS. Capitalized terms used
and not otherwise defined in this Agreement have the
meanings given to those terms in the Shareholders Agreement.
Notwithstanding the foregoing, when used in this Agreement
the term "Obligations" shall mean all of the obligations and
liabilities of the Class A Shareholder under the
Shareholders Agreement as the same may from time to time be
amended, modified, substituted, extended or renewed
(including but not limited to liabilities arising from
inaccurate representations and warranties and
indemnification obligations).
Section 2. GUARANTEE. Subject to the provisions
hereof, PEII hereby irrevocably and unconditionally
guarantees to the Class B Shareholder and MCN Investment
Corporation, a Michigan corporation ("MCNIC"), the
performance by Panda Global of any and all of its
Obligations as the Class A Shareholder under, and the
payment in full of all liabilities of Panda Global to MCNIC
or MCNIC Nepal arising under, the Shareholders Agreement in
accordance with the terms thereof. In the event of a
Transfer of the Class A Shares to a Permitted Transferee,
this Guarantee shall extend to all of the Obligations of
such Permitted Transferee, and all references herein to
"Panda Global" shall mean and include any Permitted
Transferee.
Section 3. ABSOLUTE, UNCONDITIONAL AND CONTINUING
OBLIGATION.
(a) This Agreement is an absolute, unconditional and
continuing agreement of PEII to perform or pay each and
every Obligation irrespective of (i) the validity, legality,
genuineness, regularity or enforceability of the Obligations
or any other agreement or instrument relating thereto,
(ii) the bankruptcy or insolvency of Panda Global or the
dissolution or liquidation of Panda Global or the discharge
of Panda Global's obligations in bankruptcy, (iii) any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of the terms of or rights of
Panda Global with respect to any such agreement, (iv) any
assignment, amendment, modification or termination of or any
change in the term, manner or place of payment of, or any
other term of, all or any part of the Obligations, or any
other agreement or instrument relating thereto, (v) any
exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the
Obligations or any failure of any such collateral to satisfy
in full all the Obligations, (vi) any failure to pay any
taxes that may be payable with respect to the payment of
such obligation by PEII or Panda Global, or any failure to
obtain any authorization or approval from or other action
by, or to notify or file with, any government agency or
regulatory body required in connection with the payment of
such obligation by PEII or Panda Global, (vii) any merger
or consolidation of Panda Global or PEII into or with any
other Person or any sale, lease or transfer of any of the
assets of Panda Global or PEII to any other Person, or any
change in the name, stock ownership, membership,
constitution or place of formation of Panda Global or PEII,
or any change of Panda Global or PEII into another form of
business entity, (viii) the termination of the legal
existence of Panda Global, or MCNIC, or the termination of
any legal obligation of Panda Global to discharge the
Obligations undertaken or purported to be undertaken by it
or on its behalf (other than to the extent of payment of the
Obligations by or on behalf of Panda Global), (ix) the
inability to recover any of the moneys included in the
Obligations in full from Panda Global by operation of law or
for any other reason, (x) any impossibility or
impracticality of performance, illegality, force majeure or
any action or nonaction of government, (xi) the transfer,
assignment, subletting or mortgaging or the purported
transfer, assignment, subletting or mortgaging of all or any
part of the interest of Panda Global, in any of the Project,
the Obligations, this Agreement or any other agreement or
instrument relating thereto, (xii) any failure, neglect or
omission on the part of Panda Global, the Class B
Shareholder, the Lenders or any other Person to give PEII
notice of the occurrence of any Default or Event of Default,
or to realize upon any obligation or liability of Panda
Global, or to provide for any insurance on the Project, or
to establish or maintain the priority or perfection of any
interest in the collateral, (xiii) any defect in the
compliance with specifications, conditions, design,
operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use
of the Project by any Person for any reason whatsoever
(including, without limitation, any governmental prohibition
or restriction, condemnation, requisition, seizure or any
other act on the part of any governmental or military
authority, or any act of God or the public enemy) regardless
of the duration thereof, or (xiv) any other circumstance
that might otherwise constitute a legal or equitable defense
available to or resulting in the discharge of a surety or
guarantor or any other circumstance, event or happening
whatsoever, whether foreseen or unforeseen and whether
similar or dissimilar to anything referred to above in this
Section 3(a).
(b) Notwithstanding anything to the contrary contained
herein, this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment
of any of the Obligations by or on behalf of Panda Global or
PEII is rescinded or must otherwise be returned by any
Person upon the insolvency, bankruptcy or reorganization of
Panda Global, or PEII otherwise, all as though such payment
had not been made. The obligations of PEII under this
Agreement shall not be subject to reduction, termination or
other impairment by reason of any set-off, recoupment,
counterclaim or defense or for any other reason, other than
to the extent of payments of the Obligations by or on behalf
of Panda Global.
(c) This Agreement shall be in addition to any other
guaranty or other security for the Obligations and shall not
be prejudiced or rendered unenforceable by the invalidity of
any such other guaranty or security.
(d) The obligations of PEII set forth herein
constitute the full recourse obligations of PEII enforceable
against it to the full extent of all its assets and
properties, notwithstanding any provision in the
Shareholders Agreement or any other agreement or instrument
relating thereto limiting the liability of Panda Global.
Section 4. SUBROGATION. PEII agrees not to
exercise, and hereby waives, any right against Panda Global
for repayment of any amount hereunder that PEII may acquire
by way of subrogation under this Agreement, by any payment
hereunder or otherwise until the Obligations have been paid
in full.
Section 5. SETOFF AND COUNTERCLAIM. PEII hereby
waives any defense of setoff or counterclaim against Panda
Global arising from or out of any agreement to which Panda
Global and PEII or any affiliate of PEII are parties.
Section 6. AMENDMENT AND ASSIGNMENT OF THIS
AGREEMENT. No term or provision of this Agreement may be
amended, modified, altered, waived or supplemented except in
a writing signed by PEII and consented to in writing by the
Class B Shareholder and MCNIC. PEII may not assign any of
its obligations and duties hereunder except with the prior
written consent of the Class B Shareholder and MCNIC (and
any such consent shall not release PEII from any of its
obligations and duties hereunder).
Section 7. NO WAIVER; CONSENT.
(a) Except as to applicable statutes of limitation, no
delay of Panda Global in the exercise of, or failure to
exercise, any right hereunder or under any other agreement
shall operate as a waiver of such right, a waiver of any
other right or a release of PEII from any obligation
hereunder nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
(b) PEII hereby consents to the renewal, compromise,
extension, acceleration or other changes in the time of
payment of or other changes in the terms of the Obligations,
or any part thereof or any changes or modifications to the
terms of the Shareholders Agreement.
Section 8. CONTINUING OBLIGATION. The
obligations of PEII under this Agreement shall (i) continue
in full force and effect until the Obligations have been
indefeasibly settled in full in accordance with the terms of
the Shareholders Agreement, (ii) be binding on PEII, its
permitted successors and assigns and (iii) inure to the
benefit of and be enforceable by MCNIC and the Class B
Shareholder and their respective transferees, successors and
assigns.
Section 9. COSTS OF ENFORCEMENT. PEII agrees to
pay any and all reasonable costs and expenses of the Class B
Shareholder and MCNIC (including the reasonable fees and
disbursements of legal counsel) incurred in enforcing any
right under this Agreement.
Section 10. NOTICE. Any notice, request,
instruction, correspondence or other document to be given
hereunder by any party to another (herein collectively
called "Notice") shall be in writing and delivered
personally or by a nationally recognized overnight courier
service or mailed by registered mail, postage prepaid and
return receipt requested, or by telegram or facsimile, as
follows:
To Panda Global: Panda Global Energy Company
c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Attention: Sharon Pierson
Facsimile: (345) 949-8080
To PEII: Panda Energy International, Inc.
Suite 1001
4100 Spring Valley Road
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
Notice given by personal delivery, courier service
or registered mail shall be effective upon actual receipt.
Notice given by telegram or facsimile shall be effective
upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the
recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may
change any address to which Notice is to be given to it by
giving notice as provided above of such change of address.
Section 11. MISCELLANEOUS. THIS AGREEMENT SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-
1401 AND 5-1402 OF THE GENERAL OBLIGATION LAW OF THE STATE
OF NEW YORK). This Agreement supersedes all prior
agreements and understandings relating to the subject matter
hereof. The headings in this Agreement are for purposes of
reference only and shall not affect the meaning hereof.
IN WITNESS WHEREOF, this Guarantee Agreement has
been executed by PEII through its duly authorized officer as
of the date first written above.
PANDA ENERGY INTERNATIONAL, INC.
By_______________________________
Name:
Title:
EXHIBIT NO. 10.153
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
Dated as of December 12, 1997
Bhote Koshi Power Company Private Limited and International
Finance Corporation have entered and/or anticipate entering into
one or more transactions (each a "Transaction") that are or will
be governed by this Master Agreement, which includes the schedule
(the "Schedule"), and the documents and other confirming evidence
(each a "Confirmation") exchanged between the parties confirming
those Transactions.
Accordingly, the parties agree as follows:
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the
Schedule will have the meanings therein specified for the purpose
of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between
the provisions of the Schedule and the other provisions of this
Master Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this
Master Agreement (including the Schedule), such Confirmation will
prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in
reliance on the fact that this Master Agreement and all
Confirmations form a single agreement between the parties
(collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions:
(i) Each party will make each payment or delivery specified
in each Confirmation to be made by it, subject to the other
provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due
date for value on that date in the place of the account
specified in the relevant Confirmation or otherwise pursuant
to this Agreement, in freely transferable funds and in the
manner customary for payments in the required currency.
Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation
unless otherwise specified in the relevant Confirmation or
elsewhere in this Agreement.
(iii) Each obligation of each party under Section
2(a)(i) is subject to (1) the condition precedent that no
Event of Default or Potential Event of Default with respect
to the other party has occurred and is continuing, (2) the
condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable
condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other
party at least five Local Business Days prior to the scheduled
date for the payment or delivery to which such change applies
unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's
obligation to make payment of any such amount will be
automatically satisfied and discharged and, if the aggregate
amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been
payable by the other party, replaced by an obligation upon the
party by whom the larger aggregate amount would have been payable
to pay to the other party the excess of the larger aggregate
amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that
a net amount will be determined in respect of all amounts payable
on the same date in the same currency in respect of such
Transactions, regardless of whether such amounts are payable in
respect of the same Transaction. The election may be made in the
Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being
subject to the election, together with the starting date (in
which case subparagraph (ii) above will not, or will cease to,
apply to such Transactions from such date). This election may be
made separately for different groups of Transactions and will
apply separately to each pairing of Offices through which the
parties make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be
made without any deduction or withholding for or on account
of any Tax unless such deduction or withholding is required
by any applicable law, as modified by the practice of any
relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that
party ("X") will:
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full
amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section
2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving
notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise
entitled under this Agreement, such additional amount
as is necessary to ensure that the net amount actually
received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full
amount Y would have received had no such deduction or
withholding been required. However, X will not be
required to pay any additional amount to Y to the
extent that it would not be required to be paid but
for:
(A) the failure by Y to comply with or perform
any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but
for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on
or after the date on which a Transaction is
entered into (regardless of whether such action is
taken or brought with respect to a party to this
Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:
(1) X is required by any applicable law, as modified
by the practice of any relevant governmental revenue
authority, to make any deduction or withholding in
respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X.
then, except to the extent Y has satisfied or then satisfies
the liability resulting from such Tax, Y will promptly pay
to X the amount of such liability (including any related
liability for interest, but including any related liability
for penalties only if Y has failed to comply with or perform
any agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or
effective designation of an Early Termination Date in respect of
the relevant Transaction, a party that defaults in the
performance of any payment obligation will, to the extent
permitted by law and subject to Section 6(c), be required to pay
interest (before as well as after judgment) on the overdue amount
to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date
for payments to (but excluding) the date of actual payment, at
the Default Rate. Such interest will be calculated on the basis
of daily compounding and the actual number of days elapsed. If,
prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be
settled by delivery, it will compensate the other party on demand
if and to the extent provided for in the relevant Confirmation or
elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations
will be deemed to be repeated by each party on each date on which
a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the
termination of this Agreement) that:
(a) Basic Representations.
(i) Status. It is duly organised and validly existing
under the laws of the jurisdiction of its organisation or
incorporation and, if relevant under such laws, in good
standing;
(ii) Powers. It has the power to execute this Agreement and
any other documentation relating to this Agreement to which
it is a party, to delivery this Agreement and any other
documentation relating to this Agreement that it is required
by this Agreement to deliver and to perform its obligations
under this Agreement any obligations it has under any Credit
Support Document to which it is a party and has taken all
necessary action to authorise such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution,
delivery and performance do not violate or conflict with any
law applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets
or any contractual restriction binding on or affecting it or
any of its assets;
(iv) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this
Agreement or any Credit Support Document to which it is a
party have been obtained and are in full force and effect
and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this
Agreement and any Credit Support Document to which it is a
party constitute its legal, valid and binding obligations,
enforceable in accordance with their respective terms
(subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of
whether enforcement is sought in a proceeding inequity or at
law)).
(b) Absence of Certain Events. No Event of Default or Potential
Event of Default or, to its knowledge, Termination Event with
respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or
performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its
knowledge, threatened against it or any of its Affiliates any
action, suit or proceeding at law or in equity or before any
court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support
Document to which it is a party or its ability to perform its
obligations under this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable
information that is furnished in writing by or on behalf of it to
the other party and is identified for the purpose of this Section
3(d) in the Schedule is, as of the date of the information, true,
accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in
the Schedule as being made by it for the purpose of this Section
3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in
the Schedule as being made by it for the purpose of this Section
3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party
has or may have any obligation under this Agreement or under any
Credit Support Document to which it is a party:
(a) Furnish Specified Information. It will deliver to the other
party or, in certain cases under subparagraph (iii) below, to
such government or taxing authority as the other party reasonably
directs:
(i) any forms, documents or certificates relating to
taxation specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any
form or document that may be required or reasonably
requested in writing in order to allow such other party or
its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or
with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form
or document would not materially prejudice the legal or
commercial position of the party in receipt of such demand),
with any such form or document to be accurate and completed
in a manner reasonably satisfactory to such other party and
to be executed and to be delivered with any reasonably
required certification,
in each case by the date specified in the Schedule or such
Confirmation or, if none is specified, as soon as reasonably
practicable.
(b) Maintain Authorisations. It will use all reasonable efforts
to maintain in full force and effect all consents of any
governmental or other authority that are required to be obtained
by it with respect to this Agreement or any Credit Support
Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects
with all applicable laws and orders to which it may be subject if
failure so to comply would materially impair its ability to
perform its obligations under this Agreement or any Credit
Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a
representation made by it under Section 3(f) to be accurate and
true promptly upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay
any Stamp Tax levied or imposed upon it or in respect of its
execution or performance of this Agreement by a jurisdiction in
which it is incorporated, organised, managed and controlled, or
considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other
party against any Stamp Tax levied or imposed upon the other
party or in respect of the other party's execution or performance
of this Agreement by any such Stamp Tax Jurisdiction which is not
also a Stamp Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events.
(a) Events of Default. The occurrence at any time with respect
to a party or, if applicable, any Credit Support Provider of such
party or any Specified Entity of such party of any of the
following events constitutes an event of default (an "Event of
Default") with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to
make, when due, any payment under this Agreement or delivery
under Section 2(a)(i) or 2(e) required to be made by it if
such failure is not remedied on or before the third Local
Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply
with or perform any agreement or obligation (other than an
obligation to make any payment under this Agreement or
delivery under Section 2(a)(i) or 2(e) or to give notice of
a Termination Event or any agreement or obligation under
Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirteenth day
after notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support
Provider of such party to comply with or perform any
agreement or obligation to be complied with or
performed by it in accordance with any Credit Support
Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit
Support Document or the failing or ceasing of such
Credit Support Document to be in full force and effect
for the purpose of this Agreement (in either case other
than in accordance with its terms) prior to the
satisfaction of all obligations of such party under
each Transaction to which such Credit Support Document
relates without the written consent of the other party;
or
(3) the party or such Credit Support Provider
disaffirms, disclaims, repudiates or rejects, in whole
or in part, or challenges the validity of, such Credit
Support Document;
(iv) Misrepresentation. A representation (other than a
representation under Section 3(e) or (f)) made or repeated
or deemed to have been made or repeated by the party or any
Credit Support Provider of such party in this Agreement or
any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or
deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any
Credit Support Provider of such party or any applicable
Specified Entity of such party (1) defaults under a
Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs
a liquidation of, an acceleration of obligations under, or
an early termination of, that Specified Transaction, (2)
defaults, after giving effect to any applicable notice
requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date
of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims,
repudiates or rejects, in whole or in part, a Specified
Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or
existence of (1) a default, event of default or other
similar condition or event (however described) in respect of
such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) in an
aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in
such Specified Indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such
Credit Support Provider or such Specified Entity
(individually or collectively) in making one or more
payments on the due date thereof in an aggregate amount of
not less than the applicable Threshold Amount under such
agreement or instrument (after giving effect to any
applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support
Provider of such party or any applicable Specified Entity of
such party;
(1) is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (2) becomes
insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its
debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment
of insolvency or bankruptcy or any other relief under
any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented
for its winding-up or liquidation, and, in the case of
any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in
a judgment of insolvency or bankruptcy or the entry of
an order for relief or the making of an order for its
winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or
becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for it or for all
or substantially all of its assets; (7) has a secured
party take possession of all or substantially all its
assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced
or sued on or against all or substantially all its
assets and such secured party maintains possession, or
any such process is not dismissed, discharged, stayed
or restrained, in each case within 30 days thereafter;
(8) causes or is subject to any event with respect to
it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the
events specified in clauses (1) to (7) (inclusive); or
(9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of
the foregoing acts; or
(viii) Merger Without Assumption. The party or any
Credit Support Provider of such party consolidates or
amalgamates with, or merges with or into, or transfers all
or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or
transfer:
(1) the resulting, surviving or transferee entity
fails to assume all the obligations of such party or
such Credit Support Provider under this Agreement or
any Credit Support Document to which it or its
predecessor was a party by operation of law or pursuant
to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits or any Credit Support Document fail
to extend (without the consent of the other party) to
the performance by such resulting, surviving or
transferee entity of its obligations under this
Agreement.
(b) Termination Events. The occurrence at any time with respect
to a party or, if applicable, any Credit Support Provider of such
party or any Specified Entity of such party of any event
specified below constitutes an Illegality if the event is
specified in (i) below, a Tax Event if the event is specified in
(ii) below, a Tax Event Upon Merger if the event is specified in
(iii) below, and if specified to be applicable, a Credit Event
Upon Merger if the event is specified pursuant to (iv) below or
an Additional Termination Event if the event is specified
pursuant to (v) below:
(i) Illegality. Due to the adoption of, or any change in,
any applicable law after the date of which a Transaction is
entered into, or due to the promulgation of, or any change
in, the interpretation by any court, tribunal or regulatory
authority with competent jurisdiction of any applicable law
after such date, it becomes unlawful (other than as a result
of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):
(1) to perform any absolute or contingent obligation
to make a payment or delivery or to receive a payment
or delivery in respect of such Transaction or to comply
with any other material provision of this Agreement
relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of
such party to perform, any contingent or other
obligation which the party (or such Credit Support
Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing
authority, or brought in a court of competent jurisdiction,
on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (y) a Change in Tax
Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next
succeeding Scheduled Payment Date (1) be required to pay to
the other party an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4) (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or
(2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect
of such Tax under Section 2(d)(i)(4) (other than by reason
of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened
Party") on the next succeeding Scheduled Payment Date will
either (1) be required to pay an additional amount in
respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any
Indemnifiable Tax in respect of which the other party is not
required to pay an additional amount (other than by reason
of Section 2(d)(i)(4)(A) or (B)), in either case as a result
of a party consolidating or amalgamating with, or merging
with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party)
where such action does not constitute an event described in
Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon
Merger" is specified in the Schedule as applying to such
party, such party ("X"), any Credit Support Provider of X or
any applicable Specified Entity of X consolidates or
amalgamates with, or merges with or into, or transfers all
or substantially all its assets to, another entity and such
action does not constitute an event described in Section
5(1)(viii) but the creditworthiness of the resulting,
surviving or transferee entity is materially weaker than
that of X, such Credit Support Provider or such Specified
Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as
appropriate, will be the Affected Party); or
(v) Additional Termination Event. If any "Additional
Termination Event" is specified in the Schedule or any
Confirmation as applying, the occurrence of such event (and,
in such event, the Affected party or Affected Parties shall
be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or
circumstance which would otherwise constitute or give rise to an
Event of Default also constitutes an Illegality, it will be
treated as an Illegality and will not constitute an Event of
Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any
time an Event of Default with respect to a party (the "Defaulting
Party") has occurred and is then continuing, the other party (the
"Non-defaulting Party") may, by not more than 20 days notice to
the Defaulting Party specifying the relevant Event of Default,
designate a day not earlier than the day such notice is effective
as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early
Termination Date in respect of all outstanding Transactions will
occur immediately upon the occurrence with respect to such party
of an Event of Default specified in Section 5(a)(vii)(1), (3),
(5), (6) or, to the extent analogous thereto, (8), and as of the
time immediately preceding the institution of the relevant
proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous
thereto, (8).
(b) Right to Terminate the Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected
Party will, promptly upon becoming aware of it, notify the
other party, specifying the nature of that Termination Event
and each Affected Transaction and will also give such other
information about that Termination Event as the other party
may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an
Illegality under Section 5(b)(i)(1) or a Tax Event occurs
and there is only one Affected Party, or if a Tax Event Upon
Merger occurs and the Burdened Party is the Affected Party,
the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv),
use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental
expenses) to transfer within 20 days after it gives notice
under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to
another of its Offices or Affiliates so that such
Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it
will give notice to the other party to that effect within
such 20 day period, whereupon the other party may effect
such a transfer within 30 days after the notice is given
under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii)
will be subject to and conditional upon the prior written
consent of the other party, which consent will not be
withheld if such other party's policies in effect at such
time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there are two
Affected Parties, each party will use all reasonable efforts
to reach agreement within 30 days after notice thereof is
given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) Right to Terminate. If:
(1) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b)(iii), as the case may be, has not
been effected with respect to all Affected Transactions
within 30 days after an Affected Party gives notice
under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit
Event Upon Merger or an Additional Termination Event
occurs, or a Tax Event Upon Merger occurs and the
Burdened Party is not the Affected Party, either party
in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in
the case of a Tax Event or an Additional Termination
Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination
Event if there is only one Affected Party may, by not
more than 20 days notice to the other party and
provided that the relevant Termination Event is then
continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date
in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is
given under Section 6(a) or (b), the Early Termination Date
will occur on the date so designated, whether or not the
relevant Event of Default or Termination Event is then
continuing
(ii) Upon the occurrence or effective designation of an
Early Termination Date, no further payments or deliveries
under Section 2(a)(i) or 2(e) in respect of the Terminated
Transactions will be required to be made, but without
prejudice to the other provisions of this Agreement. The
amount, if any, payable in respect of an Early Termination
Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable
following the occurrence of an Early Termination Date, each
party will make the calculations on its part, if any,
contemplated by Section 6(e) and will provide to the other
party a statement (1) showing, in reasonable detail, such
calculations (including all relevant quotations and
specifying any amount payable to its to be paid. In the
balance of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the
records of the party obtaining such quotation will be
conclusive evidence of the existence and accuracy of such
quotation.
(ii) Payment Date. An amount calculated as being due in
respect of any Early Termination Date under Section 6(e)
will be payable on the day that notice of the amount payable
is effective (in the case of an Early Termination Date which
is designated or occurs as a result of an Event of Default)
and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as
a result of a Termination Event. Such amount will be paid
together with (to the extent permitted under applicable law)
interest thereon (before as well as after judgement) in the
Termination Currency, from (and including) the relevant
Early Termination Date to (but excluding) the date such
amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the
actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date
occurs, the following provisions shall apply based on the
parties' election in the Schedule of a payment measure, either
`Market Quotation" or "Loss', and a payment method, either the
"First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it
will be deemed that "Market Quotation" or the "Second Method", as
the case may be, shall apply. The amount, if any, payable in
respect of an early Termination Date and determined pursuant to
this Section will be subject to any Set-off
(i) Events of Default. If the Early Termination Date results
from an Event of Default
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum
of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-
defaulting party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the Non-
defaulting Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing
to the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
If that amount is a positive number, the Defaulting Party will
pay it to the Non-defaulting Party; if it is a negative number,
the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect to of this Agreement. If that amount is
a positive number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the
Defaulting Party.
(ii) Termination Events, If the Early Termination Date
results from a Termination Event:
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions. and an amount will be
payable equal to (I) the sum of (a) one-behalf of
the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X")
and the Settlement Amount of the party with the
lower Settlement Amount ("Y") and (b) the
Termination Currency Equivalent of the Unpaid
Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to
Y; and
(B) if Loss applies, each party will determine its Loss
in respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of
the party with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay
it to X; if it is a negative number, X will pay the
absolute value of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an
Early Termination Date occurs because "Automatic Early
Termination" applies in respect of a party, the amount determined
under this Section 6(e) will be subject to such adjustments as
are appropriate and permitted by law to reflect payments or
deliveries made by one party to the other under this Agreement
(and retained by such other party) during the period from the
relevant Early Termination Date to the date for payment
determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market
Quotation applies an amount recoverable under this Section
6(e) is a reasonable pre-estimate of loss and not a penalty.
Such amount is payable for the loss of bargain and the loss
of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to
recover any additional damages as a consequence of such
losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any
interest or obligation in or under this Agreement may be
transferred (whether by way of security or otherwise) by either
party without the prior written consent of the other party,
except that:
(a) a party may make such a transfer of this Agreement pursuant
to a consolidation or amalgamation with, or merger with or into,
or transfer of all or substantially all its assets to, another
entity (but without prejudice to any other right or remedy under
this Agreement); and
(b) a party may make such a transfer of all or any part of its
interest in any amount payable to it from a Defaulting Party
under Section 6(e).
Any purported transfer that is not in compliance with this
Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under
this Agreement will be made in the relevant currency specified in
this Agreement for that payment (the "Contractual Currency"). To
the extent permitted by applicable law, any obligation to make
payments under this Agreement in the Contractual Currency will
not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which
payment is owed, acting in a reasonable manner and in good faith
in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for any reason
the amount in the Contractual Currency so received falls short of
the amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will, to the
extent permitted by applicable law, immediately pay such
additional amount in the Contractual Currency as may be necessary
to compensate for the shortfall. If for any reason the amount in
the Contractual Currency so received exceeds the amount in the
Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of
such excess.
(b) Judgements. To the extent permitted by applicable law, if
any judgment or order expressed in a currency other than the
Contractual Currency is rendered (i) for the payment of any
amount owing in respect of this Agreement, (ii) for the payment
of any amount relating to any early termination in respect of
this Agreement or (iii) in respect of a judgement or order of
another court for the payment of any amount described in (i) or
(ii) above, the party seeking recovery, after recovery in full of
the aggregate amount to which such party is entitled pursuant to
the judgment or order, will be entitled to receive immediately
from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of
sums paid in such other currency and will refund promptly to the
other party any excess of the Contractual Currency received by
such party as a consequence of sums paid in such other currency
if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual
Currency is converted into the currency of the judgement or order
for the purposes of such judgment or order and the rate of
exchange at which such party is able, acting in a reasonable
manner and in good faith in converting the currency received into
the Contractual Currency, to purchase the Contractual Currency
with the amount of the currency of the judgment or order actually
received by such party. The term "rate of exchange" includes,
without limitation, any premiums and costs of exchange payable in
connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable
law, these indemnities constitute separate and independent
obligations from the other obligations in this Agreement, will be
enforceable as separate and independent causes of action, will
apply notwithstanding any indulgence granted by the party to
which any payment is owned and will not be affected by judgment
being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it
will be sufficient for a party to demonstrate that it would have
suffered a loss had an actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to its
subject matter and supersedes all oral communication and prior
writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect
of this Agreement will be effective unless in writing (including
a writing evidenced by a facsimile transmission) and executed by
each of the parties or confirmed by an exchange of telexes or
electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections
2(a)(iii) and 6(c)(ii), the obligations of the parties under this
Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement,
the rights, powers, remedies and privileges provided in this
Agreement are cumulative and not exclusive of any rights, powers,
remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and
waiver in respect of it) may be executed and delivered in
counterparts (including by facsimile transmission), each of
which will be deemed an original.
(ii) The parties intend that they are legally bound by the
terms of each Transaction from the moment they agree to
those terms (whether orally or otherwise). A Confirmation
shall be entered into as soon as practicable and may be
executed and delivered in counterparts (including by
facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an
electronic messaging system., which in each case will be
sufficient for all purposes to evidence a binding supplement
to this Agreement. The parties will specify therein or
through another effective means that any such counterpart,
telex or electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any
right, power or privilege in respect of this Agreement will not
be presumed to operate as a waiver, and a single or partial
exercise of any right, power or privilege will not be presumed to
preclude any subsequent or further exercise, of that right, power
or privilege or the exercise of any other right, power or
privilege.
(g) Headings. The headings used in this Agreement are for
convenience of reference only and are not to affect the
construction of or to be taken into consideration in interpreting
this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying,
each party that enters into a Transaction through an Office other
than its head or home office represents to the other party that,
notwithstanding the place of booking office or jurisdiction of
incorporation or organization of such party, the obligations of
such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be
deemed to be repeated by such party on each date on which a
Transaction is entered into.
(b) Neither party may change the Office through which it makes
and receives payments or deliveries for the purpose of a
Transaction without the prior written consent of the other party,
(c) If a party is specified as a Multibranch Party in the
Schedule, such Multibranch Party may make and receive payments or
deliveries under any Transaction through any Office listed in the
Schedule, and the Office through which it makes and receives
payments or deliveries with respect to a Transaction will be
specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless
the other party for and against all reasonable out-of-pocket
expenses, including legal fees and Stamp Tax, incurred by such
other party by reason of the enforcement and protection of its
rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including but not limited to,
costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect
of this Agreement may be given in any manner set forth below
(except that a notice or other communication under Section 5 or 6
may not be given by facsimile transmission or electronic
messaging system) to the address or number or in accordance with
the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on
the date it is delivered;
(ii) if sent by telex, on the date the recipient's answer
back is received;
(iii) if sent by facsimile transmission, on the date
that transmission is received by a responsible employee of
the recipient in legible form (it being agreed that the
burden of proving receipt will be on the sender and will not
be met by transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt requested), on
the date that mail is delivered or its delivery is
attempted; or
(v) if sent by electronic messaging system, on the date
that electronic message is received, unless the date of that
delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that
communication is delivered (or attempted) or received, as
applicable, after the close of business on a Local Business
Day, in which case that communication shall be deemed given
and effective on the first following day that is a Local
Business Day.
(b) Change of Addresses. Either party may by notice to the
other change the address, telex or facsimile number or
electronic messaging system details at which notices or
other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and
construed in accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or
proceedings relating to this Agreement ("Proceedings"), each
party irrevocably:
(i) submits to the jurisdiction of the English courts, if
this Agreement is expressed to be governed by English law,
or to the non-exclusive jurisdiction of the courts of the
State of New York and the United States District Court
located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of
the State of New York; and
(ii) waives any objection which it may have at any time to
the laying of venue of any Proceedings brought in any such
court, waives any claim that such Proceedings have been
brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing
Proceedings in any other jurisdiction (outside, if this Agreement
is expressed to be governed by English law, the Contracting
States, as defined in Section 1(3) of the Civil Jurisdiction and
Judgements Act 1982 or any modification, extension or re-
enactment thereof for the time being in force) nor will the
bringing of Proceedings in any one or more jurisdictions preclude
the bringing of Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the
Process Agent (if any) specified opposite its name in the
Schedule to receive, for it and on its behalf, service of process
in any Proceedings. If for any reason any party's Process Agent
is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent
to service of process given in the manner provided for notices in
Section 12. Nothing in this Agreement will affect the right of
either party to serve process in any other manner permitted by
law.
(d) Waiver of Immunities. Each party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to
itself and its revenues and assets (irrespective of their use or
intended use), all immunity on the grounds of sovereignty or
other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific
performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or
enforcement of any judgment to which it or its revenues or assets
might otherwise be entitled in any Proceedings in the courts of
any jurisdiction and irrevocably agrees, to the extent permitted
by applicable law, that it will not claim any such immunity in
any Proceedings.
14. Definitions
As used in this Agreement:
"Additional Termination Event" has the meaning specified in
Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination
Event consisting of an Illegality, Tax Event or Tax Event Upon
Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination
Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any
person, any entity controlled, directly or indirectly, by the
person, any entity that controls, directly or indirectly, the
person or any entity directly or indirectly under common control
with the person. For this purpose, "control" of any entity or
person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:
(a) in respect of obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Defaulting Party,
the Default Rate;
(b) in respect of an obligation to pay an amount under Section
6(e) of either party from and after the date (determined in
accordance with Section 6(d)(iii) on which that amount is
payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable
(or which would have been but for Section 2(a)(iii)) by a Non-
defaulting Party, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution
or ratification of, or any change in or amendment to, any law (or
in the application or official interpretation of any law) that
occurs on or after the date on which the relevant Transaction is
entered into.
"consent" includes a consent, approval, action, authorization,
exemption, notice, filing, registration or exchange control
consent.
"Credit Event Upon Merger" has the meaning specified in Section
5(b).
"Credit Support Document" means any agreement or instrument that
is specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the
Schedule.
"Default Rate" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the relevant payee (as
certified by it) if it were to fund or of funding the relevant
amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance
with Section 6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and,
if applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not
be imposed in respect of a payment under this Agreement but for a
present or former connection between the jurisdiction of the
government or taxation authority imposing such Tax and the
recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or
resident of such jurisdiction, or having or having had a
permanent establishment or fixed place of business in such
jurisdiction, but excluding a connection arising solely from such
recipient or related person having executed, delivered, performed
its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified,
in the case of tax matters, by the practice of any relevant
governmental revenue authority) and "lawful and "unlawful" will
be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on
which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) (a) in
relation to any obligation under Section 2(a)(i), in the place(s)
specified in the relevant Confirmation or, if not so specified,
as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference,
in this Agreement, (b) in relation to any other payment, in the
place where the relevant account is located and, if different, in
the principal financial centre, if any, of the currency of such
payments, (c) in relation to any notice or other communication,
including notice contemplated under Section 5(a)(i), in the city
specified in the address for notice provided by the recipient
and, in the case of a notice contemplated by Section 2(b), in the
place where the relevant new account is to be located and (d) in
relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more
Terminated Transactions, as the case may be, and a party, the
Termination Currency Equivalent of an amount that party
reasonably determines in good faith to be its total Terminated
Transaction or group of Terminated Transactions, as the case may
be, including any loss of bargain, cost of funding or, at the
election of such party but without duplication, loss or cost
incurred as a result of its terminating, liquidating, obtaining
or reestablishing any hedge or related trading position (or any
gain resulting from any of them). Loss includes losses and costs
(or gains) in respect of any payment or delivery required to have
been made (assuming satisfaction of each applicable condition
precedent) on or before the relevant Early Termination Date and
not made, except, so as to avoid duplication, if Section
6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not
include a party's legal fees and out-of-pocket expenses referred
to under Section 11. A party will determine its Loss as of the
relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or
more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount
determined on the basis of quotations from reference Market-
makers. Each quotation will be for an amount, if any, that would
be paid to such party (expressed as a negative number) or by such
party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing
Credit Support Document with respect to the obligations of such
party) and the quoting Reference Market-maker to enter into a
transaction (the "Replacement Transaction") that would have the
effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was
absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that
date. For this purpose. Unpaid Amounts in respect of the
Terminated Transaction or group of Terminated Transactions are to
be excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be included.
The Replacement Transaction would be subject to such
documentation as such documentation as such party and the
Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each
reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time(without regard
to different time zones) on or as soon as reasonably practicable
after the relevant Early Termination Date. The day and time as
of which those quotations are to be obtained will be selected in
good faith by the party obliged to make a determination under
Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest
and lowest values. If exactly three such quotations are
provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this
purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded.
If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost
(without proof or evidence of any actual cost) to the Non-
defaulting Party (as certified by it) if it were to fund the
relevant amount.
"Non-defaulting Party" has the meaning as specified in Section
6(a).
"Office" means a branch or office of a party, which may be such
party's head or home office.
"Potential Event of Default" means any event which, with the
giving of notice or the lapse of time or both, would constitute
an Event of Default.
"Reference Market-makers" means four leading dealers in the
relevant market selected by the party determining a Market
Quotation in good faith (a) from among dealers of the highest
credit standing which satisfy all the criteria that such party
applies generally at the time in deciding whether to offer or to
make an extension of credit and (b) to the extent practicable,
from among such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the
jurisdictions (a) in which the party is incorporated, organised,
managed and controlled or considered to have its seat, (b) where
an Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means, with respect to a party, the
jurisdictions (a) in which the party is incorporated, organised,
managed and controlled or considered to have its seat, (b) where
an Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Set-off" means set-off, offset, combination of accounts, rights
or retention or withholding or similar right or requirement to
which the payer of an amount under Section 6 is entitled or
subject (whether arising under this Agreement, another contract,
applicable law or otherwise) that is exercised by, or imposed on,
such payer.
"Settlement Amount" means, with respect to a party and any Early
Termination Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
determined; and
(b) such party's Loss (whether positive or negative and without
reference to any Unpaid Amounts) for each Terminated Transaction
or group of Terminated Transactions for which a Market Quotation
cannot be determined or would not (in the reasonable belief of
the party making the determination) produce a commercially
reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject tot he Schedule, any
obligation (whether present or future, contingent or otherwise,
as principal or surety or otherwise) in respect of borrowed
money.
"Specified Transaction" means, subject to the Schedule, (a) any
transaction (including an agreement with respect thereto) now
existing or hereafter entered into between one party to this
Agreement (or any Credit Support Provider of such party or any
applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other
party or any applicable Specified Entity of such other party)
which is a rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-
currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of
these transactions), (b) any combination of these transactions
and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or
similar tax.
"Tax" means any present or future tax, levy, impost, duty,
charge, assessment or fee of any nature (including interest,
penalties and additions thereto) that is imposed by any
government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration,
documentation or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early
Termination Date (a) if resulting from a Termination Event, all
Affected Transactions and (b) if resulting from an Event of
Default, all Transactions (in either case) in effect immediately
before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount
denominated in the Termination Currency, such Termination
Currency amount and, in respect of any amount denominated in a
currency other than the Termination Currency (the "Other
Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to
purchase such amount of such Other currency as at the relevant
Early Termination Date, or, if the relevant Market Quotation or
Loss (as the case may be), is determined as of a later date, that
later date, with the Termination Currency at the rate equal to
the spot exchange rate of the foreign exchange agent (selected as
provided below) for the purchase of such Other Currency with the
Termination Currency at or about 11:00 a.m. (in the city in which
such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase
of such Other currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent
will, of only one party is obliged to make a determination under
Section 6(e), be selected in good faith by that party and
otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax
Event Upon Merger or, if specified to be applicable, a Credit
Event Upon Merger or an Additional Termination Event.
"Termination Rate: means a rate per annum equal to the arithmetic
mean of the cost (without proof or evidence of any actual cost)
to each party (as certified by such party) if it were to fund or
of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an
Early Termination Date, the aggregate of (a) in respect of all
Terminated Transactions, the amounts that become payable (or that
would have become payable but for Section 2(a)(iii)) to such
party under Section 2(a)(i) on or prior to such Early Termination
Date and which remain unpaid as at such Early Termination Date
and (b) in respect of each Termination Transaction, for each
obligation under Section 2(a)(i) which was (or would have been
but for Section 2(a)(iii) required to be settled by delivery to
such party on or prior to such Early Termination Date and which
has not been so settled as at such Early Termination Date, an
amount equal to the fair market value of that which was (or would
have been) required to be delivered as of the originally
scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency
of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or
performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts of interest will be calculated on
the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in
clause(b) above shall be reasonably determined by the party
obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the termination
Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date
specified on the first page of this document.
Bhote Koshi Power Company International Finance Corporation
Private Limited
By: /s/ William C. Nordlund By: /s/ N. Moukarbel
Name: William C. Nordlund Name: Nabil Moukarbel
Date December 12, 1997 Date: December 12, 1997
EXHIBIT 10..153.01
SCHEDULE
to the
Master Agreement
dated as of December 12, 1997
between
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED (Party A)
and
INTERNATIONAL FINANCE CORPORATION (IFC or Party B)
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A
for the purpose of:
Section 5(a)(v).........................Not Applicable
Section 5(a)(vi)........................Not Applicable
Section 5(a)(vii).......................Not Applicable
Section 5(b)(iv)........................Not Applicable
and in relation to Party B for the purpose of:
Section 5(a)(v).........................Not Applicable
Section 5(a)(vi)........................Not Applicable
Section 5(a)(vii).......................Not Applicable
Section 5(b)(iv)........................Not Applicable
(b) "Specified Transaction" will have the meaning specified
in Section 14 of this Agreement.
(c) The "Cross Default" provisions of Section 5(a)(vi) will
apply to Party A and will not apply to Party B.
If such provisions apply:
"Specified Indebtedness" will have the meaning specified
in Section 14 of this Agreement. In addition, any
obligation to pay or deliver in respect of a Derivative
shall also constitute "Specified Indebtedness" for
purposes of clause (2) of Section 5(a)(vi), if the
obligation is not performed as and when due, whether on a
scheduled payment or delivery date, in connection with
early termination or liquidation or otherwise. For these
purposes, "Derivative" means each kind of transaction
listed in the definition of "Specified Transaction"
entered into between the relevant party or Specified
Entity, on the one hand, and any person, on the other.
"Threshold Amount" means, in respect of Party A, US$0.
(d) The "Credit Event Upon Merger" provisions of Section
5(b)(iv) will apply to Party A and will not apply to
Party B.
(e) The "Automatic Early Termination" provisions of Section
6(a) will not apply to Party A and will not apply to
Party B.
(f) Payments on Early Termination. For the purpose of
Section 6(e) of this Agreement:
(i) Loss will apply.
(ii) The First Method will apply.
(g) "Termination Currency" means, for a Specified
Transaction, the currency specified in the Confirmation
for that Transaction, if such currency is specified and
freely available, and otherwise United States Dollars.
(h) Additional Termination Event in respect of Party A and
with respect to any Transaction. Upon the prepayment in
whole or in part of the Underlying Obligation (as defined
in the Confirmation evidencing such Transaction), Party B
shall have the right, upon five (5) Business Days notice
to Party A, to designate an Early Termination Date in
respect of such Transaction or in respect of a portion of
such Transaction under this Agreement (and Party A shall
be the Affected Party).
Part 2. Tax Representations.
(a) Payer Representations. For the purpose of Section 3(e)
of this Agreement, Party A will, and IFC will not, make
the following representation, and IFC shall make the
alternative representations stated in Part 5(c) of this
Schedule:
It is not required by any applicable law, as modified by
the practice of any relevant governmental revenue
authority, of any Relevant Jurisdiction to make any
deduction or withholding for or on account of any Tax
from any payment to be made by it to the other party
under this Agreement. In making this representation, it
may rely on (i) the accuracy of any representations made
by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) of this Agreement and the
accuracy and effectiveness of any document provided by
the other party pursuant to Section 4(a)(i) of this
Agreement and (iii) the satisfaction of the agreement of
the other party contained in Section 4(d) of this
Agreement.
(b) Payee Representations. For the purpose of Section 3(f)
of this Agreement, Party A makes the representations
specified below, if any, and IFC shall make the
alternative representations for purposes of Section 3(f)
of this Agreement as set forth in Part 5(c) of this
Schedule:
(i) The following representation will not apply to Party
A:
It is fully eligible for the benefits of the
"Business Profits" or "Industrial and Commercial Profits"
provision, as the case may be, the "Interest" provision
or the "Other Income" provision (if any) of the Specified
Treaty with respect to any payment described in such
provisions and received or to be received by it in
connection with this Agreement and no such payment is
attributable to a trade or business carried on by it
through a permanent establishment in the Specified
Jurisdiction.
(ii) The following representation will apply to Party A:
Each payment received or to be received by it in
connection with this Agreement will be effectively
connected with its conduct of a trade or business in the
Specified Jurisdiction.
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of this
Agreement, each party agrees to deliver the following
documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
Party required Form/Document/ Date by which to
to Certificate be
deliver document delivered
N/A N/A
N/A
(b) Other documents to be delivered are:
Party
required
to Covered by
deliver Section 3(d)
document Represen-
Form/Document/ Delivery Date tation
Certificate
Party A Evidence of the authority Prior to execution Yes
and authority, incumbency and date of this
Party B specimen signature of Agreement.
each person executing this
Agreement on its behalf;
Party A Evidence of the authority Prior to execution Yes
and authority, incumbency and date of relevant
Party B specimen signature of each confirmation.
each person executing a
Confirmation on its behalf;
Party A Certified copies of Prior to execution Yes
and documents evidencing its date of this
Party B authority to execute and Agreement.
deliver this Agreement
and each Confirmation,
and to perform its
obligations hereunder;
Party A Any document required or As soon as practicable Yes
permitted to be delivered following request
under the Risk Management by Party B.
Facility Agreement, if
applicable; and
Party A A Legal Opinion covering Prior to execution Yes
any of the above (as date of this
determined by Party B). Agreement.
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a)
of this Agreement:
Address for notices or communication to Party A:
Address: c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile No.: (972) 980-6815
Telephone No.: (972) 980-7159
Electronic Messaging System Details:
Address for notices or communications to Party B:
Address: 2121 Pennsylvania Avenue, NW
Washington, D.C., 20433, U.S.A.
Attention: Director, Treasury Operations Department
Telex No.: 248423
Answerback: World Bank
Facsimile No.: (202) 676-4376
Telephone No.: (202) 473-8796
Electronic Messaging System Details:
(b) Process Agent. For the purpose of Section 13(c) of this
Agreement:
Party A appoints as its
Process Agent: CT Corporation 1633 Broadway
New York, New York
Party B appoints its Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will not apply
to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of
this Agreement:
Party A is not a Multibranch Party and Party B is not a
Multibranch Party.
(e) Calculation Agent. The Calculation Agent will be Party B
or its designee.
(f) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New
York (without reference to choice of law doctrine).
(g) Netting of Payments. Subparagraph (ii) of Section 2(c)
of this Agreement will not apply.
(h) "Affiliate" will have the meaning specified in Section 14
of this Agreement unless another meaning is specified
here. As regards IFC the term "Affiliate" shall not
include the International Development Association, the
International Bank for Reconstruction and Development or
the Multilateral Investment Guarantee Agency.
Part 5. Other Provisions.
(a) Status. The "Status" provisions of Section 3(a)(i) shall
not apply to IFC. In place thereof IFC represents to
Party A that it is an international organization, duly
established and validly existing under its Articles of
Agreement among the member countries signatory thereto
(the "Articles").
(b) Binding Obligations. The "Obligations Binding"
provisions of Section 3(a)(v) shall not apply to IFC. In
place thereof IFC represents to Party A that its
obligations under this Agreement constitute its legal,
valid and binding obligations.
(c) Tax Representations of IFC. The following shall
constitute the Payer and Payee Tax Representations of IFC
for purposes of Section 3(e) and Section 3(f) of this
Agreement: "Under its Articles IFC, its assets, property,
income and its operations and transactions authorized by
the Articles are immune from all taxation and from all
customs duties levied by countries that are members of
IFC. IFC is also immune from liability for the
collection or payment of any tax or duty levied by such
member country."
(d) Withholding Tax. IFC shall have no obligation to make
payments of additional amounts pursuant to the "Deduction
or Withholding for Tax" provision of Section 2(d).
(e) Stamp Tax. IFC shall have no obligation to make any
payment under the "Payment of Stamp Tax" provisions of
Section 4(e).
(f) Specified Information. The provisions of Section
4(a)(iii) of this Agreement will not apply to either
party.
(g) Default. For the purpose of Section 5(a)(vi), two new
subsections (3) and (4) shall be added as follows:
"(3) the failure of such party or any Specified Entity to
comply with any provision, representation or covenant of
a credit or guarantee agreement (after giving effect to
any applicable grace period); or
(4) such party is in default under any provision of the
Risk Management Facility Agreement."
(h) Bankruptcy. The "Bankruptcy" event of default set forth
in Section 5(a)(vii) shall not apply to IFC. In place
thereof the following event of default shall apply to
IFC: "IFC's operations shall have been permanently
suspended pursuant to Article V, Section 5 of the
Articles."
(i) Jurisdiction. The "Jurisdiction" provisions of Section
13(b) shall not be taken to limit the right of IFC when
it is a defendant in any action brought against it in the
United States, at any time before the trial thereof, to
remove such action from a State court into a district
court of the United States for the proper district, under
Section 8 of the International Finance Corporation Act
(22 U.S.C. 282f).
(j) Waiver of Immunities. The "Waiver of Immunities"
provisions of Section 13(d) shall not apply to IFC.
(k) IFC Immunities. A new Section 13(e) shall be added to
read as follows:
"Nothing in this Agreement shall operate as or be
construed to constitute a waiver, renunciation or any
other modification of any privilege or immunity of IFC
under Article VI of its Articles or under any applicable
law. In particular, Party A acknowledges that in
accordance with IFC's Articles, actions may be brought
against IFC only in a court of competent jurisdiction in
the territories of a member in which IFC has an office,
has appointed an agent for the purpose of accepting
service or notice of process, or has issued or guaranteed
securities. Party A further acknowledges that:
(i) No actions shall be brought by members of IFC or
persons acting for or deriving claims from such members.
(ii) The property and assets of IFC, wherever located and
by whomsoever held, shall be immune from all forms of
seizure, attachment or execution before the delivery of
final judgment against IFC.
(iii) The archives of IFC shall be inviolable."
(l) Reference Market Makers. The definition of "Reference
Market-makers" shall be amended by inserting after the
word "which" in the second line the words "in the case of
Party B are otherwise satisfactory to such party and
which in the case of Party A ..."
(m) Facsimile Transmissions. Section 12(a)(iii) shall be
deleted in its entirety and replaced by the following:
"(iii) if sent by facsimile transmission, on the date
receipt is confirmed by return facsimile transmission or
by other manner set forth in this Section 12(a)."
(n) Electronic Messaging. Where a confirmation is created by
an exchange of electronic messages, such confirmation
will constitute a "Confirmation" as referred to in this
Agreement even where not so specified in the
confirmation, and will supplement, form part of, and be
subject to this Agreement, and all provisions contained
or incorporated by reference in this Agreement will
govern the Confirmation except as modified in the
Confirmation.
(o) Forward Rate Transactions. For the purpose of any
Transaction that is a forward rate agreement, unless
otherwise specified within the relevant confirmation, FRA
Discounting will be applicable and the convention for
adjustment of Payment Dates, Reset Dates and the
Termination Date will be Modified Following Business Day.
(p) Recording. Each party (i) consents to the recording of
the telephone conversations of trading and marketing
personnel of the parties in connection with this
Agreement or any potential Transaction and (ii) agrees to
obtain any necessary consent of, and give notice of such
recording to, such personnel of it.
(q) Definitions. The definitions and provisions contained in
the 1991 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc.
modified in accordance with paragraph (r) below (the
"1991 Definitions"), are incorporated into any
Confirmation which supplements and forms part of this
Agreement unless otherwise specified in the relevant
Confirmation. In the event of any conflict between this
Agreement and the provisions of the 1991 Definitions, the
provisions of this Agreement apply.
(r) Transactions. All references in the 1991
Definitions to "Swap Transactions" are deemed to
include "Transactions" as defined in this Agreement
and in any Confirmation which supplements and forms
part of this Agreement.
(s) Confirmations. Each Transaction shall be evidenced
by a Confirmation in writing signed by the parties
substantially in the form of Exhibit I to the 1991
Definitions.
(t) Interest Rate Caps, Collars and Floors Addendum.
Paragraph 4 to the May 1989 Addendum to the
Schedule to Interest Rate and Currency Exchange
Agreement, published by the International Swaps and
Derivatives Association, Inc., relating to Interest
Rate Caps, Collars and Floors and attached hereto
as Annex A is incorporated in this Agreement by
this reference and made a part of this Agreement to
the same extent as if such Addendum were set forth
in full in this Agreement.
(u) Options. Paragraph 5 to the July 1990 Addendum to
the Schedule to the Interest Rate Swap Agreement,
published by the International Swaps and
Derivatives Association, Inc., relating to options
is attached as Annex B and is incorporated in this
Agreement by this reference and made a part of this
Agreement to the same extent as if such Addendum
were set forth in full in this Agreement.
(v) Legal Opinion. As a condition of effectiveness of
this Agreement, Party B shall have received a legal
opinion from counsel for Party B, concurred in by
counsel for Party A, with respect to the
authorization, execution, delivery, legality,
validity and enforcement of this Agreement and the
Risk Management Facility Agreement and the
Specified Transactions to be executed thereunder,
and such opinion shall be in form and substance
satisfactory to Party B.
(w) Reimbursement of Expenses.
(i) Party A shall pay to Party B the fees
described in the Risk Management Facility Agreement
in accordance with the provisions thereof.
(ii) Party A shall pay to Party B, or as Party
B may direct, the fees and expenses of Party B's
counsel in Nepal incurred in connection with the
giving of any legal opinions required by Party B
under this Agreement, the Risk Management Facility
Agreement, if any, and in connection with any
Specified Transaction.
(x) Eligible Swap Participant. Section 3(a) of this
Agreement is amended to add the following new
subsection (vi):
"(vi) Eligible Swap Participant". It is an
"eligible swap participant" as such term is defined
in Section 35.1(b)(2) of the Regulations of the
Commodity Futures Trading Commission."
(y) Commodity Definitions. The 1993 Commodity
Derivatives Definitions published by ISDA (the
"Commodity Definitions") are incorporated by
reference herein. Any terms used and not otherwise
defined herein which are contained in the Commodity
Definitions shall have the meaning set forth
therein.
(z) FX Definitions. The 1992 ISDA FX and Currency
Option Definitions published by ISDA (the "FX
Definitions") are incorporated by reference herein.
Any terms used and not otherwise defined herein
which are defined in the FX Definitions shall have
the meaning set forth therein.
ANNEX A
International Swap Dealers Association, Inc.
May 1989 Addendum to Schedule to
Interest Rate and Currency Exchange Agreement
Interest Rate Caps, Collars and Floors
(1) As used in this Agreement or in a Confirmation (i)
"Rate Protection Transaction" will mean any Swap Transaction that
is identified in the related Confirmation as a Rate Protection
Transaction, Rate Cap Transaction, Rate Floor Transaction or Rate
Collar Transaction and (ii) "Specified Swap" means,
notwithstanding Section 14 of this Agreement but subject to Part
1 of this Schedule, any rate swap, rate cap, rate floor, rate
collar, currency exchange transaction, forward rate agreement or
other exchange or rate protection transaction, or any combination
of such transactions or agreements or any option with respect to
any such transaction now existing or hereafter entered into
between one party to this Agreement (or any applicable Specified
Entity) and the other party to this Agreement (or any applicable
Specified Entity).
(2) Notwithstanding anything to the contrary in this
Agreement or in any Interest Rate and Currency Exchange
Definitions published by the International Swap Dealers
Association, Inc. and incorporated in any Confirmation, the
following provisions will apply with respect to a Rate Protection
Transaction:
(a) the Floating Rate applicable to any Calculation Period will
be (i) with respect to a Floating Rate Payer for which a Cap
Rate is specified, the excess, if any, of the Floating Rate
calculated as provided in this Agreement (without reference
to this paragraph 2(a)) over the Cap Rate and (ii) with
respect to a Floating Rate Payer for which a Floor Rate is
specified, the excess, if any, of the Floor Rate over the
Floating Rate calculated as provided in this Agreement
(without reference to this paragraph 2(a)):
(b) "Cap Rate" means, in respect of any Calculation Period, the
per annum rate specified as such for that Calculation Period,
and
(c) "Floor Rate" means, in respect of any Calculation Period,
the per annum rate specified as such for that Calculation
Period.
(3) For purposes of the determination of a Market Quotation
for a Terminated Transaction in respect of which a party ("X")
had, immediately prior to the designation or occurrence of the
relevant Early Termination Date, no future payment obligation,
whether absolute or contingent, under Section 2(a)(i) of this
Agreement with respect to the Terminated transaction, (i) the
quotations obtained from Reference Market-makers shall be such as
to preserve the economic equivalent of the payment obligations of
the party ("Y") that had, immediately prior to the designation or
occurrence of the relevant Early Termination Date, future payment
obligations, whether absolute or contingent, under Section
2(a)(i) of this Agreement with respect to the Terminated
Transaction and (ii) if X is making the determination such
amounts shall be expressed as positive amounts and if Y is making
the determination such amounts shall be expressed as negative
amounts.
(4) Notwithstanding the terms of Sections 5 and 6 of this
Agreement, if at any time and so long as one of the parties to
this Agreement ("X") shall have satisfied in full all its payment
obligations under Section 2(a)(i) of this Agreement and shall at
the time have no future payment obligations, whether absolute or
contingent, under such Section, then unless the other party ("Y")
is required pursuant to appropriate proceedings to return to X or
otherwise returns to X upon demand of X any portion of any such
payment, (a) the occurrence of an event described in Section 5(a)
of this Agreement with respect to X or any Specified Entity of X
shall not constitute an Event of Default or a Potential Event of
Default with respect to X as the Defaulting Party and (b) Y shall
be entitled to designate an Early Termination Date pursuant to
Section 6 of this Agreement only as a result of the occurrence of
a Termination Event set forth in (i) either Section 5(b)(i) or
5(b)(ii) of this Agreement with respect to Y as the Affected
Party or (ii) Section 5(b)(iii) of this Agreement with respect to
Y as the Burdened Party.
ANNEX B
International Swap Dealers Association, Inc.
July 1990 Addendum to Schedule to
Interest Rate Swap Agreement
Options
(1) As used in this Agreement or in any Confirmation. "Option"
means any Rate Swap Transaction that is identified in the related
Confirmation as an Option and provides for the grant by Seller to
Buyer of (i) the right to cause an underlying Rate Swap
Transaction, the terms of which are identified in that
Confirmation (an "Underlying Rate Swap Transaction"), to become
effective, (ii) the right to cause Seller to pay Buyer pursuant
to Section 2(a) of this Agreement the Cash Settlement Amount, if
any, in respect of the Underlying Rate Swap Transaction on the
Cash Settlement Payment Date, (iii) the right to cause the
Optional Termination Date to become the Termination Date of the
related Rate Swap Transaction that is identified in that
Confirmation (a "Related Rate Swap Transaction") or (iv) any of
the right or rights specified in the related Confirmation. An
Option may provide for the grant of one or more of the foregoing
rights, all of which can be identified in a single Confirmation.
(2) The following capitalized terms, if used in relation to an
Option, have the respective meanings specified in or pursuant to
the related Confirmation (or elsewhere in this Agreement):
"Buyer", "Seller", "Option Premium", "Option Premium Payment
Date", "Cash Settlement Payment Date", "Cash Settlement Amount",
"Optional Termination Date", "Exercise Terms" and "Option
Exercise Period".
(3) The following provisions will apply with respect to an Option:
(a) Buyer will pay Seller pursuant to Section 2(a) of this
Agreement the Option Premium, if any, on the Option Premium
Payment Date or Dates.
(b) On the terms set forth in this Agreement (including the
related Confirmation), Seller grants to Buyer pursuant to the
Option, (I) if "Physical Settlement" is specified to be
applicable to the Option, the right to cause the Underlying Rate
Swap Transaction to become effective, (ii) if "Cash Settlement"
is specified to be applicable to the Option, the right to cause
Seller to pay Buyer pursuant to Section 2(a) of this Agreement
the Cash Settlement Amount, if any, in respect of the Underlying
Rate Swap Transaction on the Cash Settlement Payment Date or
(iii) if "Optional Termination" is specified to be applicable to
the Option, the right to cause the Optional Termination Date to
become the Termination Date of the Related Rate Swap Transaction.
The Underlying Rate Swap Transaction, if any, shall not become
effective unless (i) "Physical Settlement" is specified to be
applicable to the Option and (ii) the right to cause that
Underlying Rate Swap Transaction to become effective has been
exercised.
(c) Buyer may exercise the right or rights granted pursuant to
the Option only by delivering irrevocable notice (a "Notice of
Exercise") to Seller (which, notwithstanding any other provision
of this Agreement or the Code, may be delivered orally (including
by telephone)). The Notice of Exercise must become effective
during the Option Exercise Period and must include the Exercise
Terms, if any.
(d) Buyer will, if "Written Confirmation" is specified to be
applicable to the Option or upon demand from Seller (which
notwithstanding any other provision of this Agreement or the
Code, may be delivered orally (including by telephone)), (i)
execute a written confirmation confirming the substance of the
Notice of Exercise and deliver the same to Seller or (ii) issue a
telex to Seller setting forth the substance of the Notice of
Exercise. Buyer shall cause such executed written confirmation
or telex to be received by Seller within one Local Banking Day
following the date that the Notice of Exercise or Seller's
demand, as the case may be, becomes effective. If not received
within such time, Buyer will be deemed to have satisfied its
obligations under the immediately preceding sentence at the time
that such executed written confirmation or telex becomes
effective.
(e) Any notice or communication given, and permitted to be
given, orally (including by telephone) in connection with the
Option will be effective when actually received by the recipient.
(4) For purposes of the determination of a Market Quotation
for a Terminated Transaction that is identified as an Option, the
quotations obtained from Reference Market-makers shall take into
account, as of the relevant Early Termination Date, the economic
equivalent of the right or rights granted pursuant to that Option
which are or may become exercisable.
(5) Notwithstanding the terms of Sections 5 and 6 of this
Agreement and Section 11.6 of the Code, if at any time and so
long as the parties to this Agreement ("X") shall have satisfied
in full all its payment obligations under Section 2(a) of this
Agreement and shall at the time have no future payment
obligations, whether absolute or contingent, under such Section,
then unless the other party ("Y") is required pursuant to
appropriate proceedings to return to X or otherwise returns to X
upon demand of X any portion of any such payment, (a) the
occurrence of an event described in Section 5(a) of this
Agreement with respect to X or any Specified Entity of X shall
not constitute an Event of Default or Potential Event of Default
with respect to X as the Defaulting Party and (b) Y shall be
entitled to designate an Early Termination Date pursuant in (I)
either Section 5(b)(i) or 5(b)(ii) of this Agreement with respect
to Y as the Affected Party or (ii) Section 5(b)(iii) of this
Agreement with respect to Y as the Burdened Party. For purposes
of this Agreement. "Potential Event of Default" means an event
that with the giving of notice or lapse of time (or both) would
become an Event of Default.
EXHIBIT 10.154
[NEPAL ELECTRICITY AUTHORITY LETTERHEAD]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
U.S.A.
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasae 40
D-50933Koln
Federal Republic of Germany
Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-001
U.S.A.
December 9, 1997
RE: Upper Bhote Koshi Hydroelectric Project
Ladies and Gentlemen:
Reference is hereby made to that certain letter agreement
(the "Letter") dated May 25, 1997 by and among Nepal Electricity
Authority ("NEA"), International Finance Corporation ("FIC") and
Wilmington Trust Company, as Trustee and acknowledged and agreed
to by Bhote Koshi Power Company Private Limited ("BKPC").
Capitalized terms used herein, unless otherwise defined
herein, shall have their respective meanings as set forth in the
Letter.
Pursuant to such Letter, NEA, among other things,
acknowledges and consents to the assignment by BKPC of the
Assigned Agreement, including, without limitation, the right to
receive all amounts payable under the Assigned Agreement by NEA,
to Wilmington Trust Company, as Trustee for the benefit of IFC.
DEG-Deutsche Investitions-und Entwicklungsgesellschaft MbH
("DEB") has agreed, pursuant to that certain DEG-Investment
Agreement to be entered into between DEG and BKPC (the "DEG
Investment Agreement") to make loans in the aggregate principal
amount of up to Twenty-two million Deutche Marks to BKPC for the
purpose of financing a portion of the costs of construction of
BKPC's hydroelectric power facility in the Sindhupalchok District
of Nepal (the "Project").
In furtherance of the financing of the Project, NEA hereby
agrees as follows:
1. DEG shall be deemed to be a "Lender" providing
financing to BKPC in connection with the Project and shall be
entitled to all rights and benefits as a Lender under the Letter.
All references to IFC in the letter shall be deemed to include
DEG.
2. All references to "financing documents" and "security
documents" in the Letter shall be deemed to include the DEG
Investment Agreement and alal loan and security documents
executed in connection therewith.
3. DEG, on behalf of itself, shall be entitled to deliver
to NEA any and all notices that IFC, on behalf of itself, may be
entitled to deliver pursuant to the Letter and NEA to recognize
and accept any such notices.
4. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE KINGDOM OF NEPAL WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
5. NEA acknowledges and agrees that the activities
contemplated by this letter are commercial in nature rather than
governmental or public, and therefore acknowledges and agrees
that the right of immunity does not and will not arise with
respect to such activities or in any legal action or proceeding
arising out of or relating to this letter in respect of itself
and its properties.
6. NEA hereby irrevocably agrees that any suit, action or
proceeding arising out of or relating to this letter may be
instituted in the United States of America in any Federal or
State Court sitting in the State of New York, and NEA irrevocably
waives, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of
this venue or the jurisdiction or the convenience of the forum of
any such suit, action, or proceeding an dirrevocably submits
generally and unconditionally to the jurisdiction of any such
court, in any such suit, action, or proceeding. NEA designates
and appoints for the term of this letter, Nepal's Permanent
Mission to the United Nations, 820 Second Avenue, Suite 202, New
York, N.Y. 10017, Telephone (202) 370-4188. Fax: (202) 953-
2038 as its authorized agents to accept, receive, and acknowledge
for and on behalf of it and its property service of any and all
process which may be served in any suit, action, or proceeding of
the type referred to above in the State of New York. NEA
irrevocably agrees that any summons and complaint served on its
agent shall be in the English language. Nothing herein shall
affect the right of any party hereto to commence legal
proceedings in Nepal or, to the extent permitted by the laws of
Nepal, in any other jurisdiction.
7. NEA acknowledges and agrees that Wilmington Trust
Company will act as the Trustee for the benefit of both IFC and
DEG.
8. NEA confirms the representation and warranties made in
paragraph 11 of this Letter as if made as of the date hereof,
which representation and warranties are incorporated by reference
herein, to and for the benefit of each of the Trustee, IFC and
DEG, as if fully set forth herein.
9. This letter shall terminate and have no further effect
after the date on which all amounts payable by BKPC to IFC and
DEG under the lender documents shall have been paid in full, and
the Trustee shall have provided notice thereof to NEA, which
notice the Trustee shall provide within (30) days following
payment in full of all such amounts to IFC and DEG under such
financing documents.
10. NEA acknowledges that this letter is for your benefit
and for the benefit of your respective transferees, successors
and assigns, and any participant in the IFC loans to BKPC, each
of which may rely on this letter as though addressed to such
person on the date hereof.
Very truly yours,
NEPAL ELECTRICITY AUTHORITY
By: _________________________
Name: Kirti Chand Thakur
Title: Managing Director
Accepted:
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: __________________________
Name: William C. Nordlund
Title: Executive Vice President
INTERNATIONAL FINANCE CORPORATION, as Lender
By: __________________________
Name: Nabil Moukarbel
Title: Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT mbh
By: __________________________
Name: Boif Greenwald
Title: Authorized Signatory
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely in its capacity as Trustee
By: __________________________
Name:
Title: Authorized Signatory
Acknowledge, agreed and the undersigned further represents that
it is not in default under any way material covenant or
obligation under this letter or under the Assigned Agreement and
no such default has occurred prior to the date hereof.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: __________________________
Name: William C. Nordlund
Title: Executive Vice President
EXHIBIT NO. 10.155
INVESTMENT NUMBER 7365
Risk Management Facility Agreement
between
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
INTERNATIONAL FINANCE CORPORATION
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
Definitions
Section 1.2. Interpretation 5
Section 1.3. Business Day Adjustment 6
ARTICLE 2
Risk Management Facility
Section 2.1. Risk Management Facility 6
Section 2.2. Purposes and Criteria 6
Section 2.3. Master Agreement 6
Section 2.4. Front-End Fee; Commitment Fee; Fees
for Eligible Transactions 7
Section 2.5. Calculation of Fees 7
Section 2.6. Security 7
ARTICLE 3
Payments
Section 3.1. Form of Payment 8
Section 3.2. No Deduction for Taxes 8
Section 3.3. Survival of Provisions 8
Section 3.4. Additional Costs, Expenses or Losses 8
Section 3.5. Default Interest 9
ARTICLE 4
Representations and Warranties
Section 4.1. Representations and Warranties 9
Section 4.2. Repetition of Representations 10
Section 4.3. IFC Reliance 10
Section 4.4. Rights and Remedies Not Limited 10
ARTICLE 5
Conditions of Effectiveness
Section 5.1. Initial Conditions 11
Section 5.2. Conditions to all Eligible Transactions 12
Section 5.3. Certificate of BKPC 13
Section 5.4. No Implied Waiver 13
ARTICLE 6
Particular Covenants
Section 6.1. Affirmative Covenants 14
Section 6.2. Negative Covenant 15
Section 6.3. Taxes on Documents 15
ARTICLE 7
Events of Default
Section 7.1. Consequences of Events of Default 15
Section 7.2. Events of Default 16
Section 7.3. Notice of Event 17
Section 7.4. Saving of Rights 17
ARTICLE 8
MISCELLANEOUS
Section 8.1. Communications 17
Section 8.2. Termination of Agreement 18
Section 8.3. English Language 18
Section 8.4. Expenses 19
Section 8.5. Governing Law, Choice of Forum. 19
Section 8.6. General Indemnity 20
Section 8.7. Prohibition and Enforceability 20
Section 8.8. Successors and Assigns 20
Section 8.9. Amendments 21
Section 8.10. Remedies and Waivers 21
Section 8.11. No Other Agreements 21
Section 8.12. Counterparts 21
SCHEDULE 1
Form of Certificate of Bhote Koshi Power Company Private Limited
RISK MANAGEMENT FACILITY AGREEMENT
AGREEMENT dated as of the Closing Date, between BHOTE KOSHI
POWER COMPANY PRIVATE LIMITED ("BKPC") a private limited
liability company organized and existing under the laws of the
Kingdom of Nepal ("Nepal") and INTERNATIONAL FINANCE CORPORATION
("IFC").
WHEREAS:
(A) Pursuant to the terms of that certain IFC Special
Conditions dated as of the date hereof between BKPC and IFC and
that certain Investment Agreement General Conditions dated as of
the date hereof among BKPC, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH (the "General Conditions," and
together with the IFC Special Conditions, the "IFC Investment
Agreement"), IFC has agreed, inter alia, to make a loan to BKPC
in the aggregate principal amount of fifty-seven million Dollars
($57,000,000), comprised of an A Loan for IFC's own account in
the principal amount of twenty-one million Dollars ($21,000,000),
and a B Loan for the account of Participants in the principal
amount of thirty-six million Dollars ($36,000,000) for the
purpose and on the terms and conditions set forth in the IFC
Investment Agreement;
(B) BKPC has requested IFC to establish a risk management
facility in favor of BKPC to enable BKPC to engage in risk
management transactions with a final maturity of up to fifteen
(15) years from the date hereof; and
(C) IFC has agreed to make available to BKPC various
financial risk management instruments for the purpose of enabling
BKPC to manage its interest rate exposure, all on the terms and
conditions as set forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 General Definitions. Wherever used in this
Agreement and the Schedules hereto, unless the context otherwise
requires, the following terms have the following meanings:
"Aggregate Mark-to-Market Value" means, at the time of
determination, the aggregate of the Mark-to-Market Value of all
Eligible Transactions entered into under the Master Agreement at
such time outstanding;
"Aggregate Risk Exposure" means, at the time of
determination, the aggregate of IFC's Risk Exposures for all
Eligible Transactions entered into under the Master Agreement at
such time outstanding;
"Applicable Rate" means, with respect to any date of
determination, a rate of interest determined by IFC equal to the
aggregate of:
(i) five percent (5%) per annum; plus
(ii) the average, rounded up, if necessary, to the
nearest one-sixteenth (1/16th) of one percent, of the London
Interbank Offered Rates (commonly known as "LIBOR") quoted by
major banks for six-month Dollar deposits on the Dow Jones Market
Screen Page as of 11:00 a.m., London time on such date of
determination, or if such rate cannot be so determined or only
one such bank is quoted on such date, the average of the rates
for such deposits quoted on such date by three (3) such major
banks active in the Eurodollar interbank market in London;
"Auditors" means a firm of independent public accountants as
BKPC may, with the consent of IFC (consent shall be deemed given
by IFC if IFC does not object to a proposed auditor within thirty
(30) days of IFC's receipt of the request for consent accompanied
by adequate supporting documentation), from time to time appoint
as auditors of BKPC. The Auditors shall be capable of auditing
to U.S. GAAP standards.
"Authority" means any government or governmental,
administrative, fiscal, judicial or government-owned body,
department, commission, authority, tribunal, agency or entity;
"Authorization" means any consent, registration, filing,
agreement, notarization, certificate, license, approval, permit,
authority or exemption from, by or with any Authority, whether
given by express action or deemed given by failure to act within
any specified time period and all corporate, creditors' and
shareholders' approvals or consents;
"Authorized Officer" means the officers of BKPC specified in
its Board Resolution delivered to IFC, and, for purposes of
certificates or other documents relating to financial matters,
the financial controller;
"Business Day" means a day on which banks are open for
business in the City of New York, New York, the United States of
America, or any other place that may be specified by IFC for any
particular Eligible Transaction and, for purposes of the
definition of "Applicable Rate", a day on which banks are open
for business in the Eurodollar interbank market in London,
England;
"Closing Date" means December 12, 1997;
"Commitment Period" means the period commencing with the
date of this Agreement and ending on the earlier of
(i) the third anniversary of the date of this
Agreement (or such later date as IFC may designate); or
(ii) the termination date referred to in Section 7.1
(Consequences of Events of Default);
"Confirmation" means, in respect of any Eligible Transaction
entered into under the Master Agreement, the confirmation issued
pursuant to the Master Agreement;
"Dollars" and the sign "$" means the lawful currency of the
United States of America;
"Dow Jones Market Screen Page" means the display of interest
settlement rates (commonly known as LIBOR) for Dollar deposits in
London designated as page 3750 on the service formerly known as
the Dow Jones Telerate Service (or any other page that replaces
3750 and displays London interbank settlement rates for Dollar
deposits);
"Eligible Currency" means, as long as in IFC's judgment the
relevant risk management instrument is readily available to IFC
in the major financial markets in each of these currencies,
Dollars, Deutsche Mark, Japanese Yen, British Pounds, French
Francs, Swiss Francs and Dutch Guilders, and such other
currencies as IFC may agree from time to time;
"Eligible Transaction" means
(i) any transaction which is a rate swap transaction,
a basis swap transaction, a collar transaction, a currency swap
transaction, a cross-currency rate swap transaction, or any other
similar transaction (including any option with respect to any of
these transactions), all in and between Eligible Currencies as
contemplated by the 1991 ISDA Definitions published by the
International Swaps and Derivatives Association, Inc. ("ISDA"),
as modified or amended from time to time by ISDA;
(ii) any combination of these transactions; and
(iii) any other hedging transactions as IFC and
BKPC may from time to time agree;
"Event of Default" means any event specified in Section 7.2;
"Face Value" means
(i) for any Eligible Transaction which is not an
option of another Eligible Transaction, the amount stated in the
Confirmation of the Eligible Transaction as being the "Notional
Amount" or the "Initial Exchange Amount" for that Eligible
Transaction; and
(ii) for any Eligible Transaction which is an option,
the "Notional Amount" or the "Exchange Amount" of the Eligible
Transaction to which that option relates;
"Fiscal Year" means the accounting year of BKPC commencing
each year on July 16 and ending on the following July 15, or such
other period (of at least 52 consecutive weeks) as BKPC with
IFC's consent, from time to time designates as its accounting
year;
"Mark-to-Market Value" means, at the time of determination
and with respect to any Eligible Transaction entered into under
the Master Agreement, the amount expressed in Dollars, determined
by IFC in good faith and in accordance with market practice, that
an independent third party would require to be paid to it to
assume the rights and obligations of BKPC under such Eligible
Transaction effective as of such time of determination or, if IFC
determines that an independent third party would not require any
payment to it to assume BKPC's rights and obligations under such
Eligible Transaction, the Mark-to-Market Value shall be zero
($0);
"Master Agreement" means the Master Agreement (Multicurrency-
Crossborder) between BKPC and IFC dated as of the Closing Date
including the Schedule attached thereto and the Confirmations
issued thereunder from time to time, a form of which is attached
as Exhibit A hereto; and as such Agreement may be amended,
supplemented or modified from time to time;
"Operating Guidelines" means a document, prepared by BKPC
and approved by IFC, setting out guidelines for the performance,
by BKPC, of its obligations under this Agreement and otherwise
implementing this Agreement;
"Price" means, with respect to any Eligible Transactions
executed under the Master Agreement, the payment schedule quoted
by IFC to BKPC on an "all-in" basis and specified in the
Confirmation related to such Eligible Transaction, which payment
schedule will reflect IFC's cost of entering into a matching
transaction with a market counterparty and will compensate IFC
for its risk margin, determined by IFC in its sole discretion
with respect to such Eligible Transaction;
"Risk Exposure" means, at the time of determination and with
respect to any Eligible Transaction entered into under the Master
Agreement, an amount, expressed in Dollars, equal to a percentage
of the Face Value of that Eligible Transaction which reflects the
risk to IFC of such Eligible Transaction, as determined by IFC in
its sole discretion and advised to BKPC on or before the trade
date of such Eligible Transaction, such determination being made
using the same methodology as is used from time to time by IFC to
determine the risk of transactions in its portfolio which are
similar to the relevant Eligible Transaction;
"Risk Management Facility" means the facility made available
to BKPC under Article 2;
Section 1.2. Interpretation. In this Agreement, unless the
context otherwise requires:
(a) headings and underlinings are for convenience only and
do not affect the interpretation of this agreement;
(b) words importing the singular include the plural and
vice versa;
(c) words importing a gender include any gender;
(d) an expression importing a natural person includes any
company, partnership, joint venture, association, corporation or
other body corporate and any government agency;
(e) a reference to an Article, Section, party, Annex,
Exhibit or Schedule (other than the Schedule to the Master
Agreement) is a reference to an Article and Section of, and a
party, Annex, Exhibit and Schedule of, this Agreement;
(f) a reference to any statute, regulation, proclamation,
ordinance or by-law includes all statutes, regulations,
proclamations, ordinances or by-laws varying, consolidating or
replacing them, and a reference to a statute includes all
regulations, proclamations, ordinances and by-laws issued under
that statute;
(g) a reference to a document includes an amendment or sup
plement to, or replacement or novation of, that document other
than any amendment, supplement, replacement or novation made in
breach of this agreement;
(h) a reference to a party to any document includes that
party's successors and permitted assigns by this agreement;
(i) the words "include" or "including" do not imply an
exhaustive listing of all things to which the relevant word
relates;
(j) a reference to an agreement includes an undertaking,
deed, agreement or legally enforceable arrangement or under
standing whether or not in writing;
(k) a reference to a document includes any agreement in
writing, or any certificate, notice, instrument, or other
document of any kind; and
(l) no rule of construction applies to the disadvantage of
a party because that party was responsible for the preparation of
this agreement or any part of it.
Section 1.3. Business Day Adjustment.
(a) Subject to subsection (b) below, where the day on or by
which an act or obligation is to be performed or a payment is due
to be made under this Agreement is not a Business Day, such
performance or payment must be done or made on or by the next
succeeding Business Day; and in the case of interest, fees and
charges, those amounts continue to accrue for the period from and
including that due date to that next succeeding Business Day.
(b) Notwithstanding subsection (a), (i) if the effect of
applying subsection (a) would be for the relevant performance to
be done or payment due as the case may be in a different calendar
month, that performance or payment must be made on the Business
Day preceding the due date; and (ii) if there is a conflict
between any Business Day Adjustment in accordance with this
Section 1.3 and a business day adjustment provided under the
Master Agreement, then the provision under the Master Agreement
shall govern.
ARTICLE 2
Risk Management Facility
Section 2.1. Risk Management Facility. Subject to the terms
and conditions of this Agreement, IFC hereby establishes the Risk
Management Facility under which it will enter into Eligible
Transactions with BKPC as agreed by IFC.
Section 2.2. Purposes and Criteria. The Risk Management
Facility may be used only by BKPC and only for the purpose of its
financial risk management and genuine hedging operations of BKPC,
and not for any speculative purpose (as determined by IFC in its
sole discretion). Each Eligible Transaction will be reviewed and
approved by IFC in accordance with the provisions of this
Agreement.
Section 2.3. Master Agreement. All Eligible Transactions
with IFC shall be executed pursuant to the Master Agreement.
Section 2.4. Front-End Fee; Commitment Fee; Fees for
Eligible Transactions. BKPC shall pay the following fees in
respect of the Risk Management Facility and each Eligible
Transaction with IFC:
(a) Front-End Fee. Upon execution and delivery of this
Agreement, BKPC shall pay to IFC a front-end fee in the amount of
twenty-five thousand Dollars (US$25,000).
(b) Commitment Fee. During the Commitment Period, BKPC
shall pay IFC in arrears an annual commitment fee equal to one
quarter of one per cent (0.25%) of the unused portion of the
Facility, i.e., an amount representing the average daily
difference between three million Dollars ($3,000,000) and the
Aggregate Risk Exposure outstanding during the covered period, as
determined by IFC and advised to BKPC from time to time. The
Commitment Fee shall begin to accrue upon execution and delivery
of this Agreement and shall be payable in Dollars annually on
each anniversary of such date. The Commitment Fee for any period
less than a year shall accrue and be prorated on the basis of a
360-day year for the actual number of days elapsed.
(c) Transaction Fees. With respect to each Eligible Transac
tion, BKPC shall pay the Price advised to BKPC not later than the
trade date of such Eligible Transaction, payable in such amounts
and currency and on such payment dates as are specified in the
Confirmation issued in respect of such Eligible Transaction under
the Master Agreement.
Section 2.5. Calculation of Fees. Any and all fees payable
hereunder (other than payments in connection with Eligible
Transactions specified in the related Confirmation issued under
the Master Agreement) shall accrue from day to day and, in the
case of annual fees for a period of less than a full year, be pro-
rated on the basis of a 360-day year for the actual number of
days elapsed and, unless otherwise specified in this Agreement or
agreed by the parties in writing, shall be payable on the dates
specified herein or in the Confirmation for the relevant Eligible
Transaction.
Section 2.6. Security. BKPC acknowledges and agrees that,
to secure the prompt and complete payment and performance when
due of BKPC's obligations (now existing or hereafter arising)
hereunder, BKPC has granted to IFC a security interest and lien
in and to all of the same property and assets of BKPC as
contemplated by the IFC Investment Agreement, which security
interest and lien has been granted pursuant to the Security
Documents, as such term is defined in the IFC Investment
Agreement, and IFC shall be entitled to exercise all rights and
remedies against such Security as contemplated by the IFC
Investment Agreement and the Security Documents.
ARTICLE 3
Payments
Section 3.1. Form of Payment.
(a) BKPC shall pay all amounts due to IFC under this
Agreement in the specified currency in immediately available
funds at such bank in such place as IFC shall designate. If no
currency is specified and IFC does not advise otherwise then all
such payments shall be made in Dollars, in immediately available
funds, at IFC's account at the Citibank N.A., New York, 111 Wall
Street, New York, New York 10043 (Account Number 3608-5579 for
the account of International Finance Corporation).
(b) The obligation of BKPC to pay any amount payable under
this Agreement or the Master Agreement in a specified currency
shall not be novated, discharged or satisfied by tender or by
payment (whether or not by recovery under a judgment) in any
other currency, except to the extent to which such tender,
payment or recovery shall result in the effective payment of the
total amount due in the specified currency to IFC's account in
the designated place of payment. Accordingly, the amount (if
any) by which that tender, payment or recovery in a currency
other than the specified currency or Dollars, as the case may be,
falls short of the total amount due to IFC, is and remains due to
IFC as a separate obligation (regardless of any judgment for any
other amounts due under or in respect of this Agreement or the
Master Agreement).
Section 3.2. No Deduction for Taxes. BKPC shall pay all
amounts due under this Agreement or the Master Agreement without
set-off and without deducting any taxes, duties, fees or other
charges of whatever nature. If BKPC is prevented by law or
otherwise from so paying without deduction, then BKPC must
instead pay IFC an increased amount so that, after such
deduction, IFC receives the full amount it would have received
had the payments been made without the deduction.
Section 3.3. Survival of Provisions. BKPC's obligations
under (i) this Article 3 and under Sections 8.4 (Expenses) and
8.6 (General Indemnity) and (ii) the Master Agreement shall
survive the termination of this Agreement.
Section 3.4. Additional Costs, Expenses or Losses. If, as a
result of any failure by BKPC to pay any sums due under this
Agreement or the Master Agreement on the due date therefor IFC
shall incur costs, expenses or losses, BKPC shall promptly pay to
IFC, in Dollars, upon IFC's request, the amount which IFC shall
notify to BKPC as being the aggregate of such costs, expenses and
losses. For the purposes of the preceding sentence, "costs,
expenses or losses" shall include, without limitation, any
interest paid or payable to carry any unpaid amount and any loss,
premium, penalty or expense which may be incurred in liquidating
or employing deposits of or borrowings from third parties in
order to make, maintain or fund IFC's obligation to a market
counterparty in a matched transaction or any portion thereof (but
in the case of a late payment under this Agreement, after
deducting any late payment interest received by IFC in respect
thereof, pursuant to Section 3.5).
Section 3.5. Default Interest. Without prejudice to the reme
dies available to IFC under this Agreement, the Master Agreement,
the IFC Investment Agreement and the Security Documents or
otherwise, if BKPC fails to make any payment on or before its due
date as specified in this Agreement (or, if not so specified, as
notified by IFC to BKPC), BKPC shall pay, in Dollars, upon demand
in respect of the amount of such payment due and unpaid, interest
at the Applicable Rate for such due date or, if such due date is
not a Business Day, for the Business Day immediately preceding
such due date, from the date any such amount became due until the
date of actual payment (as well after as before judgment).
ARTICLE 4
Representations and Warranties
Section 4.1. Representations and Warranties. BKPC represents
and warrants as of the date of this Agreement as follows:
(a) it is a private limited liability Company duly
organized and validly existing under the laws of Nepal and has
the power to own its properties, to conduct its business as
presently conducted, to enter into this Agreement, the Master
Agreement and any Confirmation thereunder and to perform its
obligations hereunder and thereunder;
(b) each of this Agreement, the Master Agreement and any
Confirmation under such Master Agreement has been and, in the
case of each Confirmation will be, duly authorized, and when
executed and delivered by the parties thereto each such Agreement
and Confirmation will constitute the legal, valid and binding
obligations of BKPC, enforceable against BKPC in accordance with
its terms;
(c) neither the making of this Agreement, the Master
Agreement or any Confirmation, nor (when all the consents
referred to in Section 5.1(a) have been obtained) the compliance
with the terms hereof or thereof, nor the performance by BKPC of
its obligations hereunder or thereunder, will conflict with or
result in a breach of any of the terms, conditions or provisions
of, or constitute a default under, any indenture, mortgage,
decree, court or administrative order, agreement or other
instrument or arrangement to which BKPC is a party or by which it
is bound, or require any consent or waiver which has not been
obtained from any Authority or regulatory body having
jurisdiction over BKPC or any of its businesses and activities,
or violate any of the terms or provisions of BKPC's
organizational documents or any judgment, decree or order or any
statute, rule or regulation applicable to BKPC;
(d) that it is and will be acting as principal, and not as
agent for another party, and will be solely responsible for the
decision to enter into the transactions under the Risk Management
Facility; and
(e) that it is fully aware of the risks involved in the
transactions to be entered into under the Risk Management
Facility and it accepts full and sole responsibility for all the
consequences of such transactions.
Section 4.2. Repetition of Representations. The representa
tions and warranties in this Agreement, the Master Agreement and
the IFC Investment Agreement are deemed repeated on the trade
date and the effective date specified in each Confirmation
providing for an Eligible Transaction, except to the extent
amended, supplemented or modified by BKPC in its certificate to
be delivered in accordance with Section 5.3 of this Agreement.
Section 4.3. IFC Reliance.
(a) BKPC acknowledges that it has made the representations
and warranties in or referred to in Section 4.1 (Representations
and Warranties) with the intention of persuading IFC to enter
into this Agreement, the Master Agreement and each Eligible
Transaction, as the case may be, and that IFC is entering into
such Agreements and will enter into such Eligible Transactions on
the basis of, and in full reliance on, each of those
representations and warranties.
(b) BKPC warrants to IFC that each of the representations
and warranties in this Article 4 is true and correct in all
respects as of the date of this Agreement and when repeated
pursuant to Section 4.2, and that none of them omits or will omit
any matter the omission of which makes or will make any of the
representations false or misleading in any material respect.
Section 4.4. Rights and Remedies Not Limited. The rights and
remedies of IFC in relation to any misrepresentation or breach of
warranty on the part of BKPC is not limited by any investigation
by or on behalf of IFC into the affairs of BKPC, by the execution
or the performance of this Agreement, the Master Agreement, or
any Eligible Transaction or by any other act or thing which may
be done by or on behalf of IFC in connection with such Agreements
or such Eligible Transactions and which might, apart from this
Article, limit such rights or remedies.
ARTICLE 5
Conditions of Effectiveness
Section 5.1. Initial Conditions. Subject to Sections 5.2 and
5.3, the obligation of IFC to enter into the initial Eligible
Transaction under the Master Agreement for the benefit of BKPC
shall be subject to the performance by BKPC of all its
obligations to be performed under this Agreement prior to that
date and to the fulfillment, in a manner satisfactory to IFC, of
the following further conditions:
(a) BKPC has obtained, or has made arrangements satisfactory
to IFC for obtaining, all governmental, corporate, creditors' and
other necessary licenses, approvals, waivers or consents for:
(i) the carrying on of the business of BKPC as it is
presently carried on and is contemplated to be carried on;
(ii) the due authorization, execution and delivery of,
and performance under, this Agreement, the Master Agreement and
any Confirmation evidencing an Eligible Transaction under it; and
(iii) the repatriation by IFC, and the remittance
to IFC or its assigns, of all monies payable in respect of this
Agreement and any Eligible Transaction executed under the Master
Agreement in the currency in which the relevant payment is
expressed to be payable;
(b) IFC has received a legal opinion or opinions, in form
and substance satisfactory to it, of counsel in Nepal and the
United States acceptable to IFC, and concurred in by counsel for
BKPC, with respect to:
(i) the organization, existence and operations of BKPC
and its authorized and subscribed share capital;
(ii) the matters referred to in subsection (a) above;
(iii) the authorization, execution, delivery,
legality, validity and enforceability of this Agreement the
Master Agreement, any Confirmation under the Master Agreement and
any other documents in implementation thereof;
(iv) the compliance with all obligations referred to in
Sections 3.2 (No Deduction for Taxes) and 6.3 (Taxes on
Documents);
(v) the priorities or privileges, if any, that
creditors of BKPC, other than IFC, may have by reason of law; and
(vi) such other matters incident to the transactions
contemplated by this Agreement, the Master Agreement or, any
Confirmation under the Master Agreement as IFC reasonably
requests;
(c) the evidence of signature authority and specimen sig
natures referred to in Schedule 3.1(i) of the IFC Investment
Agreement has been supplied to IFC;
(d) organizational arrangements satisfactory to IFC have
been made for the administration of the Risk Management Facility;
(e) receipt of evidence that BKPC has appointed agents for
the service of process pursuant to Section 8.5 and under the
Master Agreement; and
(f) the Conditions Precedent to Initial Disbursement
specified in Section 3.1 of the General Conditions have been
satisfied or waived.
Section 5.2. Conditions to all Eligible Transactions. The
obligation of IFC to enter into any Eligible Transaction under
the Master Agreement is subject to the conditions that:
(a) the Face Value of such Eligible Transaction is not less
than two million Dollars ($2,000,000) or its equivalent, if such
Eligible Transaction does not have an amortizing maturity
schedule, or five million Dollars ($5,000,000) or its equivalent,
if it has an actual or notional amortizing maturity schedule;
(b) the maturity of such Eligible Transaction shall not
exceed fifteen (15) years from the effective date of such
Eligible Transaction and shall not be less than six (6) months
from such effective date;
(c) after giving effect to such Eligible Transaction the
Aggregate Risk Exposure of IFC at such time does not exceed three
million Dollars ($3,000,000) or its equivalent; and the Aggregate
Mark-to-Market Value of all Eligible Transactions then
outstanding does not exceed three million Dollars ($3,000,000) or
its equivalent;
(d) the relevant Eligible Transaction is entered into not
later than the third anniversary of the date of this Agreement;
(e) such Eligible Transaction is of the same type as
transactions readily available to IFC in the international swap
or derivatives markets;
(f) BKPC has obtained, or has made arrangements satisfac
tory to IFC for obtaining, all governmental, corporate,
creditors' and other necessary licenses, approvals, waivers or
consents for:
(i) entering into and performing under that Eligible
Transaction; and
(ii) remitting to IFC or its assigns all moneys payable
in respect of that Eligible Transaction in the currency in which
those moneys are expressed to be payable;
(g) no Event of Default and no event which with notice,
lapse of time or both would become an Event of Default in
accordance with Section 7.2 (Events of Default) has occurred and
is continuing;
(h) nothing has occurred which might make it improbable
that BKPC will be able to fulfill or perform any of its obli
gations under this Agreement, the Master Agreement or any
Eligible Transaction, nor shall BKPC have incurred or suffered
any material loss or liability;
(i) the representations and warranties confirmed or made in
Article 4, amended, modified or supplemented as necessary or
appropriate in accordance with Section 4.2, are true and correct
on and as of the trade date and the settlement date of the
Eligible Transaction with the same effect as though such
representations and warranties had been made on and as of that
date (but in the case of Section 4.1(c), without the words in
parentheses); and
(j) after giving effect to the Eligible Transaction, BKPC
will not be in violation of its organizational documents, its
Board authority for entering into Eligible Transactions or any
document to which BKPC is a party (including this Agreement) or
by which it is bound, nor any law, rule or regulation of the
relevant Nepalese Authorities (including, without limitation,
monetary authorities) or otherwise directly or indirectly
limiting or otherwise restricting BKPC's power or authority or
its ability to enter into hedging or risk management
transactions.
Section 5.3. Certificate of BKPC. With each request that IFC
enter into a Eligible Transaction, BKPC must deliver to IFC a
certification, in the form of Schedule 1, with respect to the
foregoing conditions, signed by an authorized representative of
BKPC and expressed to be effective as of the trade date and the
effective date of the relevant Eligible Transaction.
Section 5.4. No Implied Waiver.
(a) No course of dealing or waiver by IFC in connection
with any condition in Sections 5.1 (Initial Conditions), 5.2
(Conditions to all Eligible Transaction) or 5.3 (Certificate of
BKPC) shall impair any right, power or remedy of IFC with respect
to any other condition, or shall be construed to be a waiver of
such other condition. The action of IFC in respect of any such
condition shall not affect or impair any right, power or remedy
of IFC in respect of any other condition.
(b) Unless otherwise notified to BKPC by IFC and without
prejudice to subsection (a) above, the right of IFC to require
compliance with any condition under this Agreement which is
waived by IFC in respect of any Eligible Transaction is expressly
preserved for the purposes of any other Eligible Transaction.
ARTICLE 6
Particular Covenants
Section 6.1. Affirmative Covenants. Unless IFC otherwise
agrees, BKPC shall:
(a) utilize the Risk Management Facility and any Eligible
Transaction thereunder, exclusively to manage BKPC's interest
rate and other financial risks permitted under Section 2.2, and
not for any speculative purpose;
(b) comply with the particular covenants enumerated in
Section 5.2 of the General Conditions which are hereby
incorporated herein by reference;
(c) furnish promptly to IFC such information as IFC may
from time to time reasonably request;
(d) obtain and maintain in force (or where appropriate,
promptly renew) all licenses, approvals, waivers or consents
necessary for carrying out its obligations under this Agreement,
the Master Agreement, each Eligible Transaction, and BKPC's
business and operations generally;
(e) perform and observe all the conditions and restrictions
contained in, or imposed on BKPC by, any such licenses,
approvals, waivers or consents;
(f) as soon as practicable, after becoming available,
furnish to IFC a copy of the minutes of all its shareholders'
meetings in which resolutions are taken involving any action
materially and adversely affecting the ability of BKPC to meet
its obligations under this Agreement, the Master Agreement or in
connection with any Eligible Transaction at such time
outstanding;
(g) promptly inform IFC of any proposed changes in the
nature or scope of the business or operations of BKPC, of any
notice, claim or demand from creditors of BKPC pursuant to
applicable provisions of the Nepalese Bankruptcy Code (or similar
or successor provisions under such legislation or a similar or
successor legislation) and decrees or regulations thereunder
received by BKPC (whether or not such notice, claim or demand has
merit), which would result in or could potentially result in the
initiation of a bankruptcy or insolvency proceeding against BKPC
and of any event or condition which might materially and
adversely affect the carrying on of BKPC's business or operations
(including without limitation any action by BKPC's management to
initiate or which could result in the initiation of a bankruptcy
or insolvency proceeding of BKPC).
Section 6.2. Negative Covenant. Unless IFC otherwise con
sents, which consent will not be unreasonably withheld, BKPC
shall not:
(a) change the nature of its present business or operations
in any manner which would be inconsistent with the provisions of
this Agreement or the Master Agreement and would adversely affect
the ability of BKPC to perform its obligations under this
Agreement, the BKPC Master Agreement, or any Eligible Transaction
at any time outstanding; or
(b) change its organizational documents in any manner which
would be inconsistent with the provisions of this Agreement or
the Master Agreement.
Section 6.3. Taxes on Documents.
(a) BKPC must pay all taxes (including stamp taxes),
duties, fees or other charges, if any, payable on or in
connection with the execution, issue, delivery, registration or
notarization of this Agreement, the Master Agreement and any
Eligible Transaction and must, upon notice from IFC, reimburse
IFC or its assigns for any such taxes, duties, fees or other
charges paid by IFC or its assigns.
(b) BKPC must pay all present and future taxes, duties,
fees and all other charges of any nature, if any, levied or
imposed by His Majesty's Government of Nepal on or in connection
with the payment of any and all amounts due IFC under this
Agreement or the Master Agreement.
ARTICLE 7
Events of Default
Section 7.1. Consequences of Events of Default. Without
limiting IFC's rights under the Master Agreement, if an Event of
Default occurs and is continuing IFC may, (i) by notice to BKPC,
cancel its commitments to enter into Eligible Transactions from
the termination date specified in that notice and from that date
IFC shall have no further obligations under this Agreement; and
(ii) exercise all rights and remedies against the Security
granted herein and pursuant to the Security Documents, as such
rights and remedies are set forth in the IFC Investment Agreement
and the Security Documents.
Section 7.2. Events of Default. It is an Event of Default if:
(a) BKPC fails to pay any amount payable under this
Agreement or the Master Agreement when due and such failure shall
have continued unremedied for three (3) Business Days after
notice;
(b) BKPC fails to perform any of its other obligations
under this Agreement or any other agreement between BKPC and IFC
(including the Master Agreement or any Eligible Transaction
thereunder), and any such failure continues for a period of
thirty (30) days after IFC notifies BKPC of that failure;
(c) any representation or warranty confirmed or made in
Article 4 or in connection with the execution and delivery of
this Agreement, as amended, modified or supplemented as provided
in Section 4.2, is found to have been incorrect in any material
respect;
(d) any Authority condemns, nationalizes, seizes, or
otherwise expropriates all or any substantial part of the
property or other assets of BKPC or of its share capital or
assumes custody or control of such property or other assets or of
the business or operations of BKPC or of its share capital or
takes any action for the dissolution or disestablishment of BKPC
or any action that would prevent BKPC or its officers from
carrying on all or a substantial part of its business or
operations;
(e) any Authorization necessary or required in respect of
this Agreement, the Master Agreement or any Eligible Transaction
thereunder is rescinded, terminated, not available, lapses or
otherwise ceases to be of full force and effect, including in
respect of the remittance to IFC or its assigns in Dollars or
other specified currencies of any amounts payable under any such
document;
(f) any material Authorization necessary or required to
permit BKPC to own its properties or carry out its principal
business is rescinded, terminated, not available, lapses or
otherwise ceases to be in full force or effect;
(g) BKPC changes its organizational documents in any manner
which would be inconsistent with the provisions of this Agreement
or the Master Agreement or would adversely affect the ability of
BKPC to perform its obligations under this Agreement, the Master
Agreement or any Eligible Transaction thereunder;
(h) BKPC changes the nature of its present business or
operations in any manner which would be inconsistent with the
provisions of this Agreement or the Master Agreement or would
adversely affect the ability of BKPC to perform its obligations
under this Agreement, the Master Agreement or any Eligible
Transaction thereunder;
(i) notwithstanding anything in this Section 7.2 to the
contrary, including without limitation any grace period specified
herein otherwise applicable thereto, there exists and is
continuing any "Event of Default" or "Potential Event of Default"
(as such expressions are defined in the Master Agreement) under
the Master Agreement or any Eligible Transaction; or
(j) there exists an Event of Default (as such term is
defined in the IFC Investment Agreement) under the IFC Investment
Agreement or any Security Document.
Section 7.3. Notice of Event. If any Event of Default or any
event which, with lapse of time or notice or both, would become
an Event of Default happens, BKPC must immediately notify IFC by
telex or facsimile specifying the nature of that Event of Default
or other event and any steps BKPC is taking to remedy the same.
Section 7.4. Saving of Rights. No course of dealing and no
delay in exercising, or omission to exercise, any right, power or
remedy accruing to IFC upon any default under this Agreement or
the Master Agreement shall impair any such right, power or remedy
or may be construed to be a waiver thereof or an acquiescence
therein. No action or acquiescence of IFC in respect of any such
default shall affect or impair any right, power or remedy of IFC
in respect of any other default.
ARTICLE 8
Miscellaneous
Section 8.1. Communications. Any notice, request or other
communication to be given or made under this Agreement to any
party must be in writing. Subject to Section 7.3 (Notice of
Event), the notice, request or other communication may be
delivered by hand, registered mail, facsimile or telex to the
party's address specified below or at any other address that
party notifies to the other party from time to time.
For BKPC:
c/o Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980 6815
For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Director, Treasury Department
(Client Risk Management Unit)
Cable: CORINTFIN
Washington, D.C.
Telex: 248423 - World Bank
64145 - World Bank
197688 - World Bank
82987 - World Bank
Facsimile: Treasury: (202) 974-4376
Section 8.2. Termination of Agreement. Notwithstanding the
expiration of the Commitment Period and subject to Section 3.3 of
this Agreement, this Agreement shall remain in full force and
effect until all Eligible Transactions have been terminated in
accordance with the Master Agreement.
Section 8.3. English Language. All documents to be furnished
or communications to be given or made under this Agreement must
be in the English language or, if in another language, must be
accompanied by a translation into English certified by a
representative of BKPC, which will be the governing version
between BKPC and IFC.
Section 8.4. Expenses. BKPC must pay to IFC, or as IFC
directs:
(a) upon demand, all fees and expenses of IFC's local
counsel in Nepal and other professional fees, and all incidental
fees and expenses incurred in connection with:
(i) the preparation, execution and delivery of this
Agreement and the Master Agreement;
(ii) the opinions required by IFC hereunder;
(iii) the preparation, execution and, as relevant,
notarization, consularization, translation and registration of
this Agreement, the Master Agreement and any other documents
related to this Agreement; and
(iv) any amendment or modification to, or waiver under,
this Agreement, the Master Agreement or any such other document.
(b) If any amount owing to IFC under this Agreement or the
Master Swap Transaction or in connection with transactions
contemplated hereunder or thereunder shall be collected through
any process of law or shall be placed in the hands of attorneys
for collection, BKPC shall pay reasonable attorneys' and other
fees and expenses incurred in respect of such collection.
Section 8.5. Governing Law, Choice of Forum.
(a) This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York,
without regard to the conflicts of laws provisions thereof (other
than Sections 5-1401 and 5-1402 of the New York General
Obligations Law).
(b) For the benefit of IFC, BKPC:
(i) irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement or the
Master Agreement may be brought and enforced in the courts of the
State of New York and hereby irrevocably submits to such
jurisdiction;
(ii) hereby designates, appoints, and empowers CT
Corporation System, with offices on the date hereof at 1633
Broadway, New York, New York 10019, as its authorized agent to
receive service of process and any other legal summons in the
City of New York for purposes of any such action or proceeding;
(iii) irrevocably consents to the service of
process or any other legal summons out of said courts by mailing
copies thereof by registered airmail postage prepaid to the
address specified herein;
(iv) irrevocably agrees that final judgment against it
in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive
evidence of the fact; and
(v) irrevocably agrees that nothing herein shall
affect the right of IFC to commence legal action or proceedings
or otherwise sue it in any other country which may have
jurisdiction (including the courts of New York to whose
jurisdiction BKPC irrevocably submits), or to serve process upon
it in any manner authorized by the laws of any such jurisdiction.
Section 8.6. General Indemnity.
(a) BKPC shall indemnify and will keep indemnified, IFC,
its officers, directors, employees and/or agents against any
action, damage, loss, liability, cost, charge, expense, or
payments (including legal fees and expenses) which IFC, or any
such person, pays, suffers or incurs or is liable for, in respect
of any of the following:
(i) the occurrence of any Event of Default or any
event which, with notice, lapse of time or both would become an
Event of Default in accordance with Section 7.2 (Events of
Default);
(ii) IFC exercising its rights or powers consequent
upon or arising out of the occurrence of any Event of Default or
other event.
(b) BKPC shall pay and reimburse IFC for all costs and
expenses in relation to the enforcement or protection or
attempted enforcement or protection of any of IFC's rights under
this Agreement and/or the Master Agreement including, but not
limited to, external legal costs and expenses and any pro
fessional consultants fees on a full indemnified basis.
Section 8.7. Prohibition and Enforceability. Any provision
of, or the application of any provision of, this Agreement which
is void, illegal, or unenforceable in any jurisdiction does not
affect the validity, legality or enforceability of that provision
in any other jurisdiction.
Section 8.8. Successors and Assigns. This Agreement binds
and benefits the respective successors and assigns of its
parties, except that BKPC may not assign or delegate any of its
rights or obligations under this Agreement.
Section 8.9. Amendments. No variation of any term of this
Agreement or amendments thereto shall be effective except in
writing and signed by the parties.
Section 8.10. Remedies and Waivers. No failure or delay by
IFC in exercising any power, remedy, discretion, authority or
other rights under this Agreement or the Master Agreement shall
impair or constitute a waiver in respect of that or any other
right. No single or partial exercise of such a right, precludes
its additional or future exercise. No waiver by IFC of any right
under this Agreement or the Master Agreement shall constitute a
waiver of any other right under this Agreement or the Master
Agreement. All waivers or consents given under this Agreement
must be in writing.
Section 8.11. No Other Agreements. This Agreement and the
Master Agreement (including without limitation, the Schedules
hereto and thereto), together with the related letter agreement
dated the date hereof between BKPC and IFC, contain the entire
agreement of BKPC and IFC relating to its subject matter and
supersede all oral statements and prior writings concerning that
subject matter.
Section 8.12. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their
duly authorized representatives, have caused this Agreement to be
signed in their respective names, as of the date first above
written.
BHOTE KOSHI POWER COMPANY
PRIVATE LIMITED
By:________________________________
Authorized Representative
INTERNATIONAL FINANCE
CORPORATION
By:________________________________
Authorized Representative
SCHEDULE 1
Page 1 of 2
Form of Certificate of Bhote Koshi Power Company Private Limited
(as referred to in Section 5.3 of the
Risk Management Facility Agreement)
[LETTERHEAD OF BHOTE KOSHI POWER COMPANY PRIVATE LIMITED]
[Date]
International Finance Corporation
2121 Pennsylvania Ave., N.W.
Washington, D.C. 20433
United States of America
Dear Sirs:
Certificate of BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
1. Please refer to the Risk Management Facility Agreement
signed between us, dated as of the Closing Date (the "Risk
Management Facility Agreement").
2. Expressions defined in the Risk Management Facility
Agreement shall bear the same meaning herein.
3. Pursuant to BKPC's request that IFC enter into an Eligible
Transaction with BKPC and for the purpose of Article 5 of the
Risk Management Facility Agreement, BKPC hereby certifies that
all conditions to the obligation of IFC to enter into the
Eligible Transaction set forth in Sections 5.1 and 5.2 of the
Risk Management Facility Agreement, have been and remain
satisfied.
SCHEDULE 1
Page 2 of 2
4. The certification in paragraph 3 above is effective as of
the date of this Confirmation and will continue to be effective
as of the effective date of the relevant Eligible Transaction. If
the certification is no longer valid, BKPC will immediately
notify IFC.
Yours faithfully,
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By ________________________
Authorized Representative1
_______________________________
1 As named in BKOC's Certificate of Incumbency and
Authority.
EXHIBIT NO. 10.156
TRUST AND RETENTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
INTERNATIONAL FINANCE CORPORATION
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
and
WILMINGTON TRUST COMPANY
Dated as of the Closing Date
TRUST AND RETENTION AGREEMENT
TRUST AND RETENTION AGREEMENT, dated as of the Closing Date (this
"Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE LIMITED, a
private limited liability company registered under the Nepalese
Company Act, 2021 (the "Company"), INTERNATIONAL FINANCE
CORPORATION, an international organization organized and existing
by virtue of the Articles of Agreement among its member countries
("IFC"), DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT
mbH, a company organized and existing under the laws of the
Federal Republic of Germany ("DEG") (both DEG and IFC hereinafter
being collectively referred to as the "Lenders") and WILMINGTON
TRUST COMPANY, a Delaware banking corporation (the "Trustee").
PRELIMINARY STATEMENTS
The Company has been granted the right to build, own and
operate a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the Project pursuant
to the terms of that certain IFC Investment Agreement dated as of
the Closing Date between the Company and IFC (the "IFC Investment
Agreement").
DEG is willing to provide financing for the Project pursuant
to the terms of that certain DEG Investment Agreement dated as of
the Closing Date between the Company and DEG (the "DEG Investment
Agreement", and together with the IFC Investment Agreement, the
"Investment Agreement")).
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
the Lenders under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
APPOINTMENT OF TRUSTEE
ESTABLISHMENT OF THE TRUST AND THE OFFSHORE RETENTION ACCOUNT
Section 2.1 Acceptance of Appointment ofTrustee.
(a) The Lenders hereby appoint Wilmington Trust Company to
act as trustee hereunder in accordance with the terms hereof for
the benefit of the Lenders. The Trust Agreement dated as of
November 7, 1997 by and between Wilmington Trust Company and IFC
is hereby superseded by this Agreement. Wilmington Trust Company
hereby agrees to act as trustee hereunder, in accordance with the
terms set forth herein, and to accept all cash, payments, other
amounts and investments delivered to or held by the Trustee
pursuant to the terms of this Agreement, or through the Trustee's
Designee, pursuant to the terms of the Nepal Agency and Retention
Agreement. The Trustee shall hold and safeguard the Offshore
Retention Account and, through its Designee, shall hold the Nepal
Retention Account during the term of this Agreement or the Nepal
Agency and Retention Agreement (as applicable) and shall treat
the cash, instruments and securities in the Offshore Retention
Account or the Nepal Retention Account as funds, instruments and
securities owned and pledged by the Company to the Trustee for
the benefit of the Lenders, pursuant to this Agreement and the
other Security Documents, to be held in the custody of the
Trustee, as trustee solely for the benefit of the Lenders, in
trust in accordance with the provisions of this Agreement or the
Nepal Agency and Retention Agreement (as applicable).
(b) Wilmington Trust Company accepts the trust hereby
created and agrees to perform its duties hereunder with respect
to the same but only in accordance with the terms of this
Agreement and the Security Documents. Wilmington Trust Company
shall not be answerable or accountable except (i) for its or the
Trustee's own willful misconduct, bad faith, gross negligence,
simple negligence in the handling of funds or material breach of
its obligations, (ii) in the case of the inaccuracy of any
representation or warranty, or in the case of its failure to
perform any covenant made by Wilmington Trust Company in its
individual capacity, contained in Section 2.2(e) or Section 10.2
hereof, or (iii) for taxes, fees or other charges based on or
measured by any fees, commissions or compensation received by the
Trustee in connection with any of the transactions contemplated
by this Agreement. Without limiting the obligations and
liabilities of Wilmington Trust Company to the Lenders and the
Company under the preceding sentence, in performing its functions
and duties under this Agreement, the Trustee shall act solely as
trustee for the Lenders and does not assume and shall not be
deemed to have assumed any obligation toward the Company except
as expressly contemplated by this Agreement or any relationship
of agency or trust with or for the Company or any Affiliate of
the Company.
(c) Neither the Company nor any Affiliate of the Company
shall have any rights against the Trustee hereunder, as a third
party beneficiary or otherwise, including, without limitation,
any right to direct the Trustee to distribute or allocate any
funds in the Offshore Retention Account or the Nepal Retention
Account, except as provided in the following sentence and except
with respect to amounts deposited in the Holding Account. Any
withdrawal, transfer or investment made or caused to be made by
the Company in accordance with the provisions hereof is expressly
understood to be made with the permission of the Lenders in the
exercise of its exclusive possession of, and dominion and control
over, the Offshore Retention Account and the Nepal Retention
Account, through its agent, the Trustee.
(d) It is agreed by and among the Company, the Lenders and
the Trustee that, in the absence of an express provision to the
contrary contained in a Security Document, the Lenders (or either
Lender in the case of an affirmative instruction to exercise a
Post-Default Remedy) shall have exclusive authority to give
instructions to the Trustee. For purposes of this Section
2.1(d), "Post-Default Remedy" shall mean any right or remedy
provided to the Trustee under a Security Document that may be
exercised by the Trustee only following the occurrence of a
Default or an Event of Default.
Section 2.2 Establishment of Offshore Retention Account.
(a) The Trustee hereby establishes in the Company's name a
special, segregated and irrevocable cash collateral account with
the Trustee at its office in Wilmington, Delaware entitled "Bhote
Koshi Power Company Private Limited Offshore Retention Account"
(Account Number 43370-0) (the "Offshore Retention Account") and
the following sub-accounts:
(i) a sub-account entitled "Bhote Koshi
Power Company Private Limited Revenue Sub-Account"
(Account Number 43370-1) (the "Revenue Sub-
Account");
(ii) a sub-account entitled "Bhote Koshi
Power Company Private Limited Operations and
Maintenance Sub-Account" (Account Number 43370-2)
(the "Operations and Maintenance Sub-Account");
(iii) a sub-account entitled "Bhote Koshi
Power Company Private Limited Debt Payment Sub-
Account" (Account Number 43370-3) (the "Debt
Payment Sub-Account");
(iv) a sub-account entitled "Bhote Koshi
Power Company Private Limited Debt Service Reserve
Sub-Account" (Account Number 43370-4) (the "Debt
Service Reserve Sub-Account");
(v) a sub-account entitled "Bhote Koshi
Power Company Private Limited Maintenance Reserve
Sub-Account" (Account Number 43370-5) (the
"Maintenance Reserve Sub-Account");
(vi) a sub-account entitled "Bhote Koshi
Power Company Private Limited Construction Sub-
Account" (Account Number 43370-6) (the
"Construction Sub-Account"), which shall be
maintained until the Trustee receives from the
Lenders a Lender Completion Notice;
(vii) a sub-account entitled "Bhote Koshi
Power Company Private Limited Insurance Proceeds
Sub-Account" (Account Number 43370-7) (the
"Insurance Proceeds Sub-Account");
(viii) a sub-account entitled "Bhote Koshi
Power Company Private Limited Liquidated Damages
Sub-Account" (Account Number 43370-8) (the
"Liquidated Damages Sub-Account");
(ix) a sub-account entitled "Bhote Koshi
Power Company Private Limited Deficiency Sub-
Account" (Account Number 43370-9) (the "Deficiency
Sub-Account"); and
(x) a sub-account entitled "Bhote Koshi
Power Company Private Limited Cash Sub-Account"
(Account Number 43371-0) (the "Cash Sub-Account").
(b) All right, title and interest in and to the Offshore
Retention Account and the funds in the Offshore Retention Account
and investments made with funds from the Offshore Retention
Account, including all income or gain thereon, shall be vested in
the Trustee for the benefit of the Lenders and, upon payment in
full of all Obligations and termination of all obligations of the
Lenders under the Loan Documents, the Company. Amounts deposited
in the Offshore Retention Account shall be applied by the Trustee
as provided in this Agreement. All such amounts shall constitute
a part of the Collateral and shall not constitute payment of any
of the Obligations under the Loan Documents (including, without
limitation, any obligation in respect of principal, interest,
premium, fees or expenses) until received by the Lenders as
hereinafter provided.
(c) (i) The Trustee shall deposit all Proceeds, proceeds
of Disbursements and any other amounts (other than Rupees)
received by the Trustee (or transferred to the Trustee from the
Nepal Retention Account) in respect of the Company or the Project
into the Offshore Retention Account on the day such amounts are
received. If any such amounts are received in any currency other
than Dollars, the Trustee shall convert such amounts to Dollars
at the then applicable exchange rate available to the Trustee in
the normal course of business. Additionally, the Trustee shall
convert any payments required to be made to any Lender hereunder
in any currency other than Dollars at the then applicable
exchange rate available to the Trustee in the normal course of
business. All monies in the Offshore Retention Account shall, to
the extent possible, be invested in the name of the Trustee in
such Cash Equivalents denominated in Dollars as the Company
directs in writing. Failing such direction or in the event the
Trustee receives monies after 12:00 p.m. (Wilmington, Delaware
time) on any day, such monies shall be invested daily on an
overnight basis in Default Investments (as hereinafter defined)
or such other investments as may be approved by the Lenders.
("Default Investments" means United States Securities and
Exchange Commission registered money market mutual funds
conforming to Rule 2a-7 of the Investment Company Act of 1940,
15 U.S.C. 80a1, et seq., as from time to time amended, that
invest primarily in direct obligations backed by those
obligations, including funds for which the Trustee or an
Affiliate of the Trustee acts as an advisor, and rated in the
highest category by a nationally recognized rating agency.)
Interest and other income or gain earned in respect of any monies
deposited in a sub-account shall be credited to the same sub-
account.
(ii) All monies and Cash Equivalents shall be
"Delivered" to the Trustee for deposit in the Offshore Retention
Account in accordance with the following procedures:
1. with respect to banker's acceptances, commercial
paper, negotiable certificates of deposits and other obligations
that constitute "instruments" within the meaning of Section 9-
105(1)(ii) of the Uniform Commercial Code of any applicable
jurisdiction (the "UCC") and are susceptible to physical delivery
and certificated securities, transfer thereof to the Trustee or
its nominee or custodian by physical delivery to the Trustee or
its nominee or custodian endorsed to, or registered in the name,
of, the Trustee or its nominee or custodian or endorsed in blank,
and, with respect to a certificated security (as defined in
Section 8-102 of the UCC), transfer thereof (i) by delivery of
such certificated security endorsed to, registered in the name
of, the Trustee or its nominee or custodian or endorsed in blank
to a securities intermediary (as defined in Section 8-313 of the
UCC) and the making by such securities intermediary of entries on
its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian and the
sending by such securities intermediary of a confirmation of the
purchase of such certificated security by the Trustee or its
nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the
making by such clearing corporation of appropriate entries on its
books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of
a securities intermediary by the amount of such certificated
security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the
securities intermediary, the maintenance of such certificated
securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the clearing corporation's exclusive control, the
sending of a confirmation by the securities intermediary of the
purchase by the Trustee or its nominee or custodian (all of the
foregoing "Physical Property"), and, in any event, any such
Physical Property in registered form shall be in the name of the
Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Collateral
or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof:
2. with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations (all of the foregoing "Government
Book-Entry Securities"), the following procedures, all in
accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Government Book-Entry Securities to an
appropriate book-entry account maintained with a Federal Reserve
Bank by a securities intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such
securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee or
its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by
such securities intermediary of entries in its books and records
identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee or its nominee or custodian and
indicating that such custodian holds such Government Book-Entry
Securities solely as agent for the Trustee or its nominee or
custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of
ownership of any such trust account property to the Trustee or
its nominee or custodian, consistent with changes in applicable
law or regulations or the interpretation therein;
3. the perfection and priority of a security interest
in certificated or uncertificated securities which is governed by
the law of a jurisdiction which has adopted the 1994 Revision to
Article 8 of the UCC:
(a) with respect to Physical Property (other than
certificated securities), transfer thereof to the Trustee by
physical delivery to the Trustee, endorsed to, or registered
in the name of, the Trustee or its nominee or endorsed in
blank and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer
of ownership of any such Physical Property to the Trustee
free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transfer
thereof:
(i) by physical delivery of such
certificated security to the Trustee, provided that if
the certificated security is in registered form, it
shall be endorsed to, or registered in the name of, the
Trustee or endorsed in blank; or
(ii) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section 8-
102(a)(14) of the UCC) acting on behalf of the Trustee
if the certificated security has been specially
endorsed to the Trustee by an effective endorsement.
(c) with respect to any Government Book-Entry
Security, the following procedures, all in accordance with
applicable law, including applicable federal regulations and
Article 8 and 9 of the UCC: book-entry registration of such
property to an appropriate book-entry account maintained
with a Federal Reserve Bank by a securities intermediary
which is also a "depository" pursuant to applicable federal
regulations and issuance by such securities intermediary of
a deposit advice or other written confirmation of such book-
entry registration to the Trustee of the purchase by the
securities intermediary on behalf of the Trustee of such
book-entry security; the making by such securities
intermediary of entries in its books and records identifying
such book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent
for the Trustee; and such additional or alternative
procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Government Book-
Entry Securities to the Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or
the interpretation thereof;
(d) with respect to any item of Collateral that
is an "uncertificated security" (as defined in Section 8-
102(a)(18) of the UCC) (an "Uncertificated Security") and
that is not governed by clause (c) above, transfer thereof:
(i)(A) by registration to the Trustee
as the registered owner thereof, on the books and
records of the issuer thereof; or
(B) by another Person (not a
securities intermediary) that either becomes the
registered owner of the uncertificated security on
behalf of the Trustee, or having become the registered
owner acknowledges that it holds for the Trustee; or
(ii) the issuer thereof has agreed that
it will comply with instructions originated by the
Trustee without further consent of the registered owner
thereof.
(e) in each case of delivery contemplated herein,
the Trustee shall make appropriate notations on its records,
and shall cause same to be made of the records of its
nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement;
(f) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC)
(i) if a securities intermediary (A)
indicates by book entry that a "financial asset" (as
defined in Section 8-102(a)(9) of the UCC) has been
credited to the Trustee's "securities account" (as
defined in Section 8-501(a) of the UCC), (B) receives a
financial asset (as so defined) from the Trustee or
acquires a financial asset for the Trustee, and in
either case, accepts it for credit to the Trustee's
securities account (as so defined), (C) becomes
obligated under other law, regulation or rule to credit
a financial asset to the Trustee's securities account,
or (D) has agreed that it will comply with "entitlement
orders" (as defined in Section 8-102(a)(8) of the UCC)
originated by the Trustee without further consent by
the "entitlement holder" (as defined in Section 8-
102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary
of entries on its books and records identifying as
belonging to the Trustee of (I) a specific certificated
security in the securities intermediary's possession,
(II) a quantity of securities that constitute or are
part of a fungible bulk of certificated securities in
the securities intermediary's possession, or (III) a
quantity of securities that constitute or are part of a
fungible bulk of securities shown on the account of the
securities intermediary on the books of another
securities intermediary.
4. with respect to any Uncertificated Security (i) if the
issuer of the Uncertificated Security is organized under the laws
of an Old Article 8 Jurisdiction, registration on the books and
records of the issuer thereof in the name of the securities
intermediary, the sending of a confirmation by the securities
intermediary of the purchase by the Trustee or its nominee or
custodian of such uncertificated security, the making by such
securities intermediary of entries on its books and records
identifying such uncertificated certificates as belonging to the
Trustee or its nominee or custodian; and (ii) if the issuer of
the Uncertificated Security is organized under the laws of a
jurisdiction that has adopted Revised Article 8, (A) the issuer
registers the Trustee as the registered owner thereof or (B) the
Trustee otherwise satisfies the requirements of Section 8-106(c)
of Revised Article 8.
For purposes of this Agreement, (i) "Financial Asset" means
a "financial asset" within the meaning of Section 8-102(a)(9) of
Revised Article 8 of the UCC; (ii) "Revised Article 8" means
Revised Article 8 (1994 Version) (and corresponding amendments to
Article 9) as promulgated by the National Conference of
Commissioners on Uniform State Laws; (iii) "Securities
Intermediary" means a "securities intermediary" within the
meaning of Sections 8-102(a)(14) of Revised Article 8; (iv)
"Security Certificate" means a "securities certificate" within
the meaning of Section 8-102(a)(16) of Revised Article 8; and (v)
"Security Entitlement" means a "securities entitlement" within
the meaning of Section 8-102(a)(17) of Revised Article 8.
(iii) Each of Wilmington Trust Company and the Trustee
agrees that it will comply with instructions or entitlement
orders of IFC or DEG without further consent of the Company as
registered owner or entitlement holder of any Uncertificated
Securities and investment property held in the Offshore Retention
Account.
(d) The Trustee shall (i) within five (5) Business Days
after receipt of any written request by the Company or the
Lenders, provide the Company or each of the Lenders with such
information as the Company or the Lenders may specify regarding
all Cash Equivalents (including, without limitation, categories,
amounts, maturities and issuers) and any other investments made
by the Trustee pursuant hereto and regarding amounts available in
the Offshore Retention Account for Debt Service or otherwise and
(ii) upon the written request and at the expense of the Company,
arrange with the Company for a mutually convenient time for a
financial officer or an authorized representative of the Auditors
to visit the office of the Trustee to examine and take copies of
records relating to and instruments evidencing the Cash
Equivalents held by the Trustee pursuant hereto.
(e) Each of Wilmington Trust Company and the Trustee
agrees, for itself only, for the benefit of the Lenders and the
Company that it shall not create or incur any Lien (i) upon or
with respect to the Collateral, including without limitation, the
Offshore Retention Account or the Nepal Retention Account, except
the Lien of the Security Documents, or (ii) upon or with respect
to the Holding Account, and that it will take such action, at its
own expense, as shall be necessary to duly discharge any such
Lien.
(f) The Company shall forthwith from time to time upon
request deliver to the Trustee such resolutions, mandates,
authorities, documents, specimen signatures and other matters as
the Trustee may require and which are for the time being in
effect to enable the Offshore Retention Account, including all
sub-accounts, and the Holding Account to be opened, maintained
and operated in accordance with this Agreement. The Company
hereby appoints the Trustee and each of the Lenders as its
attorneys-in-fact to act on the Company's behalf and in the
Company's name or otherwise, at such time and in such manner as
either the Trustee or either of the Lenders may think fit, to do
anything which the Company is required to do under this Agreement
in relation to the creation, protection, preservation or
enforcement of the Security and which the Company fails duly to
do. The Company hereby ratifies and confirms and agrees to
ratify and confirm whatever the Trustee or either of the Lenders
shall do in the exercise or purported exercise in good faith of
any such power of attorney.
Section 2.3 Establishment of the Holding Account. The
Trustee hereby establishes in the Company's name a special and
segregated account with the Trustee at its office in Wilmington,
Delaware entitled "Bhote Koshi Power Company Private Limited
Holding Account" (Account Number 43372-0) (the "Holding
Account"). The Holding Account shall not be subject to any Lien
in favor of, or subject to any restriction whatsoever benefiting,
the Lenders and amounts deposited in the Holding Account may be
used by the Company for any purpose the Company wishes. The
Trustee shall apply amounts on deposit in the Holding Account
from time to time as directed by the Company in a written notice
to the Trustee.
Section 2.4 Description of the Collateral; Security
Interest in the Offshore Retention Account. Pursuant to the
Security Agreement and Assignment, the Company has assigned,
mortgaged or pledged to the Trustee, for the benefit of the
Lenders, the Collateral, including without limitation: (i) all of
the right, title and interest of the Company in, to, or under the
assignable assets of the Company relating to the Project,
including without limitation the PPA, the Project Agreement, the
Operations and Maintenance Agreement, the Services Agreements,
the EPC Contract and all other Principal Documents; (ii) all of
the right, title and interest of the Company to or under the
mortgageable assets of the Company relating to the Project,
including without limitation the mortgageable immovable assets of
the Company and the Company's right of use of the Site; (iii) the
Pledged Shares and other Pledged Collateral and all proceeds
thereof; and (iv) the Offshore Retention Account and the Nepal
Retention Account and all cash, investments and securities at any
time on deposit in the Offshore Retention Account or the Nepal
Retention Account, including all income or gain earned thereon.
The Company hereby confirms such assignment, mortgage and pledge
to the Trustee, for the benefit of the Lenders, of all of the
Company's right, title and interest in and to the Offshore
Retention Account and the Nepal Retention Account, and all cash,
investments and securities at any time on deposit therein, as
security for the payment of the Obligations. The Trustee is the
trustee of the Lenders under the Security Documents for the
purpose of receiving payments contemplated hereunder and, through
its Designee, contemplated under the Nepal Agency and Retention
Agreement and is also the trustee on behalf of the Lenders for
the purpose of perfecting the security interest of the Lenders in
and creating in favor of the Trustee and/or the Lenders legal,
valid, and enforceable first priority Liens on all of the
Collateral, including, without limitation, the Offshore Retention
Account and the Nepal Retention Account and all cash, investments
and securities and any proceeds thereof at any time on deposit in
the Offshore Retention Account or the Nepal Retention Account.
Until (x) all of the Obligations owing to the Lenders are paid in
full and all obligations of the Lenders under the Loan Documents
are terminated, and (y) a period of one hundred twenty (120) days
(or such other period as may be applicable with respect to
preference or similar periods under applicable bankruptcy,
insolvency or similar laws) has elapsed since the condition set
out in clause (x) is satisfied without any court determining that
the Company is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to either of the Lenders or the Trustee by the Company will
be set aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters, the Offshore Retention
Account and the Nepal Retention Account shall at all times be in
the exclusive possession of, and under the exclusive dominion and
control of, the Trustee (or the Trustee's Designee), as trustee
for the Lenders.
Section 2.5 Rupee Deposits. The Company agrees to cause
all amounts payable to or for the benefit of the Company in
Rupees (including, without limitation, all revenues under the PPA
and all refunds of import duties received by the Company in
Rupees) to be deposited initially in the Nepal Retention Account.
The Trustee shall cause the Designee, as trustee under the Nepal
Agency and Retention Agreement, to deposit all such amounts in
the Nepal Retention Account. To the extent amounts in the Nepal
Retention Account exceed the amount of Rupees which the Company
requires to pay Operating and Maintenance Costs payable in Rupees
for the following Quarter, determined on the basis of the Annual
Budget, and the amount of Rupees required to be deposited in the
Nepal Reserve Sub-Account pursuant to Section 3.2(a)(ii) of the
Nepal Agency and Retention Agreement, the Trustee shall cause the
Designee to convert the excess Rupee amount into Dollars or if
Dollars are unavailable, other convertible currencies (in
accordance with the procedures set forth in the Nepal Agency and
Retention Agreement) and transfer such Dollars or other
convertible currencies to (i) the Nepal Dollar Sub-Account, to
the extent requested by the Company in a Payment Requisition, or
(ii) to the Trustee for deposit in the Offshore Retention
Account. If any excess Rupee amount (excluding Rupees deposited
in the Nepal Reserve Sub-Account) is not converted to Dollars or
other convertible currencies within 90 days of deposit in the
Nepal Retention Account under circumstances in which Nepal Rastra
Bank, HMGN or another Governmental Authority in Nepal having
power to regulate foreign exchange is not generally permitting
conversion of Rupees into Dollars or other convertible currencies
or remittance thereof in order to pay obligations denominated in
convertible currencies, the Trustee shall cause the Designee, at
the request of the Lenders, to withdraw and transfer to the
Lenders such excess Rupee amount. Upon receiving Rupees pursuant
to this Section 2.5, the Lenders will, if they are able, convert
such Rupees to Dollars or other convertible currencies and apply
such amount to pay Obligations owing to the Lenders from time to
time in accordance with the terms of the Intercreditor Agreement.
ARTICLE 3
DEPOSITS INTO THE OFFSHORE RETENTION ACCOUNT
Section 3.1 Revenue Sub-Account Deposits.
(a) All amounts (other than Rupees) received by the Trustee
in respect of the Company or the Project shall be deposited on
the day of receipt in the Offshore Retention Account and, unless
otherwise specified in this Article 3, into the Revenue Sub-
Account. If any such amounts are received in any currency other
than Dollars, the Trustee shall convert such amounts to Dollars
at the then applicable exchange rate available to the Trustee in
the normal course of business. The Company agrees, and confirms
that it has so instructed each of the other parties to the Third
Party Agreements, the Share Retention and Project Funds Agreement
and each of the Subscription Agreements, that all payments due or
to become due to the Company under each such agreement (except
for payments contemplated to be deposited in the Nepal Retention
Account) shall be made directly to the Trustee for deposit in the
Revenue Sub-Account (except as otherwise specified in this
Article 3). The Company agrees to cause all other amounts
payable to or for the benefit of the Company (including without
limitation Sales Proceeds, amounts received in respect of a
Special Buyout Event and cash on hand on the Financial Closing
Date) to be made directly to the Trustee for deposit in the
Revenue Sub-Account, except as otherwise specified hereunder or
in the Nepal Agency and Retention Agreement. In the event that,
notwithstanding the foregoing, any such payments or other amounts
are received by the Company, the Company shall promptly pay,
endorse, transfer and deliver such payments or other amounts, as
the case may be, to the Trustee for deposit in the Revenue Sub-
Account, and, until such delivery, the Company shall hold such
payments and other amounts, as the case may be, in the same form
as received in trust for the Trustee.
(b) On the Commercial Operation Date, the Trustee shall
withdraw from the Construction Sub-Account and deposit in the
Revenue Sub-Account $1,500,000.
(c) The Trustee shall deposit any Liquidated Damages
Proceeds received in respect of delays pursuant to the EPC
Contract or the EPC Performance Guarantees and all Insurance
Proceeds relating to delays (including proceeds of any claim
under Delay in Start-Up or Advance Loss of Profits or Business
Interruption coverages) in the Revenue Sub-Account immediately
upon receipt thereof.
(d) After the Commercial Operation Date, the Trustee shall
deposit in the Revenue Sub-Account all refunds of import duties
received by the Company in Dollars.
Section 3.2 Operations and Maintenance Sub-Account
Deposits. On the first Business Day of each Quarter commencing
after the Commercial Operation Date, the Trustee shall withdraw
from the Revenue Sub-Account and deposit in the Operations and
Maintenance Sub-Account an amount equal to (i) the product of
(x) Operating and Maintenance Costs payable in currencies other
than Rupees budgeted for such Quarter in the Annual Budget,
multiplied by (y) 1.10, minus (ii) the amount then on deposit in
the Operations and Maintenance Sub-Account, as set forth in a
Debt Service and Reserve Deposit Certificate or Correction
Notice. The Trustee shall promptly notify each of the Lenders
and the Company if, according to a calculation made by the
Trustee based on the most recent Annual Budget delivered to the
Trustee under Section 9.1(a) hereof, the amount set forth in a
Debt Service and Reserve Deposit Certificate for deposit in the
Operations and Maintenance Sub-Account is incorrect and stating
the reasons therefor. No transfer shall be made until such
amount is corrected.
Section 3.3 Debt Payment Sub-Account Deposits.
(a) On the first Business Day of each Month commencing
after the earlier to occur of the Commercial Operation Date and
September 15, 1999 after making any withdrawal required on such
date pursuant to Section 3.2 hereof, the Trustee shall withdraw
from the Revenue Sub-Account and deposit in the Debt Payment Sub-
Account an amount equal to one-sixth (1/6) of the aggregate Debt
Service payable on the Loans on the next scheduled Payment Date,
as set forth in a Debt Service and Reserve Deposit Certificate or
Correction Notice, until the balance therein equals aggregate
Debt Service payable on the Loans on the next scheduled Payment
Date. The amount required to be deposited in the Debt Payment
Sub-Account pursuant to this Section 3.3(a) in connection with
the DEG Loan shall be calculated on a semi-annual basis at the
time of the preceding Interest Payment Date or at such other time
as a Debt Service and Reserve Deposit Certificate or Correction
Notice is delivered to the Trustee on the basis of the Deutsche
Mark to US$ exchange rate available to the Trustee in the normal
course of business. Notwithstanding anything contained herein to
the contrary, the amount required to be retained in the Debt
Payment Sub-Account in connection with the B Loan pursuant to
this Section 3.3(a) shall be determined on the basis of any
Hedging Transactions plus the B Loan Spread made by the Company,
and the Debt Service and Reserve Deposit Certificate or
Correction Notice of any Lender shall specify an amount to be
retained in accordance with this Section 3.3(a).
(b) At the direction of the Lenders, the Trustee shall
deposit in the Debt Payment Sub-Account any or all proceeds of
any Deficiency Loan or Deficiency Subscription received in
respect of a Project Funds Shortfall.
Section 3.4 Maintenance Reserve Sub-Account Deposits. On
the Commercial Operation Date, the Company shall deposit into the
Maintenance Reserve Sub-Account $55,000. On the first Business
Day of January of each year thereafter, after making any
withdrawal required on such date pursuant to Section 3.2 or 3.3
hereof, the Trustee shall withdraw from the Revenue Sub-Account
and deposit in the Maintenance Reserve Sub-Account an amount
equal to the Maintenance Reserve Requirement. In addition, the
Trustee shall withdraw from the Revenue Sub-Account and deposit
in the Maintenance Reserve Sub-Account from time to time an
amount sufficient to replenish any funds withdrawn from the
Maintenance Reserve Sub-Account pursuant to Section 4.6(b)
hereof, subject to and in accordance with the priorities set
forth in Section 4.2 hereof.
Section 3.5 Debt Service Reserve Sub-Account Deposits.
On the earlier to occur of the Commercial Operation Date and
February 15, 2000 and on the first Business Day of each Month
thereafter, after making any withdrawal required on such date
pursuant to Section 3.2, 3.3 or 3.4 hereof, the Trustee shall
withdraw from the Revenue Sub-Account and deposit in the Debt
Service Reserve Sub-Account an amount equal to (i) the Debt
Service Reserve Requirement, less (ii) the amount then on deposit
in the Debt Service Reserve Sub-Account, as set forth in a Debt
Service and Reserve Deposit Certificate or Correction Notice.
The amount required to be deposited in the Debt Service Reserve
Sub-Account pursuant to this Section 3.5 in connection with the
DEG Loan shall be calculated on a semi-annual basis at the time
of the preceding Interest Payment Date or at such other time as a
Debt Service and Reserve Deposit Certificate or Correction Notice
is delivered to the Trustee on the basis of the Deutsche Mark to
US$ exchange rate available to the Trustee in the normal course
of business. Notwithstanding anything contained herein to the
contrary, the amount required to be retained in the Debt Service
Reserve Sub-Account in connection with the B Loan pursuant to
this Section 3.5 shall be determined on the basis of any Hedging
Transactions plus the B Loan Spread made by the Company, and the
Debt Service and Reserve Deposit Certificate or Correction Notice
of any Lender shall specify an amount to be retained in
accordance with this Section 3.5.
Section 3.6 Holding Account Deposits. Provided (i) the
Trustee has not received from either of the Lenders a written
notice stating that the Company is not permitted, under
Section 6.3 of the General Conditions, to make distributions
(unless the Trustee shall have received subsequently written
notice from such Lender that distributions may recommence), (ii)
each of the Operations and Maintenance Sub-Account, the Debt
Payment Sub-Account, the Maintenance Reserve Sub-Account, the
Debt Service Reserve Sub-Account, the Nepal Operations and
Maintenance Sub-Account and the Nepal Reserve Sub-Account
contains funds equal to the maximum amount that would be required
to be funded hereunder and under the Nepal Agency and Retention
Agreement at the time of the next Payment Date (and prior to
making any withdrawals on such Payment Date) (such maximum amount
referred to herein as the "Maximum Amount"), (iii) the Operations
and Maintenance Sub-Account and the Nepal Operations and
Maintenance Sub-Account contain sufficient funds to pay Operating
and Maintenance Costs budgeted for the following two (2)
Quarters, and (iv) all Sub-Accounts hereunder and under the Nepal
Agency and Retention Agreement other than those Sub-Accounts
referenced in clauses (ii) and (iii) are funded to the full
amount then required to be funded hereunder and under the Nepal
Agency and Retention Agreement, at the request of the Company set
forth in a Payment Requisition (which may not be delivered prior
to the Project Completion Date and thereafter may be delivered on
a monthly basis after the Project Completion Date), the Trustee
shall withdraw from the Revenue Sub-Account and deposit in the
Holding Account funds which are in excess of the amounts required
to be on deposit as specified in this Section 3.6, and shall
direct the Designee to withdraw from the Nepal Reserve Sub-
Account and deposit in the Nepal Holding Account funds which are
in excess of the amounts required to be on deposit as specified
in this Section 3.6, as specified in a Payment Requisition.
After any deposits of funds in the Holding Account or the Nepal
Holding Account during a period between Payment Dates, then until
the next Payment Date the Maximum Amount shall be required to be
maintained as described above, and such funding shall be in
addition to the other funding requirements hereunder (including
those set forth in clauses (i), (iii), and (iv) of this Section
3.6).
Section 3.7 Construction Sub-Account Deposits.
(a) The Trustee shall deposit in the Construction Sub-
Account the proceeds of each Disbursement delivered to the
Trustee.
(b) Except as provided in Section 3.3(b) hereof, the
Trustee shall deposit in the Construction Sub-Account the
proceeds of any Deficiency Loan or Deficiency Subscription
received in respect of a Project Funds Shortfall delivered to the
Trustee.
(c) The Trustee shall deposit in the Construction Sub-
Account all amounts paid pursuant to Section 2.1(a) of any
Subscription Agreement and delivered to the Trustee.
(d) The Trustee shall deposit in the Construction
Sub-Account any contractual damages or other amounts (other than
Liquidated Damages Proceeds) paid by or on behalf of the EPC
Contractor under the EPC Contract, including amounts received
from draws under the EPC Performance Guarantee (other than such
draws which are in respect of liquidated damages owed by the EPC
Contractor under the EPC Contract).
(e) Prior to the Commercial Operation Date, the Trustee
shall, from time to time, withdraw from the Revenue Sub-Account
and deposit in the Construction Sub-Account all amounts received
from the NEA pursuant to the PPA.
(f) Prior to the Commercial Operation Date, the Trustee
shall deposit in the Construction Sub-Account all refunds of
import duties received by the Company in Dollars.
Section 3.8 Insurance Proceeds Sub-Account Deposits.
Except as otherwise provided in Section 3.1(c) hereof, the
Company shall remit (or cause to be remitted) to the Trustee for
deposit in the Insurance Proceeds Sub-Account all Insurance
Proceeds (i) relating to each claim or, if related, aggregate
claims in excess of seven hundred fifty thousand Dollars
($750,000) or (ii) received during the occurrence and
continuation of an Event of Default, relating to any loss. In
addition, the Company shall remit to the Trustee for deposit in
the Revenue Sub-Account all Insurance Proceeds relating to any
single loss of seven hundred fifty thousand Dollars ($750,000) or
less to the extent such Insurance Proceeds are not applied by the
Company to repair, restore or replace the Project. The Trustee
shall deposit in the Insurance Proceeds Sub-Account all Insurance
Proceeds received by the Trustee pursuant to any insurance
policies in respect of the Project, except as otherwise provided
in this Section 3.8 or Section 3.1(c) hereof. The Trustee shall
promptly notify each of the Lenders and the Company of its
receipt of Insurance Proceeds.
Section 3.9 Liquidated Damages Sub-Account Deposits. The
Trustee shall deposit in the Liquidated Damages Sub-Account all
Liquidated Damages Proceeds (other than Liquidated Damages
Proceeds received in respect of delays pursuant to the EPC
Contract or the EPC Performance Guarantees) received by the
Trustee, including amounts received from draws under the EPC
Performance Guarantees to the extent such draws are in respect of
liquidated damages (other than for delay) owed by the EPC
Contractor under the EPC Contract.
Section 3.10 Deficiency Sub-Account Deposits. The Trustee
shall deposit in the Deficiency Sub-Account all amounts received
by the Trustee pursuant to Section 3.2(b) of the Share Retention
and Project Funds Agreement.
Section 3.11 Cash Sub-Account Deposits. The Trustee shall
deposit in the Cash Sub-Account all amounts received by the
Trustee pursuant to Article 7 of the Share Retention and Project
Funds Agreement.
ARTICLE 4
WITHDRAWALS FROM ACCOUNTS AND FUNDING REQUIREMENTS
Section 4.1 Special Buyout Event.
(a) Upon the occurrence and during the continuation of a
Special Buyout Event, the Trustee shall accumulate all monies
then held by the Trustee and, unless the Lenders shall otherwise
direct in writing, shall not pay to the Company or any other
Person other than the Lenders any amounts of money held by the
Trustee pursuant to this Agreement; provided, however, that the
Trustee (i) shall continue to make regularly scheduled payments
of Debt Service and (ii) shall make the payments described in
priority First set forth in Section 4.2 hereof until the Trustee
receives from HMGN the Purchase Price (as defined in Section 6.2
of the Project Agreement), identified as such to the Trustee.
(b) The Trustee shall notify each of the Lenders
immediately of the Trustee's receipt of the Purchase Price and
shall apply the Purchase Price and all other funds in the
Offshore Retention Account in accordance with instructions of the
Lenders (it being expressly acknowledged and agreed that such
application of the Purchase Price may include the repayment of
the Loans and the IFC equity) within three (3) Business Days of
the Trustee's receipt of such instructions.
Section 4.2 Revenue Sub-Account Withdrawals. Subject to
Section 4.1 hereof and provided that the Trustee shall not have
received a Notice of Default specifying an Event of Default
(unless the Trustee shall have subsequently received written
notice of the cure or waiver of such Event of Default from the
Lenders), the Trustee is hereby authorized to make withdrawals
from the Revenue Sub-Account pursuant to the applicable Payment
Requisition or Correction Notice, in the following order of
priority:
(a) First: On the first Business Day of each
Quarter commencing after the Commercial Operation Date, withdraw
and transfer for deposit in the Operations and Maintenance Sub-
Account the amount required to be deposited therein pursuant to
Section 3.2 hereof;
(b) Second: On the first Business Day of each Month
commencing after the earlier to occur of the Commercial Operation
Date and September 15, 1999, withdraw and transfer for deposit in
the Debt Payment Sub-Account the amount required to be deposited
therein pursuant to Section 3.3(a) hereof;
(c) Third: On the first Business Day of each
January, withdraw and transfer for deposit in the Maintenance
Reserve Sub-Account the amount, if any, required to be deposited
therein pursuant to Section 3.4 hereof;
(d) Fourth: On the earlier to occur of the Commercial
Operation Date and February 15, 2000, and the first Business Day
of each Month thereafter, withdraw and transfer for deposit in
the Debt Service Reserve Sub-Account, the amount, if any,
required to be deposited therein pursuant to Section 3.5 hereof;
(e) Fifth: On a monthly basis after the Project
Completion Date, withdraw and transfer for deposit in the Holding
Account the amount, if any, permitted to be deposited therein
pursuant to Section 3.6 hereof and Section 6.3 of the General
Conditions.
If, on any date on which funds were required to be deposited in a
sub-account pursuant to priorities First through Fourth above,
the available funds in the Revenue Sub-Account were insufficient
to make some or all of any such deposit, then, subject to and in
accordance with the priorities set forth above, on the first day
of each Month thereafter the Trustee shall withdraw from the
Revenue Sub-Account and deposit into each such sub-account such
shortfall, in addition to any amount required to be deposited in
such sub-account on such date.
Section 4.3 Operations and Maintenance Sub-Account
Withdrawals. Within two (2) Business Days following a request of
the Company pursuant to a Payment Requisition (or a Correction
Notice), the Trustee shall withdraw from the Operations and
Maintenance Sub-Account the amounts set forth in such Payment
Requisition (or Correction Notice) and transfer such amounts to
the payees or to the Nepal Retention Account as specified in such
Payment Requisition or Correction Notice.
Section 4.4 Debt Payment Sub-Account Withdrawals. On
each Payment Date, or, at the request of the Lenders on any other
date on which Debt Service is due and owing to the Lenders, the
Trustee shall withdraw from the Debt Payment Sub-Account and
transfer to the Lenders an amount equal to Debt Service due and
owing to the Lenders, as set forth in a Debt Service and Reserve
Deposit Certificate or Correction Notice.
Section 4.5 Debt Service Reserve Sub-Account Withdrawals.
(a) The Trustee shall, after application to the payment of
Debt Service due and owing to the Lenders of all funds on deposit
in the Debt Payment Sub-Account, withdraw from the Debt Service
Reserve Sub-Account and pay over to the Lenders an amount equal
to the balance of Debt Service then due and owing to the Lenders.
(b) If funds on deposit in the Operations and Maintenance
Sub-Account are insufficient to pay Operating and Maintenance
Costs on the date specified in a Payment Requisition delivered
pursuant to Section 4.3 hereof, before making any withdrawal
required on such date pursuant to Section 4.5(a) hereof, the
Trustee shall withdraw from the Debt Service Reserve Sub-Account
and transfer to the Operations and Maintenance Sub-Account funds
up to the amount of such deficiency, as set forth in a Payment
Requisition or Correction Notice. The Trustee shall notify each
of the Lenders of any withdrawal of funds pursuant to this
Section 4.5(b).
(c) Whenever funds on deposit in the Debt Service Reserve
Sub-Account are in excess of the Debt Service Reserve Requirement
(as specified in the most recent Debt Service and Reserve Deposit
Certificate (or Correction Notice) delivered to the Trustee), the
Trustee shall withdraw such excess funds from the Debt Service
Reserve Sub-Account and transfer such excess funds to the Revenue
Sub-Account.
Section 4.6 Maintenance Reserve Sub-Account Withdrawals.
(a) The Trustee shall withdraw from the Maintenance Reserve
Sub-Account to pay when due costs of scheduled major maintenance
or extraordinary repair or replacement of the Project, in
accordance with a Payment Requisition (delivered to the Trustee
and each of the Lenders at least thirty (30) Business Days prior
to the proposed transfer date) or a Correction Notice.
(b) The Trustee shall, after application to the payment of
Debt Service due and owing on the Loans of all funds on deposit
in the Debt Payment Sub-Account and the Debt Service Reserve Sub-
Account, withdraw from the Maintenance Reserve Sub-Account and
pay over to the Lenders an amount equal to Debt Service then due
and owing to the Lenders. Funds so transferred shall be
replenished on the earliest possible date from available funds in
the Revenue Sub-Account, subject to and in accordance with the
priorities set forth in Section 4.2 hereof.
(c) The Trustee shall notify each of the Lenders of each
withdrawal of funds from the Maintenance Reserve Sub-Account.
Section 4.7 Construction Sub-Account Withdrawals.
(a) Prior to the Project Completion Date and provided that
the Trustee shall not have received a Notice of Default
specifying an Event of Default (unless the Trustee shall have
received subsequently written notice from the Lenders of the
waiver of such Event of Default, and the Lenders shall not have
delivered to the Trustee a Notice of Default specifying an Event
of Default within the 30-day period following receipt of such
notice(s) of waiver), the Company may from time to time request
that funds be withdrawn from the Construction Sub-Account to pay
Project Costs in accordance with a Payment Requisition or
Correction Notice, and the Trustee shall make such withdrawals
and payments as are specified in such Payment Requisition or
Correction Notice.
(b) Prior to the Commercial Operation Date, the Company may
from time to time request that funds be withdrawn from the
Construction Sub-Account to pay Operating and Maintenance Costs
in accordance with a Payment Requisition or Correction Notice,
and upon the Lenders' prior approval thereof, the Trustee shall
make such withdrawals and payments as are specified in such
Payment Requisition or Correction Notice.
(c) From September 15, 1999 until the Commercial Operation
Date, the Company may from time to time request that funds be
withdrawn from the Construction Sub-Account to fund the Debt
Payment Sub-Account pursuant to Section 3.3 hereof in accordance
with a Payment Requisition or Correction Notice, and upon the
Lenders' prior approval thereof, the Trustee shall make such
withdrawals from the Construction Sub-Account and payments into
the Debt Payment Account as are specified in such Payment
Requisition or Correction Notice.
(d) On the Business Day immediately following the
Commercial Operation Date, the balance remaining, if any, of any
proceeds of any Deficiency Loan or Deficiency Subscription on
deposit in the Construction Sub-Account shall, upon the Lenders'
instructions, be transferred to the Persons that provided such
Deficiency Loans or Deficiency Subscriptions (pro rata based on
the relative amounts of such funds provided by such Persons) if
either Lender determines in its good faith judgment that a
Project Funds Shortfall no longer exists. Notwithstanding the
foregoing, each Lender shall maintain the right to issue a
Deficiency Notice (and the Sponsors shall be bound thereby) in
respect of any future Project Funds Shortfall at any time
thereafter in accordance with the Project Funds and Share
Retention Agreement. Upon receipt of a Lender Completion Notice
from the Lenders, the balance remaining, if any, of any proceeds
of any Deficiency Loan or Deficiency Subscription on deposit in
the Construction Sub-Account shall, upon the Lenders'
instructions, be transferred to the Persons that provided such
Deficiency Loans or Deficiency Subscriptions (pro rata based on
the relative amounts of such funds provided by such Persons).
(e) Upon receipt of a Lender Completion Notice from the
Lenders, after making any payments required pursuant to the last
sentence of Section 4.7(c) hereof, the balance remaining, if any,
of all amounts paid pursuant to Section 2.1(a) of the
Subscription Agreements and loan and equity disbursements made
pursuant to the Investment Agreement on deposit in the
Construction Sub-Account shall, upon the Lenders' instructions,
be transferred to the Persons that provided such funds (pro rata
based on the relative amounts of such funds provided by such
Persons).
Section 4.8 Insurance Proceeds Sub-Account Withdrawals.
(a) If, within 30 days of receipt of the Company's notice
that the Project has been damaged or destroyed (and that the
amount of the Company's claim or, if related, aggregate claims is
more than seven hundred fifty thousand Dollars ($750,000) and
less than five million Dollars ($5,000,000)), the Company has
delivered to the Trustee and each of the Lenders a notice that it
wishes to repair, reinstate or make good the loss and the Lenders
have delivered to the Trustee notice that all conditions set
forth in Section 5.3(b)(i)(B) of the General Conditions have been
met, funds on deposit in the Insurance Proceeds Sub-Account shall
be released to the Company from time to time to pay costs of
repair, reinstatement or making good the loss or damage within
ten (10) Business Days following receipt of an Insurance Proceeds
Request. Upon receipt of written notice from the Company that
the repair, reinstatement or making good of the loss or damage
has been completed, the Trustee shall withdraw and transfer from
the Insurance Proceeds Sub-Account any remaining Insurance
Proceeds for deposit in the Revenue Sub-Account (if on or after
the Commercial Operation Date) or the Construction Sub-Account
(if prior to the Commercial Operation Date).
(b) If the Trustee does not receive the notices described
in subsection (a) above or if the Trustee shall have received a
written notice that the amount of the claim or, if related,
aggregate claims with respect to which Insurance Proceeds were
received is five million Dollars ($5,000,000) or more and
following expiration of any consultation period set forth in
Section 5.3(b)(ii) of the General Conditions, funds on deposit in
the Insurance Proceeds Sub-Account shall be released in
accordance with the written instructions of the Lenders.
Section 4.9 Liquidated Damages Sub-Account Withdrawals.
To the extent there is on deposit in the Liquidated Damages Sub-
Account excess Performance Liquidated Damages which have been
paid by the EPC Contractor and are remaining after the payment to
the Lenders specified in Section 3.7(c) of the IFC Special
Conditions and Section 3.7(d) of the DEG Special Conditions, such
excess shall be withdrawn by the Trustee and applied to repay
equity in an amount equal to (x) the Dollar amount which has then
been paid in to the Company for the purchase of Shares,
multiplied by (y) the Capacity Shortfall Percentage. Such amount
shall be divided pro rata (based on the amount of equity
contributed) among all shareholders of the Company. After such
application, any remaining Performance Liquidated Damages shall
be transferred to the Revenue Sub-Account.
Section 4.10 Deficiency Sub-Account Withdrawals.
(a) The Trustee shall apply the amounts in the Deficiency
Sub-Account as directed by the Lenders. On the Business Day
immediately following the Project Completion Date, the balance
remaining, if any, after the application of amounts on deposit in
the Deficiency Sub-Account as directed by the Lenders, of amounts
in such Deficiency Sub-Account shall be transferred to Panda
Energy International, Inc.
(b) The Trustee shall apply the amounts in the Deficiency
Sub-Account as directed by the Lenders. Prior to the Project
Completion Date, the balance remaining, if any, after the
application of amounts on deposit in the Deficiency Sub-Account
as directed by the Lenders, of amounts in such Deficiency Sub-
Account shall be transferred to Panda Energy International, Inc.
in accordance with Section 3.3(c)(iv) of the Share Retention and
Project Funds Agreement.
Section 4.11 Cash Sub-Account Withdrawals.
(a) The Trustee shall apply the amounts in the Cash Sub-
Account as directed by the Lenders. Prior to Final Acceptance,
after the application of amounts on deposit in the Cash Sub-
Account as directed by the Lenders, the Cash Sub-Account Excess
(as such term is defined in the Share Retention and Project Funds
Agreement) shall be transferred to Panda Energy International,
Inc. in accordance with Section 7.1(d) of the Share Retention and
Project Funds Agreement.
(b) The Trustee shall apply the amounts in the Cash Sub-
Account as directed by the Lenders. Following Final Acceptance,
the balance remaining, if any, after the application of amounts
on deposit in the Cash Sub-Account as directed by the Lenders, of
amounts in such Cash Sub-Account shall be transferred to Panda
Energy International, Inc. in accordance with Section 7.1(e) of
the Share Retention and Project Funds Agreement. The Trustee
shall apply such amounts as directed by the Lenders.
Section 4.12 No Other Rights of Withdrawal. Except as
specifically set forth in this Article 4 or in Section 7.4
hereof, the Company shall have no right to request withdrawals in
respect of the Offshore Retention Account.
ARTICLE 5
REMEDIES ON DEFAULT
Section 5.1 Action by the Trustee. If the Trustee
receives a Notice of Default specifying an Event of Default from
the Company or either Lender, then the Trustee shall take such
action or shall refrain from taking such action with respect to
such Event of Default as the Trustee shall be directed in writing
by such Lender. Such actions may include proceeding to protect
and enforce the rights vested in the Trustee by the Loan
Documents (including, without limitation, bringing appropriate
judicial proceedings or taking any of the actions as shall be
provided for in the Loan Documents). Without limiting the
foregoing, if the Trustee receives a Notice of Default specifying
an Event of Default from the Company or either Lender, the
Trustee shall accumulate all monies then held by the Trustee and,
unless the Lenders shall otherwise direct in writing, shall not
pay to the Company or any other Person other than the Lenders any
amounts of monies held by the Trustee pursuant to this Agreement;
provided, however, that the Trustee (i) shall continue to make
regularly scheduled payments of Debt Service, and (ii) unless
otherwise directed in writing by the Lenders, shall make the
payments described in priority First set forth in Section 4.2
hereof.
Section 5.2 For Benefit of the Lenders Only. The
provisions of this Article Five are for the benefit of the
Lenders and the Trustee only and may be enforced only by the
Lenders or the Trustee.
ARTICLE 6
THE TRUSTEE
Section 6.1 Appointment of Trustee; Powers and
Immunities. The Lenders hereby appoint and authorize Wilmington
Trust Company to act as their trustee with respect to the
Collateral as provided herein and in the other Security
Documents, and as their trustee, through its Designee, under the
Nepal Agency and Retention Agreement, with such powers as are
expressly delegated to the Trustee by the terms of this
Agreement, the other Security Documents or the Nepal Agency and
Retention Agreement, as applicable, together with such other
powers as are reasonably incidental thereto. The Trustee shall
not bear any duties or responsibilities except those expressly
set forth in this Agreement, the Nepal Agency and Retention
Agreement and the other Security Documents to which it is a
party, and those necessarily incidental thereto. Except with
respect to the Holding Account or as otherwise expressly provided
herein, the Trustee shall only take such action under this
Agreement as it shall be directed in writing by the Lenders. The
Trustee shall have the right at any time to seek instructions
concerning the administration of this Agreement, the other
Security Documents to which it is a party or the Nepal Agency and
Retention Agreement from the Lenders or any court of competent
jurisdiction. Wilmington Trust Company hereby accepts such
appointment as trustee for the Lenders. In the event (i) a
Sponsor Shareholder fails to make any Subscription Amount Payment
or other payment as and when required under such Sponsor
Shareholder's Equity Subscription Agreement, and/or (ii) Panda
Energy International, Inc. fails to make any Deficiency payment
as and when required under the Share Retention and Project Funds
Agreement, and/or (iii) the Trustee and/or the Lenders receive
notice (x) under any of the Equity Letters of Credit that any
such Equity Letter of Credit will not be extended beyond the
Stated Expiration Date or the New Stated Expiration Date (as such
terms are defined in the Equity Letters of Credit), as the case
may be, or (y) under either the Panda Letter of Credit or the
Panda Project Completion Letter of Credit that such Panda Letter
of Credit or Panda Project Completion Letter of Credit will not
be extended beyond the then applicable expiration date thereof,
the Trustee or the Lenders shall have the right at any time prior
to the Stated Expiration Date, the New Stated Expiration Date or
any other expiration date, as the case may be, to draw the full
amount then available under such Equity Letter of Credit, Panda
Letter of Credit or Panda Project Completion Letter of Credit, as
the case may be. Any amounts so drawn shall be deposited in
accordance with this Agreement or the Nepal Agency and Retention
Agreement, as applicable.
Section 6.2 Reliance by Trustee. The Trustee shall be
entitled to rely upon any signature, certificate, notice or other
document (including any cable, telegram, telecopy or telex)
reasonably believed by it to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or
Persons, and shall have no liability for its actions taken
thereupon, unless due to the Trustee's gross negligence or
willful misconduct. As to any matters not expressly provided for
by this Agreement, the Trustee shall not be required or
authorized to take any action or exercise any discretion, but
shall be required to act or to refrain from acting upon
instructions of the Lenders, and shall in all such cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with such instructions, and any action taken or
failure to act pursuant thereto, shall be binding on the Lenders.
Section 6.3 Court Orders. The Trustee is hereby
authorized, in its exclusive discretion, to obey and comply with
all writs, orders, judgments or decrees issued by any court or
administrative agency affecting any money, documents or things
held by the Trustee, provided the Trustee has notified each of
the Lenders in advance of any such writ, order, judgment or
decree and the Trustee's proposed actions in connection
therewith. The Trustee shall not be liable to any of the parties
hereto, their successors, heirs or personal representatives by
reason of the Trustee's compliance with such writs, orders,
judgments or decrees, notwithstanding such writ, order, judgment
or decree is later reversed, modified, set aside or vacated.
Section 6.4 Concerning The Trustee.
(a) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.4.
(b) Any request, direction or authorization by the Company
or the Lenders shall be sufficiently evidenced by a request,
direction or authorization in writing, delivered to the Trustee,
signed in the name of any such party by any duly authorized
officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be
sufficiently evidenced by a copy of such resolution certified by
the Secretary or an Assistant Secretary of such party, to have
been duly adopted and to be in full force and effect on the date
of such certification, and delivered to the Trustee; provided
that, in the case of any requisition, request or certificate
which by any provision hereof is specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether it conforms on its face to
the requirements of this Agreement.
(c) Whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder or under any other agreement, the Trustee (unless other
evidence be herein or therein specifically prescribed), absent
actual knowledge to the contrary, may rely in good faith upon a
certificate in writing, delivered to the Trustee and signed by
any duly authorized officer of the Company (provided copies
thereof have been delivered to each of the Lenders) and notice of
such need for such proof or establishment shall be delivered to
the Company and the Lenders, who may advise the Trustee in
respect of such matter and the Trustee shall act in conformity
with such advice.
(d) The Trustee may rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by
the advice of such counsel in anything done or omitted to be done
in accordance with such advice.
(e) The Trustee shall not be under any obligation to take
any action under this Agreement or under any other agreement at
the request or direction of the Company or the Lenders unless
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by the Trustee in compliance
with such request or direction shall have been offered to the
Trustee; nor shall the Trustee be required to take any action nor
shall any provision of this Agreement be deemed to impose on the
Trustee any obligation to take any action, if the Trustee shall
have been advised by its counsel that such action is unlawful or
is contrary to the terms of this Agreement.
(f) Except as explicitly provided herein, the Trustee shall
not be bound to make any investigation into the accuracy or
completeness of the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document
unless an officer in the Corporate Trust Administration
Department of the Trustee has actual knowledge that the facts or
matters stated therein are false or inaccurate, but the Trustee
may make such further inquiry or investigation into such facts or
matters as instructed by the Lenders.
(g) Except as otherwise provided in written instructions
given to the Trustee by the Lenders, the Trustee shall not have
any duty (i) to arrange for any recording or filing of this
Agreement or any other document or any financing statement or
continuation statement or other notice or document relating
thereto or to arrange for the maintenance of any such recording
or filing, (ii) to arrange for the payment or discharge of any
such recording or filing, (iii) to arrange for the payment or
discharge of any tax, assessment or other governmental charge or
any Lien, (iv) to confirm or verify any financial statements or,
except as explicitly provided herein, observance of any of the
Company's covenants under this Agreement or any other document.
(h) Notwithstanding anything contained herein to the
contrary, neither Wilmington Trust Company nor the Trustee shall
be required to take any action in any jurisdiction other than in
the State of Delaware if the taking of such action will
(i) require the consent or approval or authorization or order of
or the giving of other action in respect of, any state or other
governmental authority or agency of any jurisdiction other than
the State of Delaware unless such consent, approval,
authorization, order or other action has been obtained or given;
(ii) result in any fee, tax or other governmental charge under
the laws of any jurisdiction or any political subdivisions
thereof in existence on the date hereof other than the State of
Delaware becoming payable by Wilmington Trust Company unless such
fee, tax or other governmental charge has been paid; or
(iii) subject Wilmington Trust Company to personal jurisdiction
in any jurisdiction other than the State of Delaware for causes
of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company or the Trustee, as the
case may be, contemplated hereby. The Trustee shall be entitled
to obtain advice of counsel (which advice shall be an expense of
the Company) to determine whether any action required to be taken
pursuant to the Agreement results in the consequences described
in clauses (i), (ii) and (iii) of the preceding sentence. In the
event that said counsel advises the Trustee that such action will
result in such consequences, the Trustee shall promptly give
notice to such effect to each of the Lenders, and the Trustee may
appoint a Co-trustee as hereinafter defined in accordance with
paragraph (i) below to take any actions on its behalf.
(i) If there is any enforcement of remedies or exercise of
rights upon the occurrence of an Event of Default, or if the
Trustee deems that, by reason of any present or future law of any
jurisdiction, it may or may not effectively exercise any of the
powers, rights or remedies granted to it under this Agreement or
the other Security Documents, or hold title to the properties, in
trust, as granted under this Agreement or the other Security
Documents, or take any other action which may be desirable or
necessary in connection therewith, or if the Trustee is excused
from taking any required action pursuant to paragraph (h) above,
the Trustee shall be entitled to appoint, to the extent
consistent with applicable law, a separate or additional co-
trustee (a "Co-trustee"). If the Trustee appoints an individual
or institution as a Co-trustee:
(1) the appointment of a Co-trustee by the
Trustee shall be made only with the prior written
consent of the Lenders, which consent shall not be
unreasonably withheld or delayed; and
(2) each and every remedy, power, right,
title, interest, trust, duty and obligation
expressed or intended by this Agreement or the
other Security Documents to be exercised by or
vested in, conveyed to or imposed upon, the
Trustee with respect thereto shall be exercisable
by and vest in the Co-trustee but only to the
extent necessary, appropriate or desirable to
enable it to exercise or have vested in it such
powers, rights, trusts, titles, interests, duties
and obligations and remedies, and every covenant
and obligation necessary, appropriate or desirable
to the exercise thereof by the Co-trustee shall
run to and be enforceable by either of them. The
Trustee shall have the right to terminate the
appointment of a Co-trustee with the prior written
consent of the Lenders, which consent shall not be
unreasonably withheld or delayed. If any
instrument in writing from the Company is required
by the Co-trustee to more fully and certainly vest
in and confirm to it such remedies, rights,
powers, titles, interests, trusts, duties and
obligations, any and all such instruments in
writing shall, on request, be executed,
acknowledged and delivered by the Company. If the
Co-trustee becomes incapable of acting, resigns or
is removed, all the remedies, rights, powers,
titles, interests, trusts, duties and obligations
of the Co-trustee shall vest in and be exercised
by the Trustee until the appointment of a
successor to the Co-trustee.
(j) The Trustee shall not be responsible or liable for any
failure of the Designee to comply with any direction or
instruction delivered by the Trustee, or any failure of the
Designee to perform its covenants or obligations under the Nepal
Agency and Trust Agreement, or any misconduct of the Designee.
(k) In the event the Trustee is uncertain as to the
application of any provision of this Agreement, or such provision
is ambiguous as to its application or is, or appears to be, in
conflict with any other provision hereof, or in the event that
this Agreement permits any determination by the Trustee or is
silent or incomplete as to the course of action which the Trustee
is required to take with respect to a particular set of facts,
then the Trustee may seek instructions from the Lenders and shall
not be liable to any person to the extent that it acts in good
faith in accordance with the instructions of the Lenders.
Section 6.5 Resignation or Removal of Trustee. Subject
to the appointment and acceptance of a successor Trustee as
provided below, the Trustee may resign at any time by giving
notice thereof to each of the Lenders and the Company. The
Trustee may be removed at any time with or without cause by
either of the Lenders. Upon any such resignation or removal, the
Lenders shall appoint a successor Trustee with (prior to an Event
of Default) the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed. If no
successor Trustee shall have been appointed by the Lenders and
shall have accepted such appointment within ninety (90) days
after a retiring Trustee's giving of notice of resignation, then
the retiring Trustee may, on behalf of the Lenders, appoint a
successor Trustee, which shall be a bank or trust company
reasonably acceptable to the Lenders. Any successor Trustee
appointed by the Lenders or by a retiring Trustee shall have a
combined capital and surplus of at least $500 million. Upon the
acceptance of any appointment as Trustee hereunder by a successor
Trustee, (i) such successor Trustee shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the Trustee hereunder, and the retiring Trustee shall
be discharged from its duties and obligations hereunder, and
(ii) the retiring Trustee shall promptly transfer the Offshore
Retention Account, the Nepal Retention Account and the Holding
Account and all other Collateral to the possession or control of
the successor Trustee and shall execute and deliver such notices,
instructions and assignments as may be necessary or desirable to
transfer the rights of the Trustee with respect to the Offshore
Retention Account, the Nepal Retention Account and the Holding
Account and all other Collateral to the successor Trustee. After
the retiring Trustee's resignation or removal hereunder as
Trustee, the provisions of this Article 6 and of Article 7 hereof
shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Trustee.
ARTICLE 7
EXPENSES; INDEMNIFICATION; FEES
Section 7.1 Expenses.
(a) The Company agrees to pay or reimburse within thirty
(30) days of demand therefor all out-of-pocket expenses of the
Trustee (including reasonable expenses for legal services) in
respect of, or incident to, the preparation, execution and
delivery of this Agreement, the administration of this Agreement
and the Offshore Retention Account and the other Loan Documents,
the enforcement of any of the provisions of this Agreement or any
other Loan Document or in connection with any amendment, waiver
or consent relating to this Agreement or any other Loan Document,
provided that any such demand is accompanied by such supporting
documentation as may be reasonably requested by the Company.
(b) Without limiting the foregoing, the Company will upon
demand pay to the Trustee or the Designee the amount of any and
all reasonable fees and expenses which the Trustee or the
Designee may incur in connection with:
(i) the administration of this Agreement,
the Nepal Agency and Trust Agreement or any other
Security Document (including, without limitation,
any fees and expenses relating to the conversion
of payments required to be made to any Lender in
any currency other than Dollars),
(ii) the custody, preservation, use or
operation of, or the sale of, collection from, or
other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any
of the rights of the Trustee on behalf of the
Lenders hereunder or under any other Security
Document, or
(iv) the failure by the Company to perform or
observe any of the provisions hereof or under any
Security Document.
(c) In the event the Trustee is required, pursuant to a
written demand from any Governmental Authority, to pay any
withholding taxes to any Governmental Authority, the Trustee
shall promptly notify each of the Lenders and the Company of the
receipt of such written demand and the Company shall promptly
thereafter, but in no event prior to the last date on which such
withholding taxes are due and payable, pay the amount of such
withholding taxes. The Trustee shall not pay any withholding
taxes to such Governmental Authority until the last date on which
such withholding taxes are due and payable. If at any time any
such withholding taxes are payable, the Lenders agree to consult
with the Company with a view to taking, and/or instructing the
Trustee to take, such reasonable steps as the Trustee and the
Lenders may take in order to minimize or eliminate any such
withholding taxes; provided, however, that in no event shall the
Lenders be required to take, or instruct the Trustee to take, any
action which would adversely affect the rights, benefits or
interests of the Lenders under any Principal Document.
Section 7.2 Indemnification.
(a) The Company agrees, unconditionally, absolutely, and
irrevocably, to indemnify and hold harmless Wilmington Trust
Company and the Trustee, its affiliates and their respective
directors, officers, employees, attorneys, agents, servants and
advisors, and their respective successors and assigns (each being
an "Indemnified Party"), from and against any and all
liabilities, damages, penalties, taxes (other than taxes in the
nature of income or gross receipts taxes on the compensation
received by Wilmington Trust Company for its services as Trustee
hereunder), claims (including, without limitation, claims
involving strict liability in tort), actions, costs, expenses and
disbursements (including, without limitation, legal fees and
expenses) of any kind and nature whatsoever which may be imposed
on, incurred by or asserted at any time against such Indemnified
Party in any way relating to this Agreement or any other
Principal Document, the Collateral, the Project, or any part
thereof, any of the transactions contemplated in any other
Principal Document or the performance or enforcement of any of
the terms hereof or thereof, or in any way relating to or arising
out of the creation, acceptance, operation, administration,
ownership or rejection of the trust, the Collateral, the Project,
or any part thereof or any accident in connection therewith
(including, without limitation, latent and other defects, whether
or not discoverable, and any claim for patent, trademark or
copyright infringement), or in any way relating to or arising out
of the administration of the Collateral or the Project or the
action or inaction of such Indemnified Party under this Agreement
or such other documents. The Company shall not be required to
indemnify any Indemnified Party (i) in the case of willful
misconduct or gross negligence (or, in the case of handling of
funds, simple negligence) on the part of an Indemnified Party in
the performance of its duties under this Agreement or (ii) for
the falseness or inaccuracy of any representation or warranty, or
the breach of any covenant of, such Indemnified Party.
(b) Without limiting the generality of the foregoing, the
Company agrees to indemnify and hold harmless each Indemnified
Party from and against any and all liabilities, sums paid in
settlement of claims, obligations, charges, actions (formal or
informal), claims (including, without limitation, claims for
personal injury under any theory or for real or personal property
damage), liens, taxes, administrative proceedings, losses,
damages (including, without limitation, punitive damages,
penalties, fines, court costs, administrative service fees,
response and remediation costs, stabilization costs,
encapsulation costs, treatment, storage or disposal costs,
groundwater monitoring or environmental study, sampling or
monitoring costs, other causes of action and any other costs and
expenses (including, without limitation, reasonable attorneys',
experts' and consultants' fees and disbursements and
investigation, laboratory and data review fees) imposed upon or
incurred by any Indemnified Party (whether or not indemnified
against by any other party) arising directly or indirectly out
of:
(i) the past, present or future treatment,
storage, disposal, generation, use, transport,
movement, presence, release, threatened release,
spill, installation, sale, emission, injection,
leaching, dumping, escaping or seeping of any
Hazardous Materials at or from the Site or the
Project or any part thereof; and/or
(ii) the violation or alleged violation by
the Trustee or any third party of any
Environmental Laws with regard to the past,
present or future ownership, operation, use or
occupying of the Site or the Project or any part
thereof.
(c) The indemnities set forth in this Section shall be in
addition to any other rights the Indemnified Parties may have.
The indemnities and obligations contained herein shall survive
the termination of the trust, any disposition by the Trustee of
its interest in the Collateral, the Project or any other event.
(d) The payor of any indemnity under this Section 7.2 shall
be subrogated to any right of the Indemnified Party in respect of
the matter as to which such indemnity was paid.
(e) The obligations of the Company pursuant to this
Section 7.2 shall survive the termination of this Agreement and
the resignation or removal of such Indemnified Party.
Section 7.3 Fees. The Company agrees to pay the Trustee
the fees as separately agreed to by the Company, the Lenders and
the Trustee in the letter agreement attached hereto as
Schedule F.
Section 7.4 Payments of Expenses and Indemnities.
Amounts required to be paid by the Company under Section 7.1 or
7.2 hereof shall be paid out of funds remaining in the Revenue
Sub-Account after making any withdrawals then required pursuant
to Section 3.2, 3.3, 3.4 or 3.5 hereof, as specified in a Payment
Requisition. If funds so remaining in the Revenue Sub-Account
are insufficient to pay such amounts, the Trustee shall withdraw
from the Debt Service Reserve Sub-Account and transfer to the
Person to whom such amount is owed funds up to the amount of such
deficiency. Funds so transferred shall be replenished on the
earliest possible date from available funds in the Revenue Sub-
Account, subject to and in accordance with the priorities set
forth in Section 4.2 hereof. The insufficiency of funds in the
Revenue Sub-Account and/or the Debt Service Reserve Sub-Account
shall not relieve the Company of its obligations to pay amounts
required to be paid under Section 7.1 or 7.2 hereof.
ARTICLE 8
SATISFACTION AND DISCHARGE OF TRUST
Section 8.1 Satisfaction and Discharge of Trust.
(a) If (i) at any time all Obligations owing to the Lenders
have been paid in full and (ii) a period of one hundred twenty
(120) days (or such other period as may be applicable with
respect to preference or similar periods under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (i) is satisfied without any court
determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters, then this Agreement shall cease to be of further effect;
provided that the provisions of Article 7 shall survive such
termination.
(b) If (i) at any time the Trustee shall have received a
notice from the Lenders that all Obligations owing to the Lenders
have been paid in full and all obligations of the Lenders under
the Investment Agreement have terminated, and (ii) a period of
one hundred twenty (120) days (or such other period as may be
applicable with respect to preference or similar periods under
applicable bankruptcy, insolvency or similar laws) has elapsed
since the condition set out in clause (i) is satisfied without
any court determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters, then, upon payment in full of all amounts payable to the
Trustee pursuant to Section 7.1, 7.2 or 7.3 hereof, this
Agreement shall cease to be of further effect and the Trustee, at
the cost and expense of the Company, upon delivery to the Trustee
of a certificate signed by two (2) financial officers of the
Company and concurred in by the Lenders stating that all
conditions precedent to the satisfaction and discharge of this
Agreement and the other Security Documents have been complied
with, shall execute proper instruments acknowledging the
satisfaction and discharge of this Agreement and shall transfer
all funds, if any, in the Offshore Retention Account and
investments made with funds in the Offshore Retention Account to
the Company at such place and in such manner to be specified in
writing by the Company. The Lenders agree to give the notice
provided for in this paragraph without unreasonable delay.
ARTICLE 9
PARTICULAR COVENANTS
Section 9.1 Reporting Requirements.
(a) The Company shall deliver to the Trustee copies of each
Annual Budget required to be delivered by the Company to the
Lenders pursuant to the Investment Agreement or any other Loan
Document.
(b) On or before 1 December of each year after the Project
Completion Date, the Company shall deliver to the Trustee and to
each of the Lenders a notice stating the Maintenance Reserve
Requirement for the following year with an explanation of and
documentation supporting the Company's calculation thereof.
Unless the Lenders shall deliver a Correction Notice prior to the
following January 1, the amount set forth in the Company's notice
shall be the Maintenance Reserve Requirement for such year.
(c) The Trustee shall, on a monthly basis and at such other
times as the Lenders or the Company may from time to time
reasonably request, provide to each of the Lenders and the
Company account balance statements in respect of the Offshore
Retention Account.
(d) Within two (2) Business Days of its receipt of such
funds, the Trustee shall notify each of the Lenders and the
Company of each deposit of funds in the Insurance Proceeds Sub-
Account or in the Liquidated Damages Sub-Account, each deposit in
the Construction Sub-Account of proceeds of any Deficiency Loan
or Deficiency Subscription or Subscription Payment Amount, and
each deposit in the Revenue Sub-Account of Liquidated Damages
Proceeds in respect of delays.
(e) The Company will deliver to the Trustee from time to
time, when available, a schedule of Contract Months (as such term
is defined in the PPA) under the PPA. On the last day of each
such Contract Month, the Trustee shall notify each of the Lenders
and the Company if it has not received payment by NEA under the
PPA for the prior Contract Month.
(f) Within two (2) Business Days of the date a payment in
respect of Shares is due from a Sponsor, the Company shall
deliver to the Trustee a properly completed certificate in the
form of Schedule E hereto.
(g) Within two (2) Business Days of its receipt of a
certificate from the Company in the form of Schedule E hereto,
the Trustee shall, upon verification of the information set forth
in items 3, 6 and 7 of such certificate, sign and deliver such
certificate to Nepal Rastra Bank.
Section 9.2 Payment Requisitions, Etc.
(a) Any notice, request or requisition given to the Trustee
shall be in writing and shall state with specificity the date of
the requested transfer, withdrawal, deposit or payment, the
dollar amount, source and disposition of any such funds;
provided, however, that any Payment Requisition or Correction
Notice may be delivered by facsimile. The Lenders or the
Company, as the case may be, may withdraw, modify, delete or
amend any item in any notice, request or requisition delivered by
it by delivering to the Trustee and the other parties hereto a
notice in writing specifying any such withdrawal, modification,
deletion or amendment.
(b) Except as otherwise provided in this Agreement, each
Payment Requisition shall be delivered by the Company to the
Lenders not less than ten (10) Business Days prior to the
proposed date of transfer of funds specified in such Payment
Requisition.
(c) At least ten (10) District of Columbia Business Days
prior to the first day of each Month and each Payment Date after
the Project Completion Date, the Company shall deliver to the
Trustee and each of the Lenders a Debt Service and Reserve
Deposit Certificate. The Trustee shall review such Debt Service
and Reserve Deposit Certificate and will promptly notify the
Company and each of the Lenders if, in the Trustee's opinion
based on its review of the Annual Budget then in effect, the
amounts requested to be transferred to the Operations and
Maintenance Sub-Account or any sub-account of the Nepal Retention
Account exceeds the amount permitted to be transferred to any
such sub-account pursuant to Section 3.2 of this Agreement or
Section 3.2 of the Nepal Agency and Retention Agreement, as
applicable.
(d) The Trustee shall rely on each Payment Requisition or
Debt Service and Reserve Deposit Certificate properly completed
and signed by an Authorized Officer of the Company, unless, prior
to the date funds are withdrawn by the Trustee, the Lenders shall
have delivered a Correction Notice to the Trustee (with copies to
the Company). Upon receipt thereof, the Trustee shall rely on
such Correction Notice or, if the Lenders have issued a
Correction Notice requesting additional information, the Trustee
shall not make any withdrawals of funds until the Lenders have
notified the Trustee that they have received the requested
information and that withdrawals may be made in accordance with
the Payment Requisition or Debt Service and Reserve Deposit
Certificate or the Lenders' Correction Notice. If the Company
fails to deliver any Payment Requisition or Debt Service and
Reserve Deposit Certificate when required hereunder, the Lenders
may do so on the Company's behalf.
(e) Until the Lenders shall otherwise notify the Trustee,
all transfers to be made to the Lenders hereunder shall be in
accordance with the transfer instructions set forth in Schedule D
hereto. All transfers to the Lenders shall be made in Dollars.
Section 9.3 Default Notices. The Company shall give a
Notice of Default to the Trustee and each of the Lenders of any
act, occurrence or condition the happening or existence of which
constitutes a Default or an Event of Default, immediately upon
becoming aware of the occurrence or existence thereof. Each
Lender may also deliver a Notice of Default if a Default or Event
of Default has occurred and is continuing under the Investment
Agreement. Any such Notice of Default shall specify the nature
of such act, occurrence or condition, and any Notice of Default
delivered by the Company shall describe the steps taken by the
Company to cure such Default or Event of Default. The Trustee
shall rely on any Notice of Default it shall receive from either
Lender or the Company. The Trustee shall not be deemed to have
knowledge of a Default or an Event of Default unless and until it
shall have received a Notice of Default in respect thereof from
either Lender or the Company. The Trustee shall deliver copies
of any such notice to the Lenders, the Company and each Sponsor
promptly after receipt thereof.
Section 9.4 Completion Notices.
(a) The Trustee shall, within two (2) Business Days of
receipt from the Company of a Company Completion Certificate,
distribute copies of such Company Completion Certificate to each
of the Lenders, with a notice stating the date on which such
Company Completion Certificate was received by the Trustee.
(b) The Trustee shall, within two (2) Business Days of
receipt from the Lenders of a Lender Completion Notice,
distribute copies of such Lender Completion Notice (and, if such
Lender Completion Notice is undated, a notice stating the date on
which such Lender Completion Notice was received) to the Company.
Section 9.5 Other Notices. The Trustee shall promptly
notify each of the Lenders of any matter of which the Trustee
becomes aware in the course of performance of its obligations
under this Agreement that may, in the opinion of the Trustee, be
of concern to the Lenders, including without limitation, any
failure of the Company to deliver a Payment Requisition, Debt
Service and Reserve Deposit Certificate or other notice or
request to the Trustee when anticipated under the terms of this
Agreement.
Section 9.6 Business Days. If any transfer, withdrawal,
deposit or payment of any funds by the Trustee, or any other
action to be taken by the Trustee under this Agreement is to be
made or taken on a day other than a Business Day, such transfer,
withdrawal, deposit, payment or other action shall be made or
taken on the next succeeding Business Day.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties of the
Company. The Company represents and warrants that as of the date
hereof:
(a) it (i) is a private limited liability company duly
incorporated and registered under the Nepalese Company Act, 2021,
validly existing and in good standing under the laws of Nepal and
(ii) has the power and authority to own its property and assets
and to transact the business in which it is engaged or proposes
to be engaged and to do all things necessary or appropriate in
respect of the Project and to consummate the transactions
contemplated by the Principal Documents;
(b) it has the corporate power to execute, deliver and
perform the terms and provisions of each of the Principal
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Principal Documents. The
Company has duly executed and delivered each of the Principal
Documents to which it is party, and each such Principal Document
constitutes its legal, valid and binding obligation;
(c) neither the execution and delivery by the Company of
the Principal Documents to which it is a party, nor the Company's
compliance with or performance of the terms and provisions
thereof, nor the use of the proceeds of the Loans as contemplated
by the Investment Agreement and the other Loan Documents:
(i) will contravene any provision of any
applicable law, statute, rule or regulation or any
order, writ, injunction or decree of any court or
governmental instrumentality or any Governmental
Approval relating to the Company or the Project,
including, without limitation, any Remittance and
Repatriation Approval,
(ii) conflicts or is inconsistent with or
results in any breach of any of the terms,
covenants, conditions or provisions of, or
constitutes a default under, or results in the
creation or imposition of (or the obligation to
create or impose) any Lien (except Permitted
Liens) upon any of the property or assets of the
Company pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, Loan
Document, Principal Document or any other material
agreement, contract or instrument to which the
Company is a party or by which it or any of its
property or assets is bound or to which it may be
subject, or
(iii) violates any provision of the
Memorandum of Association, the Articles of
Association or the Joint Venture Agreement of the
Company;
(d) no Governmental Approval, except those which have been
obtained or made and are in full force and effect and those which
are listed in Schedule 4.4 to the General Conditions, is required
to authorize, or is required in connection with, (i) the
execution, delivery or performance of any Principal Document to
which the Company is a party, (ii) the legality, validity,
binding effect or enforceability of any such Principal Document
or (iii) carrying out the Project;
(e) it has power to open and maintain the Offshore
Retention Account, the Holding Account and the Nepal Retention
Account and has taken all necessary corporate and other action
required to authorize the opening and maintenance thereof upon
the terms referred to herein and the execution and delivery of
all such documents as are necessary for the purpose thereof;
(f) except for the approval of the Nepal Rastra Bank for
the establishment of the Offshore Retention Account and the
Holding Account and the remittance of foreign currency to and
from the Offshore Retention Account and the Nepal Retention
Account, which have been obtained and are in full force and
effect, it is not necessary to permit the performance of or to
ensure the legality, validity, enforceability or admissibility in
evidence of this Agreement or the assignment, charge, security
interest and Lien on the Collateral created by this Agreement,
that this Agreement be filed, recorded or enrolled with any
Governmental Authority;
(g) all consents, licenses, approvals or authorizations of
or declarations to or registrations with Governmental Authorities
and the payment of all stamp duties and other transaction taxes
required to make this Agreement and the assignment, charge,
security interest and Lien on the Offshore Retention Account
created under this Agreement and the Security Agreement and
Assignment legal, valid and enforceable as a first assignment,
charge, security interest and Lien over the Offshore Retention
Account and admissible in evidence, and to enable it lawfully to
enter into and perform its obligations hereunder and thereunder,
have been obtained or made and are in full force and effect; and
(h) this Agreement and the Security Agreement and
Assignment are effective to create a valid assignment, charge,
security interest and Lien over the Offshore Retention Account
and the Nepal Retention Account, constituting in favor of the
Trustee for the benefit of the Lenders a first priority security
interest with respect to the Offshore Retention Account and the
Nepal Retention Account, and all cash, investments and securities
at any time on deposit therein, to the exclusion of all other
obligations of the Company to its other creditors.
Section 10.2 Representations and Warranties of Wilmington
Trust Company. Wilmington Trust Company, in its individual
capacity, hereby represents and warrants that:
(a) this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and legally binding
obligation, enforceable in accordance with its terms; and
(b) it is a banking corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of
its incorporation and has the corporate power and authority to
enter into and perform its obligations under this Agreement, and
has full right, power and authority to enter into and perform its
obligations as the Trustee under each of the Principal Documents
to which the Trustee is a party; and
(c) the execution, delivery and performance of this
Agreement will not conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default
or require any consent under, any indenture, mortgage, agreement
or other instrument or arrangement to which it is a party or by
which it is bound, or violate any of the terms or provisions of
its articles of incorporation, by-laws or other governing
documents, or any judgment, decree or order or any law, statute,
rule or regulation applicable to it.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Benefit of Agreement. Nothing in this
Agreement, expressed or implied, shall give or be construed to
give to any Person other than the parties hereto any legal or
equitable right, remedy or claim under this Agreement, or under
any covenant or provision herein contained, all such covenants
and provisions being for the sole benefit of the parties herein
(subject to Section 2.1(b) hereof).
Section 11.2 Successors or Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that neither
the Trustee nor the Company may assign or transfer any of its
rights or obligations hereunder without the prior written consent
of the Lenders. Notwithstanding any such assignment by the
Company, the Company shall remain liable under Sections 7.1 and
7.2 hereof if, as of the date of such transfer, the transferee or
assignee does not have a net worth at least equal to the net
worth of the Company, in each case, as determined on the date of
such transfer. Each of the Lenders may transfer, assign or grant
its rights hereunder in connection with an assignment or transfer
of all or any part of its interest in its Commitment or the IFC
Loans or the DEG Loan, as the case may be, in accordance with the
Investment Agreement.
(b) This Agreement, and the Liens and security interests
granted in the other Security Documents, shall be a continuing
security and accordingly shall not be discharged by an
intermediate payment by or on behalf of the Company.
(c) Any rights conferred on the Trustee or the Lenders by
this Agreement shall be in addition to and not in substitution
for or derogation of any other rights and remedies which the
Lenders may at any time have under the Investment Agreement or
other Loan Documents or otherwise, including, without limitation,
rights to seek and obtain from the Company or any party to the
Security Documents reimbursement of or indemnification against
payments made or liabilities incurred under the Investment
Agreement or the other Loan Documents or otherwise.
(d) Neither the Trustee nor the Lenders shall be obliged
before taking any steps to enforce or to seek to enforce any
rights conferred on any of them pursuant to the security created
by this Agreement and the Security Agreement and Assignment or
before exercising any of the rights, powers and remedies
conferred upon any of them by this Agreement or by law (and the
Company hereby irrevocably waives any right or benefit afforded
by applicable law that would require the Trustee or the Lenders)
(i) to make any demand on or to take action or obtain judgment in
any court against the Company or any party to any Loan Document,
(ii) to make or file any claim in a bankruptcy, winding-up,
liquidation or reorganization of the Company or any such party,
or (iii) to enforce or to seek to enforce any other rights or
remedies either of them may have against the Company or their
rights or remedies against any such party.
Section 11.3 Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
ADDRESSES:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 011 977-1-270027
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attention: Director, Power Department
Facsimile: (202) 974-4307
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49 221 4986 107
Trustee or Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-8726
Facsimile: (302) 651-8882
Section 11.4 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 11.5 Headings Descriptive. The headings of the
several Articles of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
Section 11.6 Governing Law; Submission to Jurisdiction;
Venue. (a) This Agreement is a contract made under the laws of
the State of Delaware of the United States of America and shall
for all purposes be governed by and construed in accordance with
the laws of such State. Each of the Company and the Trustee
agrees that any legal action or proceeding with respect to this
Agreement may be brought in the courts of the State of Delaware
in the County of New Castle or of the United States for the
District of Delaware and, by execution and delivery of this
Agreement, each of the Company and the Trustee hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each
of the Company and the Trustee agrees that a judgment in any such
action or proceeding shall be conclusive and binding upon itself,
and may be enforced in any other jurisdiction, including without
limitation Nepal, by a suit upon such judgment, a certified copy
of which shall be conclusive evidence of the judgment. The
Company hereby irrevocably designates, appoints and empowers
Corporation Trust Company, with offices on the date hereof at
1209 Orange Street, Wilmington, Delaware, as its designee,
appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and
all legal process, summons, notices and documents which may be
served in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act
as such, the Company agrees to designate a new designee,
appointee and agent in Wilmington, Delaware on the terms and for
the purposes of this provision satisfactory to the Lenders. The
Company further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at its address set forth
in Section 11.3 hereof, such service to become effective ten (10)
days after such mailing. Nothing herein shall affect the right
of the Trustee or the Lenders to serve process in any other
manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in Nepal or in any other
jurisdiction.
(b) Each of the Company and the Trustee hereby irrevocably
waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in
the courts referred to in clause (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 11.7 Survival. All indemnities, agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making and
repayment of the Obligations.
Section 11.8 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Trustee or the Lenders in exercising any
right, power or privilege hereunder or under any other Loan
Document, and no course of dealing between the Company and the
Trustee or the Lenders, shall impair any such right, power or
privilege or operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder or
under any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and
remedies herein or provided in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Trustee or the Lenders would otherwise have. No notice
to or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Trustee
or the Lenders to any other or further action in any
circumstances without notice or demand.
Section 11.9 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability but that shall not invalidate the
remaining provisions of this Agreement or affect such provision
in any other jurisdiction.
Section 11.10 Communications. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company, which translation shall be the
governing version between the Company, the Lenders and the
Trustee.
Section 11.11 Amendments. Neither this Agreement nor any of
the terms hereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in
writing signed by all of the parties hereto.
Section 11.12 Further Assurances. From time to time, the
Company shall execute and deliver to the Trustee and each of the
Lenders such additional documents as the Lenders may require to
carry out the purposes of this Agreement or to preserve and
protect the Lenders' rights as contemplated herein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and acknowledged by their respective
officers or representatives hereunto duly authorized, as of the
date first above written.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
INTERNATIONAL FINANCE CORPORATION
By:
Name:
Title: Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH
By:
Name:
Title:
WILMINGTON TRUST COMPANY, in its individual
capacity and as Trustee
By:
Name:
Title:
SCHEDULE A
FORM OF PAYMENT REQUISITION
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
USA
Attention: Corporate Trust Administration
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attention: Director, Power Department
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Dear Sirs:
Reference is made to the Trust and Retention Agreement
(the "Agreement"), dated as of the Closing Date, among Bhote
Koshi Power Company Private Limited (the "Company"),
International Finance Corporation ("IFC"), DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH ("DEG") and
Wilmington Trust Company, as trustee (the "Trustee").
Capitalized terms used herein without definition shall have the
meanings specified in Schedule A to the General Conditions.
I. The Company hereby requests that, on ,
the Trustee, in accordance with Section 4.3 of the Agreement,
withdraw the following amounts from the Operations and
Maintenance Sub-Account and transfer such amounts to the payees
indicated below:
Payee Amount of Payment
[Nepal Retention Account]
The Company hereby requests that the Trustee instruct the
Designee to deposit $ in the Nepal Dollar Sub-
Account.
The Company hereby certifies that such withdrawals and
transfers are to be made to pay Operating and Maintenance Costs
or Project Costs, that the Dollars requested to be deposited in
the Nepal Dollar Sub-Account will be used to pay Operating and
Maintenance Costs or Project Costs, and that the amount of such
Operating and Maintenance Costs to be paid does not exceed by
more than 10% the amount budgeted therefor in the Annual Budget
for the relevant period.
II. The Company hereby requests that, on ,
the Trustee withdraw the following amounts from the Construction
Sub-Account and transfer such amounts to the payees indicated
below:
Payee Amount of Payment
The Company hereby certifies that such withdrawals and
transfers are to be made to pay Project Costs and that the amount
of each Project Cost to be paid does not exceed the amount
budgeted therefor in the Annual Budget for the relevant period.
III. The Company hereby requests that the Trustee withdraw, in
accordance with Section 4.5(b) of the Agreement, from the Debt
Service Reserve Sub-Account the amount of US$_____________ and
transfer such amount to the Operations and Maintenance Sub-
Account on [specify Business Day not earlier than Business
Days from the date of delivery hereof to each of the Lenders and
the Trustee]. The Company hereby certifies that, without such
transfer, funds on deposit in the Operations and Maintenance Sub-
Account are insufficient to pay when due Operating and
Maintenance Costs.
IV. The Company hereby requests that, on [specify Business
Day not earlier than 30 Business Days from the date of delivery
hereof to each of the Lenders and the Trustee] the Trustee, in
accordance with Section 4.6 of the Agreement, withdraw the
following amounts from the Maintenance Reserve Sub-Account and
transfer such amounts to the payees indicated below:
Payee Amount of Payment
The Company certifies that such withdrawals and transfers are
to be made to pay costs of scheduled major maintenance or
extraordinary repair or replacement of the Project.
V. The Company hereby requests that, on [enter date, which occurs
monthly after the Project Completion Date], the Trustee withdraw
the following amount from the Revenue Sub-Account and transfer
such amounts to the Holding Account: $______________________.
In addition, the Company hereby requests that the Trustee direct
the Designee to withdraw from the Nepal Reserve Sub-Account, on
[same date], the following amount from the Nepal Reserve Sub-
Account and transfer such amounts to the Nepal Holding Account:
Rs._____________.
The Company hereby certifies that:
(i) no Default or Event of Default has occurred and is
continuing, no Force Majeure Event has occurred (unless
the effect of such Force Majeure Event has been cured to
the Lenders' satisfaction), and no event of default or
default under any other Indebtedness of the Company will
occur as a result of the contemplated transfer;
(ii) the Debt Service Reserve Sub-Account, Debt Payment
Sub-Account, Maintenance Reserve Sub-Account, the
Operations and Maintenance Sub-Account, the Nepal
Operations and Maintenance Sub-Account, the Nepal Reserve
Sub-Account, the Nepal Dollar Sub-Account, and the Nepal
Petty Cash Sub-Account are funded to the extent required
under the Agreement or the Nepal Agency and Retention
Agreement, as the case may be;
(iii) the Debt Service Coverage Ratio for the
preceding 12-month period equaled or exceeded 1.20:1 and,
based on the Company's projections (calculated on the
basis of assumptions developed by the Company and
approved by the Lenders), the Debt Service Coverage Ratio
for the following 12-month period will remain above
1.20:1;
(iv) the aggregate amount to be transferred to the
Holding Account equals the amount of funds remaining in
the Revenue Sub-Account on [any date on a monthly basis
occurring after the Project Completion Date] as specified
in Section 3.6 of the Agreement; and
(v) if IFC is a shareholder of the Company, the Person
nominated by IFC is a member of the Board of Directors of
the Company or such Person has resigned from the Board of
Directors of the Company and IFC has not nominated a
replacement therefor.
VI. The Company hereby certifies that:
(i) as of the date hereof no Default or Event of Default
has occurred and is continuing which has not been waived
by the Lenders [or if a Default exists, specifying the
nature and extent thereof and what action the Company is
taking with respect thereto]; and
(ii) a copy of this Payment Requisition has been timely
delivered to each of the Lenders in accordance with the
provisions of the Agreement.
The undersigned hereby certifies that he/she is an Authorized
Officer of the Company, and that, as such, is authorized to
execute and deliver this Payment Requisition on behalf of the
Company.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE B
FORM OF INSURANCE PROCEEDS REQUEST
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
USA
Telephone: (302) 651-8726
Telecopy: (302) 651-8882
Dear Sirs:
Reference is made to the Trust and Retention Agreement (the
"Agreement"), dated as of the Closing Date among Bhote Koshi
Power Company Private Limited (the "Company"), International
Finance Corporation ("IFC"), DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG") and Wilmington Trust
Company, as Trustee (the "Trustee"). Capitalized terms used
herein without definition shall have the meanings specified in
Schedule A to the General Conditions.
The Company hereby certifies that the following information
is true, correct and complete:
1. No Event of Default under the Loan Documents has
occurred and is continuing.
2. The Company hereby requests that the Trustee
withdraw funds from the Insurance Proceeds Sub-Account
and make the following payments in respect of work
completed or materials furnished in connection with the
repair, restoration or replacement of the Project:
Amount Payee
3. The sum requested above either has been paid by
the Company, or is, to the best of the Company's
knowledge, justly due to the contractors,
subcontractors, materialmen, engineers, architects or
other Persons who have rendered services or furnished
materials for the repair, restoration or replacement of
the Project. Attached hereto is a brief description of
such services and materials and the amounts so paid or
due to each of said Persons in respect thereof. No
part of such expenditures has been or is being made the
basis, in any previous or pending request, for the
withdrawal of funds from the Insurance Proceeds Sub-
Account or has been made out of Insurance Proceeds
received by the Company, and the sum requested does not
exceed the value of the services and materials
described in this certificate.
4. Except for the amount, if any, stated pursuant to
the foregoing paragraph 3 to be due for services and
materials, plus any pending requests made pursuant to
the foregoing paragraph 3, there is no outstanding
Indebtedness shown on the Company's books or known to
the undersigned, after due inquiry, which is due and
payable on the date hereof for labor, wages, materials,
supplies or services in connection with such repair,
restoration or replacement of the Project.
5. To the best of the Company's knowledge, the cost,
as estimated by the undersigned, of the repair,
restoration or replacement of the Project required to
be done subsequent to the date hereof in order to
complete the same, does not exceed funds remaining in
the Insurance Proceeds Sub-Account.
6. A copy of this Insurance Proceeds Request has been
timely delivered to each of the Lenders in accordance
with the Agreement.
The undersigned hereby certifies that he/she is an
Authorized Officer of the Company, and that, as such, is
authorized to execute and deliver this Insurance Proceeds Request
on behalf of the Company.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE C
FORM OF DEBT SERVICE AND RESERVE DEPOSIT CERTIFICATE
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
USA
Attention: Corporate Trust Administration
Telephone: (302) 651-8726
Telecopy: (302) 651-8882
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attention: Director, Power Department
Facsimile: (202) 974-4307
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49 221 4986 107
Dear Sirs:
Reference is made to the Trust and Retention Agreement (the
"Agreement"), dated as of the Closing Date among Bhote Koshi
Power Company Private Limited (the "Company"), International
Finance Corporation ("IFC"), DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG") and Wilmington Trust
Company, as Trustee (the "Trustee"). Capitalized terms used
herein without definition shall have the meanings specified in
Schedule A to the General Conditions.
I. In accordance with Section(s) [enter 3.2, 3.3, 3.4 or 3.5 as
appropriate] of the Agreement, the Company hereby sets forth the
following information, certifies that such information is true,
correct and complete for the date to which this Debt Service and
Reserve Deposit Certificate relates, and requests that the
Trustee make the following deposits to the specified sub-accounts
from the Revenue Sub-Account (Account No. 43370-1) as set forth
below:
Account Deposit Amount
Operations and Maintenance
Sub-Account:
_________________
(Account No. 43370-2)
1.10 x Amount budgeted
for Quarter: __________________
Current Balance: __________________
Debt Payment Sub-Account
__________________
(Account No. 43370-3)
Debt Service Reserve Sub-Account
__________________
(Account No. 43370-4)
Debt Service Reserve
Requirement: __________________
Current Balance:
__________________
Maintenance Reserve Sub-Account
__________________
(Account No. 43370-5)
In addition, the Company hereby certifies that
(i) for the Quarter commencing on [insert date], the
amount of Rupees budgeted in the Annual Budget for
Operating and Maintenance Costs payable in Rupees is
_________Rs., and the Company requests that the Trustee
direct the Designee to deposit such amount multiplied
by 1.10, minus ________ (the amount currently on
deposit in the Nepal Operations and Maintenance Sub-
Account) in the Nepal Operations and Maintenance Sub-
Account;
(ii) the Rupee amounts received from NEA pursuant to
the PPA deposited in the Nepal Retention Account since
the date of the most recent Debt Service and Reserve
Deposit Certificate delivered to the Trustee equals in
the aggregate __________Rs.; and
(iii) the Company requests that the Trustee direct
the Designee to convert all remaining Rupees in the
Nepal Retention Account, ________Rs., into Dollars in
accordance with the procedures set forth in the Nepal
Agency and Retention Agreement.
II. The Company hereby requests that the Trustee, in accordance
with Section 4.4 of the Agreement, make each of the following
payments to the Lenders in respect of Debt Service from the
account indicated on [insert applicable Payment Date]:
Amount of Account from Which
Debt Service** Funds to be Transferred
The undersigned hereby certifies that he/she is an
Authorized Officer of the Company, and that, as such, he/she is
authorized to execute and deliver this Debt Service and Reserve
Deposit Certificate on behalf of the Company.
The Company hereby certifies to the Trustee that a copy of
this Debt Service and Reserve Deposit Certificate has been timely
delivered to each of the Lenders in accordance with the
provisions of the Agreement.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE D
TRANSFER INSTRUCTIONS
For IFC:
Northern Trust International Banking Corporation
New York, New York
(Account No. CHIPS ID 142255), in favor of
International Finance Corporation
For DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH:
Westdeutsche Landesbank Koeln
Account: 406066
Bank Number: BLZ 370 50000
For Wilmington Trust Company:
Wilmington Trust Company
ABA Routing Number 031100092
For Credit to the Appropriate Account Name,
For Credit to the corresponding Account Number
Attn: David Vanaskey
SCHEDULE E
FORM OF CERTIFICATE OF EQUITY CAPITAL INVESTMENT
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
USA
Attention: Corporate Trust Administration
Telephone: (302) 651-8726
Telecopy: (302) 651-8882
[DATE]
Dear Sirs:
Reference is made to the Trust and Retention Agreement (the
"Agreement"), dated as of the Closing Date among Bhote Koshi
Power Company Private Limited (the "Company"), International
Finance Corporation ("IFC"), DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH ("DEG") and Wilmington Trust
Company, as Trustee (the "Trustee"). Capitalized terms used
herein without definition shall have the meanings specified in
Schedule A to the General Conditions.
The Company was due on [Date] a payment of $___________ in
respect of Shares issued to [Sponsor].
In accordance with Section 9.1(f) of the Agreement, the
Company hereby delivers the attached certificate and certifies
that the information contained therein is true, correct and
complete for the date to which such certificate relates.
The undersigned hereby certifies that he/she is an
Authorized Officer of the Company, and that, as such, he/she is
authorized to execute and deliver this certificate on behalf of
the Company.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Nepal Rastra Bank
Central Office
Foreign Exchange Department
Investment Section
P.O. Box Number 73
Baluwatar-Kathmandu, Nepal
THE RECEIPT OF FUNDS AS EQUITY
CAPITAL INVESTMENT IN NEPAL COMPANY
FROM FOREIGN INVESTOR
BANK CERTIFICATE
FORM DATE
NO.
1. Name of Industry/Company
In which foreign investor is investing:
2. Industry/Company Registration Number:
3. Name of foreign investor:
Address of foreign investor:
4. Industry/Company's
(a) Authorized Capital:
(b) Paid Up Capital:
5. Foreign investors investment
(a) Amount
(b) Percentage
6. Details of funds deposited in the Bank by
foreign investor
(a) Currency & Amount
(b) Equivalent Nepali rupees
7. Foreign currency deposited in
(a) Agency Bank's Name
(b) Date
I/we certify that the above stated foreign exchange has been
deposited in this bank.
_____________________________
Authorized Signature
Bank Stamp
cc: 1. Industry Department, His Majesty's Government,
Tripureswor, Kathmandu, Nepal
2. Ministry of Water Resources, His Majesty's
Government, Singa Durbar, Kathmandu, Nepal
SCHEDULE F
FEE AGREEMENT
This Agreement is made as of the Closing Date by and among
Wilmington Trust Company, a Delaware banking corporation
("Wilmington Trust"), International Finance Corporation, an
international organization organized and existing by virtue of
the Articles of Agreement among its member countries ("IFC"), DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH, a company
organized and existing under the laws of the Federal Republic of
Germany ("DEG") (IFC and DEG collectively referred to herein as
the "Lenders") and Bhote Koshi Power Company Private Limited, a
private limited liability company registered under the Nepalese
Company Act, 2021 (the "Company").
W I T N E S S E T H
WHEREAS, pursuant to a Trust and Retention Agreement dated
as of the Closing Date (the "Trust Agreement"), among Wilmington
Trust, IFC, DEG and the Company, Wilmington Trust will act as
Trustee on behalf of the Lenders in connection with the financing
of a hydroelectric power plant in Sindhupalchok District in
Nepal;
WHEREAS, pursuant to Section 7.3 of the Trust Agreement, the
Company has agreed to pay the fees and expenses of Wilmington
Trust for its services as Trustee, as agreed to by Wilmington
Trust, the Lenders and the Company;
WHEREAS, Wilmington Trust, the Lenders and the Company
desire to set forth with greater particularity the specific
agreement as to the compensation owing to Wilmington Trust
pursuant to the Trust Agreement;
NOW, THEREFORE, for good and valuable consideration, the
parties hereto hereby agree as follows:
(a) The compensation due and owing to Wilmington Trust
pursuant to Section 7.3 of the Trust Agreement shall be as
follows:
(i) Initial Fee: $15,000.00
(This fee covers the in-house legal and administrative review of
all operative documents, the establishment of domestic and
international accounts and cash flows and administrative duties
related to the closing.)
(ii) Annual Administration Fee: $18,000.00
(This fee covers the administration of the trust under the Trust
Agreement.)
(iii) Closing Attendance Fee: $1,000.00
(This fee includes travel expenses for one officer's attendance
at closing in New York City or Washington, D.C. for up to two
days; to the extent that more than two days' attendance is
necessary, there will be an additional fee of $500.00 per day.
Should it be required to send two officers, there will be a
$500.00 fee for the second officer's attendance. The Closing
Attendance Fee for the officer's attendance at closing in other
cities is $750.00 per day plus travel expenses; to the extent
that more than two days attendance is necessary there will be an
additional fee of $500.00 per day.)
(iv) Transaction Fees: (ONLY IF INCURRED)
Purchase, sale, withdrawal,
maturities, calls and puts of
domestic securities: $15.00
Physical delivery of
domestic securities $50.00
Purchase of Eurodollar
certificate of deposit: $65.00
Principal amortizing securities
(per pool/per month): $10.00
Wire charge (per transfer):
Outgoing: $12.00
Incoming: $ 7.00
Expenses Related to the Conversion of Payments to the Lenders
in any Currency other than Dollars
(Transfers made by associate banks may result in additional wire
charges.)
(v) Transfer or Re-Registration Fee:
(ONLY IF INCURRED) $1,000.00
(vi) Termination Fee: To be determined
(Wilmington Trust reserves the right to charge a fee relating to
the termination of the trust and the final distribution of the
[Trust Property] held by the Trustee, such fee to be determined
at the time of termination.)
Wilmington Trust acknowledges and agrees that the Lenders shall
not be responsible or liable for the payment of any of its fees
or expenses for its services as Trustee as provided herein, and
further acknowledges and agrees that it shall look solely to the
Company for the payment of all such fees and expenses.
(b) In the event of a substantive change in the nature of
the Trustee's duties, and in any event after the expiration of
three years from the closing date, Wilmington Trust reserves the
right to adjust its fees.
(c) The Initial Fee, the first year's Annual Administration
Fee, the Closing Attendance Fee and outside counsel's fees and
expenses are due and payable within 30 days after the closing.
Thereafter, the Annual Administration Fee is due and payable
annually in advance on each anniversary of the closing date.
Transaction Fees are due and payable annually in arrears. All
fees are nonrefundable and will not be pro rated in the event of
an early termination of the trust. In the event that the
transaction does not close, Wilmington Trust reserves the right
to be paid its initial fee.
(d) Out of pocket expenses (including outside counsel's
fees and expenses in connection with the closing and in
connection with any post-closing matters) are additional and are
billed separately.
(e) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all of such counterparts
shall together constitute but one and the same Agreement.
(f) Invoices should be sent to the Company, with a copy to
each of the Lenders, at the addresses set forth below, or at such
other address as such party shall hereafter furnish in writing:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 011-977-1-270027
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attention: Director, Power Department
Facsimile: (202) 974-4307
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49 221 4986 107
(g) No waiver, modification or amendment of this Agreement
shall be valid unless executed in writing by the parties hereto.
(h) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to conflicts of laws principles.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers
effective as of the day first above written.
WILMINGTON TRUST COMPANY
By:_______________________________
Name:__________________________
Title:_________________________
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:_______________________________
Name:__________________________
Title:_________________________
INTERNATIONAL FINANCE
CORPORATION
By:________________________________
Name:___________________________
Title:__________________________
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH
By:_______________________________
Name:__________________________
Title:_________________________
_______________________________
** Specify by amount of principal, interest, fees or other amount owed.
EXHIBIT NO. 10.157
NEPAL AGENCY AND RETENTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
INTERNATIONAL FINANCE CORPORATION
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
WILMINGTON TRUST COMPANY, as Trustee,
and
NEPAL GRINDLAYS BANK LIMITED
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 2
ARTICLE 2
APPOINTMENT OF AGENT
ESTABLISHMENT OF THE TRUST AND THE NEPAL RETENTION ACCOUNT
Section 2.1 Acceptance of Appointment of Agent 2
Section 2.2 Establishment of Nepal Retention Account 2
Section 2.3 Security Interest in the Nepal
Retention Account 4
Section 2.4 Establishment of the Nepal Holding Account 4
Section 2.5 Rupee Deposits 4
ARTICLE 3
DEPOSITS INTO THE NEPAL RETENTION ACCOUNT
Section 3.1 Nepal Retention Account Deposits 5
Section 3.2 Sub-Account Deposits 5
ARTICLE 4
WITHDRAWALS FROM ACCOUNTS AND FUNDING REQUIREMENTS
Section 4.1 Mandatory Withdrawals 7
Section 4.2 Nepal Operations and Maintenance
Sub-Account Withdrawals 8
Section 4.3 Nepal Dollar Sub-Account 8
Section 4.4 No other Rights of Withdrawal 8
ARTICLE 5
REMEDIES ON DEFAULT
Section 5.1 Action by the Agent 8
ARTICLE 6
THE AGENT
Section 6.1 Appointment of Agent; Powers and Immunities 8
Section 6.2 Reliance by Agent 9
Section 6.3 Resignation or Removal of Agent 9
Section 6.4 Court Orders 9
ARTICLE 7
EXPENSES; INDEMNIFICATION; FEES
Section 7.1 Expenses 9
Section 7.2 Indemnification 10
Section 7.3 Fees 10
ARTICLE 8
SATISFACTION AND DISCHARGE OF TRUST
Section 8.1 Satisfaction and Discharge of Trust 10
ARTICLE 9
PARTICULAR COVENANTS
Section 9.1 Reporting Requirements 11
Section 9.2 Nepal Payment Requisitions, Etc. 11
Section 9.3 Other Notices 12
Section 9.4 Business Days 12
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties of the
Company 12
Section 10.2 Representations and Warranties of Nepal
Grindlays Bank Limited 13
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Successors or Assigns 14
Section 11.2 Notices 14
Section 11.3 Counterparts 15
Section 11.4 Governing Law; Dispute Resolution 15
Section 11.5 No Waiver; Cumulative Remedies 17
Section 11.6 Severability 17
Section 11.7 Communications 17
Section 11.8 Amendments 17
Section 11.9 Concerning the Trustee 17
SCHEDULE A
FORM OF NEPAL PAYMENT REQUISITION A-1
SCHEDULE B
FORM OF NEPAL DEPOSIT CERTIFICATE B-1
SCHEDULE C
PROCEDURE FOR CONVERSION OF RUPEES TO DOLLARS C-1
SCHEDULE D
FEE SCHEDULE D-1
NEPAL AGENCY AND RETENTION AGREEMENT
NEPAL AGENCY AND RETENTION AGREEMENT, dated as of the
Closing Date (this "Agreement"), among BHOTE KOSHI POWER COMPANY
PRIVATE LIMITED, a private limited liability company registered
under the Nepalese Company Act, 2021 (the "Company"),
INTERNATIONAL FINANCE CORPORATION, an international organization
organized and existing by virtue of the Articles of Agreement
among its member countries ("IFC"), DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH, a company organized and existing
under the laws of the Federal Republic of Germany ("DEG") (IFC
and DEG hereinafter being collectively referred to as the
"Lenders" and individually as a "Lender"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Trustee under the Trust and Retention
Agreement, as Trustee (the "Trustee"), and NEPAL GRINDLAYS BANK
LIMITED, a commercial bank of Nepal, as agent for the Trustee
(the "Agent").
PRELIMINARY STATEMENTS
The Company has been granted the right to build, own and
operate a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the Project pursuant
to the terms of that certain IFC Investment Agreement dated as of
the Closing Date, between the Company and IFC (the "IFC
Investment Agreement").
DEG is willing to provide financing for the Project pursuant
to the terms of that certain DEG Investment Agreement dated as of
the Closing Date, between the Company and DEG (the "DEG
Investment Agreement").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
The Company has granted to the Trustee, for the benefit of
the Lenders, a security interest in all of the Company's assets,
including the accounts created in accordance with this Agreement.
The Trustee desires to appoint Nepal Grindlays Bank Limited to
act as its agent hereunder to hold and administer such accounts
and protect the interests of the Trustee therein, and Nepal
Grindlays Bank Limited desires to act as the Trustee's agent
pursuant to this Agreement.
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
APPOINTMENT OF AGENT
ESTABLISHMENT OF THE TRUST AND THE NEPAL RETENTION ACCOUNT
Section 2.1 Acceptance of Appointment of Agent.
(a) Nepal Grindlays Bank Limited hereby agrees to act as
the Agent hereunder, in accordance with the terms set forth
herein, and to accept all cash, payments and other amounts
delivered to or held by the Agent pursuant to the terms of this
Agreement. The Agent shall hold and safeguard the Nepal
Retention Account during the term of this Agreement and, as agent
of the Trustee, shall treat the funds in the Nepal Retention
Account as funds owned and pledged by the Company to the Lenders
or to the Trustee for the benefit of the Lenders pursuant to the
Security Documents, to be held in the custody of the Agent, as
agent of the Trustee, as trustee solely for the benefit of the
Lenders, in trust in accordance with the provisions of this
Agreement and the Trust and Retention Agreement.
(b) Neither the Company nor any Affiliate of the Company
shall have any rights against the Agent or its officers,
employees, agents or representatives hereunder (other than rights
which may arise against Nepal Grindlays Bank Limited as a result
of its or the Agent's gross negligence (or, in the case of
handling of funds by the Agent, simple negligence) or willful
misconduct, or a breach of its covenant set forth in Section
2.2(f) hereof, or a material inaccuracy of any representation and
warranty set forth in Section 10.2 hereof), including, without
limitation, any right to direct the Agent to distribute or
allocate any funds in the Nepal Retention Account, except as
otherwise provided elsewhere in this Agreement and except for
funds in the Nepal Holding Account.
Section 2.2 Establishment of Nepal Retention Account.
(a) The Agent hereby establishes in the Company's name a
special, segregated and irrevocable cash account (which
constitutes security for the benefit of the Lenders) with the
Agent at its office in Kathmandu, Nepal entitled "Bhote Koshi
Power Company Private Limited Nepal Retention Account" (the
"Nepal Retention Account") (Account Number 1010215481001) and the
following sub-accounts:
(i) a sub-account entitled "Bhote Koshi
Power Company Private Limited Nepal Operations
and Maintenance Sub-Account" (Account Number
1010215481002) (the "Nepal Operations and
Maintenance Sub-Account");
(ii) a sub-account entitled "Bhote Koshi
Power Company Private Limited Nepal Reserve Sub-
Account" (Account Number 1010215481003) (the
"Nepal Reserve Sub-Account");
(iii) a sub-account entitled "Bhote
Koshi Power Company Private Limited Dollar
Account" (Account Number 1010215481051) (the
"Nepal Dollar Sub-Account") which shall be a
Dollar-denominated account); and
(iv) a sub-account entitled "Bhote Koshi
Power Company Private Limited Nepal Petty Cash
Sub-Account" (Account Number 1010215481004)
(the "Nepal Petty Cash Sub-Account").
(b) All right, title and interest in and to the Nepal
Retention Account and the funds in the Nepal Retention Account
shall be vested in the Agent, as agent of the Trustee, for the
benefit of the Lenders and, upon (i) payment in full of all
Obligations owing to each of the Lenders and termination of all
obligations of each of the Lenders under the Loan Documents, and
(ii) a period of one hundred twenty (120) days (or such other
period as may be applicable with respect to preference or similar
periods under applicable bankruptcy, insolvency or similar laws)
has elapsed since the condition set out in clause (i) is
satisfied without any court determining that the Company is
insolvent or, if such determination is made within that time, the
Lenders are reasonably satisfied that no payment made to each of
the Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters, for the benefit of the Company.
Amounts deposited in the Nepal Retention Account shall be applied
by the Agent as provided in this Agreement.
(c) The Agent shall deposit all amounts received by the
Agent in Rupees in respect of the Company or the Project into the
Nepal Retention Account on the day such amounts are received.
Further, the Agent shall deposit all amounts received by the
Agent in Rupees by way of transfer to the Agent from the Offshore
Retention Account (after conversion of Dollars so transferred
into Rupees at the prevailing market rate), unless instructed by
the Trustee to deposit the same in Dollars in the Nepal Dollar
Sub-Account, into the Nepal Retention Account on the day such
amounts are received. Subject to Section 3.2 hereof, all Rupees
in the Nepal Retention Account shall, to the extent possible, be
invested in the name of the Agent in such Cash Equivalents
denominated in Rupees as the Company directs in writing. Subject
to Section 3.2 hereof, all Dollars in the Nepal Dollar Sub-
Account shall, to the extent possible, be invested in the name of
the Agent in such Cash Equivalents denominated in Dollars as the
Company directs in writing. Failing such direction or in the
event the Agent shall be unable to invest any or all of such
monies in such Cash Equivalents, the Agent shall invest such
monies daily on an overnight basis in accordance with normal
business practices of the Agent and standing instructions to be
delivered to the Agent by the Trustee from time to time.
Interest and other income gained or earned in respect of any
monies deposited in any sub-account shall be deposited in the
same sub-account.
(d) The Agent shall (i) within five (5) Business Days after
receipt of written request by the Trustee, the Company or either
of the Lenders, provide the Trustee, the Company or such Lender
with such information as the Trustee, the Company or such Lender
may specify regarding all Cash Equivalents (including, without
limitation, categories, amounts, maturities and issuers) and any
other investments made by the Agent pursuant hereto and (ii) upon
the written request and at the expense of the Company, arrange
with the Company for a mutually convenient time for a financial
officer or an authorized representative of the Auditors to visit
the office of the Agent to examine and take copies of records
relating to and instruments evidencing the Cash Equivalents held
by the Agent pursuant hereto.
(e) The Company shall forthwith from time to time upon
request of the Agent deliver to the Agent such resolutions,
mandates, authorities, documents, specimen signatures and other
matters as the Agent may require and which are for the time being
in effect to enable the Nepal Retention Account, including all
sub-accounts, to be opened, maintained and operated in accordance
with this Agreement. The Company shall notify the Agent (with
copies to the Trustee and each of the Lenders) of any changes or
additions to the Company's authorized signatories, and such
notice shall be given prior to the implementation of such changes
or additions hereunder.
(f) Each of Nepal Grindlays Bank Limited, individually and
as Agent, and the Trustee agree, for the benefit of the Lenders
and the Company, that it will not create or incur any Lien (i)
upon or with respect to the Nepal Retention Account, except the
Lien of this Agreement and the other Security Documents, or (ii)
upon or with respect to the Nepal Holding Account (as such term
is defined in Section 2.4 hereof), and that it shall take such
action, at its own expense, as shall be necessary to duly
discharge any such Lien.
Section 2.3 Security Interest in the Nepal Retention
Account. The Company has pledged and granted to the Trustee, for
the benefit of the Lenders, a first priority charge over,
security interest in and Lien on all of the Company's right,
title and interest in and to the Nepal Retention Account, and all
cash, investments and securities at any time on deposit therein,
as security for the payment of the Obligations. The Trustee
hereby appoints Nepal Grindlays Bank Limited as its agent for the
purpose of carrying out the Trustee's obligations under the
Security Documents in respect of the Nepal Retention Account and
for the purpose of perfecting the security interest of the
Lenders in and to the Nepal Retention Account and all cash at any
time on deposit in the Nepal Retention Account.
Section 2.4 Establishment of the Nepal Holding Account.
The Agent hereby establishes in the Company's name a special and
segregated account with the Agent at its office in Kathmandu,
Nepal entitled "Bhote Koshi Power Company Private Limited Nepal
Holding Account" (the "Nepal Holding Account"). The Agent shall
withdraw from time to time, strictly in accordance with the
written directions of the Trustee, Rupees on deposit in the Nepal
Reserve Sub-Account and transfer such Rupees to the Nepal Holding
Account. The Holding Account shall not be subject to any Lien in
favor of, or subject to any restriction whatsoever benefiting,
the Lenders and amounts deposited in the Nepal Holding Account
may be used by the Company for any purpose the Company wishes.
The Agent shall apply amounts on deposit in the Nepal Holding
Account from time to time as directed by the Company in a written
notice to the Agent.
Section 2.5 Rupee Deposits. If any excess Rupee amount
(excluding Rupees deposited in the Nepal Reserve Sub-Account) is
not converted to Dollars or other convertible currencies within
ninety (90) days of deposit in the Nepal Retention Account under
circumstances in which Nepal Rastra Bank, HMGN or another
Governmental Authority in Nepal having power to regulate foreign
exchange is not generally permitting conversion of Rupees into
Dollars or other convertible currencies or remittance thereof in
order to pay obligations denominated in convertible currencies,
the Designee, at the request of the Lenders, shall withdraw and
transfer to the Lenders such excess Rupee amount. Upon receiving
Rupees pursuant to this Section 2.5, the Lenders will, if they
are able, convert such Rupees to Dollars or other convertible
currencies and apply such amount to pay Obligations owing to the
Lenders from time to time in accordance with the terms of the
Intercreditor Agreement.
ARTICLE 3
DEPOSITS INTO
THE NEPAL RETENTION ACCOUNT
Section 3.1 Nepal Retention Account Deposits. All amounts
received by the Agent in respect of the Company or the Project
shall be deposited on the day of receipt into the Nepal Retention
Account. The Company agrees to cause all amounts payable in
Rupees to or for the benefit of the Company (including, without
limitation, all revenues under the PPA and all refunds of import
duties received by the Company in Rupees) to be made directly to
the Agent for deposit in the Nepal Retention Account. In the
event that, notwithstanding the foregoing, any such payments in
Rupees or other amounts denominated in Rupees are received by the
Company, or if the Company shall draw funds available under the
NEA Letter of Credit, the Company shall promptly pay, endorse,
transfer and deliver such payments, other amounts, or funds, to
the Agent for deposit in the Nepal Retention Account, and, until
such delivery, the Company shall hold such payments and other
amounts, as the case may be, in the same form as received in
trust for the Agent.
Section 3.2 Sub-Account Deposits.
(a) The Agent shall notify the Trustee of each deposit of
funds received under the PPA from NEA (or from HMGN, as guarantor
of NEA's payment obligations under the PPA). Subject to Section
5.1 hereof, on or before the Commercial Operation Date and at
least five (5) days prior to the first day of each Quarter
thereafter, provided the Trustee has received a properly
completed Debt Service and Reserve Deposit Certificate in
accordance with the Trust and Retention Agreement (or a
Correction Notice), the Trustee shall instruct the Agent to make
the following transfers, in the amounts specified by the Trustee
in a Nepal Deposit Certificate in the form of Schedule B hereto:
(i) for deposit in the Nepal Operations and
Maintenance Sub-Account, an amount equal to (A)
the product of (x) Operating and Maintenance Costs
payable in Rupees budgeted for the following
Quarter in the Annual Budget, multiplied by (y)
1.10, minus (B) the amount then on deposit in the
Nepal Operations and Maintenance Sub-Account;
(ii) after making any withdrawal required on
such date pursuant to paragraph (i), for deposit
in the Nepal Reserve Sub-Account an amount equal
to the number of Rupees required to be deposited
in the Nepal Operations and Maintenance Sub-
Account pursuant to clause (i) above.
(b) If funds on deposit in the Nepal Retention Account are
insufficient to make some or all of the deposit into the Nepal
Operations and Maintenance Sub-Account specified in paragraph (i)
above, then funds in the amount of such shortfall shall be
withdrawn from the Nepal Reserve Sub-Account and transferred to
the Nepal Operations and Maintenance Sub-Account and, following
each subsequent deposit in the Nepal Retention Account of funds
received under the PPA during such Quarter, the Agent shall
withdraw from the Nepal Retention Account and deposit in the
Nepal Operations and Maintenance Sub-Account any remaining
shortfall. (The Agent shall within one (1) Business Day provide
the Trustee with notice of any such shortfall and any transfers
from the Nepal Reserve Sub-Account or the Nepal Retention Account
made to cover such shortfall).
(c) At least five (5) days prior to the first day of each
Quarter prior to the Commercial Operation Date, the Trustee shall
instruct the Agent to withdraw from the Nepal Retention Account
and transfer to the Nepal Petty Cash Sub-Account, after making
any withdrawals required pursuant to paragraphs (a) and (b)
above, the amount specified by the Trustee in a Nepal Deposit
Certificate, which amount shall be the lesser of (i) Seventy-five
Thousand Dollars ($75,000) or (ii) such amount as equals Seventy-
five Thousand Dollars when added to any amount that would
otherwise be on deposit in the Nepal Petty Cash Sub-Account on
the first day of the applicable Quarter. During each Quarter,
the Company shall be permitted to withdraw from such Nepal Petty
Cash Sub-Account an amount not to exceed $75,000. Any funds
remaining in the Nepal Petty Cash Sub-Account on the Commercial
Operation Date shall be deposited in the Nepal Retention Account.
(d) All funds received from NEA under the PPA in excess of
the amounts directed by the Trustee to be deposited in the Nepal
Operations and Maintenance Sub-Account or the Nepal Reserve Sub-
Account, all funds in excess of the amounts directed by the
Trustee to be deposited in the Nepal Petty Cash Sub-Account, and
all other amounts received by the Agent in respect of the Company
or the Project, shall be held in the Nepal Retention Account,
converted by the Agent into Dollars, or if Dollars are
unavailable, other convertible currencies, at the earliest
possible date, in accordance with the procedures set forth in
Schedule C, and except Dollars required to be deposited in the
Nepal Dollar Sub-Account pursuant to paragraph (e) below, and
provided the Agent has received any necessary Governmental
Approvals (which Governmental Approvals shall be obtained by the
Company, with the Agent hereby agreeing to reasonably cooperate
in connection therewith), transferred to the Trustee for deposit
in the Offshore Retention Account. If any such Rupees have not
been converted into Dollars or other convertible currencies and
transferred to the Trustee within ninety (90) days of the date
such Rupees are deposited under circumstances in which Nepal
Rastra Bank, HMGN or another Governmental Authority in Nepal
having power to regulate foreign exchange is not generally
permitting conversion of Rupees into Dollars or other convertible
currencies or remittance thereof in order to pay obligations
denominated in convertible currencies, the Trustee may direct the
Agent to withdraw and transfer to the Lenders such Rupees, and
the Agent shall, to the extent that it is able to do so under
applicable law, make such transfer. Upon receiving Rupees
pursuant to this Section 3.2(d), the Lenders will, if they are
able, convert such Rupees into Dollars or other convertible
currencies and apply such amount to pay Obligations owing to the
Lenders from time to time in accordance with the terms of the
Intercreditor Agreement.
(e) Upon receipt from time to time of notice from the
Trustee that Dollars are to be deposited in the Nepal Dollar Sub-
Account, the Agent shall deposit the number of Dollars specified
in the Trustee's notice in the Nepal Dollar Sub-Account, when and
as Rupees are converted to Dollars in accordance with the
procedures set forth in Schedule C.
ARTICLE 4
WITHDRAWALS FROM ACCOUNTS
AND FUNDING REQUIREMENTS
Section 4.1 Mandatory Withdrawals. Upon receipt of notice
from the Trustee of the occurrence of a Special Buyout Event, the
Agent shall not pay to the Company or any other Person other than
the Lenders any amounts held by the Agent pursuant to this
Agreement; provided, however, that the Agent shall continue to
make withdrawals from the Nepal Operations and Maintenance Sub-
Account in accordance with Section 4.2 hereof and from the Nepal
Dollar Sub-Account in accordance with Section 4.3 hereof.
Section 4.2 Nepal Operations and Maintenance Sub-Account
Withdrawals. Within two (2) Business Days following a request of
the Company pursuant to a Nepal Payment Requisition in the form
of Schedule A hereto, the Agent shall withdraw from the Nepal
Operations and Maintenance Sub-Account the amounts set forth in
such Nepal Payment Requisition and transfer such amounts to the
payees specified therein.
Section 4.3 Nepal Dollar Sub-Account. Within two (2)
Business Days following a request of the Company pursuant to a
Nepal Payment Requisition, the Agent shall withdraw from the
Nepal Dollar Sub-Account the amounts set forth in such Nepal
Payment Requisition and transfer such amounts to the payees
specified therein.
Section 4.4 No other Rights of Withdrawal. Except as
specifically set forth in Sections 3.2(c), 4.2 and 4.3 hereof,
the Company shall have no right to request that the Agent
withdraw and transfer funds in the Nepal Retention Account.
ARTICLE 5
REMEDIES ON DEFAULT
Section 5.1 Action by the Agent. If the Agent receives a
Notice of Default from the Trustee or either of the Lenders
specifying that an Event of Default of the Company has occurred
under the Investment Agreement, the Agent shall take such action
or shall refrain from taking such action with respect to such
Event of Default as the Agent shall be directed in writing by the
Trustee or either of the Lenders. Without limiting the
foregoing, the Agent shall accumulate all monies then held by the
Agent and, unless the Trustee or either of the Lenders shall
otherwise direct in writing, shall not pay to the Company or any
other Person other than the Trustee any monies held by the Agent
pursuant to this Agreement.
ARTICLE 6
THE AGENT
Section 6.1 Appointment of Agent; Powers and Immunities.
The Trustee hereby appoints and authorizes Nepal Grindlays Bank
Limited to act as its agent hereunder, with such powers as are
expressly delegated to the Agent by the terms of this Agreement.
The Agent shall not bear any duties or responsibilities except
those expressly set forth in this Agreement.
Section 6.2 Reliance by Agent. The Agent shall be entitled
to rely upon any certificate, notice or other document (including
any cable, telegram, telecopy or tested telex) reasonably
believed by it to be genuine and correct and to have been signed
or sent by or on behalf of the Person or Persons purporting to
sign or send such certificate, notice or other document, and
shall have no liability for its actions taken thereupon, unless
due to the Agent's willful misconduct or gross negligence.
Section 6.3 Resignation or Removal of Agent. Subject to
the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving notice thereof
to the Trustee, each of the Lenders and the Company. The Agent
may be removed at any time with or without cause by the Trustee
(with the concurrence of either of the Lenders). Upon any such
resignation or removal, the Trustee shall appoint a successor
Agent with the prior written consent of the Lenders, or, if the
Trustee shall fail to do so within sixty (60) days, the Lenders
shall appoint a successor Agent, and thereafter, the retiring
Agent shall be relieved of its obligations hereunder. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, the retiring Agent shall promptly transfer the Nepal
Retention Account and the Nepal Holding Account to the possession
or control of the successor Agent. If the Lenders also fail to
appoint a successor Agent within an additional sixty (60) day
period following the aforesaid sixty (60) day period, the Agent
shall be relieved of its obligations hereunder and will hold any
amounts remaining in the Nepal Retention Account at the disposal
of the Trustee.
Section 6.4 Court Orders. The Agent is hereby authorized,
in its exclusive discretion, to obey and comply with all writs,
orders, judgments or decrees issued by any court or
administrative agency affecting any money, documents or things
held by the Agent, provided the Agent has notified the Trustee of
any such writ, order, judgment or decree and the Agent's actions
in connection therewith. The Agent shall not be liable to any of
the parties hereto, their successors, heirs or personal
representatives by reason of the Agent's compliance with such
writs, orders, judgments or decrees, notwithstanding such writ,
order, judgment or decree is later reversed, modified, set aside
or vacated.
ARTICLE 7
EXPENSES; INDEMNIFICATION; FEES
Section 7.1 Expenses. The Company agrees to pay or
reimburse within thirty (30) days of demand therefor all
reasonable out-of-pocket expenses of the Agent in respect of, or
incident to, the preparation, execution and delivery of this
Agreement, the administration of this Agreement, the Nepal
Retention Account (including currency conversion costs) and the
Nepal Holding Account, the enforcement of any of the provisions
of this Agreement or in connection with any amendment, waiver or
consent relating to this Agreement, provided that any such demand
is accompanied by such supporting documentation as may be
reasonably requested by the Company.
Section 7.2 Indemnification. The Company agrees to
indemnify and hold harmless the Agent, its directors, officers,
employees, agents and representatives (the Agent and its
directors, officers, employees, agents and representatives each
an "Indemnified Party") from and against any and all claims,
losses and liabilities growing out of or resulting from or in any
way related to this Agreement and the transactions hereunder
(including, without limitation, enforcement of this Agreement,
but excluding any such claims, losses or liabilities resulting
from the Indemnified Party's gross negligence or willful
misconduct or, in the case of handling of funds, simple
negligence of the Agent).
Section 7.3 Fees. The Company agrees to pay to the Agent
the fees set forth in the Fee Schedule attached hereto as
Schedule D. Such Fee Schedule shall be subject to review and
amendment by the Agent every second (2nd) anniversary of the date
hereof; provided, however, that any amendments to the Fee
Schedule shall be subject to the mutual agreement of the parties
hereto and to the prior written consent of the Lenders.
ARTICLE 8
SATISFACTION AND DISCHARGE OF TRUST
Section 8.1 Satisfaction and Discharge of Trust. Upon
delivery to the Agent of a certificate signed by the Trustee and
the Lenders stating that all conditions precedent to the
satisfaction and discharge of this Agreement and the other
Security Documents have been complied with, this Agreement shall
cease to be of further effect, and the Agent, at the cost and
expense of the Company, shall execute proper instruments
acknowledging the satisfaction and discharge of this Agreement
and shall transfer all funds, if any, in the Nepal Retention
Account or the Nepal Holding Account to the Company at such place
and in such manner to be specified in writing by the Company.
ARTICLE 9
PARTICULAR COVENANTS
Section 9.1 Reporting Requirements.
(a) The Agent shall, on a monthly basis and at such other
times as the Trustee, the Lenders or the Company may from time to
time reasonably request, provide to the Trustee, each of the
Lenders and the Company account balance statements in respect of
the Nepal Retention Account.
(b) On the fifth Business Day of each Contract Month, as
such term is defined in the PPA, the Agent shall notify the
Trustee, each of the Lenders and the Company if it has not
received the monthly payment by NEA under the PPA for the
preceding Contract Month.
(c) The Agent shall give notice to the Trustee and the
Company of funds received by the Agent in respect of the Company
or the Project, specifying the amount of such payment, the date
of receipt and the name of the payor. If any such funds are
received by 12:00 noon on any Business Day, the Agent shall give
the aforesaid notice on such Business Day. If any such funds are
received after 12:00 noon on any Business Day, the Agent shall
give the aforesaid notice on the next following Business Day.
Section 9.2 Nepal Payment Requisitions, Etc.
(a) Any notice, request or requisition given to the Agent
shall be in writing and shall state the date of the requested
transfer, withdrawal, deposit or payment, the amount, source and
disposition of any such funds.
(b) The Agent shall rely on each Nepal Payment Requisition
properly completed and signed by an Authorized Officer of the
Company and each Nepal Deposit Certificate, Notice of Default or
other notice delivered by the Trustee.
Section 9.3 Other Notices. The Agent shall promptly notify
the Trustee of any matter of which the Agent becomes aware in the
course of the performance of its obligations under this Agreement
that may, in the opinion of the Agent, be of concern to the
Trustee or the Lenders.
Section 9.4 Business Days. If any transfer, withdrawal,
deposit or payment of any funds by the Agent is to be made or
taken on a day other than a Business Day, such transfer,
withdrawal, deposit or payment shall be made or taken on the next
succeeding Business Day.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties of the Company.
The Company represents and warrants that as of the date hereof:
(a) it has the power to open and maintain the Nepal
Retention Account, including all sub-accounts, and the Nepal
Holding Account and has taken all necessary corporate and other
action required to authorize the opening and maintenance thereof
upon the terms referred to herein and the execution and delivery
of all such documents as are necessary for the purpose thereof;
(b) except for the approval of the Nepal Rastra Bank for
the establishment of the Nepal Retention Account and the Nepal
Holding Account and the remittance of foreign currency to and
from the Offshore Retention Account and the Nepal Retention
Account (including all sub-accounts) and the Nepal Holding
Account, all of which have been obtained and are in full force
and effect and those which have been listed in Schedule 4.1(d) of
the General Conditions, it is not necessary to permit the
performance of or to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or
the assignment, charge, security interest and Lien on the
Collateral created by this Agreement, that this Agreement be
filed, recorded or enrolled with any Governmental Authority;
(c) all consents, licenses, approvals or authorizations of
or declarations to or registrations with Governmental Authorities
and the payment of all stamp duties and other transaction taxes
required to make this Agreement and the Nepal Retention Account
and the Nepal Holding Account and the assignment, charge,
security interest and Lien on the Nepal Retention Account created
under this Agreement and the Security Agreement and Assignment
legal, valid and enforceable as a first assignment, charge,
security interest and Lien over the Nepal Retention Account and
admissible in evidence, and to enable it lawfully to enter into
and perform its obligations hereunder and thereunder, have been
obtained or made and are in full force and effect; and
(d) this Agreement is effective to create a valid
assignment, charge, security interest and Lien over the Nepal
Retention Account, constituting in favor of the Agent, as agent
for the Trustee, for the benefit of the Lenders, a first priority
security interest with respect to the Nepal Retention Account,
and all cash, investments and securities at any time on deposit
therein, to the exclusion of all other obligations of the Company
to its other creditors.
Section 10.2 Representations and Warranties of Nepal
Grindlays Bank Limited. Nepal Grindlays Bank Limited, in its
individual capacity, hereby represents and warrants that:
(a) it is a banking corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of
its incorporation and has the corporate power and authority to
enter into and perform its obligations under this Agreement, and
has full right, power and authority to enter into and perform its
obligations as the Agent hereunder;
(b) this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and legally binding
obligation, enforceable in accordance with its terms;
(c) the execution, delivery and performance of this
Agreement will not conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default
or require any consent under, any indenture, mortgage, agreement
or other instrument or arrangement to which it is a party or by
which it is bound, or violate any of the terms or provisions of
its articles of incorporation, by-laws or other governing
documents, or any judgment, decree or order or any law, statute,
rule or regulation applicable to it;
(d) it has obtained all consents, licenses, approvals and
authorizations of all Governmental Authorities required under
applicable laws, regulations, decrees or orders of or in Nepal
(which may legally be obtained as of the date hereof) in
connection with its execution, delivery, performance, validity or
enforceability of this Agreement, and that such consents,
licenses and authorizations are in full force and effect; and
(e) it is an authorized foreign exchange dealer in Nepal.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Successors or Assigns. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
parties hereto; provided, however, that neither the Company, the
Trustee nor the Agent may assign or transfer any of its rights or
obligations hereunder without the prior written consent of the
Lenders. Each of the Lenders may transfer, assign or grant its
rights hereunder in connection with an assignment or transfer of
all or any part of its interest in its Commitment or the IFC
Loans or the DEG Loan, as the case may be, in accordance with the
Investment Agreement.
Section 11.2 Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
Addresses:
Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attn: Project Manager
Fax: 011 977-1-270027
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Tel: (302) 651-8726
Fax: (302) 651-8882
Nepal Grindlays Bank Limited
G.P.O. Box No. 3990
Naya Baneshwor
Kathmandu, Nepal
Attn: J. Basnyat
Senior Manager
Fax: (977) 1-226762
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attn: Director, Power Department
Fax: (202) 974-4307
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attn: Infrastructure Department
Fax: 011 49 221 4986 107
Section 11.3 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 11.4 Governing Law; Dispute Resolution.
(a) This Agreement shall for all purposes be governed by
and construed in accordance with the laws of the Kingdom of
Nepal.
(b) Each of the Agent and the Trustee shall designate in
writing to the other party a representative who shall be
authorized to resolve any dispute arising under this Agreement in
an equitable manner and, unless otherwise expressly provided
herein, to exercise the authority of the parties hereto to make
decisions by mutual agreement.
(i) If the designated
representatives are unable to resolve
a dispute under this Agreement within
thirty (30) days of the commencement
of discussions, such dispute shall be
referred by such representatives,
respectively, to a senior officer
designated by the Agent and a senior
officer designated by the Trustee to
be resolved within thirty (30) days
of the commencement of discussions.
(ii) The parties hereto agree to
attempt to resolve all disputes
arising hereunder promptly, equitably
and in a good faith manner.
(iii) The parties further
agree to provide each other with
reasonable access during normal
business hours to any and all
records, information and data
pertaining to any such dispute other
than any confidential communication
between any party and its legal
advisor(s) or any such records,
information or data which any party
has agreed with any third party to
keep confidential.
(c) In the event that any dispute is unable to be resolved
between the parties pursuant to Section 11.4(b) hereof, then such
dispute shall be settled exclusively and finally by binding
arbitration. It is specifically understood and agreed that any
dispute that cannot be resolved between the parties, including
any matter relating to the interpretation of this Agreement,
shall be submitted to arbitration irrespective of the magnitude
thereof, the amount in dispute or whether such dispute would
otherwise be considered justiciable or ripe for resolution by any
court or arbitral tribunal. This Agreement and the rights and
obligations of the parties shall remain in full force and effect
pending the award in such arbitration proceeding, which award
shall determine whether and when termination of this Agreement,
if relevant, shall become effective.
(d) Each arbitration shall be conducted in accordance with
the UNCITRAL Arbitration Rules as in effect on Chaitra 17, 2050
(March 30, 1994) except as such Rules conflict with the
provisions of this Section 11.4 in which event the provisions of
this Section 11.4 shall prevail.
(e) Each arbitral tribunal shall consist of three
arbitrators. Provided there are only two parties to any dispute,
each party shall appoint one arbitrator and the third arbitrator
shall be appointed by the Secretary General of the Permanent
Court of Arbitration at the Hague. If there are more than two
parties to any dispute, each of the parties thereto will work
together in good faith to appoint three arbitrators. If the
parties are unable to agree on such arbitrators with fifteen (15)
days, three arbitrators shall be appointed by the Secretary
General of the Permanent Court of Arbitration at the Hague upon
the request of any party to the dispute. No arbitrator shall be
a present employee or agent of, or consultant or counsel to, any
party or any Affiliate of any party.
(f) Each arbitration shall be conducted in Kathmandu,
Nepal, and the parties agree to exclude any right of application
to any court or tribunal of competent jurisdiction in connection
with any question of law arising in the course of any arbitration
in connection with this Agreement.
(g) The language to be used and all written documents
provided in each arbitration shall be English.
(h) Any decision or award of a majority of an arbitral
tribunal appointed pursuant to this Section 11.4 shall be final
and binding upon the parties. The Agent, the Trustee and the
Company each waives to the extent permitted by law any rights to
appeal or any review of such award by any court or tribunal of
competent jurisdiction. The Agent, the Trustee and the Company
each agrees that a judgment upon any arbitration award may be
entered into by any court of competent jurisdiction thereof.
(i) All arbitration awards shall be denominated in the
currency to which such dispute relates, Dollars, Deutsche Marks
or Rupees. Interest on the amount to be paid in accordance with
the arbitration award at a rate equal to seven percent (7%) per
annum shall be due and payable to the prevailing party from the
date on which the matter was first submitted to arbitration up to
and including the date of payment.
Section 11.5 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Trustee, the Agent or the Lenders in
exercising any right, power or privilege hereunder shall impair
any such right, power or privilege or operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Loan Document
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder or thereunder.
Section 11.6 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability but that shall not invalidate the
remaining provisions of this Agreement or affect such provision
in any other jurisdiction.
Section 11.7 Communications. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company, which translation shall be the
governing version between the Company, the Lenders, the Trustee
and the Agent.
Section 11.8 Amendments. Neither this Agreement nor any of
the terms hereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in
writing signed by all of the parties hereto.
Section 11.9 Concerning the Trustee. In acting hereunder,
Wilmington Trust Company shall be afforded all rights, immunities
and protections of the Trustee under the Trust and Retention
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and acknowledged by their respective
officers or representatives hereunto duly authorized, as of the
date first above written.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
INTERNATIONAL FINANCE CORPORATION
By:
Name:
Title: Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH
By:
Name:
Title: Authorized Signatory
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
Name:
Title:
NEPAL GRINDLAYS BANK LIMITED
By:
Name:
Title:
SCHEDULE A
FORM OF NEPAL PAYMENT REQUISITION
[Date]
Nepal Grindlays Bank Limited
G.P.O. Box No. 3990
Naya Baneshwor
Kathmandu, Nepal
Attention: J. Basnyat, Senior Manager
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
USA
Attention: Corporate Trust Administration
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433, United States
Attention: Director, Power Department
DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH
Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Dear Sirs:
Reference is made to the Nepal Agency and Retention
Agreement (the "Agreement"), dated as of the Closing Date, among
Bhote Koshi Power Company Private Limited (the "Company"),
International Finance Corporation ("IFC"), DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH ("DEG"), Wilmington
Trust Company, as Trustee (the "Trustee") and Nepal Grindlays
Bank Limited, as Agent (the "Agent"). Capitalized terms used
herein without definition shall have the meanings specified in
Schedule A to the General Conditions.
I. The Company hereby requests that, on __________,
the Agent, in accordance with Section 4.2 of the Agreement,
withdraw the following amounts of Rupees from the Nepal
Operations and Maintenance Sub-Account and transfer such amounts
to the payees indicated below:
Payee Amount of Payment
The Company hereby requests that, on , the
Agent, in accordance with Section 4.3 of the Agreement, withdraw
the following amounts of Dollars from the Nepal Dollar Sub-
Account and transfer such amounts to the payees indicated below:
Payee Amount of Payment
The Company hereby certifies that such withdrawals and transfers
are to be made to pay Operating and Maintenance Costs or Project
Costs.
II. The Company hereby certifies that:
(i) as of the date
hereof no Default or Event of
Default has occurred and is
continuing which has not been
waived by the Lenders [or, if
a Default exists, specifying
the nature and extent thereof
and what action the Company is
taking in respect thereto];*
(ii) a copy of this
Nepal Payment Requisition has
been timely delivered to the
Trustee, and each of the
Lenders in accordance with the
provisions of the Agreement.
The undersigned hereby certifies that he/she is an
Authorized Officer of the Company, and that, as such, is
authorized to execute and deliver this Nepal Payment Requisition
on behalf of the Company.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Title:
SCHEDULE B
FORM OF NEPAL DEPOSIT CERTIFICATE
[Date]
Nepal Grindlays Bank Limited
G.P.O. Box No. 3990
Naya Baneshwor
Kathmandu, Nepal
Attention: J. Basnyat, Senior Manager
Dear Sirs:
Reference is made to the Nepal Agency and Retention
Agreement (the "Agreement"), dated as of the Closing Date, among
Bhote Koshi Power Company Private Limited (the "Company"),
International Finance Corporation ("IFC"), DEG-Deutsche
Investitions-und Entwicklungsgesellschaft mbH ("DEG"), Wilmington
Trust Company, as Trustee (the "Trustee") and Nepal Grindlays
Bank Limited (the "Agent"). Capitalized terms used herein
without definition shall have the meanings specified in Schedule
A to the General Conditions.
In accordance with Section 3.2(a), the Trustee hereby
directs the Agent to withdraw the following amount from the Nepal
Retention Account (Account No. 1010215481001) or, if funds in the
Nepal Retention Account are insufficient, from the Nepal Reserve
Sub-Account (Account No. 1010215481003), and transfer such amount
to the Nepal Operations and Maintenance Sub-Account (Account No.
1010215481002): __________Rs.
The Trustee hereby directs the Agent to withdraw the
following amount from the Nepal Retention Account (Account No.
1010215481001) and transfer such amount to the Nepal Reserve Sub-
Account (Account No. 1010215481003): __________Rs.
The Trustee hereby directs the Agent to withdraw the
following amount from the Nepal Retention Account (Account No.
1010215481001) and transfer such amount to the Nepal Petty Cash
Sub-Account (Account No. 1010215481004): __________Rs.
The Trustee hereby directs the Agent to convert into Dollars
at the earliest practicable date all Rupees remaining in the
Nepal Retention Account after the foregoing transfers have been
made, in accordance with the procedures set forth in the Nepal
Agency and Retention Agreement, and to transfer such Dollars as
follows: (i) to the Nepal Dollar Sub-Account: $ ;
(ii) through your correspondent bank in New York, to the Trustee
for deposit in the Offshore Retention Account: $ .
Wire transfer instructions are as follows:
Wilmington Trust Company
ABA Routing Number 031100092
For Credit to Offshore Retention
Account (Account No. 43370-0)
Attn: David A. Vanaskey
Ref: Bhote Koshi Power Company Private Limited
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:
Name:
Title:
SCHEDULE C
PROCEDURE FOR CONVERSION OF RUPEES TO DOLLARS
1. Under the PPA, the Company will submit an invoice to
NEA for each Contract Month (each Nepalese calendar month) on or
before the fifth Business Day of each Contract Month commencing
with the first full Contract Month to occur after the date of
First Unit Delivery. (The Company will copy the Agent on each
such invoice.) Amounts owing by NEA are denominated in Dollars
and Rupees. The Dollar proportion of each payment by the NEA is
made at Nepal Rastra Bank's published selling rate of exchange on
the date of payment (the "Dollar Equivalency Rate").
2. NEA is required pursuant to the PPA to pay each invoice
within thirty (30) days of receipt.
3. Fifteen (15) days prior to the scheduled receipt of
such Rupee payment from NEA, the Company will submit to the Nepal
Rastra Bank the application required for approval (the "NRB
Approval") of the conversion of all or a portion of such payment
from Rupees into Dollars and transfer of the resulting amount to
the Offshore Retention Account.
4. If such payment from NEA is received on any Business
Day after 12:00 noon, Kathmandu time, or on any non-Business Day,
such payment will be placed by the Agent into the Nepal Retention
Account and the Agent will take the steps outlined in paragraph 5
on the next Business Day in Nepal. Amounts held on deposit in
the Nepal Retention Account will be invested overnight by the
Agent (whether or not specifically instructed to do so by the
Company) in Cash Equivalents.
5. If such payment from NEA is received on any Business
Day before 12:00 noon, Kathmandu time, then the Agent will place
in the Nepal Operations and Maintenance Sub-Account and the Nepal
Reserve Sub-Account on the same Business Day the amount specified
by the Trustee in a Nepal Deposit Certificate, subject to the
same being received before 12:00 noon.
6. At the direction of the Trustee, the remaining portion
of such payment will be converted by the Agent into Dollars at
the best rate then obtainable in the market by the Agent.
Further:
(a) The Agent will use its best efforts to convert the
remaining portion of such payment in the market at a rate at
least as favorable to the Company as the Dollar Equivalency Rate.
If it is able to convert the entire remaining portion of such
payment at the Dollar Equivalency Rate (or a better rate), on the
date of receipt of such payment, the Agent will effect such
conversion immediately.
(b) If the Agent is unable, as a consequence of a
temporary decline in the market conversion rate or a temporary
disruption in, or lack of sufficient depth in, the market for
Rupee/Dollar exchange, to convert the entire remaining portion of
such payment at a rate at least as favorable to the Company as
the Dollar Equivalency Rate, then the Agent shall, upon the
Company's request, immediately convert any part of the remaining
portion that it is able to convert at a rate at least as
favorable to the Company as the Dollar Equivalency Rate. If
there is any balance remaining, the Agent will consult with the
Company and if the Agent and the Company reasonably believe that
the market may improve during the next seven (7) Business Days,
the Agent, on the Company's request, will delay the conversion of
such remaining portion and will convert it on the one or more
days on or before the seventh (7th) Business Day following
receipt of such payment. If the Agent and the Company do not
reasonably believe that conditions may improve during the next
seven (7) Business Days, then paragraph (c) below will apply.
(c) If the Agent is unable to convert all or any part
of the remaining portion of such payment under paragraphs (a) or
(b) above it will, on receipt of the Company's request
accompanied by an application to Nepal Rastra Bank, apply to
Nepal Rastra Bank to effect the conversion, which conversion
shall be on terms directed or approved by the Trustee.
7. On the same date the Agent effects each conversion, or
if Nepal Rastra Bank effects any conversion, on the same date
Nepal Rastra Bank effects such conversion, the amount of the
Dollars obtained will be transferred to the Offshore Retention
Account or, if the Trustee has so instructed the Agent, to the
Nepal Dollar Sub-Account.
8. Amounts of Dollars to be transferred by the Agent to
the Offshore Retention Account will be credited by the Agent to
its account at a correspondent bank in New York (American Express
Bank, ANZ or any other bank satisfactory to the Trustee and the
Company), which will transfer such amounts for value on the same
day (or, if such day is not a business day in New York, on the
next business day in New York) to the Offshore Retention Account;
provided, that the Agent shall not be responsible for any delay
in the crediting of such amounts to the Offshore Retention
Account during any period in which its correspondent bank is
unable, for reasons entirely beyond the Agent's reasonable
control, to receive instructions from the Agent to credit the
relevant amounts on such date (so long as the Agent has properly
dispatched telex or other instructions and used every reasonable
effort to communicate with its correspondent bank).
9. In the event that the Agent is unable to effect a
conversion hereunder from Rupees to Dollars, the Agent will, upon
receipt of the direction or approval of the Trustee, convert such
Rupees to convertible currencies other than Dollars, all in
accordance with terms directed or approved by the Trustee.
SCHEDULE D
FEE SCHEDULE
In terms of Section 7.3 hereof the Company agrees to pay to the
Agent the following fees:
Documentation Fee:
A front-end fee of USD $10,000 or equivalent Nepali rupees
payable within thirty (30) days of signing the Agreement.
Retention Fee:
A retention fee at the rate of USD $1,500 or equivalent Nepali
rupees per annum or part thereof, payable on or before the
anniversary of the signing of the Agreement and every anniversary
thereafter until the Agreement is terminated.
Management Fee:
A management fee of USD $6,000 or equivalent Nepali rupees per
annum or part thereof payable on the day of receipt of the first
payment into the Nepal Retention Account and every anniversary
thereafter until the Agreement is terminated.
Remittance Fee:
A remittance fee at the rate of 0.025% of the face value of the
amount being transferred in the form of draft or telegraphic
transfers.
Other Charges:
Other charges as applicable payable from time to time for
services rendered as per the Agent's standard tariff of charges
and all out-of pocket expenses of the Agent in respect of, or
incident to, the performance, execution, delivery, and
enforcement of this Agreement.
_______________________________
* No transfers requested in any Nepal Payment Requisition
shall be made unless the Company certifies that no Event of
Default exists, except in accordance with Article 5 of the
Agreement.
EXHIBIT NO. 10.158
Mortgage Deed
This Mortgage Deed (the "Mortgage Deed") is made between Bhote
Koshi Power Company Private Limited, a private limited company
duly registered under the Companies Act, 2021, (1964) with His
Majesty's Government of Nepal (HMG/Nepal), Office of the Company
Registrar (private Limited Company Registration No. 5066/052-053)
having its corporate office at Kathmandu District, Kathmandu
Metropolitan, Ward no. 14. Tahachal, Kathmandu, Nepal
(hereinafter referred to as the "Borrower") duly represented by
its authorized Project Manager Mr. Robert L. Ransom, Deutsche
Investitions-und Entwicklungsgesellschaft mbH having its
registered office at Belvederestrasse 40 D-50933, Kolu
(Mungersdorf) Federal Republic of Germany ("DEG") and
International Finance Corporation having its registered office at
2121 Pennsylvania Avenue, N.W. Washington, D.C. U.S.A. ("IFC" and
together with DEG, the "Lenders") duly represented by advocate
Mr. Bharat Raj Upreti, Senior Partner of Pioneer Law Associates,
Kathmandu, Nepal.
Whereas, the Borrower having obtained a license from HMG/Nepal,
Ministry of Water Resources for the construction of a run of the
river hydroelectric power facility with a capacity of 36
megawatts (nominal) (hereinafter referred to as the "Project")
has requested IFC for loans in the amount of US $57,000,000.00
(the IFC "Loans") (for the purpose of the registration of this
deed, equivalent to NRS. 3,62,52,00.000/- according to the
prevailing exchange rate of this day) and DEG for Loans in the
amount of Deutsch Marks 21,000,000 (the "DEG Loan") (for the
purpose of the registration of this deed, equivalent to NRS
75,26,40,000/- according to the prevailing exchange rate of this
day) (the IFC Loans and DEG Loan hereinafter collectively
referred to as the "Loans")for the purpose of financing a portion
of the cost of the Project.
In consideration of the aforesaid requirements of the Borrower,
IFC and the Borrower have entered into that certain IFC
Investment Agreement dated 12 December, 1997 (the "IFC Investment
Agreement") and DEG and the Borrower have entered into that
certain DEG Investment Agreement dated 12 December, 1997 (the
"DEG Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreements"). Subject to the terms and
conditions stipulated in the Investment Agreements and in this
Mortgage Deed and other documents forming part of it, the Lenders
have agreed to lend and advance to the Borrower the Loans in the
amount of US $57,000,000.00 and DM 21,000,000_ which includes the
IFC loan of Class A Loan of US $21,000,000, and the IFC Class B
loan of US $36,000,000 and the DEG loan of DM 21,000,000. The
Borrower agrees to receive the disbursement of the Loans in the
manner prescribed in the Investment Agreements and the Trust and
Retention Agreement (as defined in the Investment Agreements).
The Loans shall be repaid in 22 (twenty-two) installments
commencing on March 15, 2001 and thereafter payable annually on
each March 15 and September 15. The Loans shall be fully repaid
by March 15, 2011. The repayment schedule of the Loans shall be
as prescribed in the Investment Agreements. The rates of
interest on the Loans (which includes the Class A Loan, the Class
B Loan and the DEG Loan) shall be as determined in the manner
prescribed in the Investment Agreements.
As security for the aforesaid Loans, and all other Obligations
(as such term is defined in the Investment Agreements) of the
Borrower, by virtue of this Mortgage Deed, mortgages the plots of
land registered in its name at Sindhupalchowk District, Nepal,
the details and plot Nos. of which are set forth in Annex A
hereto, along with any construction made thereof, and
hypothecates and assigns its rights in the entire Project
inclusive of all present and future fixed and current assets
either procured from its own resources or from the above said
Loans or other investments in favor of the Lenders who shall have
a first charge (right) over the security. The Lenders shall have
a first charge over the said mortgaged land, buildings and other
fixed and current assets of the Borrower.
The Borrower hereby agrees to repay to the Lenders the principal
amount of the Loans, interest accrued thereon, additional
interest, penalty interest and other fees, prepayment fees and
charges and all other Obligations of the Borrower at the rate and
in the manner as laid down in the Investment Agreements and the
other related agreements. The Borrower further agrees to comply
with the terms and conditions stipulated in the Investment
Agreements and this Mortgage Deed and other documents forming
part of it, and agrees that the Lenders may realize the
outstanding Loan amounts together with interest , other dues
payable and all other Obligations of the Borrower as per the
terms of the Investment Agreements by disposing of or otherwise,
all or any part of the mortgaged, hypothecated and assigned
movable and immovable properties and assets by following the
procedures stipulated in the Investment Agreements, this Mortgage
Deed and the Security Documents (as defined in the Investment
Agreements) upon failure of the Borrower to repay the said
principal amount, interest, other dues and all other Obligations
of the Borrower or upon the breach of the terms and conditions
stipulated in the Investment Agreements, this Mortgage Deed and
other agreements forming a part of it which constitutes an event
of default under the said agreements and documents.
And in case the proceeds so realized from the sale of the
mortgaged assets are less than the amounts due to each of the
Lenders under the Investment Agreements, each of the Lenders may
also realize such shortfall amount out of the other current and
fixed assets of the Borrower, if any.
In accordance with the terms and conditions mentioned in the
Investment Agreements, this Mortgage Deed and the other documents
forming part of it, the Borrower has executed this Mortgage Deed
in favor of the Lenders in the presence of the witnesses stated
herein. The Borrower further undertakes to register and get
registered this Mortgage Deed, within the time limit as
prescribed by law. The Borrower hereby further agrees to abide
by or cause to be abided by the following terms, in addition to
the terms set forth in the documents forming a part of this
Mortgage Deed and in the Investment Agreements.
1. Security:
1.1 The Borrower mortgages, hypothecates and assigns all
its present and future assets (except the Nepal Holding
Account and the other Excluded Assets, as defined in
the Investment Agreements) either procured from the
Loans or from its own resources inclusive of land,
buildings, sheds, machines, equipment etc. as mentioned
below, and all its accounts receivable and current
accounts in favor of the Lenders as security for the
said Loans and all other obligations of the Borrower
according to the Investment Agreements, this Mortgage
Deed and the other documents forming a part hereof.
1.2 The Borrower covenants and represents that the Borrower
is the sole owner of all the assets mortgaged,
hypothecated and assigned under this Mortgage Deed and
the same has not been bequeathed, transferred or
released on lease or rent to any other person in any
manner and such assets are free from any encumbrances
other than Permitted Liens (as defined in the
Investment Agreements).
1.3 The Borrower will not sell or dispose of or transfer in
any manner the title over the assets mortgaged,
hypothecated and assigned under this Mortgage Deed or
other assets belonging to the Borrower, except in
accordance with the Investment Agreements, this
Mortgage Deed and the other documents forming a part of
it.
1.4 Grant of the Mortgage of Immovable Assets:
The detail of the land and buildings mortgaged by the
Borrower in favor of the Lenders is given in Annex A to
this Mortgage Deed. In case the Borrower acquires the
ownership of any additional land and buildings by
purchase or otherwise, the Borrower shall, by a
separate Mortgage Deed, execute fresh mortgage of the
said additional plots of land within 35 days from the
date of the registration of ownership of such land and
buildings in the name of the Borrower, in favor of the
Lenders, by preparing a separate document of the said
additional, land and buildings. Any mortgage deed so
executed and registered in regard to such land to which
the right is acquired on private basis shall form an
integral part of this Mortgage Deed.
1.5 Pledge of Movable Assets:
As security for the performance of all the Obligations
(as defined in the Investment Agreements) and for the
payment of the amounts payable to the Lenders and in
order to induce the Lenders to make the Loans, the
Borrower hereby mortgages and pledges to the Lenders.
the following right, title and ownership interest in,
to and under the following (all of which being
hereinafter collectively called the "Collateral"), and
assigns and transfers entitlement to the said right,
title, interest, ownership and benefits, in the name of
the Lenders, in addition to the mortgage of the
immovable property and assets as described herein (but
excluding Excluded Assets, as defined in the Investment
Agreements).
(1) The assigned contracts listed in Annex B hereto
(the "Assigned Contracts"), including but not
limited to (a) all rights of the Borrower to
receive moneys due and to become due thereunder or
pursuant thereto, (b) all rights of the Borrower
to receive proceeds of any insurance, indemnity,
warranty, letter of credit, surety bond,
performance bond or guarantee with respect
thereto, (c) all claims which the Borrower may
make for compensation for breach thereof or
default thereunder, and (d) the right of the
Borrower to terminate, amend, supplement or
otherwise modify any such agreement;
(2) All bank accounts of the Borrower;
(3) All accounts receivable of the Borrower;
(4) All equipments, materials, structures, machinery,
fixtures, accessories and furnishings of the
Borrower including, but not limited to, turbines,
generators, transformers, switchgears, breakers,
transmission lines, runners, protective devices,
safety equipment, metering equipment spare-parts,
tools, vehicles, control and communication
equipment and office materials and equipments;
(5) All supplies and new materials, fuel, stores,
spare parts and other consumables;
(6) All inventory along with the details of movable
property;
(7) All general intangibles, such as leases,
proprietary rights, goodwill rights, licenses,
rights, records;
(8) All present or future rights and claims of the
Borrower under any indemnity, warranty or guaranty
provided for or arising out of or in connection
with any construction contract or otherwise or any
equipment, and any performance bonds, letters of
credit or other support delivered by any
construction contractor or any other equipment
supplier or contractor to the Borrower;
(9) All governmental permits, approvals, licenses,
authorizations, consents or clearances issued to
the Borrower;
(10) Any and all cash, investments and securities from
time to time on deposit (including income or
profit earned therefrom) in the accounts (other
than Excluded Assets) of the Borrower created
pursuant to the Trust and Retention Agreement or
the Nepal Agency and Retention Agreement (as
defined in the Investment Agreements);
(11) Any and all other letters of credit, drafts,
acceptances, contract rights, accounts receivable,
documents, deposit accounts, instruments, chattel
paper, rights, interests, general intangibles and
assets owned by the Borrower on the date hereof or
hereafter existing or acquired, including, but not
limited to, designs, plans and specifications
relating to the Project; and
(12) To the extent not otherwise included in the
foregoing, all rights, interests, proceeds and
products generated (including, but not limited to,
power generated by operation of the Project) by
all of the foregoing Collateral.
2. The Lenders shall have the right to appoint an agent (the
"Agent") from time to time to represent the Lenders in Nepal who
shall be entitled to exercise all or some of the rights and
authorities of the Lenders granted to them by the Borrower under
the Investment Agreements, this Mortgage Deed and the other
documents forming part of it. The Borrower shall have no
objection to the Agent taking any action against it for and on
behalf of the Lenders or exercising its authority subject to the
terms and conditions stipulated in the Investment Agreements, the
Mortgage Deed and other documents forming part of it. The
Borrower agrees to execute all such documents and do such other
things as the Agent may reasonably require in order to enable the
Agent to take any such action or to exercise any such authority.
3. The Lenders' Rights:
3.1 In the event of the occurrence of an event of default
and for so long as such event of default shall
continue, the Lenders may treat the Loans and all other
Obligations of the Borrower to be defaulted or the
terms and conditions of the Investment Agreements
relating to the Loans violated, in which case the
Lenders may initiate any one or all of the remedies
available to the Lenders (or the Agent) against the
assets mortgaged under this Mortgage Deed, including
any one or all of the following actions:
(a) Terminate or suspend its promise or commitments;
(b) Demand prepayment of the Loans in accordance with
the Investment Agreements;
(c) Deliver a Notice of Default (as defined in the
Investment Agreements);
(d) Accelerate the maturity of the Loans;
(e) Direct the Agent in writing to foreclose or
exercise other rights or remedies relating to the
collateral, including, but not limited to, the
sale or disposition of all or any part of the
security including, but not limited to, all
movable and immovable assets of the Borrower;
(f) Deliver a notice to the Agent that with respect to
the Investment Agreements, an event of default has
been cured or waived;
(g) Take possession of the Project and appoint one or
more operators to complete construction and
operate the Project to the benefit of the Lenders.
3.2 The Lenders may realize the outstanding amount of the
Loans and other outstanding Obligations from the
Borrower by the foreclosure or sale of the mortgaged,
hypothecated or assigned assets or by collection of
accounts receivable and out of any other assets (other
than Excluded Assets) belonging to the Borrower whether
or not mortgaged or hypothecated or assigned by the
Borrower or any other properties owned by the Borrower
without recourse to court proceedings. The Borrower
has vested the Lenders with all the rights, power and
authorities as available to commercial banks under
section 47A of the Commercial Bank Act, 2031, (1974) of
Nepal in the matter of foreclosure, sale and
disposition of securities, land, buildings, all types
of movable and current and fixed assets, assigned
rights, and accounts receivable, mortgaged and charged
by the Borrower in favor of the Lenders under this
Mortgage Deed. The Borrower shall not object to or
interfere with the Lenders or their Agent in any manner
in exercising said right or power or authority in
accordance with this Mortgage Deed and the Security
Documents.
3.3 The proceeds of the sale of any collateral including,
but not limited to, immovable assets of the Borrower
mortgaged under this Mortgage Deed or any other assets
realized by the Lenders or their Agent by exercising
the rights under this Mortgage Deed and the documents
forming part of it shall be applied in the following
order:
First: Payment of all fees, remunerations and expenses
of the Agent or other agents appointed by the Lenders
under the Investment Agreements, this Mortgage Deed and
the documents forming a part of it to the extent not
reimbursed by the Borrower.
Second: Repayment of interest accrued on the
outstanding Loans and Obligations (other than
prepayment fees or penalties with respect to the
Loans).
Third: Repayment of all other amounts due (other than
prepayment fees or penalties with respect to the
Loans).
Fourth: Payment of prepayment fees or penalties owing
to the Lenders.
Fifth: Payment of any remaining balance to the
Borrower or as the Borrower may direct in writing.
3.4 Without prejudice to any other remedy available to the
Lenders in the event of the occurrence of an event of
default, the Lenders shall have the right to take into
possession the whole or the part of the Project and to
complete construction thereof or operate it through one
or more operators appointed by the Lenders or the Agent
for and on behalf of the Lenders.
4. The expenses to be incurred during the proceedings initiated
by the Lenders in the events mentioned above shall be borne
by the Borrower.
5. The Borrower shall neither change its nature of business or
operate any subsidiary company or amalgamate itself into
another company nor permit the transfer of shares held by
its shareholders, unless permitted under the Investment
Agreements and other documents forming part of this Mortgage
Deed; provided however, that this restriction shall not
apply to the transferal of shares to the Lenders or to a
person designated by the Lenders.
6. The borrower agrees that the Lenders may, in connection with
a transfer of an interest in the Loans, transfer, mortgage
or sell this Mortgage Deed to any other corporation or
financial institution.
7. The Loans and obligations referred to in this Mortgage Deed
shall not be construed as unsecured on the ground of the
Lenders failing to initiate action on default of payment of
the Loans or breach of any terms and conditions of this
Mortgage Deed and the Investment Agreements or the documents
forming part of this Mortgage Deed.
8. The Borrower agrees that it shall not be free from the
liability of repaying the principal and interest on the
grounds of foreclosure or sale or disposition of the
properties mortgaged, hypothecated or assigned or on the
grounds of assignment of the Loans to any other person by
the Lenders.
9. Integral Parts of this Deed:
The following documents shall form integral parts of this
Mortgage Deed.
9.1 The IFC Investment Agreement concluded on 12 December,
1997) between IFC and the Borrower.
9.2 The Nepal Agency and Retention Agreement concluded on
12 December, 1997 among Nepal Gridlays Bank Limited,
IFC, DEG, the Borrower and the Wilmington Trust Company
(Trustee).
9.3 The Security and Assignment Agreement concluded on 12
December, 1997 among the Borrower, IFC, DEG and
Wilmington Trust Company (Trustee).
9.4 The Trust and Retention Agreement concluded on 12
December, 1997 among the Borrower, IFC, DEG and the
Wilmington Trust Company (Trustee).
9.5 Reinsurance Assignment Agreement concluded on 12
December, 1997 among the borrower, Wilmington Trust
Company (Trustee) and National Life and General
Insurance Company Ltd.
9.6 The Investment Agreement concluded on 12 December, 1997
between DEG and the Borrower.
9.7 The Intercreditor Agreement concluded on 12 December,
1997) between IFC and DEG.
The details of land mortgaged are as follows:
Annex - "A"
SCHEDULE 3.1 (e)
TITLE TO THE SITE
Details of Land owned by Bhote Koshi Power Company Pvt. Ltd.
Location of Land:
Zone: Bagmati, District: Sindhupalchowk, V.D.C.: Phulphingkatti
<TABLE>
<CAPTION>
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership Ward Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
<C> <C> <C> <C> <C> <C> <C>
1 1 1 411 2-3-2-1 2053-6-11 1996-09-27
" 2 1 413 1-14-3-1 2053-6-11 1996-09-27
" 3 1 499 4-1-1-0 2053-6-11 1996-09-27
" 4 1 500 20-0-0-0 2053-6-11 1996-09-27
" 5 1 462 3-9-1-1 2053-6-28 1996-10-14
" 6 1 465 0-5-0-3 2053-6-28 1996-10-14
" 7 1 433 1-5-1-0 2053-9-04 1997-12-19
" 8 2 217 1-9-3-1 2053-10-17 1997-01-30
" 9 2 215 3-5-1-3 2053-10-17 1997-01-30
" 10 2 11 12-8-2-2 2053-10-17 1997-01-30
" 11 2 4 7-7-0-3 2053-10-17 1996-09-27
" 12 2 13 13-4-0-0 2053-10-17 1997-01-30
" 13 2 1 4-8-2-2 2053-10-17 1997-01-30
" 14 1 490 0-12-2-3 2053-10-17 1997-01-30
" 15 1 489 0-12-2-1 2053-10-17 1997-01-30
" 16 1 263 3-0-1-3 2053-10-17 1997-01-30
" 17 1 262 3-8-2-2 2053-11-9 1997-02-20
" 18 1 468 6-0-0-0 2053-11-9 1997-02-20
" 19 2 6 1-6-1-1 2054-2-30 1997-06-12
" 20 2 5 1-9-2-0 2054-2-30 1997-06-12
" 21 2 216 1-4-3-1 2054-2-30 1997-06-12
<CAPTION>
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership Ward Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
<C> <C> <C> <C> <C> <C> <C>
2 1 1 443 0-8-0-0 2053-6-11 1996-09-27
" 2 1 474 0-2-1-3 2053-6-11 1996-09-27
" 3 1 428 1-9-0-3 2053-6-11 1996-09-27
" 4 1 429 0-9-3-3 2053-6-11 1996-09-27
" 5 1 444 9-12-0-2 2053-6-11 1996-09-27
" 6 1 438 0-3-1-1 2053-6-11 1996-09-27
" 7 1 459 0-2-0-0 2053-6-11 1996-09-27
" 8 1 423 0-8-0-3 2053-6-11 1996-09-27
" 9 1 432 0-13-2-0 2053-6-11 1996-09-27
" 10 1 441 2-6-1-2 2053-6-11 1996-09-27
" 11 1 426 0-3-0-0 2053-6-11 1996-09-27
" 12 1 412 12-3-1-1 2053-6-11 1996-09-27
" 13 1 415 3-0-1-3 2053-6-11 1996-09-27
" 14 1 417 2-6-1-2 2053-6-11 1996-09-27
" 15 1 430 0-6-2-2 2053-6-11 1996-09-27
" 16 1 448 0-1-2-1 2053-6-11 1996-09-27
" 17 1 461 0-1-2-0 2053-6-11 1996-09-27
" 18 1 447 0-1-2-1 2053-6-11 1996-09-27
" 19 1 427 0-9-3-3 2053-6-11 1996-09-27
" 20 1 425 0-3-0-0 2053-6-11 1996-09-27
" 21 4 357 1-3-2-3 2053-6-11 1996-09-27
" 22 1 422 1-6-2-2 2053-6-11 1996-09-27
<CAPTION>
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership Ward Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
<C> <C> <C> <C> <C> <C> <C>
3 1 1 419 1-2-2-3 2054-3-18 1997-07-02
" 2 1 418 1-10-3-0 2054-3-18 1997-07-02
" 3 1 420 4-12-0-2 2054-3-18 1997-07-02
" 4 1 502 18-2-3-3 2054-3-18 1997-07-02
" 5 1 504 9-5-3-3 2054-3-18 1997-07-02
" 6 1 463 0-1-0-0 2054-7-26 1997-11-11
" 7 4 368 0-9-1-3 2054-8-20 1997-12-05
<CAPTION>
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership Ward Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
<C> <C> <C> <C> <C> <C> <C>
4 1 1 464 0-3-0-0 2054-2-30 1997-06-12
" 2 1 501 1-0-0-0 2054-2-30 1997-06-12
" 3 1 503 4-14-0-0 2054-2-30 1997-06-12
TOTAL 51 174-8-0-2
</TABLE>
Annex - B
Assigned Contracts
As each of the following may be amended, supplemented, modified or restated:
1. Project Licenses issued by HMGN, dated November 28, 1996, as amended.
2. Project Agreement, dated 21 July 1996, between HMGN and the Company.
3. Power Purchase Agreement, dated 21 July 1996, between NEA and the Company.
4. Amended and Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project, dated as of
19 December 1996, between the Company and China Gezhouba Construction
Group Corporation for Water Resources and Hydropower.
5. Operations and Maintenance Agreement dated as of April 24, 1997 between
the Company and the O & M Operater.
6. Amended and Restated Services Agreement dated July 11, 1997 between Panda
and Nepal and Harza Engineering Company International L.P. for services
provided outside Nepal, and the Amended and Restated Services Agreement
dated July 11, 1997 between the Company and Harza Engineering Company
International L.P. for services provided inside Nepal.
7. Agreement between HMGN, Ministry of Forest and Soil Conservation,
Department of Forest and the Company, dated February 27, 1997, concerning
granting a lease on certain land referred to therein.
8. Equity Subscription Agreement, dated as of the Financial Closing Date,
between the Company and Himal International Power Corporation Ltd.
9. Equity Subscription Agreement, dated as of the Financial Clsoing Date,
between the Company and Panda of Nepal.
10. Equity Subscription Agreement, dated as of the Financial Closing Date,
between the Company and RDC of Nepal.
11. Land Leases
12. HMGN Leases
EXHIBIT NO. 10.159
SECURITY AGREEMENT AND ASSIGNMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
INTERNATIONAL FINANCE CORPORATION
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
and
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
under the Trust and Retention Agreement
Dated as of the Closing Date
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 2
ARTICLE 2
GRANT OF SECURITY INTEREST
Section 2.1. Grant of Security Interest. 2
Section 2.2. Maintenance of Records. 3
ARTICLE 3
PROVISIONS REGARDING ASSIGNED CONTRACTS
Section 3.1. Performance of Obligations. 4
Section 3.2. Signed Counterparts. 4
Section 3.3. Representations and Warranties as to Assigned
Contracts and other Collateral. 4
Section 3.4. Instructions with Respect to Future Third
Party Agreements and other Collateral 5
Section 3.5. No Obligation of the Trustee. 5
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. 6
ARTICLE 5
FURTHER ASSURANCES
Section 5.1. Further Documentation; Pledge of Instruments. 6
ARTICLE 6
INDEMNIFICATION, ETC.
Section 6.1. Indemnification. 7
Section 6.2. Further Indemnification. 7
Section 6.3. Equipment. 7
Section 6.4. Continuous Perfection. 7
ARTICLE 7
ATTORNEY-IN-FACT
Section 7.1. Trustee's Appointment as Attorney-in-Fact. 8
Section 7.2. Performance by the Trustee of the Company's
Obligations. 10
ARTICLE 8
RIGHTS AND REMEDIES OF COLLATERAL AGENT UPON DEFAULT
Section 8.1. Payments Received. 11
Section 8.2. Remedies. 11
Section 8.3. Waivers. 12
Section 8.4. Reasonable Care. 13
Section 8.5. The Trustee. 13
ARTICLE 9
EXPENSES; INDEMNIFICATION; FEES
Section 9.1. Expenses. 13
Section 9.2. Indemnification. 13
ARTICLE 10
SATISFACTION AND DISCHARGE OF TRUST
Section 10.1. Satisfaction and Discharge of Trust. 14
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1. Benefit of Agreement. 15
Section 11.2. Successors or Assigns. 15
Section 11.3. Notices. 15
Section 11.4. Counterparts. 16
Section 11.5. Headings Descriptive. 17
Section 11.6. Governing Law; Submission to
Jurisdiction; Venue. 17
Section 11.7. Survival. 17
Section 11.8. No Waiver; Cumulative Remedies. 18
Section 11.9. Severability. 18
Section 11.10. Communications. 18
Section 11.11. Amendments. 18
EXHIBIT A Assigned Contracts 1
EXHIBIT B Financing Statement Filings 1
SECURITY AGREEMENT AND ASSIGNMENT
SECURITY AGREEMENT AND ASSIGNMENT, dated as of the Closing
Date (this "Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE
LIMITED, a private limited liability company registered under the
Nepalese Company Act, 2021 (the "Company"), INTERNATIONAL FINANCE
CORPORATION, an international organization organized and existing
by virtue of the Articles of Agreement among its member countries
("IFC"), DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT
mbH, a company organized and existing under the laws of the
Federal Republic of Germany ("DEG") (IFC and DEG are hereinafter
referred to collectively as the "Lenders" and individually as a
"Lender"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity but solely as Trustee
under the Trust and Retention Agreement (the "Trustee").
PRELIMINARY STATEMENTS
The Company has been granted the right to build, own and
operate a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant
pursuant to the terms of that certain IFC Investment Agreement
dated as of the Closing Date between the Company and IFC (the
"IFC Investment Agreement").
DEG is willing to provide financing for the power plant
pursuant to the terms of that certain DEG Investment Agreement
dated as of the Closing Date between the Company and DEG (the
"DEG Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
GRANT OF SECURITY INTEREST
Section 2.1. Grant of Security Interest. As security for
the prompt and complete payment and performance when due of all
the Obligations, and in order to induce each of the Lenders to
make the Loans, the Company hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Trustee, and hereby
grants to the Trustee for the benefit of the Lenders, a
continuing security interest in and Lien on all the Company's
right, title and interest in, to and under the following (all of
such right, title and interest being hereinafter collectively
called the "Collateral"):
(i) the Assigned Contracts listed in Exhibit A hereto,
including, without limitation, (a) all rights of the Company
to receive moneys due and to become due thereunder or
pursuant thereto, (b) all rights of the Company to receive
proceeds of any insurance, indemnity, warranty, letter of
credit, surety bond, performance bond or guaranty with
respect thereto and (c) all claims of the Company for
damages for breach thereof or default thereunder and,
subject to the Investment Agreement, (d) the right of the
Company to terminate, amend, supplement or otherwise modify
any such agreement;
(ii) the Accounts;
(iii) the Equipment;
(iv) the Supplies and Raw Materials;
(v) the Inventory;
(vi) the General Intangibles;
(vii) all rights and claims of the Company, now or hereafter
existing, under any indemnity, warranty or guaranty provided
for or arising out of or in connection with the EPC
Contract, any Equipment or otherwise, and any performance
bonds, letters of credit or other support delivered by the
EPC Contractor or any other equipment supplier or contractor
to the Company (including, without limitation, the EPC
Performance Guarantees);
(viii) all Assigned Approvals;
(ix) any and all cash, investments and securities from time
to time on deposit (including all income or gain earned
thereon) in the accounts (other than the Holding Account or
the Nepal Holding Account) of the Company created pursuant
to the Trust and Retention Agreement or the Nepal Agency and
Retention Agreement;
(x) any and all other drafts, acceptances, contract
rights, accounts receivable, documents, letters of credit
(including, without limitation, the NEA Letter of Credit,
the Panda Letter of Credit, the Panda Project Completion
Letter of Credit and the Equity Letters of Credit), deposit
accounts, instruments, chattel paper, rights, interests,
general intangibles and assets owned by the Company on the
date hereof or hereafter arising or acquired, including,
without limitation, designs, plans and specifications
relating to the Project; and
(xi) to the extent not otherwise included in the
foregoing, all proceeds and products (including,
without limitation, power generated by operation of the
Project) of all of the foregoing Collateral;
BUT EXCLUDING, in any case, the Company's right, title and
interest in and to the Holding Account or the Nepal Holding
Account and any cash, investments and securities on deposit
therein (the "Excluded Accounts").
The Collateral is intended to include all of the above-
described assets, wheresoever the same may be now or hereafter
located.
It is the intention of the parties that the foregoing description
of the Collateral be sufficient, together with the description of
the "Collateral" under the Mortgage, to enable the Trustee, upon
the occurrence and continuance of an Event of Default, to take
possession of, and foreclose upon, all of the respective
interests of the Company in and to the Project Site, the Project
and any and all real property and personal property, tangible and
intangible, used or usable in connection therewith and to enable
the Trustee to operate, sell or otherwise dispose of the entire
interest of the Company in and to the Project Site, the Project
or any part thereof, but, in each case, excluding the Excluded
Accounts.
Section 2.2. Maintenance of Records. The Company will
keep and maintain at its own cost and expense customary business
records in respect of the Collateral. Such records shall be kept
at the Company's chief executive office.
ARTICLE 3
PROVISIONS REGARDING ASSIGNED CONTRACTS
Section 3.1. Performance of Obligations. The Company will
comply with all requirements of applicable law and Assigned
Approvals and, except as otherwise expressly permitted in the
Investment Agreement, will duly perform and observe in all
material respects all of the covenants, agreements and conditions
on its part to be performed or observed under the Assigned
Contracts to which it is a party.
Section 3.2. Signed Counterparts. Except as otherwise
expressly permitted in the Investment Agreement, the Company
agrees that it will not waive any default under or breach of any
of the Assigned Contracts to which it is a party or waive, fail
to enforce, forgive or release any right, interest or entitlement
of any kind, however arising, under or in respect of any Assigned
Contract, or agree or consent to the variation in any provision
of any Assigned Contract or in the performance of any Person
required thereunder. The Company will deliver to the Trustee
promptly upon receipt thereof a copy of any notice or other
document issued or received by the Company pursuant to any
Assigned Contract. The Company agrees to furnish to the Trustee
as soon as possible (and in any event within ten (10) days after
the execution thereof) a signed counterpart of each amendment,
modification or supplement to any Assigned Contract and a copy of
each Third Party Agreement executed after the date hereof (other
than Non-Material Agreements).
Section 3.3. Representations and Warranties as to Assigned
Contracts and other Collateral. The Company hereby represents
and warrants as of the date hereof:
(a) Each of the Assigned Contracts in effect on the date
hereof, a true and complete copy of which has been furnished
to the Trustee, has been duly authorized, executed and
delivered by the Company, and, to the knowledge of the
Company, each of the other parties thereto, and is in full
force and effect; and is binding upon the Company and, to
the knowledge of the Company, each of the other parties
thereto;
(b) None of the Assigned Contracts has heretofore been
amended, modified, suspended, canceled or terminated, except
as set forth in Exhibit A hereof; none of the Company nor,
to the knowledge of the Company, the other parties thereto
is currently in default in any material respect under any of
the terms thereunder;
(c) None of the Assigned Contracts has been transferred or
assigned by the Company, or, to the knowledge of the
Company, any other party thereto, except to the Trustee as
expressly provided herein;
(d) The Company has given to each other party to any
of the Assigned Contracts executed on or before the
date hereof notice of an assignment of such Assigned
Contract to the Trustee and has obtained a consent of
each such other party to such assignment. The Company
has directed each such other party to make payments due
or to become due and all amounts payable to the Company
thereunder directly to the Trustee or the Designee; and
(e) As of the Financial Closing Date the Company will have
delivered possession to the Trustee of the complete
originals of the Equity Letters of Credit and the EPC
Performance Guarantee.
Section 3.4. Instructions with Respect to Future Third
Party Agreements and other Collateral.
(a) The Company will give instructions similar to those
referenced in Section 3.3(d) hereof to the other parties to
Third Party Agreements (other than Non-Material Agreements)
executed after the date hereof.
(b) The Company shall deliver possession to the Trustee
promptly upon the Company's receipt of the executed NEA
Letter of Credit, Panda Letter of Credit, Panda Project
Completion Letter of Credit and EPC Warranty Performance
Guarantee together with, in the case of the NEA Letter of
Credit and the EPC Warranty Performance Guarantee, an
acknowledgement and consent executed by the respective
issuers thereof in form and substance satisfactory to the
Lenders providing in each case, among other things, that the
issuer of each of the NEA Letter of Credit and the EPC
Warranty Performance Guarantee acknowledges and consents (i)
to the assignment by way of security of the NEA Letter of
Credit and the EPC Warranty Performance Guarantee by the
Company to the Trustee, (ii) that upon delivery by the
Trustee or either of the Lenders of notice of an Event of
Default, the Trustee will thereafter be the beneficiary for
all purposes under the NEA Letter of Credit and the EPC
Warranty Performance Guarantee and shall be entitled to all
rights and remedies thereunder or in connection therewith,
including, without limitation, the right to claim, draw,
request or demand payment under the NEA Letter of Credit and
the EPC Warranty Performance Guarantee.
Section 3.5. No Obligation of the Trustee. Anything
herein to the contrary notwithstanding, the Company shall remain
liable under the Assigned Contracts to perform all the
obligations assumed by it thereunder and the Trustee shall have
no obligation or liability thereunder by reason of or arising out
of the assignments herein provided for, nor shall the Trustee be
required or obligated in any manner to perform or fulfill any
obligations of the Company under the Assigned Contracts or
pursuant thereto, or to make any payment thereunder, or, unless
and until indemnified to its satisfaction, to present or file any
claim or to take any other action to enforce any right assigned
to it hereunder or to which it may be entitled pursuant hereto at
any time or times.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. The
Company hereby represents and warrants, as of the date hereof,
that:
(a) The Company is the sole owner of each item of
Collateral in existence on the date hereof and will be the sole
owner of each item of Collateral hereafter acquired, having good
and valid title thereto, free and clear of Liens, except
Permitted Liens.
(b) No security agreement, financing statement,
mortgage, equivalent security or lien instrument or continuation
statement covering all or any part of the Collateral is on file
or of record in any public office, except those in favor of the
Trustee pursuant to this Agreement or the Mortgage.
(c) Financing statements or other appropriate
instruments having been filed in the public offices listed on
Exhibit B hereto, (i) this Security Agreement constitutes a valid
and continuing lien on and (to the extent possible under
applicable law) perfected security interest in the Collateral in
favor of the Trustee, for the benefit of the Lenders, and is
enforceable as such against creditors of and purchasers from the
Company against any owner or mortgagee of the real property where
any of the equipment is located, and against any purchaser of
such real property and any present or future creditor obtaining a
Lien on such real property, and (ii) all action currently
necessary to protect and perfect such Lien on and security
interest in each item of such Collateral has been duly taken.
(d) The Company's chief executive office and principal
place of business and the place where its records concerning the
Collateral are kept is: KHA 1-960, Kalimati, Tahachal,
Kathmandu, Nepal. The Company does not have a place of business
or residence in the United States of America.
ARTICLE 5
FURTHER ASSURANCES
Section 5.1. Further Documentation; Pledge of
Instruments. At any time and from time to time, upon the written
request of the Trustee, and at the sole expense of the Company,
the Company shall duly execute and deliver promptly any and all
such further instruments and documents and take such further
action as the Trustee may deem necessary in order to obtain the
full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, marking its books
and records or providing notice to perfect or evidence the
Trustee's security interest in such part of the Collateral, if
any, in which the Trustee's security interest cannot be perfected
by filing, placing the interest of the Trustee as lienholder on
motor vehicle certificates of title and the filing of any
financing or continuation statements under the Code in effect in
any jurisdiction with respect to the Liens and security interests
granted hereby. The Company also hereby authorizes the Trustee
to file any such financing or continuation statement without the
signature of the Company to the extent permitted by applicable
law. The Trustee agrees to deliver copies of any such filing to
the Company. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument
shall be immediately pledged to the Trustee hereunder, duly
endorsed in a manner satisfactory to the Trustee.
ARTICLE 6
INDEMNIFICATION, ETC.
Section 6.1. Indemnification. In any suit,
proceeding or action brought by the Trustee, after the occurrence
and during the continuation of an Event of Default, under any
Account or Assigned Contract or for any sum owing thereunder, or
to enforce any provisions of such Account or Assigned Contract,
the Company will save, indemnify and hold the Trustee harmless
from and against any and all expenses, losses or damages suffered
by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account debtor or the
other party under such Assigned Contract, arising out of a breach
by the Company of any obligation to the Account debtor or to the
other party under such Assigned Contract or arising out of any
other agreement, indebtedness or liability at any time owing to
or in favor of such other party or its successors from the
Company, and all such obligations of the Company shall be and
remain enforceable against and only against the Company and shall
not be enforceable against the Trustee. The foregoing is not
intended to indemnify any party for any expense, loss, damage,
claim or liability resulting from its gross negligence or willful
misconduct.
Section 6.2. Further Indemnification. The
Company will furnish to the Trustee from time to time statements
and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the
Trustee may reasonably request, all in reasonable detail.
Section 6.3. Equipment. No Equipment shall be
removed from the Site, except in the ordinary course of the
Company's business or in connection with the repair,
refurbishment or replacement of such Equipment, without the
express prior written consent of the Trustee.
Section 6.4. Continuous Perfection. The Company
will not change its name or identity or change the location of
its principal place of business or chief executive office, or
conduct any regular or substantial business or operations in or
from any office or location other than that set forth in Section
4.1(d) hereof unless the Company shall have given the Trustee at
least sixty (60) days' prior written notice thereof and shall
have taken, at the Company's expense, all action necessary in
order to continue the perfection and priority of the Liens and
security interests in the Collateral intended to be created by
this Agreement.
ARTICLE 7
ATTORNEY-IN-FACT
Section 7.1. Trustee's Appointment as Attorney-in-Fact.
(a) The Company hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead
of the Company and in the name of the Company or in its own name,
from time to time, for the purpose of carrying out the terms of
and in a manner consistent with the terms of this Agreement, to
take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement. The Company hereby
gives the Trustee the power and right, on behalf of the Company,
without notice to or assent by the Company, upon the occurrence
and continuance of an Event of Default, to do the following:
(i) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any
repairs or obtain any insurance called for by the terms
of this Agreement or the Investment Agreement and to
pay all or any part of the premium therefor and the
costs thereof;
(ii) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due
and to become due under any Collateral and, in the name
of the Company or its own name or otherwise, to take
possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral;
(iii) to file any claim, institute any proceeding in
any court of law or equity, or take any other action
deemed appropriate by the Trustee for the purpose of
collecting any and all such moneys due under any
Collateral whenever payable and to enforce any other
right in respect of any Collateral;
(iv) to direct any party liable for any payment under
any Collateral to make payment of any and all moneys
due and to become due thereunder directly to the
Trustee or as the Trustee shall direct;
(v) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts
and other documents relating to the Collateral;
(vi) to defend any suit, action or proceeding brought
against the Company with respect to any Collateral;
(vii) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection
therewith, to give discharges or releases;
(viii) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the
Trustee were the absolute owner thereof for all
purposes, and to do, at the Trustee's option and the
Company's expense, at any time, or from time to time,
all acts and things which the Trustee deems necessary
to protect, preserve or realize upon the Collateral and
the Trustee's security interest therein, in order to
effect the intent of this Agreement, all as fully and
effectively as the Company might do;
(ix) to claim, request, draw or demand payment under
the Equity Letters of Credit, the NEA Letter of Credit,
the Panda Project Completion Letter of Credit, the
Panda Letter of Credit and the EPC Performance
Guarantees; and
(x) to take possession of all or any part of the
Collateral, and to exclude the Company and all Persons
claiming under the Company wholly or partly therefrom,
and thereafter to hold, store, use, operate, manage and
control the same, and upon any such taking of
possession, at the expense of the Company, to make all
such repairs, replacements, alterations, additions and
improvements to and of the Collateral as the Trustee
may deem proper, and to manage and control the
Collateral and to carry on the business of, and to
exercise all rights and powers of, the Company in
respect thereto as the Trustee shall deem best,
including the right to enter into any and all such
agreements with respect to the leasing and/or operation
of the Collateral or any part thereof as the Trustee
may see fit, and to collect and receive all rents,
issues, profits, fees, revenues and other income of the
same and every part thereof, with such rents, issues,
profits, fees, revenues and other income being applied
to pay the expenses of holding and operating the
Collateral, of conducting the business thereof and of
all maintenance, repairs, replacements, alterations,
additions and improvements with respect thereto, and to
make all payments which the Trustee may be required or
may elect to make, if any, for taxes, assessments,
insurance and other charges upon the Collateral or any
part thereof, and all other payments which the Trustee
may be required or authorized to make under any
provision of this Agreement (including, without
limitation, legal costs and attorneys' fees).
Any surplus received in respect of the
Collateral after payment in full of the
Obligations will be paid to the Company or
such other Person as may be lawfully entitled
thereto.
The Company hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof and in
accordance herewith. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) The powers conferred on the Trustee hereunder are
solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Trustee
shall be accountable only for such amounts as the Trustee shall
actually receive as a result of the exercise of such powers and
neither the Trustee nor any of its officers, directors, employees
or agents shall be responsible to the Company for any act or
failure to act, except for their own gross negligence or willful
misconduct.
(c) The Company also authorizes the Trustee, during
the continuation of an Event of Default, (i) to communicate in
its own name with any party to any contract, agreement or
instrument included in the Collateral, at any time, with regard
to any matter relating to such contract, agreement or instrument,
and (ii) to execute, in connection with any sale provided for in
Section 8.2 hereof, any endorsements, assignments, bills of sale
or other instruments of conveyance or transfer with respect to
the Collateral.
Section 7.2. Performance by the Trustee of the
Company's Obligations. If the Company fails to perform or comply
with any of its agreements contained herein and the Trustee, as
authorized by the terms of this Agreement, shall perform or
comply, or otherwise cause the performance of or compliance with,
any such agreements, the expenses of the Trustee incurred in
connection with such performance or compliance, together with
interest thereon, shall be payable by the Company to the Trustee
on demand and shall constitute part of the Obligations secured
hereby.
ARTICLE 8
RIGHTS AND REMEDIES OF COLLATERAL AGENT UPON DEFAULT
Section 8.1. Payments Received. If an Event of
Default shall occur and be continuing, all payments received by
the Company under or in connection with any of the Collateral
shall be held by the Company in trust for the Trustee, shall be
segregated from other funds of the Company and shall, forthwith
upon receipt by the Company, be turned over to the Trustee or the
Designee in the same form as received by the Company (duly
endorsed by the Company to the Trustee or the Designee).
Section 8.2. Remedies. If an Event of Default
shall occur and be continuing, the Trustee may exercise, in
addition to all other rights and remedies granted to it in this
Agreement and in any other Security Document or other instrument
or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Trustee, without
demand of performance or other demand, advertisement or further
notice of any kind (except the notice specified below with
respect to a public or private sale) to or upon the Company or
any other Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Collateral or
any part thereof, and/or sell, lease, assign, give options to
purchase or sell, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do so), in one or
more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Trustee's offices or elsewhere at
such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The
Trustee and each of the Lenders shall have the right upon any
such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of
redemption in the Company, which right or equity of redemption is
hereby expressly waived and released. The Company further
agrees, at the Trustee's request, to assemble the Collateral, and
make it available to the Trustee at such places as the Trustee
reasonably shall select, whether at the Company's premises or
elsewhere. The Trustee shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale
toward payment of the Obligations (in such order as the Lenders
shall direct in the event such net proceeds are not sufficient to
pay the Obligations in full), and then any surplus shall be paid
to such Persons as may be lawfully entitled thereto. The Company
agrees that the Trustee need not give more than ten (10) days'
notice of the time and place of any public sale or of the time
after which a private sale may take place and that such notice is
reasonable notification of such matters.
Section 8.3. Waivers.
(a) The Company hereby waives presentment, demand,
protest and, except as otherwise expressly provided herein and to
the extent permitted by applicable law, notice of any kind in
connection with this Agreement or any Collateral.
(b) Except as otherwise required by applicable law,
the Trustee shall not be required to marshall any Collateral or
to resort to any item of Collateral in any particular order; and
all of its rights hereunder and in respect of the Collateral
shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that it lawfully may, the
Company (i) hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Trustee's rights under this
Agreement or under any other Security Document, and (ii) hereby
irrevocably waives the benefits of all such laws and any and all
rights to equity of redemption or other rights of redemption that
it may have in equity or at law with respect to the Collateral.
(c) Except as otherwise provided in this Agreement,
THE COMPANY HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, JUDICIAL HEARING IN CONNECTION WITH THE TRUSTEE'S
TAKING POSSESSION OR THE TRUSTEE'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE
COMPANY WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY
STATUTE OF THE UNITED STATES OR NEPAL OR ANY POLITICAL
SUBDIVISION OF ANY SUCH JURISDICTION, and the Company hereby
further waives, to the maximum extent permitted by applicable
law:
(i) all damages occasioned by such taking of
possession, except any damages which are the direct
result of the gross negligence or willful misconduct of
the Trustee or any person acting on its behalf or
instruction;
(ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the
enforcement of the Trustee's rights hereunder; and
(iii) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or
hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion
thereof, and the Company, for itself and all who may
claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such
laws.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all
right, title, interest, claim and demand, either at law or in
equity, of the Company therein and thereto, and shall be a
perpetual bar both at law and in equity against the Company and
against any and all persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under the Company.
Section 8.4. Reasonable Care. The Trustee shall
be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which the Trustee accords its own property.
Section 8.5. The Trustee. In connection with its
power and functions hereunder, the Trustee shall act solely as
the trustee of the Lenders and shall not assume or be deemed to
have assumed any relationship of agency or other fiduciary
relationship with the Company. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 9
EXPENSES; INDEMNIFICATION; FEES
Section 9.1. Expenses. The Company agrees to pay
or reimburse within thirty (30) days of demand therefor all out-
of-pocket expenses of the Trustee (including expenses for legal
services) in respect of, or incident to, the preparation,
execution and delivery of this Agreement, the administration of
this Agreement and the Collateral, the enforcement of any of the
provisions of this Agreement or in connection with any amendment,
waiver or consent relating to this Agreement (which shall be
reasonable other than upon the occurrence and during the
continuance of an Event of Default or any event which would
become (with the expiration of any applicable grace periods or
the giving of notice or both) an Event of Default), provided that
any such demand is accompanied by invoices pertaining thereto.
Section 9.2. Indemnification. The Company agrees
to indemnify and hold harmless the Trustee, its directors,
officers, employees, agents and representatives (the Trustee and
its directors, officers, employees, agents and representatives
each an "Indemnified Party") from and against any and all claims,
losses and liabilities growing out of or resulting from or in any
way related to (i) this Agreement and the transactions hereunder
(including, without limitation, enforcement of this Agreement,
but excluding any such claims, losses or liabilities resulting
from the Indemnified Party's gross negligence or willful
misconduct) or (ii) any refund or adjustment of any amount paid
or payable to the Trustee or any other Indemnified Party under or
in respect of this Agreement which may be ordered or otherwise
required by any Person.
ARTICLE 10
SATISFACTION AND DISCHARGE OF TRUST
Section 10.1. Satisfaction and Discharge of Trust.
(a) If (i) at any time all Obligations owing to the
Lenders have been paid in full and (ii) a period of one hundred
twenty (120) days (or such other period as may be applicable with
respect to preference or similar periods under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (i) is satisfied without any court
determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters, then this Agreement shall terminate; provided that the
provisions of Article 9 shall survive such termination.
(b) If at any time the Trustee shall have received a
notice from the Lenders that all Obligations owing to the Lenders
have been paid in full and (ii) a period of one hundred twenty
(120) days (or such other period as may be applicable with
respect to preference or similar periods under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (i) is satisfied without any court
determining that the Company is insolvent or, if such
determination is made within that time, the Lenders are
reasonably satisfied that no payment made to the Lenders or the
Trustee by the Company will be set aside as a consequence thereof
under any law relating to bankruptcy, insolvency or similar
matters, then, upon payment in full of all amounts payable to the
Trustee pursuant to Section 9.1 hereof, this Agreement shall
cease to be of further effect and the Trustee, at the cost and
expense of the Company, upon delivery to the Trustee of a
certificate signed by two officers of the Company and concurred
in by the Lenders stating that all conditions precedent to the
satisfaction and discharge of this Agreement and the other
Security Documents have been complied with, shall execute proper
instruments acknowledging the satisfaction and discharge of this
Agreement, and shall duly assign, transfer and deliver to the
Company such of the Collateral as has not theretofore been sold
or otherwise applied or released pursuant to this Agreement,
together with any moneys at the time held by the Trustee
hereunder. The Lenders agree to give the notice provided for in
this paragraph without unreasonable delay.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1. Benefit of Agreement. Nothing in this
Agreement, expressed or implied, shall give or be construed to
give to any Person other than the parties hereto any legal or
equitable right, remedy or claim under this Agreement, or under
any covenant or provision herein contained, all such covenants
and provisions being for the sole benefit of the parties herein.
Section 11.2. Successors or Assigns. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
parties hereto; provided, however, that the Company may not
assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Lenders. Each of the
Lenders may transfer, assign or grant its rights hereunder in
connection with an assignment or transfer of all or any part of
its interest in its Commitment or the IFC Loans or the DEG Loan,
as the case may be, in accordance with the Investment Agreement.
Section 11.3. Notices. All notices, demands, requests
and other communications provided for hereunder shall be in
writing and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
Addresses:
Bhote Koshi Power Company Private Limited
Address: KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 977-1-270027
with a copy to:
Panda Energy International, Inc.
4100 Spring Valley, Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
IFC
Address: 2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Power Department
Facsimile: (202) 974-4307
DEG
Address: Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49221 4986 107
Wilmington Trust Company
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Telephone: (302) 651-8726
Facsimile: (302) 651-8882
Section 11.4. Counterparts. This Agreement may be
executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 11.5. Headings Descriptive. The headings of
the several Articles of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 11.6. Governing Law; Submission to
Jurisdiction; Venue. (a) This Agreement is a contract made under
the laws of the State of New York of the United States of America
and shall for all purposes be governed by and construed in
accordance with the laws of such State without regard to the
conflicts of laws provisions thereof (other than Section 5-1401
and 5-1402 of the General Obligations Law of the State of New
York). Any legal action or proceeding against the Company with
respect to this Agreement or any other Loan Document may be
brought in the courts of the State of New York in the County of
New York or of the United States for the Southern District of New
York and, by execution and delivery of this Agreement, the
Company hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Company agrees that a judgment in any
such action or proceeding shall be conclusive and binding upon
itself, and may be enforced in any other jurisdiction, including
without limitation Nepal, by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the
judgment. The Company hereby irrevocably designates, appoints
and empowers CT Corporation System, with offices on the date
hereof at 1633 Broadway, New York, New York 10019, as its
designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which
may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be
available to act as such, the Company agrees to designate a new
designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the Lenders.
The Company further irrevocably consents to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at its
address set forth in Section 11.3 hereof, such service to become
effective ten (10) days after such mailing. Nothing herein shall
affect the right of the Trustee or either of the Lenders to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in Nepal or
in any other jurisdiction.
(b) The Company hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Loan
Document brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum.
Section 11.7. Survival. All indemnities, agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making and
repayment of the Obligations.
Section 11.8. No Waiver; Cumulative Remedies. No
failure or delay on the part of the Trustee or either of the
Lenders in exercising any right, power or privilege hereunder or
under any other Loan Document, and no course of dealing between
the Company and the Trustee or either of the Lenders, shall
impair any such right, power or privilege or operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Loan Document
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder or thereunder. The
rights, powers and remedies herein or provided in any other Loan
Document are cumulative and not exclusive of any rights, powers
or remedies which the Trustee or either of the Lenders would
otherwise have. No notice to or demand on the Company in any
case shall entitle the Company to any other or further notice or
demand in similar or other circumstances or constitute a waiver
of the rights of the Trustee or either of the Lenders to any
other or further action in any circumstances without notice or
demand.
Section 11.9. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 11.10. Communications. All documents to be
furnished or communications to be given or made under this
Agreement shall be in the English language or, if in another
language, shall be accompanied by a translation into English
certified by a representative of the Company, which translation
shall be the governing version between the Company, the Lenders
and the Trustee.
Section 11.11. Amendments. Neither this Agreement nor
any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the
date first set forth above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By: _________________________
Name:
Title:
INTERNATIONAL FINANCE CORPORATION,
as Lender
By: ____________________________
Name:
Title:
Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH,
as Lender
By: ____________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Trustee under the
Trust and Retention Agreement
By: ____________________________
Name:
Title: Vice President
EXHIBIT A
Assigned Contracts
As each of the following may be amended, supplemented, modified
or restated:
1. Project Licenses issued by HMGN, dated
November 28, 1996, as amended.
2. Project Agreement, dated 21 July 1996,
between HMGN and the Company.
3. Power Purchase Agreement, dated 21 July
1996, between NEA and the Company.
4. Amended and Restated Contract for the
Engineering, Procurement and Construction of the
Upper Bhote Koshi Hydroelectric Project, dated as of
19 December 1996, between the Company and China
Gezhouba Construction Group Corporation for Water
Resources and Hydropower.
5. Operations and Maintenance Agreement dated
as of April 24, 1997 between the Company and the O&M
Operator.
6. Amended and Restated Services Agreement
dated July 11, 1997 between Panda of Nepal and Harza
Engineering Company International L.P., as amended by
that certain Amendment No. 1 dated December 5, 1997,
for services provided outside Nepal, and the Amended
and Restated Services Agreement dated July 11, 1997
between the Company and Harza Engineering Company
International L.P. for services provided inside
Nepal.
7. Agreement between HMGN, Ministry of Forest
and Soil Conservation, Department of Forest and the
Company, dated February 27, 1997, concerning granting
a lease on certain land referred to therein.
8. Equity Subscription Agreement, dated as of
the Closing Date, among the Company, Himal
International Power Corporation Pvt. Ltd. and the
Trustee.
9. Equity Subscription Agreement, dated as of
the Closing Date, among the Company, Panda of Nepal
and the Trustee.
10. Equity Subscription Agreement, dated as of
the Closing Date, among the Company, RDC of Nepal and
the Trustee.
11. Land Leases.
EXHIBIT B
Financing Statement Filings
1. UCC-1 Financing Statement filed at the Secretary of
State of Delaware, showing Wilmington Trust Company, as
Trustee, with respect to the Collateral created under the
Trust and Retention Agreement.
2. UCC-1 Financing Statement filed at the Secretary of
State of New York, showing Wilmington Trust Company, as
Trustee, with respect to the Collateral created under the
Trust and Retention Agreement.
EXHIBIT NO. 10.160
SECURITY AGREEMENT AND ASSIGNMENT
among
PANDA OF NEPAL
INTERNATIONAL FINANCE CORPORATION
DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT mbH
and
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
under the Trust and Retention Agreement
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
ARTICLE 2
GRANT OF SECURITY INTEREST AND ASSIGNMENT
Section 2.1.Grant of Security Interest and Assignment. 2
ARTICLE 3
PROVISIONS REGARDING ASSIGNED AGREEMENT
Section 3.1. Performance of Obligations. 2
Section 3.2. Signed Counterparts. 2
Section 3.3. Representations and Warranties of Panda of Nepal. 3
Section 3.4. No Obligation of the Trustee. 3
ARTICLE 4
FURTHER ASSURANCES
Section 4.1. Further Documentation. 4
ARTICLE 5
INDEMNIFICATION, ETC.
Section 5.1. Indemnification. 4
Section 5.2. Further Indemnification. 4
Section 5.3. Continuous Perfection. 5
ARTICLE 6
ATTORNEY-IN-FACT
Section 6.1. Trustee's Appointment as Attorney-in-Fact. 5
Section 6.2. Performance by the Trustee of Panda of Nepal's
Obligations. 7
ARTICLE 7
RIGHTS AND REMEDIES OF COLLATERAL AGENT UPON DEFAULT
Section 7.1. Payments Received. 7
Section 7.2. Remedies. 7
Section 7.3. Waivers. 8
Section 7.4. Reasonable Care. 9
Section 7.5. The Trustee. 9
ARTICLE 8
EXPENSES; INDEMNIFICATION; FEES
Section 8.1. Expenses. 10
Section 8.2. Indemnification. 10
ARTICLE 9
SATISFACTION AND DISCHARGE OF TRUST
Section 9.1. Satisfaction and Discharge of Trust. 10
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1. Benefit of Agreement. 11
Section 10.2. Successors or Assigns. 11
Section 10.3. Notices. 11
Section 10.4. Counterparts. 13
Section 10.5. Headings Descriptive. 13
Section 10.6. Governing Law; Submission to
Jurisdiction; Venue. 13
Section 10.7. Survival. 14
Section 10.8. No Waiver; Cumulative Remedies. 14
Section 10.9. Severability. 14
Section 10.10. Communications. 14
Section 10.11. Amendments. 14
EXHIBIT A
Financing Statement Filings 1
SECURITY AGREEMENT AND ASSIGNMENT, dated as of the Closing Date
(this "Agreement"), among PANDA OF NEPAL, an exempted company
with limited liability organized and existing under the laws of
the Cayman Islands ("Panda of Nepal"), INTERNATIONAL FINANCE
CORPORATION, an international organization organized and existing
by virtue of the Articles of Agreement among its member countries
("IFC"), DEG-DEUTSCHE INVESTITIONS-und ENTWICKLUNGSGESELLSCHAFT
mbH, a company organized and existing under the laws of the
Federal Republic of Germany ("DEG") (IFC and DEG are hereinafter
collectively referred to as the "Lenders" and individually as a
"Lender"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity but solely as Trustee
under the Trust and Retention Agreement (the "Trustee").
PRELIMINARY STATEMENTS
The Company has been granted the right to build, own and
operate a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant
pursuant to the terms of that certain IFC Investment Agreement
dated as of the Closing Date between the Company and IFC (the
"IFC Investment Agreement").
DEG is willing to provide financing for the power plant
pursuant to the terms of that certain DEG Investment Agreement
dated as of the Closing Date between the Company and DEG (the
"DEG Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
Panda of Nepal and Harza Engineering Company International
L.P. have entered into that certain Amended and Restated Services
Agreement dated July 11, 1997 for services provided outside
Nepal, as amended by that certain Amendment No. 1 dated December
5, 1997, (the "Assigned Agreement").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
GRANT OF SECURITY INTEREST AND ASSIGNMENT
Section 2.1. Grant of Security Interest and Assignment.
As security for the prompt and complete payment and performance
when due of all the Obligations, and in order to induce each of
the Lenders to make the Loans, Panda of Nepal hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers to the
Trustee for the benefit of the Lenders, a continuing security
interest in and Lien on all of Panda of Nepal's right, title and
interest in, to and under the Assigned Agreement, including,
without limitation, (a) all rights of Panda of Nepal to receive
moneys due and to become due thereunder or pursuant thereto, (b)
all rights of Panda of Nepal to receive proceeds of any
insurance, indemnity, warranty, letter of credit, surety bond,
performance bond or guaranty with respect thereto, (c) all claims
of Panda of Nepal for damages for breach thereof or default
thereunder and, subject to the Assigned Agreement, (d) the right
of Panda of Nepal to terminate, amend, supplement or otherwise
modify any such agreement, and (e) to the extent not otherwise
included in the foregoing, all proceeds and products of all of
the foregoing Collateral (all of such right, title and interest
being hereinafter collectively called the "Collateral").
ARTICLE 3
PROVISIONS REGARDING ASSIGNED AGREEMENT
Section 3.1. Performance of Obligations. Panda of Nepal
will comply with all requirements of applicable law, will duly
perform and observe in all material respects all of the
covenants, agreements and conditions on its part to be performed
or observed under the Assigned Agreement.
Section 3.2. Signed Counterparts. Except as otherwise
expressly permitted in the Panda of Nepal Consent, Panda of Nepal
agrees that it will not waive any default under or breach of the
Assigned Agreement or waive, fail to enforce, forgive or release
any right, interest or entitlement of any kind, however arising,
under or in respect of the Assigned Agreement, or agree or
consent to the variation in any provision of the Assigned
Agreement or in the performance of any Person required
thereunder. Panda of Nepal will deliver to the Trustee promptly
upon receipt thereof a copy of any notice or other document
issued or received by Panda of Nepal pursuant to the Assigned
Agreement. Panda of Nepal agrees to furnish to the Trustee as
soon as possible (and in any event within ten (10) days after the
execution thereof) a signed counterpart of each amendment,
modification or supplement to the Assigned Agreement.
Section 3.3. Representations and Warranties of Panda of
Nepal. Panda of Nepal hereby represents and warrants as of the
date hereof:
(a) The Assigned Agreement in effect on the date hereof, a
true and complete copy of which has been furnished to the
Trustee, has been duly authorized, executed and delivered by
Panda of Nepal, and, to the knowledge of Panda of Nepal,
each of the other parties thereto, and is in full force and
effect; and is binding upon Panda of Nepal and, to the
knowledge of Panda of Nepal, each of the other parties
thereto;
(b) The Assigned Agreement has not heretofore been amended,
modified, suspended, canceled or terminated, none of Panda
of Nepal nor, to the knowledge of Panda of Nepal, the other
parties thereto is currently in default in any material
respect under any of the terms thereunder;
(c) The Assigned Agreement has not been transferred or
assigned by Panda of Nepal, or, to the knowledge of Panda of
Nepal, any other party thereto, except to the Trustee as
expressly provided herein;
(d) Panda of Nepal's chief executive office and principal
place of business and the place where its records concerning
the Collateral are kept is c/o Maples & Calder, P. O. Box
309, Ugland House, South Church Street, Grand Cayman, Cayman
Islands, British West Indies. Panda of Nepal does not have
a place of business or residence in the United States of
America;
(e) Financing statements or other appropriate instruments
having been filed in the public offices listed on Exhibit A
hereto, (i) this Agreement constitutes a valid and
continuing lien on and (to the extent possible under
applicable law) perfected security interest in the
Collateral in favor of the Trustee, for the benefit of the
Lenders, and (ii) all action currently necessary to protect
and perfect such Lien on and security interest in the
Collateral has been duly taken; and
(f) No security agreement, financing statement, mortgage,
equivalent security or lien instrument or continuation
statement covering all or any part of the Collateral is on
file or of record in any public office, except those in
favor of the Trustee pursuant to this Agreement.
Section 3.4. No Obligation of the Trustee. Anything
herein to the contrary notwithstanding, Panda of Nepal shall
remain liable under the Assigned Agreement to perform all the
obligations assumed by it thereunder and the Trustee shall have
no obligation or liability thereunder by reason of or arising out
of the assignments herein provided for, nor shall the Trustee be
required or obligated in any manner to perform or fulfill any
obligations of Panda of Nepal under the Assigned Agreement or
pursuant thereto, or to make any payment thereunder, or, unless
and until indemnified to its satisfaction, to present or file any
claim or to take any other action to enforce any right assigned
to it hereunder or to which it may be entitled pursuant hereto at
any time or times.
ARTICLE 4
FURTHER ASSURANCES
Section 4.1. Further Documentation. At any time and from
time to time, upon the written request of the Trustee, and at the
sole expense of Panda of Nepal, Panda of Nepal shall duly execute
and deliver promptly any and all such further instruments and
documents and take such further action as the Trustee may deem
necessary in order to obtain the full benefits of this Agreement
and of the rights and powers herein granted. Panda of Nepal also
hereby authorizes the Trustee to file any financing or
continuation statement without the signature of Panda of Nepal to
the extent permitted by applicable law. The Trustee agrees to
deliver copies of any such filing to Panda of Nepal.
ARTICLE 5
INDEMNIFICATION, ETC.
Section 5.1. Indemnification. In any suit, proceeding or
action brought by the Trustee, after the occurrence and during
the continuation of an Event of Default, under the Assigned
Agreement or for any sum owing thereunder, or to enforce any
provisions of such Assigned Agreement, Panda of Nepal will save,
indemnify and hold the Trustee harmless from and against any and
all expenses, losses or damages suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the other party under such Assigned
Agreement, arising out of a breach by Panda of Nepal of any
obligation to the other party under such Assigned Agreement or
arising out of any other agreement, indebtedness or liability at
any time owing to or in favor of such other party or its
successors from Panda of Nepal, and all such obligations of Panda
of Nepal shall be and remain enforceable against and only against
Panda of Nepal and shall not be enforceable against the Trustee.
The foregoing is not intended to indemnify any party for any
expense, loss, damage, claim or liability resulting from its
gross negligence or willful misconduct.
Section 5.2. Further Indemnification. Panda of Nepal will
furnish to the Trustee from time to time statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
Section 5.3. Continuous Perfection. Panda of Nepal will
not change its name or identity or change the location of its
principal place of business or chief executive office, or conduct
any regular or substantial business or operations in or from any
office or location other than that set forth in Section 3.3(d)
hereof unless Panda of Nepal shall have given the Trustee at
least sixty (60) days' prior written notice thereof and shall
have taken, at Panda of Nepal's expense, all action necessary in
order to continue the perfection and priority of the Liens and
security interests in the Collateral intended to be created by
this Agreement.
ARTICLE 6
ATTORNEY-IN-FACT
Section 6.1. Trustee's Appointment as Attorney-in-Fact.
(a) Panda of Nepal hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead
of Panda of Nepal and in the name of Panda of Nepal or in its own
name, from time to time, for the purpose of carrying out the
terms of and in a manner consistent with the terms of this
Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement. Panda of
Nepal hereby gives the Trustee the power and right, on behalf of
Panda of Nepal, without notice to or assent by Panda of Nepal,
upon the occurrence and continuance of an Event of Default, to do
the following:
(i) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against
the Collateral, to effect any repairs or obtain any
insurance called for by the terms of this Agreement and to
pay all or any part of the premium therefor and the costs
thereof;
(ii) to ask, demand, collect, receive and give acquittances
and receipts for any and all moneys due and to become due
under any Collateral and, in the name of Panda of Nepal or
its own name or otherwise, to take possession of and endorse
and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any
Collateral;
(iii) to file any claim, institute any proceeding in any
court of law or equity, or take any other action deemed
appropriate by the Trustee for the purpose of collecting any
and all such moneys due under any Collateral whenever
payable and to enforce any other right in respect of any
Collateral;
(iv) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due and to
become due thereunder directly to the Trustee or as the
Trustee shall direct;
(v) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and
notices in connection with accounts and other documents
relating to the Collateral;
(vi) to defend any suit, action or proceeding brought
against Panda of Nepal with respect to any Collateral;
(vii) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection therewith,
to give discharges or releases;
(viii) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Trustee
were the absolute owner thereof for all purposes, and to do,
at the Trustee's option and Panda of Nepal's expense, at any
time, or from time to time, all acts and things which the
Trustee deems necessary to protect, preserve or realize upon
the Collateral and the Trustee's security interest therein,
in order to effect the intent of this Agreement, all as
fully and effectively as Panda of Nepal might do; and
(ix) to take possession of all or any part of the
Collateral, and to exclude Panda of Nepal and all Persons
claiming under Panda of Nepal wholly or partly therefrom,
and thereafter to hold, store, use, operate, manage and
control the same, and upon any such taking of possession, at
the expense of Panda of Nepal, to make all such repairs,
replacements, alterations, additions and improvements to and
of the Collateral as the Trustee may deem proper, and to
manage and control the Collateral and to carry on the
business of, and to exercise all rights and powers of, Panda
of Nepal in respect thereto as the Trustee shall deem best,
including the right to enter into any and all such
agreements with respect to the leasing and/or operation of
the Collateral or any part thereof as the Trustee may see
fit, and to collect and receive all rents, issues, profits,
fees, revenues and other income of the same and every part
thereof, with such rents, issues, profits, fees, revenues
and other income being applied to pay the expenses of
holding and operating the Collateral, of conducting the
business thereof and of all maintenance, repairs,
replacements, alterations, additions and improvements with
respect thereto, and to make all payments which the Trustee
may be required or may elect to make, if any, for taxes,
assessments, insurance and other charges upon the Collateral
or any part thereof, and all other payments which the
Trustee may be required or authorized to make under any
provision of this Agreement (including, without limitation,
legal costs and attorneys' fees).
Any surplus received in respect of the Collateral after
payment in full of the Obligations will be paid to
Panda of Nepal or such other Person as may be lawfully
entitled thereto.
Panda of Nepal hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof and in
accordance herewith. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) The powers conferred on the Trustee hereunder are
solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Trustee
shall be accountable only for such amounts as the Trustee shall
actually receive as a result of the exercise of such powers and
neither the Trustee nor any of its officers, directors, employees
or agents shall be responsible to Panda of Nepal for any act or
failure to act, except for their own gross negligence or willful
misconduct.
(c) Panda of Nepal also authorizes the Trustee, during the
continuation of an Event of Default, (i) to communicate in its
own name with any party to any contract, agreement or instrument
included in the Collateral, at any time, with regard to any
matter relating to such contract, agreement or instrument, and
(ii) to execute, in connection with any sale provided for in
Section 7.2 hereof, any endorsements, assignments, bills of sale
or other instruments of conveyance or transfer with respect to
the Collateral.
Section 6.2. Performance by the Trustee of Panda of
Nepal's Obligations. If Panda of Nepal fails to perform or
comply with any of its agreements contained herein and the
Trustee, as authorized by the terms of this Agreement, shall
perform or comply, or otherwise cause the performance of or
compliance with, any such agreements, the expenses of the Trustee
incurred in connection with such performance or compliance,
together with interest thereon, shall be payable by Panda of
Nepal to the Trustee on demand.
ARTICLE 7
RIGHTS AND REMEDIES OF COLLATERAL AGENT UPON DEFAULT
Section 7.1. Payments Received. If an Event of Default
shall occur and be continuing, all payments received by Panda of
Nepal under or in connection with the Collateral shall be held by
Panda of Nepal in trust for the Trustee, shall be segregated from
other funds of Panda of Nepal and shall, forthwith upon receipt
by Panda of Nepal, be turned over to the Trustee or the Designee
in the same form as received by Panda of Nepal (duly endorsed by
Panda of Nepal to the Trustee or the Designee).
Section 7.2. Remedies. If an Event of Default shall occur
and be continuing, the Trustee may exercise, in addition to all
other rights and remedies granted to it in this Agreement and in
any other Security Document or other instrument or agreement
securing, evidencing or relating to the Obligations, all rights
and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, Panda of Nepal expressly agrees
that in any such event the Trustee, without demand of performance
or other demand, advertisement or further notice of any kind
(except the notice specified below with respect to a public or
private sale) to or upon Panda of Nepal or any other Person (all
and each of which demands, advertisements and/or notices are
hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral or any part thereof,
and/or sell, lease, assign, give options to purchase or sell, or
otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do so), in one or more parcels at public
or private sale or sales, at any exchange, broker's board or at
any of the Trustee's offices or elsewhere at such prices as it
may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Trustee and each of
the Lenders shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in
Panda of Nepal, which right or equity of redemption is hereby
expressly waived and released. Panda of Nepal further agrees, at
the Trustee's request, to assemble the Collateral, and make it
available to the Trustee at such places as the Trustee reasonably
shall select, whether at Panda of Nepal's premises or elsewhere.
The Trustee shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale toward
payment of the Obligations (in such order as the Lenders shall
direct in the event such net proceeds are not sufficient to pay
the Obligations in full), and then any surplus shall be paid to
such Persons as may be lawfully entitled thereto. Panda of Nepal
agrees that the Trustee need not give more than ten (10) days'
notice of the time and place of any public sale or of the time
after which a private sale may take place and that such notice is
reasonable notification of such matters.
Section 7.3. Waivers.
(a) Panda of Nepal hereby waives presentment, demand,
protest and, except as otherwise expressly provided herein and to
the extent permitted by applicable law, notice of any kind in
connection with this Agreement or any Collateral.
(b) Except as otherwise required by applicable law, the
Trustee shall not be required to marshall any Collateral or to
resort to any item of Collateral in any particular order; and all
of its rights hereunder and in respect of the Collateral shall be
cumulative and in addition to all other rights, however existing
or arising. To the extent that it lawfully may, Panda of Nepal
(i) hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the
enforcement of the Trustee's rights under this Agreement or under
any other Security Document, and (ii) hereby irrevocably waives
the benefits of all such laws and any and all rights to equity of
redemption or other rights of redemption that it may have in
equity or at law with respect to the Collateral.
(c) Except as otherwise provided in this Agreement, PANDA
OF NEPAL HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, JUDICIAL HEARING IN CONNECTION WITH THE TRUSTEE'S
TAKING POSSESSION OR THE TRUSTEE'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH PANDA OF
NEPAL WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE
OF THE UNITED STATES, NEPAL OR THE CAYMAN ISLANDS OR ANY
POLITICAL SUBDIVISION OF ANY SUCH JURISDICTION, and Panda of
Nepal hereby further waives, to the maximum extent permitted by
applicable law:
(i) all damages occasioned by such taking of possession,
except any damages which are the direct result of the gross
negligence or willful misconduct of the Trustee or any
person acting on its behalf or instruction;
(ii) all other requirements as to the time, place and terms
of sale or other requirements with respect to the
enforcement of the Trustee's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and Panda of Nepal, for
itself and all who may claim under it, insofar as it or they
now or hereafter lawfully may, hereby waives the benefit of
all such laws.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all
right, title, interest, claim and demand, either at law or in
equity, of Panda of Nepal therein and thereto, and shall be a
perpetual bar both at law and in equity against Panda of Nepal
and against any and all persons claiming or attempting to claim
the Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under Panda of Nepal.
Section 7.4. Reasonable Care. The Trustee shall be deemed
to have exercised reasonable care in the custody and preservation
of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Trustee accords
its own property.
Section 7.5. The Trustee. In connection with its power
and functions hereunder, the Trustee shall act solely as the
trustee of the Lenders and shall not assume or be deemed to have
assumed any relationship of agency or other fiduciary
relationship with Panda of Nepal. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 8
EXPENSES; INDEMNIFICATION; FEES
Section 8.1. Expenses. Panda of Nepal agrees to pay or
reimburse within thirty (30) days of demand therefor all out-of-
pocket expenses of the Trustee (including expenses for legal
services) in respect of, or incident to, the preparation,
execution and delivery of this Agreement, the administration of
this Agreement and the Collateral, the enforcement of any of the
provisions of this Agreement or in connection with any amendment,
waiver or consent relating to this Agreement (which shall be
reasonable other than upon the occurrence and during the
continuance of an Event of Default or any event which would
become (with the expiration of any applicable grace periods or
the giving of notice or both) an Event of Default), provided that
any such demand is accompanied by invoices pertaining thereto.
Section 8.2. Indemnification. Panda of Nepal agrees to
indemnify and hold harmless the Trustee, its directors, officers,
employees, agents and representatives (the Trustee and its
directors, officers, employees, agents and representatives each
an "Indemnified Party") from and against any and all claims,
losses and liabilities growing out of or resulting from or in any
way related to (i) this Agreement and the transactions hereunder
(including, without limitation, enforcement of this Agreement,
but excluding any such claims, losses or liabilities resulting
from the Indemnified Party's gross negligence or willful
misconduct) or (ii) any refund or adjustment of any amount paid
or payable to the Trustee or any other Indemnified Party under or
in respect of this Agreement which may be ordered or otherwise
required by any Person.
ARTICLE 9
SATISFACTION AND DISCHARGE OF TRUST
Section 9.1. Satisfaction and Discharge of Trust.
(a) If (i) at any time all Obligations owing to the Lenders
have been paid in full and (ii) a period of one hundred twenty
(120) days (or such other period as may be applicable with
respect to preference or similar periods under applicable
bankruptcy, insolvency or similar laws) has elapsed since the
condition set out in clause (i) is satisfied without any court
determining that Bhote Koshi Power Company Private Limited (the
"Company") is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to the Lenders or the Trustee by the Company will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters, then this Agreement
shall terminate; provided that the provisions of Article 9 shall
survive such termination.
(b) If at any time the Trustee shall have received a notice
from the Lenders that all Obligations owing to the Lenders have
been paid in full and (ii) a period of one hundred twenty (120)
days (or such other period as may be applicable with respect to
preference or similar periods under applicable bankruptcy,
insolvency or similar laws) has elapsed since the condition set
out in clause (i) is satisfied without any court determining that
the Company is insolvent or, if such determination is made within
that time, the Lenders are reasonably satisfied that no payment
made to the Lenders or the Trustee by the Company will be set
aside as a consequence thereof under any law relating to
bankruptcy, insolvency or similar matters, then, upon payment in
full of all amounts payable to the Trustee pursuant to Section
8.1 hereof, this Agreement shall cease to be of further effect
and the Trustee, at the cost and expense of Panda of Nepal, upon
delivery to the Trustee of a certificate signed by two officers
of Panda of Nepal and concurred in by the Lenders stating that
all conditions precedent to the satisfaction and discharge of
this Agreement and the other Security Documents have been
complied with, shall execute proper instruments acknowledging the
satisfaction and discharge of this Agreement, and shall duly
assign, transfer and deliver to Panda of Nepal such of the
Collateral as has not theretofore been sold or otherwise applied
or released pursuant to this Agreement, together with any moneys
at the time held by the Trustee hereunder. The Lenders agree to
give the notice provided for in this paragraph without
unreasonable delay.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1. Benefit of Agreement. Nothing in this
Agreement, expressed or implied, shall give or be construed to
give to any Person other than the parties hereto any legal or
equitable right, remedy or claim under this Agreement, or under
any covenant or provision herein contained, all such covenants
and provisions being for the sole benefit of the parties herein.
Section 10.2. Successors or Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that neither the Company nor Panda of Nepal
may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Lenders. Each
of the Lenders may transfer, assign or grant its rights hereunder
in connection with an assignment or transfer of all or any part
of its interest in its Commitment or the IFC Loans or the DEG
Loan, as the case may be, in accordance with the Investment
Agreement.
Section 10.3. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Any party may
designate from time to time by written notice to the other
parties another address to which notices are to be sent.
Addresses:
Panda of Nepal
Address: c/o Maples & Calder
P.O. Box 309
Ugland House, South Church Street
Grand Cayman, Cayman Islands
British West Indies
Attention: Sharon Pierson
Facsimile: (809) 949-8080
with a copy to:
Panda Energy International, Inc.
4100 Spring Valley, Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
IFC
Address: 2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Power Department
Facsimile: (202) 974-4307
DEG
Address: Belvederestrasse 40
D-50933
Koeln (Mungersdorf)
Federal Republic of Germany
Attention: Infrastructure Department
Facsimile: 011 49221 4986 107
Wilmington Trust Company
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-001
Attention: Corporate Trust Administration
Telephone: (302) 651-8726
Facsimile: (302) 651-8882
Section 10.4. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 10.5. Headings Descriptive. The headings of the
several Articles of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
Section 10.6. Governing Law; Submission to Jurisdiction;
Venue. (a) This Agreement is a contract made under the laws of
the State of New York of the United States of America and shall
for all purposes be governed by and construed in accordance with
the laws of such State without regard to the conflicts of laws
provisions thereof (other than Sections 5-1401 and 5-1402 of the
General Obligations Law of the State of New York). Any legal
action or proceeding against Panda of Nepal with respect to this
Agreement may be brought in the courts of the State of New York
in the County of New York or of the United States for the
Southern District of New York and, by execution and delivery of
this Agreement, Panda of Nepal hereby irrevocably accepts for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Panda
of Nepal agrees that a judgment in any such action or proceeding
shall be conclusive and binding upon itself, and may be enforced
in any other jurisdiction, including without limitation Nepal, by
a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. Panda of Nepal hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, Panda of
Nepal agrees to designate a new designee, appointee and agent in
New York City on the terms and for the purposes of this provision
satisfactory to the Lenders. Panda of Nepal further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it at its address set forth in Section 10.3
hereof, such service to become effective ten (10) days after such
mailing. Nothing herein shall affect the right of the Trustee or
either of the Lenders to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against Panda of Nepal in Nepal, the Cayman Islands or in
any other jurisdiction.
(b) Panda of Nepal hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in
connection with this Agreement brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought
in an inconvenient forum.
Section 10.7. Survival. All indemnities, agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement.
Section 10.8. No Waiver; Cumulative Remedies. No failure or
delay on the part of the Trustee or either of the Lenders in
exercising any right, power or privilege hereunder or under any
other Loan Document, and no course of dealing between Panda of
Nepal and the Trustee or either of the Lenders, shall impair any
such right, power or privilege or operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Loan Document preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights,
powers and remedies herein or provided in any other Loan Document
are cumulative and not exclusive of any rights, powers or
remedies which the Trustee or either of the Lenders would
otherwise have. No notice to or demand on Panda of Nepal in any
case shall entitle Panda of Nepal to any other or further notice
or demand in similar or other circumstances or constitute a
waiver of the rights of the Trustee or either of the Lenders to
any other or further action in any circumstances without notice
or demand.
Section 10.9. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 10.10. Communications. All documents to be
furnished or communications to be given or made under this
Agreement shall be in the English language or, if in another
language, shall be accompanied by a translation into English
certified by a representative of Panda of Nepal, which
translation shall be the governing version between Panda of
Nepal, the Lenders and the Trustee.
Section 10.11. Amendments. Neither this Agreement nor any
of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the
date first set forth above.
PANDA OF NEPAL
By:
Name:
Title:
INTERNATIONAL FINANCE CORPORATION,
as Lender
By:
Name:
Title: Authorized Signatory
DEG-DEUTSCHE INVESTITIONS-und
ENTWICKLUNGSGESELLSCHAFT mbH,
as Lender
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Trustee under the
Trust and Retention Agreement
By:
Name:
Title:
EXHIBIT A
Financing Statement Filings
1. UCC-1 Financing Statement filed at the Secretary of
State of Delaware, showing Wilmington Trust Company, as
Trustee, with respect to the Collateral.
2. UCC-1 Financing Statement filed at the Secretary of
State of New York, showing Wilmington Trust Company, as
Trustee, with respect to the Collateral.
EXHIBIT NO. 10.161
SHARE PLEDGE AGREEMENT
among
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.
as Pledgor,
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Trustee under the
Trust and Retention Agreement,
as Pledgee,
and
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Dated as of the Closing Date
TABLE OF CONTENTS
PRELIMINARY STATEMENTS 1
DEFINITIONS 1
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee 2
Section 1.2. Security for Obligations 3
Section 1.3. Delivery of Pledged Collateral 3
Section 1.4. Waiver 4
Section 1.5. Further Assurances 4
Section 1.6. Voting Rights; Dividends, etc 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Power and Authorization;
Enforceable Obligations 5
Section 2.3. Government Approval 6
Section 2.4. Ownership 6
Section 2.5. First Lien 6
ARTICLE 3
COVENANTS
Section 3.1. Existence 6
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest 6
Section 3.3. Defense of Pledged Collateral 6
Section 3.4. No Modification 7
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact 7
Section 4.2. Pledgee May Perform 7
Section 4.3. Reasonable Care 7
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor 8
Section 5.2. Sale of Pledged Collateral 8
Section 5.3. Conveyances 9
Section 5.4. Payments Received 9
Section 5.5. Application of Proceeds 9
Section 5.6. Discharge of Purchaser 9
Section 5.7. No Liability 9
Section 5.8. Remedies Cumulative 9
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances 10
Section 6.2. Pledgee 10
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification 10
ARTICLE 8
WAIVER
Section 8.1. Waivers 11
ARTICLE 9
TERMINATION
Section 9.1. Termination 11
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices 12
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue 13
Section 10.3. Benefit of Agreement 13
Section 10.4. No Waiver; Remedies Cumulative 14
Section 10.5. Severability 14
Section 10.6. Language 14
Section 10.7. Headings Descriptive 14
Section 10.8. Amendment or Waiver 14
Section 10.9. Counterparts 14
SCHEDULE A
SHAREHOLDINGS 16
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares 17
SCHEDULE C
Form No. (5)
Application for Transfer of Shares 18
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT (this "Agreement"), dated as of
the Closing Date, among HIMAL INTERNATIONAL POWER CORPORATION
PVT. LTD., a private limited company organized and existing under
the laws of Nepal (the "Pledgor"), WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as Trustee under the Trust
and Retention Agreement (the "Pledgee"), and BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED, a private limited liability company
registered under the Nepalese Company Act, 2021 (the "Company").
PRELIMINARY STATEMENTS
As of the date hereof, the Pledgor is the legal and
beneficial owner of Seventy-Six Thousand Six Hundred Sixty-Six
(76,666) Shares of the Company, which Shares are set forth
opposite the Pledgor's name in Schedule A attached hereto (such
Shares, collectively, the "Pledged Shares").
The Company has been granted the right to build, own
and operate a 36MW (nominal net) hydroelectric power plant in the
Sindhupalchok District of Nepal.
IFC is willing to provide financing for the power
plant, pursuant to that certain IFC Investment Agreement dated as
of the Closing Date between the Company and IFC (the "IFC
Investment Agreement"), but only if the Pledgor shall pledge its
Shares pursuant to this Agreement.
DEG is willing to provide financing for the power
plant, pursuant to that certain DEG Investment Agreement dated as
of the Closing Date between the Company and DEG (the "DEG
Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement"), but only if the Pledgor
shall pledge its shares pursuant to this Agreement. (IFC and DEG
are hereinafter collectively referred to as the "Lenders" and
individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each
of IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, in consideration of each of the Lenders
entering into the Investment Agreement, and to induce each of the
Lenders to make disbursements thereunder, the Pledgor agrees as
follows:
DEFINITIONS
For all purposes of this Agreement (i) capitalized
terms not otherwise defined herein shall have the meanings set
forth in Schedule A to the General Conditions and (ii) the
principles of construction set forth in Schedule A to the General
Conditions shall apply.
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee.
(a) Subject to Section 7.1(c) hereof, the Pledgor
hereby irrevocably and unconditionally guarantees to the Pledgee,
for the benefit of the Lenders, the timely performance by the
Company of all of its obligations under the Loan Documents and
the other Principal Documents as and when required thereunder and
the payment by the Company when due of any and all sums owed
under the Loan Documents and the other Principal Documents (the
"Guaranteed Obligations").
(b) No compromise, alteration, amendment,
modification, extension, renewal, release or other change of, or
waiver, consent or other action in respect of any liability or
obligation under or in respect of, or of any of the terms,
covenants or conditions of the Investment Agreement or any other
Principal Document, or any Security, shall in any way alter or
affect the obligations of the Pledgor hereunder (other than a
written waiver of any obligation hereunder executed by the
Pledgee at the direction of the Lenders).
(c) The obligations of the Pledgor under this Section
1.1 are absolute and unconditional, subject to the limitations
set forth in Section 7.1(c) hereof.
(d) The Pledgor hereby irrevocably waives, to the
extent it may do so under applicable law, any defense based on
the adequacy of a remedy at law which may be asserted as a bar to
the remedy of specific performance in any action brought against
it.
(e) The Pledgor irrevocably waives, to the extent it
may do so under applicable law, any protection to which it may be
entitled under bankruptcy, liquidation, winding up, insolvency or
similar laws of any jurisdiction in the event of a Company
Bankruptcy. In the event a trustee in bankruptcy or debtor-in-
possession takes any action (including without limitation the
institution of any action, suit or other proceeding) in a Company
Bankruptcy for the purpose of enforcing the obligations of the
Pledgor under this Agreement, the Pledgor hereby agrees, to the
extent it may do so under applicable law, that it will not assert
any defense, claim or counterclaim denying liability hereunder on
the basis that this Agreement is an executory contract that
cannot be assumed, assigned or enforced. If a Company Bankruptcy
shall occur, the Pledgor, to the extent it may do so under
applicable law, shall reconfirm its prepetition waiver of any
protection to which it may be entitled under such laws and, to
give effect to such waiver, the Pledgor consents to the
assumption and enforcement of each provision of this Agreement by
the debtor-in-possession or the Company's trustee in bankruptcy,
as the case may be.
(f) The Pledgor hereby irrevocably waives all rights
of subrogation which may have arisen or may hereafter arise in
connection with this Section 1.1 to the claims of the Trustee or
the Lenders against the Company and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity or
other similar such right from the Company which may otherwise
have arisen in connection with this Section 1.1.
(g) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Pledgee, for the benefit of the
Lenders, as security for its timely and punctual payment and
performance of the Guaranteed Obligations and payment and
performance when due of any and all sums owed by and all
obligations of the Pledgor hereunder (collectively, the
"Obligations") and grants a first lien on, and prior perfected
security interest in, all of the Pledgor's right, title and
interest in, to and under the following, whether now owned or
hereafter acquired (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the
certificates representing such Pledged
Shares, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise distributed
in respect of or in exchange for any or all
of such Pledged Shares;
(ii) all additional Shares of and
other securities of the Company from time to
time acquired by the Pledgor in any manner,
and the certificates representing such
additional Shares and other securities, and
all dividends, cash, instruments, and other
property from time to time received,
receivable or otherwise distributed in
respect of or in exchange for any or all of
such Shares; and
(iii) all the Pledgor's right,
title and interest to, in and under the
Project Agreement, including without
limitation (A) all rights of the Pledgor to
receive moneys due from time to time
thereunder or pursuant thereto and (B) all
claims of the Pledgor for damages for breach
thereof or default thereunder.
(h) This Agreement and the grant of the security
interest made hereby are for collateral purposes only, and
neither the Pledgee nor the Lenders shall by virtue of this
Agreement or by their exercise of any rights hereunder be deemed
to have any liability for any contractual obligations of the
Pledgor or of the Company.
Section 1.2. Security for Obligations. This Agreement
secures the payment and performance of all Obligations, as
defined in Section 1.1(g) hereof.
Section 1.3. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by the Pledgee on behalf of the Lenders pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, together with an executed Form 4 (the form
of which is attached hereto as Schedule B), all in form and
substance satisfactory to the Pledgee and the Lenders. The
Pledgor hereby instructs the Company, and the Company hereby
agrees, to promptly deliver directly to the Pledgee all stock
certificates, instruments or other documents evidencing or
constituting Pledged Collateral issued by the Company after the
date of this Agreement, marked to show recordation by the Company
of the pledge thereof to the Trustee. If any such certificates,
instruments or documents are delivered to the Pledgor, the
Pledgor shall hold in trust for the Pledgee upon receipt, and
immediately thereafter transfer to the Pledgee, any such
certificates, instruments or documents (except, until the Pledgee
has requested a transfer of the Pledged Collateral pursuant to
Section 1.6(b) hereof, cash dividends and interest paid in
respect of the Pledged Collateral). The Pledgor shall also
promptly deliver to the Company executed Form(s) 4 with respect
to all Pledged Collateral and to the Pledgee duly executed
instruments of transfer or assignment in blank relating to all
Pledged Collateral delivered to the Pledgee.
(b) The Pledgee shall have the right, at any time, in
its discretion and upon notice to the Pledgor, following the
occurrence and continuance of an Event of Default, to file a Form
5 (the form of which is attached hereto as Schedule C) with
respect to the Pledged Collateral with the Company and to
transfer to or to register in the names of the Lenders or any of
their nominees any or all of the Pledged Collateral. In
addition, the Pledgee shall have the right, if an Event of
Default shall have occurred and be continuing, to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
Section 1.4. Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of claims with
a court in the event of receivership or bankruptcy, protests of
any kind, and all setoffs and counterclaims, to the extent
permitted by applicable law. Upon the occurrence and continuance
of an Event of Default, the Pledgee may proceed directly and at
once, upon reasonable prior notice to the Pledgor if practicable
under the circumstances, against the Pledged Collateral to
collect and recover the full amount or any portion of the
Obligations so due and payable, without first proceeding against
the Pledgor or the Company or against any other security or
collateral provided by the Pledgor or the Company with respect to
the Obligations.
Section 1.5. Further Assurances. The Pledgor agrees
that at any time and from time to time, at its expense, the
Pledgor shall promptly execute and deliver all further
instruments and documents (including, without limitation, any
additional pledge agreement or security agreement), and take all
further action that, in the opinion of the Pledgee or the
Lenders, is necessary in order to perfect and protect any
security interest in the Pledged Collateral granted or purported
to be granted hereby or to enable the Pledgee to exercise and
enforce its rights and remedies hereunder with respect to the
Pledged Collateral or any part thereof.
Section 1.6. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred
and be continuing, the Pledgee shall not request the transfer of
the Pledged Shares into its name in the Company's share register
and, until the Pledgee has requested such a transfer in
accordance with Section 1.6(b) hereof:
(i) the Pledgor shall be entitled
to exercise any and all voting and other
consensual rights pertaining to the Pledged
Collateral or any part thereof for any
purpose not inconsistent with the terms of
this Agreement, the Investment Agreement or
the other Loan Documents; and
(ii) the Pledgor shall be entitled
to receive and retain any and all cash
dividends and interest paid in respect of the
Pledged Collateral.
(b) Upon the occurrence and during the continuation of
an Event of Default, the Pledgee may require the Pledged Shares
to be transferred into its name in the Company's share register
and thereupon:
(i) all rights of the Pledgor to
exercise the voting and other consensual
rights which the Pledgor would otherwise be
entitled to exercise pursuant to Section
1.6(a)(i) hereof and to receive the dividends
and interest payments which the Pledgor would
otherwise be authorized to receive and retain
pursuant to Section 1.6(a)(ii) hereof shall
cease, and all such rights shall thereupon
become vested in the Pledgee, which shall
thereupon have the sole right to exercise
such voting and other consensual rights and
to receive and hold as Pledged Collateral
such dividends and interest payments; and
(ii) all dividends and interest
payments which are received by the Pledgor
contrary to the provisions of
Section 1.6(b)(i) hereof shall be received in
trust for the benefit of the Pledgee, shall
be segregated from other funds of the Pledgor
and shall be forthwith paid over to the
Pledgee as Pledged Collateral in the same
form as so received (with any necessary
endorsement).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants as of the
date hereof:
Section 2.1. Power and Authorization; Enforceable
Obligations.
(a) The Pledgor has full power and authority and the
legal right to conduct its business as now conducted and as
proposed to be conducted by it, to execute, deliver and perform
this Agreement and any other Principal Documents to which it is a
party and to take all actions necessary to complete the
transactions contemplated by this Agreement and any such other
Principal Document. The Pledgor has taken all necessary action
to authorize the transactions contemplated hereby on the terms
and conditions of this Agreement and any other Principal Document
to which it is a party, and to authorize the execution, delivery
and performance of this Agreement and any other Principal
Document to which it is a party.
(b) Each of this Agreement and any other Principal
Documents to which the Pledgor is a party has been duly executed
and delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor.
Section 2.2. No Legal Bar. The execution, delivery
and performance of this Agreement and any other Principal
Documents to which the Pledgor is a party will not violate any
requirement of law applicable to, or any contractual obligation
of, the Pledgor. The execution, delivery and performance of this
Agreement or any other Principal Document to which the Pledgor is
a party will not result in, or require the creation or imposition
of any Lien on any of the properties or revenues of the Pledgor
pursuant to any requirement of law or contractual obligation,
except for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
Indebtedness of the Pledgor are required in connection with the
execution, delivery and performance by the Pledgor of this
Agreement or any other Principal Document to which it is a party,
except such approvals or consents as have been duly obtained and
are in full force and effect.
Section 2.3. Government Approval. No Governmental
Approvals or other consents or approvals (except those which have
been obtained or made and are in full force and effect or which
are listed in Schedule 4.1(d) of the General Conditions and are
not now required to be obtained) are required to be obtained by
the Pledgor in connection with the execution, delivery and
performance of this Agreement.
Section 2.4. Ownership. The Pledgor is the legal and
beneficial owner of the Pledged Shares free and clear of any Lien
created by the Pledgor except for the security interest created
by this Agreement. The Pledgor has no knowledge of any Lien,
other than the Lien created by this Agreement, on the Pledged
Collateral.
Section 2.5. First Lien. The pledge of the Pledged
Shares pursuant to this Agreement and delivery thereof to the
Pledgee in Wilmington, Delaware creates a valid and perfected
first priority security interest therein, securing the payment of
the Obligations.
ARTICLE 3
COVENANTS
So long as the Obligations remain outstanding or the
Lenders have any obligation under any Loan Document, the Pledgor
covenants and agrees with the Pledgee and the Lenders as follows:
Section 3.1. Existence. The Pledgor shall preserve
and maintain (a) its legal existence and form and (b) all of its
rights, privileges and franchises necessary for the maintenance
of its existence and the performance of its obligations
hereunder.
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest. The Pledgor shall not without the prior
written consent of the Lenders (i) sell, transfer, convey or
otherwise dispose of, or grant any option with respect to or
pledge any interest in, any ownership interest in the Company,
except if such sale, transfer, conveyance or other disposition is
not prohibited by, and would not result in a breach of, any
Principal Document and the recipient agrees in writing to be
bound by the terms of, and become a party to, this Agreement (or
a separate Share Pledge Agreement in respect of the Pledged
Collateral of such recipient), (ii) consent to or approve (A) the
cancellation of any of the Pledged Shares or other Pledged
Collateral or (B) the creation or authorization of any ownership
interest in the Company other than the interests in existence on
the date hereof, except in accordance with or as contemplated by
the Subscription Agreements, the Share Retention and Project
Funds Agreement, the Shareholders' Agreement and the Investment
Agreement, or (iii) create any Lien upon or with respect to any
of the Pledged Collateral owned by the Pledgor, other than the
Lien created pursuant to this Agreement.
Section 3.3. Defense of Pledged Collateral. The
Pledgor warrants and will defend the Pledgee's right, title and
security interest in and to the Pledged Collateral against the
claims of any Person that purports to have rights created by,
through or under the Pledgor.
Section 3.4. No Modification. The Pledgor shall not
amend or modify, or participate in the amendment or modification
of, any provision of the Company's Memorandum of Association or
Articles of Association (other than amendments to increase the
Company's share capital or as required by law, in either of which
cases prompt written notice of the amendment shall be given to
each of the Lenders) without the express written consent of the
Lenders. The Pledgor shall not amend or modify the Shareholders'
Agreement without the express written consent of the Lenders.
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact. The Pledgor
does hereby make, constitute and appoint the Pledgee, with full
power of substitution, as the Pledgor's attorney-in-fact, with
full power and authority, in its own name or in the name, place
and stead of the Pledgor, or otherwise, (i) if an Event of
Default shall have occurred and be continuing, to exercise all
voting, consent, managerial and other rights related to the
Pledged Collateral, and (ii) if an Event of Default shall have
occurred and be continuing, from time to time, generally to do,
at the Pledgee's request and the Pledgor's expense, all acts and
things which the Pledgee or the Lenders may deem necessary to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to the Pledgor representing any payment or other dividend
in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same, all as fully and effectually as
the Pledgor might or could do; and the Pledgor hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement.
Any attempted revocation of the powers of attorney granted herein
shall be null and void. There are no conditions or requirements
imposed on the Pledgee's exercise of the powers of attorney other
than as set forth herein.
Section 4.2. Pledgee May Perform. If an Event of
Default shall have occurred and be continuing, the Pledgee may
itself perform, or cause performance of, any agreement contained
herein, and the expenses of the Pledgee or such other performing
party incurred in connection therewith shall be payable by the
Pledgor; provided, however, that the Pledgee shall have no
obligation to perform or cause performance of any of the
Pledgor's obligations hereunder or under any other Principal
Document to which it is a party.
Section 4.3. Reasonable Care. The Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to
that which the Pledgee accords its own property.
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor. If an Event of
Default shall have occurred and be continuing, then, in addition
to any other rights and remedies provided for herein or otherwise
available to it under any Loan Document or by law, the Pledgee
may, and upon the request of the Lenders shall, exercise the
powers of attorney set forth in Section 4.1 of this Agreement,
and shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be
commercially reasonable:
Section 5.2. Sale of Pledged Collateral. If an Event
of Default shall have occurred and be continuing, then, in
addition to any other rights and remedies provided for herein or
otherwise available to it, the Pledgee may without any further
demand, advertisement or notice (except as expressly provided in
this Section 5.2), exercise all the rights and remedies of a
secured party under the Code as in effect in any relevant
jurisdiction (whether or not the Code applies to the Pledged
Collateral), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided and may
sell, lease, finance, refinance, mortgage or convey the Pledged
Collateral. The Pledged Collateral may so be sold or otherwise
disposed of in one or more sales, at public or private sale,
conducted by any officer or agent of, or auctioneer or attorney
for, the Pledgee, at any exchange or broker's board or at the
Pledgee's place of business or elsewhere, for cash, upon credit
or for other property, for immediate or future delivery, and at
such price or prices and on such terms (including, without
limitation, a requirement that any purchase of all or any part of
the Pledged Collateral for investment be without any intention to
make a distribution thereof) as the Pledgee shall, in its sole
discretion, deem appropriate. Either of the Lenders may be the
purchasers of any or all of the Pledged Collateral so sold at any
such sale and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind. The Pledgee may in its sole
discretion, at any such sale, restrict the prospective bidders or
purchasers as to their number, nature of business and investment
intention. Upon any such sale, the Pledgee shall have the right
to deliver, assign and transfer to the purchaser thereof
(including either of the Lenders) the Pledged Collateral so sold.
Except if and to the extent otherwise prohibited by law, each
purchaser (including either of the Lenders) at any such sale
shall hold the Pledged Collateral so sold absolutely free from
any claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Pledgee shall give the
Pledgor at least ten (10) days' notice (which the Pledgor agrees
is reasonable notification) of any such public or private sale.
Such notice shall state the time and place fixed for any public
sale and the time after which any private sale is to be made.
Any such public sale shall be held at such time or times within
ordinary business hours as the Pledgee shall fix in the notice of
such sale. At any such sale the Pledged Collateral may be sold
in one lot as an entirety or in separate parcels. The Pledgee
shall not be obligated to make any sale pursuant to any such
notice. The Pledgee may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or
publication. In case of any sale of all or any part of the
Pledged Collateral on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Pledgee until the full
selling price is paid by the purchaser thereof, but the Pledgee
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Collateral so sold,
and, in case of any such failure, such Pledged Collateral may
again be sold pursuant to the provisions hereof.
Section 5.3. Conveyances. The Pledgee may as attorney-
in-fact pursuant and subject to Section 4.1 hereof, in the name
and stead of the Pledgor, make and execute all conveyances,
assignments and transfers of the Pledged Collateral sold pursuant
to Section 5.2 hereof, and the Pledgor hereby ratifies and
confirms all that the Pledgee, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Pledgor shall, if so
requested by the Pledgee, ratify and confirm any sale or sales by
executing and delivering to the Pledgee, or to such purchaser or
purchasers, all such instruments as may, in the judgment of the
Pledgee, be advisable for the purpose.
Section 5.4. Payments Received. Until the Pledgee has
requested a transfer in accordance with Section 1.6(b) hereof,
the Pledgor, subject to the terms of the Loan Documents, shall be
entitled to exercise any and all rights, remedies and powers of
the Pledgor under, and receive and retain any amounts paid or
payable to the Pledgor under or pursuant to, the Project
Agreement; thereafter, the Pledgee shall be entitled to exercise
the Pledgor's rights, remedies or powers, and receive and retain
amounts, under the Project Agreement, and all payments received
by the Pledgor under or in connection with the Project Agreement
shall be held in trust for the Pledgee, shall be segregated from
the other funds of the Pledgor and shall, forthwith upon receipt
by the Pledgor, be turned over to the Pledgee or the Designee in
the same form as received by the Pledgor (duly endorsed by the
Pledgor to the Pledgee or the Designee, as appropriate).
Section 5.5. Application of Proceeds. All cash
proceeds received by the Pledgee in respect of any sale or lease
of, collection from, or other realization upon all or any part of
the Pledged Collateral may be held by the Pledgee as Collateral
for the Obligations and/or applied to the payment of the
Obligations. Any surplus of such cash proceeds held by the
Pledgee in excess of or remaining after payment in full of the
Obligations shall be paid over to the Pledgor or whomsoever the
Pledgee shall determine to be lawfully entitled thereto.
Section 5.6. Discharge of Purchaser. The receipt by
the Pledgee of the purchase money paid at any sale made by it
shall be a sufficient discharge therefor, sold as aforesaid; and
no purchaser (or representative or assign of any purchaser),
after paying such purchase money, shall be bound to see to the
application of such purchase money or any part thereof or in any
manner whatsoever be answerable for any loss, misapplication or
non-application of any such purchase money, or any part thereof,
or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
Section 5.7. No Liability. Neither the Pledgee nor
the Lenders shall incur any liability as a result of the sale of
the Pledged Collateral, or any part thereof, at any private sale
conducted in a commercially reasonable manner. The Pledgor
hereby waives, to the full extent permitted by applicable law,
all claims, damages and demands against the Pledgee and the
Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any claims
against the Pledgee and the Lenders, arising by reason of the
fact that the price at which the Pledged Collateral, or any part
thereof, was sold was less than may have been obtained at a
public sale or was less than the aggregate amount of the
Obligations so long as such sale shall have been conducted in
accordance with this Agreement. The foregoing is not intended to
release any party from liability for any claim, damage or demand
resulting from its gross negligence or willful misconduct.
Section 5.8. Remedies Cumulative. Each and every
right and remedy of the Pledgee shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy
given hereunder or under any other Loan Document or any other
document now or hereafter existing at law or in equity or by
statute.
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances. If the Pledgee shall
determine to exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 5.2 hereof, the Pledgor shall,
upon request of the Pledgee, at the Pledgor's own expense do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any requirement
of law.
Section 6.2. Pledgee. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification.
(a) Subject to the limitations set forth in Section
7.1(c) hereof, the Pledgor shall indemnify each of the Pledgee
and each of the Lenders from and against any and all claims,
losses and liabilities growing out of or resulting from the
failure by the Pledgor to perform or observe any of the
provisions hereof, including, without limitation, (i) the sale
of, collection from, or other realization upon, the Pledged
Collateral, or any part thereof, in connection with such failure,
or (ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders, except for claims, losses or liabilities
resulting from such party's gross negligence or willful
misconduct. Subject as aforesaid, the Pledgor will upon demand
pay to the Pledgee or the Lenders the amount of any and all
expenses, including the fees and expenses of its and their
respective counsel and of any experts and agents, which such
party may incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (i) the sale of, collection from, or other
realization upon, the Pledged Collateral, or any part thereof, or
(ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders.
(b) If any obligation of the Pledgor arising under
this Article 7, as limited by the provisions of Section 7.1(c)
hereof, shall be prohibited or unenforceable in any jurisdiction
then, as to such jurisdiction and subject to such limitations,
the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible
under applicable law.
(c) The Pledgor is willing to enter into this
Agreement and to guarantee the Guaranteed Obligations, and to
secure such guarantee by granting to the Pledgee a Lien on the
Pledged Collateral, only if the Pledgee agrees, on behalf of
itself and the Lenders, to limit the personal liability of the
Pledgor under this Agreement as provided in this Section 7.1(c).
Accordingly, and notwithstanding anything in this Agreement to
the contrary, all payments to be made by the Pledgor under this
Agreement in respect of the Guaranteed Obligations and other
Obligations shall be made or payable only from and to the extent
of the Pledged Collateral and all proceeds, of whatever nature,
of the realization thereof, and the Pledgee, on behalf of itself
and the Lenders, agrees that it and the Lenders will look solely
to the Pledged Collateral and such proceeds for payments to be
made by the Pledgor under this Agreement and that the Pledgor
shall not, save as expressly hereinafter provided in this
Section 7.1(c), be otherwise personally liable under this
Agreement for any Guaranteed Obligations or other Obligations;
provided, however, that (i) the provisions of this Section 7.1(c)
shall not prevent the Pledgee from exercising any and all of its
remedies provided in this Agreement with respect to the Pledged
Collateral or provided in any other agreement or document, and
(ii) the Pledgor shall remain personally liable for, and shall
indemnify the Pledgee and the Lenders against, any and all
claims, losses and liabilities growing out of or resulting from,
(y) the failure by the Pledgor to perform its obligations under
Section 1.3, Article 3 or Section 10.2 hereof or (z) any material
inaccuracy of any representation and warranty set forth in
Article 2 hereof, except to the extent arising out of the gross
negligence or willful misconduct of the Pledgee.
ARTICLE 8
WAIVER
Section 8.1. Waivers. To the fullest extent it may
lawfully so agree, the Pledgor agrees that it will not at any
time insist upon, claim, plead, or take any benefit or advantage
of any appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in order to
prevent, delay or hinder the enforcement hereof or the absolute
sale of any part of the Pledged Collateral; the Pledgor for
itself and all who claim through it, so far as it or they now or
hereafter lawfully may do so, hereby waives the benefit of all
such laws, and all right to have the Pledged Collateral
marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Agreement may order the
sale of the Pledged Collateral as an entirety. Without limiting
the generality of the foregoing, the Pledgor hereby (i)
authorizes the Pledgee, for the benefit of the Lenders, in its
sole discretion and without notice to or demand upon the Pledgor
and without otherwise affecting the obligations of the Pledgor
hereunder, from time to time to take and hold other collateral
for payment of any Obligations, or any part thereof, and to
exchange, enforce or release such other collateral or any part
thereof, and to accept and hold any endorsement or guarantee of
payment of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person granting
security for or in any other way obligated upon any Obligations
or any part thereof and (ii) waives and releases any and all
right to require the Pledgee or the Lenders to collect any of the
Obligations from any specific item or items of the Pledged
Collateral or from any other party liable as guarantor or in any
other manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
ARTICLE 9
TERMINATION
Section 9.1. Termination. If (i) at any time all
Obligations owing to the Lenders have been paid in full and (ii)
a period of one hundred twenty (120) days (or such other period
as may be applicable with respect to preference or similar
periods under applicable bankruptcy, insolvency or similar laws)
has elapsed since the condition set out in clause (i) is
satisfied without any court determining that the Company is
insolvent or, if such determination is made within that time, the
Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters, then this Agreement shall
terminate; provided that the provisions of Article 7 shall
survive such termination. At the time of such termination, the
Pledgee at the request and expense of the Pledgor, will promptly
execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to the
Pledgor such of the Pledged Collateral as has not theretofore
been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the
Pledgee hereunder on account of the Pledged Collateral and not
otherwise applied to the payment of the Obligations.
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, demands, requests
and other communications provided for hereunder shall be in
writing and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Either party may
designate from time to time by written notice to the other party
another address to which notices are to be sent.
For Pledgor:
Address: HIPC
Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
Attention: Chairman
Facsimile: 011 977-1-272201
For Pledgee:
Address: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and
be governed by the laws of the State of New York without regard
to the conflicts of laws provisions thereof (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Pledgor
with respect to this Agreement or any other Principal Document to
which the Pledgor is a party may be brought in the courts of the
State of New York in the Borough of Manhattan or of the United
States for the Southern District of New York and, by execution
and delivery of this Agreement, the Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
Pledgor agrees that a judgment in any such action or proceeding
shall be conclusive and binding upon it, and may be enforced in
any other jurisdiction, including without limitation in Nepal, by
a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. The Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Pledgor
agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Pledgee. The Pledgor further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth opposite its
signature below, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of the
Pledgee to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the
Pledgor in Nepal or in any other jurisdiction.
(b) The Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which it is a party brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any action or
proceeding brought by the Pledgee in any such court has been
brought in an inconvenient forum.
(c) The Pledgor acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 10.3. Benefit of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
Pledgor, the Pledgee, and all future holders of the Pledged
Shares or other Pledged Collateral; provided, however, that the
Pledgor may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Pledgee. Each of the Lenders may transfer, assign
or grant its rights hereunder in connection with an assignment or
transfer of all or any part of its interest in its Commitment or
the IFC Loans or the DEG Loan, as the case may be, in accordance
with the Investment Agreement.
Section 10.4. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in exercising any
right, power or privilege hereunder or under any other Loan
Document, and no course of dealing between the Pledgor and the
Pledgee, shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies
provided under this Agreement or in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Pledgee may otherwise have. No notice to or demand on
the Pledgor in any case shall entitle the Pledgor to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Pledgor to any other or
further action in any circumstances without notice or demand.
Section 10.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 10.6. Language. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language, or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Pledgor or the Pledgee, as the case may be,
which translation shall be the governing version between the
Pledgor and the Pledgee.
Section 10.7. Headings Descriptive. The headings of
the several Articles and sections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 10.8. Amendment or Waiver. Neither this
Agreement nor any of the terms hereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by all of the parties hereto.
Section 10.9. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and acknowledged by their
respective officers or representatives hereunto duly authorized
as of the date first above written.
HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
under the Trust and Retention Agreement
By:
Name:
Title:
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE A
SHAREHOLDINGS*
Par Value No. of
Holder Class of Shares of Shares
Shares
Himal International Ordinary Shares 100Rs. 76,666
Power Corporation
Pvt. Ltd.
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
We have mortgaged shares of R.S. 100 each of Bhote Koshi Power
Company Private Limited, registered in the name of
_________________ from Share No. ___________ to _______________
totalling ________ shares of the value of Rs. ____________ to
Wilmington Trust Company, not in its individual capacity but
solely as Trustee for International Finance Corporation and DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH. We
herewith submit this application, along with a copy of the
related document and the share certificate(s). Please record the
matter of the mortgage of said shares in the Register of the
Company.
Dated:
Yours,
(Signature of the applicant)
Name: Himal International Power Corporation Pvt. Ltd.
Address: c/o Soaltee Hotel Limited
Tahachal, Kathmandu
Nepal
SCHEDULE C
Form No. (5)
Application for Transfer of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
As _____________________________ has duly executed the deed
transferring its right over the shares of R.S. 100 each of Bhote
Koshi Power Company Private Limited registered in its name from
Share no. ________ to ___________, having received R.S.
______________ as consideration for the said shares, in our
favor. We, having agreed to be responsible for the profit and
loss relating to those shares, have submitted this application
along with one copy of the said deed and the share
certificate(s). Kindly transfer the ownership of said shares in
our name.
Yours,
(Signature of the purchaser)
Name:
Address:
Date:
_______________________________
* Prior to issuance and pledge of shares at the Financial
Closing Date.
EXHIBIT NO. 10.162
SHARE PLEDGE AGREEMENT
among
RDC OF NEPAL
as Pledgor,
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Trustee under the
Trust and Retention Agreement,
as Pledgee,
and
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Dated as of the Closing Date
TABLE OF CONTENTS
PRELIMINARY STATEMENTS 1
DEFINITIONS 1
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee 2
Section 1.2. Security for Obligations 3
Section 1.3. Delivery of Pledged Collateral 3
Section 1.4. Waiver 4
Section 1.5. Further Assurances 4
Section 1.6. Voting Rights; Dividends, etc 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Power and Authorization; Enforceable
Obligations 5
Section 2.3. Government Approval 6
Section 2.4. Ownership 6
Section 2.5. First Lien 6
ARTICLE 3
COVENANTS
Section 3.1. Existence 6
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest 6
Section 3.3. Defense of Pledged Collateral 7
Section 3.4. No Modification 7
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact 7
Section 4.2. Pledgee May Perform 7
Section 4.3. Reasonable Care 7
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor 8
Section 5.2. Sale of Pledged Collateral 8
Section 5.3. Conveyances 9
Section 5.4. Payments Received 9
Section 5.5. Application of Proceeds 9
Section 5.6. Discharge of Purchaser 9
Section 5.7. No Liability 9
Section 5.8. Remedies Cumulative 10
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances 10
Section 6.2. Pledgee 10
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification 10
ARTICLE 8
WAIVER
Section 8.1. Waivers 11
ARTICLE 9
TERMINATION
Section 9.1. Termination 12
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices 12
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue 13
Section 10.3. Benefit of Agreement 14
Section 10.4. No Waiver; Remedies Cumulative 14
Section 10.5. Severability 14
Section 10.6. Language 14
Section 10.7. Headings Descriptive 14
Section 10.8. Amendment or Waiver 14
Section 10.9. Counterparts 14
SCHEDULE A
SHAREHOLDINGS 16
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares 17
SCHEDULE C
Form No. (5)
Application for Transfer of Shares 18
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT (this "Agreement"), dated as of
the Closing Date, among RDC OF NEPAL, an exempted company with
limited liability organized and existing under the laws of the
Cayman Islands (the "Pledgor"), WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Trustee under the Trust and
Retention Agreement (the "Pledgee"), and BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED, a private limited liability company
registered under the Nepalese Company Act, 2021 (the "Company").
PRELIMINARY STATEMENTS
As of the date hereof, the Pledgor is the legal and
beneficial owner of thirty eight thousand three hundred thirty
three (38,333) Shares of the Company, which Shares are set forth
opposite the Pledgor's name in Schedule A attached hereto (such
Shares, collectively, the "Pledged Shares").
The Company has been granted the right to build, own
and operate a 36MW (nominal net) hydroelectric power plant in the
Sindhupalchok District of Nepal.
IFC is willing to provide financing for the power
plant, pursuant to that certain IFC Investment Agreement dated as
of the Closing Date between the Company and IFC (the "IFC
Investment Agreement"), but only if the Pledgor shall pledge its
Shares pursuant to this Agreement.
DEG is willing to provide financing for the power
plant, pursuant to that certain DEG Investment Agreement dated as
of the Closing Date between the Company and DEG (the "DEG
Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement"), but only if the Pledgor
shall pledge its shares pursuant to this Agreement. (IFC and DEG
are hereinafter collectively referred to as the "Lenders" and
individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each
of IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, in consideration of each of the Lenders
entering into the Investment Agreement, and to induce each of the
Lenders to make disbursements thereunder, the Pledgor agrees as
follows:
DEFINITIONS
For all purposes of this Agreement (i) capitalized
terms not otherwise defined herein shall have the meanings set
forth in Schedule A to the General Conditions and (ii) the
principles of construction set forth in Schedule A to the General
Conditions shall apply.
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee.
(a) Subject to Section 7.1(c) hereof, the Pledgor
hereby irrevocably and unconditionally guarantees to the Pledgee,
for the benefit of the Lenders, the timely performance by the
Company of all of its obligations under the Loan Documents and
the other Principal Documents as and when required thereunder and
the payment by the Company when due of any and all sums owed
under the Loan Documents and the other Principal Documents (the
"Guaranteed Obligations").
(b) No compromise, alteration, amendment,
modification, extension, renewal, release or other change of, or
waiver, consent or other action in respect of any liability or
obligation under or in respect of, or of any of the terms,
covenants or conditions of the Investment Agreement or any other
Principal Document, or any Security, shall in any way alter or
affect the obligations of the Pledgor hereunder (other than a
written waiver of any obligation hereunder executed by the
Pledgee at the direction of the Lenders).
(c) The obligations of the Pledgor under this Section
1.1 are absolute and unconditional, subject to the limitations
set forth in Section 7.1(c) hereof.
(d) The Pledgor hereby irrevocably waives, to the
extent it may do so under applicable law, any defense based on
the adequacy of a remedy at law which may be asserted as a bar to
the remedy of specific performance in any action brought against
it.
(e) The Pledgor irrevocably waives, to the extent it
may do so under applicable law, any protection to which it may be
entitled under bankruptcy, liquidation, winding up, insolvency or
similar laws of any jurisdiction in the event of a Company
Bankruptcy. In the event a trustee in bankruptcy or debtor-in-
possession takes any action (including without limitation the
institution of any action, suit or other proceeding) in a Company
Bankruptcy for the purpose of enforcing the obligations of the
Pledgor under this Agreement, the Pledgor hereby agrees, to the
extent it may do so under applicable law, that it will not assert
any defense, claim or counterclaim denying liability hereunder on
the basis that this Agreement is an executory contract that
cannot be assumed, assigned or enforced. If a Company Bankruptcy
shall occur, the Pledgor, to the extent it may do so under
applicable law, shall reconfirm its prepetition waiver of any
protection to which it may be entitled under such laws and, to
give effect to such waiver, the Pledgor consents to the
assumption and enforcement of each provision of this Agreement by
the debtor-in-possession or the Company's trustee in bankruptcy,
as the case may be.
(f) The Pledgor hereby irrevocably waives all rights
of subrogation which may have arisen or may hereafter arise in
connection with this Section 1.1 to the claims of the Trustee or
the Lenders against the Company and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity or
other similar such right from the Company which may otherwise
have arisen in connection with this Section 1.1.
(g) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Pledgee, for the benefit of the
Lenders, as security for its timely and punctual payment and
performance of the Guaranteed Obligations and payment and
performance when due of any and all sums owed by and all
obligations of the Pledgor hereunder (collectively, the
"Obligations") and grants a first lien on, and prior perfected
security interest in, all of the Pledgor's right, title and
interest in, to and under the following, whether now owned or
hereafter acquired (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the
certificates representing such Pledged
Shares, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise distributed
in respect of or in exchange for any or all
of such Pledged Shares;
(ii) all additional Shares of and
other securities of the Company from time to
time acquired by the Pledgor in any manner,
and the certificates representing such
additional Shares and other securities, and
all dividends, cash, instruments, and other
property from time to time received,
receivable or otherwise distributed in
respect of or in exchange for any or all of
such Shares; and
(iii) all the Pledgor's right,
title and interest to, in and under the
Project Agreement, including without
limitation (A) all rights of the Pledgor to
receive moneys due from time to time
thereunder or pursuant thereto and (B) all
claims of the Pledgor for damages for breach
thereof or default thereunder.
(h) This Agreement and the grant of the security
interest made hereby are for collateral purposes only, and
neither the Pledgee nor the Lenders shall by virtue of this
Agreement or by their exercise of any rights hereunder be deemed
to have any liability for any contractual obligations of the
Pledgor or of the Company.
Section 1.2. Security for Obligations. This Agreement
secures the payment and performance of all Obligations, as
defined in Section 1.1(g) hereof.
Section 1.3. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by the Pledgee on behalf of the Lenders pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, together with an executed Form 4 (the form
of which is attached hereto as Schedule B), all in form and
substance satisfactory to the Pledgee and the Lenders. The
Pledgor hereby instructs the Company, and the Company hereby
agrees, to promptly deliver directly to the Pledgee all stock
certificates, instruments or other documents evidencing or
constituting Pledged Collateral issued by the Company after the
date of this Agreement, marked to show recordation by the Company
of the pledge thereof to the Trustee. If any such certificates,
instruments or documents are delivered to the Pledgor, the
Pledgor shall hold in trust for the Pledgee upon receipt, and
immediately thereafter transfer to the Pledgee, any such
certificates, instruments or documents (except, until the Pledgee
has requested a transfer of the Pledged Collateral pursuant to
Section 1.6(b) hereof, cash dividends and interest paid in
respect of the Pledged Collateral). The Pledgor shall also
promptly deliver to the Company executed Form(s) 4 with respect
to all Pledged Collateral and to the Pledgee duly executed
instruments of transfer or assignment in blank relating to all
Pledged Collateral delivered to the Pledgee.
(b) The Pledgee shall have the right, at any time, in
its discretion and upon notice to the Pledgor, following the
occurrence and continuance of an Event of Default, to file a Form
5 (the form of which is attached hereto as Schedule C) with
respect to the Pledged Collateral with the Company and to
transfer to or to register in the names of the Lenders or any of
their nominees any or all of the Pledged Collateral. In
addition, the Pledgee shall have the right, if an Event of
Default shall have occurred and be continuing, to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
Section 1.4. Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of claims with
a court in the event of receivership or bankruptcy, protests of
any kind, and all setoffs and counterclaims, to the extent
permitted by applicable law. Upon the occurrence and continuance
of an Event of Default, the Pledgee may proceed directly and at
once, upon reasonable prior notice to the Pledgor if practicable
under the circumstances, against the Pledged Collateral to
collect and recover the full amount or any portion of the
Obligations so due and payable, without first proceeding against
the Pledgor or the Company or against any other security or
collateral provided by the Pledgor or the Company with respect to
the Obligations.
Section 1.5. Further Assurances. The Pledgor agrees
that at any time and from time to time, at its expense, the
Pledgor shall promptly execute and deliver all further
instruments and documents (including, without limitation, any
additional pledge agreement or security agreement), and take all
further action that, in the opinion of the Pledgee or the
Lenders, is necessary in order to perfect and protect any
security interest in the Pledged Collateral granted or purported
to be granted hereby or to enable the Pledgee to exercise and
enforce its rights and remedies hereunder with respect to the
Pledged Collateral or any part thereof.
Section 1.6. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred
and be continuing, the Pledgee shall not request the transfer of
the Pledged Shares into its name in the Company's share register
and, until the Pledgee has requested such a transfer in
accordance with Section 1.6(b) hereof:
(i) the Pledgor shall be entitled
to exercise any and all voting and other
consensual rights pertaining to the Pledged
Collateral or any part thereof for any
purpose not inconsistent with the terms of
this Agreement, the Investment Agreement or
the other Loan Documents; and
(ii) the Pledgor shall be entitled
to receive and retain any and all cash
dividends and interest paid in respect of the
Pledged Collateral.
(b) Upon the occurrence and during the continuation of
an Event of Default, the Pledgee may require the Pledged Shares
to be transferred into its name in the Company's share register
and thereupon:
(i) all rights of the Pledgor to
exercise the voting and other consensual
rights which the Pledgor would otherwise be
entitled to exercise pursuant to Section
1.6(a)(i) hereof and to receive the dividends
and interest payments which the Pledgor would
otherwise be authorized to receive and retain
pursuant to Section 1.6(a)(ii) hereof shall
cease, and all such rights shall thereupon
become vested in the Pledgee, which shall
thereupon have the sole right to exercise
such voting and other consensual rights and
to receive and hold as Pledged Collateral
such dividends and interest payments; and
(ii) all dividends and interest
payments which are received by the Pledgor
contrary to the provisions of
Section 1.6(b)(i) hereof shall be received in
trust for the benefit of the Pledgee, shall
be segregated from other funds of the Pledgor
and shall be forthwith paid over to the
Pledgee as Pledged Collateral in the same
form as so received (with any necessary
endorsement).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants as of the
date hereof:
Section 2.1. Power and Authorization; Enforceable
Obligations.
(a) The Pledgor has full power and authority and the
legal right to conduct its business as now conducted and as
proposed to be conducted by it, to execute, deliver and perform
this Agreement and any other Principal Documents to which it is a
party and to take all actions necessary to complete the
transactions contemplated by this Agreement and any such other
Principal Document. The Pledgor has taken all necessary action
to authorize the transactions contemplated hereby on the terms
and conditions of this Agreement and any other Principal Document
to which it is a party, and to authorize the execution, delivery
and performance of this Agreement and any other Principal
Document to which it is a party.
(b) Each of this Agreement and any other Principal
Documents to which the Pledgor is a party has been duly executed
and delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor.
Section 2.2. No Legal Bar. The execution, delivery
and performance of this Agreement and any other Principal
Documents to which the Pledgor is a party will not violate any
requirement of law applicable to, or any contractual obligation
of, the Pledgor. The execution, delivery and performance of this
Agreement or any other Principal Document to which the Pledgor is
a party will not result in, or require the creation or imposition
of any Lien on any of the properties or revenues of the Pledgor
pursuant to any requirement of law or contractual obligation,
except for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
Indebtedness of the Pledgor are required in connection with the
execution, delivery and performance by the Pledgor of this
Agreement or any other Principal Document to which it is a party,
except such approvals or consents as have been duly obtained and
are in full force and effect.
Section 2.3. Government Approval. No Governmental
Approvals or other consents or approvals (except those which have
been obtained or made and are in full force and effect or which
are listed in Schedule 4.1(d) of the General Conditions and are
not now required to be obtained) are required to be obtained by
the Pledgor in connection with the execution, delivery and
performance of this Agreement.
Section 2.4. Ownership. The Pledgor is the legal and
beneficial owner of the Pledged Shares free and clear of any Lien
created by the Pledgor except for the security interest created
by this Agreement. The Pledgor has no knowledge of any Lien,
other than the Lien created by this Agreement, on the Pledged
Collateral.
Section 2.5. First Lien. The pledge of the Pledged
Shares pursuant to this Agreement and delivery thereof to the
Pledgee in Wilmington, Delaware creates a valid and perfected
first priority security interest therein, securing the payment of
the Obligations.
ARTICLE 3
COVENANTS
So long as the Obligations remain outstanding or the
Lenders have any obligation under any Loan Document, the Pledgor
covenants and agrees with the Pledgee and the Lenders as follows:
Section 3.1. Existence. The Pledgor shall preserve
and maintain (a) its legal existence and form and (b) all of its
rights, privileges and franchises necessary for the maintenance
of its existence and the performance of its obligations
hereunder.
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest. The Pledgor shall not without the prior
written consent of the Lenders (i) sell, transfer, convey or
otherwise dispose of, or grant any option with respect to or
pledge any interest in, any ownership interest in the Company,
except if such sale, transfer, conveyance or other disposition is
not prohibited by, and would not result in a breach of, any
Principal Document and the recipient agrees in writing to be
bound by the terms of, and become a party to, this Agreement (or
a separate Share Pledge Agreement in respect of the Pledged
Collateral of such recipient), (ii) consent to or approve (A) the
cancellation of any of the Pledged Shares or other Pledged
Collateral or (B) the creation or authorization of any ownership
interest in the Company other than the interests in existence on
the date hereof, except in accordance with or as contemplated by
the Subscription Agreements, the Share Retention and Project
Funds Agreement, the Shareholders' Agreement and the Investment
Agreement, or (iii) create any Lien upon or with respect to any
of the Pledged Collateral owned by the Pledgor, other than the
Lien created pursuant to this Agreement.
Section 3.3. Defense of Pledged Collateral. The
Pledgor warrants and will defend the Pledgee's right, title and
security interest in and to the Pledged Collateral against the
claims of any Person that purports to have rights created by,
through or under the Pledgor.
Section 3.4. No Modification. The Pledgor shall not
amend or modify, or participate in the amendment or modification
of, any provision of the Company's Memorandum of Association or
Articles of Association (other than amendments to increase the
Company's share capital or as required by law, in either of which
cases prompt written notice of the amendment shall be given to
each of the Lenders) without the express written consent of the
Lenders. The Pledgor shall not amend or modify the Shareholders'
Agreement without the express written consent of the Lenders.
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact. The Pledgor
does hereby make, constitute and appoint the Pledgee, with full
power of substitution, as the Pledgor's attorney-in-fact, with
full power and authority, in its own name or in the name, place
and stead of the Pledgor, or otherwise, (i) if an Event of
Default shall have occurred and be continuing, to exercise all
voting, consent, managerial and other rights related to the
Pledged Collateral, and (ii) if an Event of Default shall have
occurred and be continuing, from time to time, generally to do,
at the Pledgee's request and the Pledgor's expense, all acts and
things which the Pledgee or the Lenders may deem necessary to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to the Pledgor representing any payment or other dividend
in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same, all as fully and effectually as
the Pledgor might or could do; and the Pledgor hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement.
Any attempted revocation of the powers of attorney granted herein
shall be null and void. There are no conditions or requirements
imposed on the Pledgee's exercise of the powers of attorney other
than as set forth herein.
Section 4.2. Pledgee May Perform. If an Event of
Default shall have occurred and be continuing, the Pledgee may
itself perform, or cause performance of, any agreement contained
herein, and the expenses of the Pledgee or such other performing
party incurred in connection therewith shall be payable by the
Pledgor; provided, however, that the Pledgee shall have no
obligation to perform or cause performance of any of the
Pledgor's obligations hereunder or under any other Principal
Document to which it is a party.
Section 4.3. Reasonable Care. The Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to
that which the Pledgee accords its own property.
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor. If an Event of
Default shall have occurred and be continuing, then, in addition
to any other rights and remedies provided for herein or otherwise
available to it under any Loan Document or by law, the Pledgee
may, and upon the request of the Lenders shall, exercise the
powers of attorney set forth in Section 4.1 of this Agreement,
and shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be
commercially reasonable:
Section 5.2. Sale of Pledged Collateral. If an Event
of Default shall have occurred and be continuing, then, in
addition to any other rights and remedies provided for herein or
otherwise available to it, the Pledgee may without any further
demand, advertisement or notice (except as expressly provided in
this Section 5.2), exercise all the rights and remedies of a
secured party under the Code as in effect in any relevant
jurisdiction (whether or not the Code applies to the Pledged
Collateral), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided and may
sell, lease, finance, refinance, mortgage or convey the Pledged
Collateral. The Pledged Collateral may so be sold or otherwise
disposed of in one or more sales, at public or private sale,
conducted by any officer or agent of, or auctioneer or attorney
for, the Pledgee, at any exchange or broker's board or at the
Pledgee's place of business or elsewhere, for cash, upon credit
or for other property, for immediate or future delivery, and at
such price or prices and on such terms (including, without
limitation, a requirement that any purchase of all or any part of
the Pledged Collateral for investment be without any intention to
make a distribution thereof) as the Pledgee shall, in its sole
discretion, deem appropriate. Either of the Lenders may be the
purchasers of any or all of the Pledged Collateral so sold at any
such sale and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind. The Pledgee may in its sole
discretion, at any such sale, restrict the prospective bidders or
purchasers as to their number, nature of business and investment
intention. Upon any such sale, the Pledgee shall have the right
to deliver, assign and transfer to the purchaser thereof
(including either of the Lenders) the Pledged Collateral so sold.
Except if and to the extent otherwise prohibited by law, each
purchaser (including either of the Lenders) at any such sale
shall hold the Pledged Collateral so sold absolutely free from
any claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Pledgee shall give the
Pledgor at least ten (10) days' notice (which the Pledgor agrees
is reasonable notification) of any such public or private sale.
Such notice shall state the time and place fixed for any public
sale and the time after which any private sale is to be made.
Any such public sale shall be held at such time or times within
ordinary business hours as the Pledgee shall fix in the notice of
such sale. At any such sale the Pledged Collateral may be sold
in one lot as an entirety or in separate parcels. The Pledgee
shall not be obligated to make any sale pursuant to any such
notice. The Pledgee may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or
publication. In case of any sale of all or any part of the
Pledged Collateral on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Pledgee until the full
selling price is paid by the purchaser thereof, but the Pledgee
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Collateral so sold,
and, in case of any such failure, such Pledged Collateral may
again be sold pursuant to the provisions hereof.
Section 5.3. Conveyances. The Pledgee may as attorney-
in-fact pursuant and subject to Section 4.1 hereof, in the name
and stead of the Pledgor, make and execute all conveyances,
assignments and transfers of the Pledged Collateral sold pursuant
to Section 5.2 hereof, and the Pledgor hereby ratifies and
confirms all that the Pledgee, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Pledgor shall, if so
requested by the Pledgee, ratify and confirm any sale or sales by
executing and delivering to the Pledgee, or to such purchaser or
purchasers, all such instruments as may, in the judgment of the
Pledgee, be advisable for the purpose.
Section 5.4. Payments Received. Until the Pledgee has
requested a transfer in accordance with Section 1.6(b) hereof,
the Pledgor, subject to the terms of the Loan Documents, shall be
entitled to exercise any and all rights, remedies and powers of
the Pledgor under, and receive and retain any amounts paid or
payable to the Pledgor under or pursuant to, the Project
Agreement; thereafter, the Pledgee shall be entitled to exercise
the Pledgor's rights, remedies or powers, and receive and retain
amounts, under the Project Agreement, and all payments received
by the Pledgor under or in connection with the Project Agreement
shall be held in trust for the Pledgee, shall be segregated from
the other funds of the Pledgor and shall, forthwith upon receipt
by the Pledgor, be turned over to the Pledgee or the Designee in
the same form as received by the Pledgor (duly endorsed by the
Pledgor to the Pledgee or the Designee, as appropriate).
Section 5.5. Application of Proceeds. All cash
proceeds received by the Pledgee in respect of any sale or lease
of, collection from, or other realization upon all or any part of
the Pledged Collateral may be held by the Pledgee as Collateral
for the Obligations and/or applied to the payment of the
Obligations. Any surplus of such cash proceeds held by the
Pledgee in excess of or remaining after payment in full of the
Obligations shall be paid over to the Pledgor or whomsoever the
Pledgee shall determine to be lawfully entitled thereto.
Section 5.6. Discharge of Purchaser. The receipt by
the Pledgee of the purchase money paid at any sale made by it
shall be a sufficient discharge therefor, sold as aforesaid; and
no purchaser (or representative or assign of any purchaser),
after paying such purchase money, shall be bound to see to the
application of such purchase money or any part thereof or in any
manner whatsoever be answerable for any loss, misapplication or
non-application of any such purchase money, or any part thereof,
or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
Section 5.7. No Liability. Neither the Pledgee nor
the Lenders shall incur any liability as a result of the sale of
the Pledged Collateral, or any part thereof, at any private sale
conducted in a commercially reasonable manner. The Pledgor
hereby waives, to the full extent permitted by applicable law,
all claims, damages and demands against the Pledgee and the
Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any claims
against the Pledgee and the Lenders, arising by reason of the
fact that the price at which the Pledged Collateral, or any part
thereof, was sold was less than may have been obtained at a
public sale or was less than the aggregate amount of the
Obligations so long as such sale shall have been conducted in
accordance with this Agreement. The foregoing is not intended to
release any party from liability for any claim, damage or demand
resulting from its gross negligence or willful misconduct.
Section 5.8. Remedies Cumulative. Each and every
right and remedy of the Pledgee shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy
given hereunder or under any other Loan Document or any other
document now or hereafter existing at law or in equity or by
statute.
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances. If the Pledgee shall
determine to exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 5.2 hereof, the Pledgor shall,
upon request of the Pledgee, at the Pledgor's own expense do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any requirement
of law.
Section 6.2. Pledgee. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification.
(a) Subject to the limitations set forth in Section
7.1(c) hereof, the Pledgor shall indemnify each of the Pledgee
and each of the Lenders from and against any and all claims,
losses and liabilities growing out of or resulting from the
failure by the Pledgor to perform or observe any of the
provisions hereof, including, without limitation, (i) the sale
of, collection from, or other realization upon, the Pledged
Collateral, or any part thereof, in connection with such failure,
or (ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders, except for claims, losses or liabilities
resulting from such party's gross negligence or willful
misconduct. Subject as aforesaid, the Pledgor will upon demand
pay to the Pledgee or the Lenders the amount of any and all
expenses, including the fees and expenses of its and their
respective counsel and of any experts and agents, which such
party may incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (i) the sale of, collection from, or other
realization upon, the Pledged Collateral, or any part thereof, or
(ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders.
(b) If any obligation of the Pledgor arising under
this Article 7, as limited by the provisions of Section 7.1(c)
hereof, shall be prohibited or unenforceable in any jurisdiction
then, as to such jurisdiction and subject to such limitations,
the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible
under applicable law.
(c) The Pledgor is willing to enter into this
Agreement and to guarantee the Guaranteed Obligations, and to
secure such guarantee by granting to the Pledgee a Lien on the
Pledged Collateral, only if the Pledgee agrees, on behalf of
itself and the Lenders, to limit the personal liability of the
Pledgor under this Agreement as provided in this Section 7.1(c).
Accordingly, and notwithstanding anything in this Agreement to
the contrary, all payments to be made by the Pledgor under this
Agreement in respect of the Guaranteed Obligations and other
Obligations shall be made or payable only from and to the extent
of the Pledged Collateral and all proceeds, of whatever nature,
of the realization thereof, and the Pledgee, on behalf of itself
and the Lenders, agrees that it and the Lenders will look solely
to the Pledged Collateral and such proceeds for payments to be
made by the Pledgor under this Agreement and that the Pledgor
shall not, save as expressly hereinafter provided in this
Section 7.1(c), be otherwise personally liable under this
Agreement for any Guaranteed Obligations or other Obligations;
provided, however, that (i) the provisions of this Section 7.1(c)
shall not prevent the Pledgee from exercising any and all of its
remedies provided in this Agreement with respect to the Pledged
Collateral or provided in any other agreement or document, and
(ii) the Pledgor shall remain personally liable for, and shall
indemnify the Pledgee and the Lenders against, any and all
claims, losses and liabilities growing out of or resulting from,
(y) the failure by the Pledgor to perform its obligations under
Section 1.3, Article 3 or Section 10.2 hereof or (z) any material
inaccuracy of any representation and warranty set forth in
Article 2 hereof, except to the extent arising out of the gross
negligence or willful misconduct of the Pledgee.
ARTICLE 8
WAIVER
Section 8.1. Waivers. To the fullest extent it may
lawfully so agree, the Pledgor agrees that it will not at any
time insist upon, claim, plead, or take any benefit or advantage
of any appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in order to
prevent, delay or hinder the enforcement hereof or the absolute
sale of any part of the Pledged Collateral; the Pledgor for
itself and all who claim through it, so far as it or they now or
hereafter lawfully may do so, hereby waives the benefit of all
such laws, and all right to have the Pledged Collateral
marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Agreement may order the
sale of the Pledged Collateral as an entirety. Without limiting
the generality of the foregoing, the Pledgor hereby (i)
authorizes the Pledgee, for the benefit of the Lenders, in its
sole discretion and without notice to or demand upon the Pledgor
and without otherwise affecting the obligations of the Pledgor
hereunder, from time to time to take and hold other collateral
for payment of any Obligations, or any part thereof, and to
exchange, enforce or release such other collateral or any part
thereof, and to accept and hold any endorsement or guarantee of
payment of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person granting
security for or in any other way obligated upon any Obligations
or any part thereof and (ii) waives and releases any and all
right to require the Pledgee or the Lenders to collect any of the
Obligations from any specific item or items of the Pledged
Collateral or from any other party liable as guarantor or in any
other manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
ARTICLE 9
TERMINATION
Section 9.1. Termination. If (i) at any time all
Obligations owing to the Lenders have been paid in full and (ii)
a period of one hundred twenty (120) days (or such other period
as may be applicable with respect to preference or similar
periods under applicable bankruptcy, insolvency or similar laws)
has elapsed since the condition set out in clause (i) is
satisfied without any court determining that the Company is
insolvent or, if such determination is made within that time, the
Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters, then this Agreement shall
terminate; provided that the provisions of Article 7 shall
survive such termination. At the time of such termination, the
Pledgee at the request and expense of the Pledgor, will promptly
execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to the
Pledgor such of the Pledged Collateral as has not theretofore
been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the
Pledgee hereunder on account of the Pledged Collateral and not
otherwise applied to the payment of the Obligations.
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, demands, requests
and other communications provided for hereunder shall be in
writing and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Either party may
designate from time to time by written notice to the other party
another address to which notices are to be sent.
For Pledgor:
Address: RDC of Nepal
c/o Harza Engineering Company International
L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
Attention: General Counsel
Facsimile: (312) 831-3999
For Pledgee:
Address: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and
be governed by the laws of the State of New York without regard
to the conflicts of laws provisions thereof (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Pledgor
with respect to this Agreement or any other Principal Document to
which the Pledgor is a party may be brought in the courts of the
State of New York in the Borough of Manhattan or of the United
States for the Southern District of New York and, by execution
and delivery of this Agreement, the Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
Pledgor agrees that a judgment in any such action or proceeding
shall be conclusive and binding upon it, and may be enforced in
any other jurisdiction, including without limitation in Nepal, by
a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. The Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Pledgor
agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Pledgee. The Pledgor further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth opposite its
signature below, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of the
Pledgee to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the
Pledgor in Nepal or in any other jurisdiction.
(b) The Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which it is a party brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any action or
proceeding brought by the Pledgee in any such court has been
brought in an inconvenient forum.
(c) The Pledgor acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 10.3. Benefit of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
Pledgor, the Pledgee, and all future holders of the Pledged
Shares or other Pledged Collateral; provided, however, that the
Pledgor may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Pledgee. Each of the Lenders may transfer, assign
or grant its rights hereunder in connection with an assignment or
transfer of all or any part of its interest in its Commitment or
the IFC Loans or the DEG Loan, as the case may be, in accordance
with the Investment Agreement.
Section 10.4. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in exercising any
right, power or privilege hereunder or under any other Loan
Document, and no course of dealing between the Pledgor and the
Pledgee, shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies
provided under this Agreement or in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Pledgee may otherwise have. No notice to or demand on
the Pledgor in any case shall entitle the Pledgor to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Pledgor to any other or
further action in any circumstances without notice or demand.
Section 10.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 10.6. Language. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language, or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Pledgor or the Pledgee, as the case may be,
which translation shall be the governing version between the
Pledgor and the Pledgee.
Section 10.7. Headings Descriptive. The headings of
the several Articles and sections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 10.8. Amendment or Waiver. Neither this
Agreement nor any of the terms hereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by all of the parties hereto.
Section 10.9. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and acknowledged by their
respective officers or representatives hereunto duly authorized
as of the date first above written.
RDC OF NEPAL
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
under the Trust and Retention Agreement
By:
Name:
Title:
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE A
SHAREHOLDINGS*
Par Value No. of
Holder Class of Shares of Shares
Shares
RDC of Nepal Ordinary Shares 100 Rs.
38,333
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
We have mortgaged shares of R.S. 100 each of Bhote Koshi Power
Company Private Limited, registered in the name of
_________________ from Share No. ___________ to _______________
totalling ________ shares of the value of Rs. ____________ to
Wilmington Trust Company, not in its individual capacity but
solely as Trustee for International Finance Corporation and DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH. We
herewith submit this application, along with a copy of the
related document and the share certificate(s). Please record the
matter of the mortgage of said shares in the Register of the
Company.
Dated:
Yours,
(Signature of the applicant)
Name: RDC of Nepal
Address: c/o Harza Engineering Company International L.P.
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6392
SCHEDULE C
Form No. (5)
Application for Transfer of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
As _____________________________ has duly executed the deed
transferring its right over the shares of R.S. 100 each of Bhote
Koshi Power Company Private Limited registered in its name from
Share no. ________ to ___________, having received R.S.
______________ as consideration for the said shares, in our
favor. We, having agreed to be responsible for the profit and
loss relating to those shares, have submitted this application
along with one copy of the said deed and the share
certificate(s). Kindly transfer the ownership of said shares in
our name.
Yours,
(Signature of the purchaser)
Name:
Address:
Date:
_______________________________
* Prior to issuance and pledge of shares at the Financial
Closing Date.
EXHIBIT NO. 10.163
SHARE PLEDGE AGREEMENT
among
PANDA BHOTE KOSHI
as Pledgor,
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Trustee under the
Trust and Retention Agreement,
as Pledgee,
and
PANDA OF NEPAL
Dated as of the Closing Date
TABLE OF CONTENTS
PRELIMINARY STATEMENTS 1
DEFINITIONS 1
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee 2
Section 1.2. Security for Obligations 3
Section 1.3. Delivery of Pledged Collateral 3
Section 1.4. Waiver 4
Section 1.5. Further Assurances 4
Section 1.6. Voting Rights; Dividends, etc 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Power and Authorization;
Enforceable Obligations 5
Section 2.3. Government Approval 6
Section 2.4. Ownership 6
Section 2.5. First Lien 6
ARTICLE 3
COVENANTS
Section 3.1. Existence 6
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest 6
Section 3.3. Defense of Pledged Collateral 6
Section 3.4. No Modification 7
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact 7
Section 4.2. Pledgee May Perform 7
Section 4.3. Reasonable Care 7
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor 7
Section 5.2. Sale of Pledged Collateral 8
Section 5.3. Conveyances 8
Section 5.4. Payments Received 9
Section 5.5. Application of Proceeds 9
Section 5.6. Discharge of Purchaser 9
Section 5.7. No Liability 9
Section 5.8. Remedies Cumulative 9
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances 10
Section 6.2. Pledgee 10
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification 10
ARTICLE 8
WAIVER
Section 8.1. Waivers 11
ARTICLE 9
TERMINATION
Section 9.1. Termination 12
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices 12
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue 13
Section 10.3. Benefit of Agreement 14
Section 10.4. No Waiver; Remedies Cumulative 14
Section 10.5. Severability 15
Section 10.6. Language 15
Section 10.7. Headings Descriptive 15
Section 10.8. Amendment or Waiver 15
Section 10.9. Counterparts 15
SCHEDULE A
SHAREHOLDINGS 17
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares 18
SCHEDULE C
Form No. (5)
Application for Transfer of Shares 19
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT (this "Agreement"), dated as of
the Closing Date, among PANDA BHOTE KOSHI, an exempted company
with limited liability organized and existing under the laws of
the Cayman Islands (the "Pledgor"), WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as Trustee under the Trust
and Retention Agreement (the "Pledgee"), and PANDA OF NEPAL, an
exempted company with limited liability organized and existing
under the laws of the Cayman Islands (the "Company").
PRELIMINARY STATEMENTS
As of the date hereof, the Pledgor is the legal and
beneficial owner of two (2) shares of the Company issued and
outstanding from time to time (the "Shares), which Shares are set
forth opposite the Pledgor's name in Schedule A attached hereto
(such Shares, collectively, the "Pledged Shares").
Bhote Koshi Power Company Private Limited ("BKPC") has
been granted the right to build, own and operate a 36MW (nominal
net) hydroelectric power plant in the Sindhupalchok District of
Nepal.
IFC is willing to provide financing for the power
plant, pursuant to that certain IFC Investment Agreement dated as
of the Closing Date between BKPC and IFC (the "IFC Investment
Agreement"), but only if the Pledgor shall pledge its Shares
pursuant to this Agreement.
DEG is willing to provide financing for the power
plant, pursuant to that certain DEG Investment Agreement dated as
of the Closing Date between the Company and DEG (the "DEG
Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement"), but only if the Pledgor
shall pledge its shares pursuant to this Agreement. (IFC and DEG
are hereinafter collectively referred to as the "Lenders" and
individually as a "Lender").
BKPC, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each
of IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, in consideration of each of the Lenders
entering into the Investment Agreement, and to induce each of the
Lenders to make disbursements thereunder, the Pledgor agrees as
follows:
DEFINITIONS
For all purposes of this Agreement (i) capitalized
terms not otherwise defined herein shall have the meanings set
forth in Schedule A to the General Conditions and (ii) the
principles of construction set forth in Schedule A to the General
Conditions shall apply.
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee.
(a) Subject to Section 7.1(c) hereof, the Pledgor
hereby irrevocably and unconditionally guarantees to the Pledgee,
for the benefit of the Lenders, the timely performance by the
Company of all of its obligations under the Loan Documents and
the other Principal Documents as and when required thereunder and
the payment by the Company when due of any and all sums owed
under the Loan Documents and the other Principal Documents (the
"Guaranteed Obligations").
(b) No compromise, alteration, amendment,
modification, extension, renewal, release or other change of, or
waiver, consent or other action in respect of any liability or
obligation under or in respect of, or of any of the terms,
covenants or conditions of the Investment Agreement or any other
Principal Document, or any Security, shall in any way alter or
affect the obligations of the Pledgor hereunder (other than a
written waiver of any obligation hereunder executed by the
Pledgee at the direction of the Lenders).
(c) The obligations of the Pledgor under this Section
1.1 are absolute and unconditional, subject to the limitations
set forth in Section 7.1(c) hereof.
(d) The Pledgor hereby irrevocably waives, to the
extent it may do so under applicable law, any defense based on
the adequacy of a remedy at law which may be asserted as a bar to
the remedy of specific performance in any action brought against
it.
(e) The Pledgor irrevocably waives, to the extent it
may do so under applicable law, any protection to which it may be
entitled under bankruptcy, liquidation, winding up, insolvency or
similar laws of any jurisdiction in the event of any voluntary or
involuntary bankruptcy, insolvency, reorganization, compromise,
dissolution, liquidation, arrangement or adjustment of debt in
respect of the Company (a "Company Bankruptcy"). In the event a
trustee in bankruptcy or debtor-in-possession takes any action
(including without limitation the institution of any action, suit
or other proceeding) in a Company Bankruptcy for the purpose of
enforcing the obligations of the Pledgor under this Agreement,
the Pledgor hereby agrees, to the extent it may do so under
applicable law, that it will not assert any defense, claim or
counterclaim denying liability hereunder on the basis that this
Agreement is an executory contract that cannot be assumed,
assigned or enforced. If a Company Bankruptcy shall occur, the
Pledgor, to the extent it may do so under applicable law, shall
reconfirm its prepetition waiver of any protection to which it
may be entitled under such laws and, to give effect to such
waiver, the Pledgor consents to the assumption and enforcement of
each provision of this Agreement by the debtor-in-possession or
the Company's trustee in bankruptcy, as the case may be.
(f) The Pledgor hereby irrevocably waives all rights
of subrogation which may have arisen or may hereafter arise in
connection with this Section 1.1 to the claims of the Trustee or
the Lenders against the Company and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity or
other similar such right from the Company which may otherwise
have arisen in connection with this Section 1.1.
(g) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Pledgee, for the benefit of the
Lenders, as security for its timely and punctual payment and
performance of the Guaranteed Obligations and payment and
performance when due of any and all sums owed by and all
obligations of the Pledgor hereunder (collectively, the
"Obligations") and grants a first lien on, and prior perfected
security interest in, all of the Pledgor's right, title and
interest in, to and under the following, whether now owned or
hereafter acquired (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the
certificates representing such Pledged
Shares, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise distributed
in respect of or in exchange for any or all
of such Pledged Shares;
(ii) all additional Shares of and
other securities of the Company from time to
time acquired by the Pledgor in any manner,
and the certificates representing such
additional Shares and other securities, and
all dividends, cash, instruments, and other
property from time to time received,
receivable or otherwise distributed in
respect of or in exchange for any or all of
such Shares; and
(iii) all the Pledgor's right,
title and interest to, in and under the
Project Agreement, including without
limitation (A) all rights of the Pledgor to
receive moneys due from time to time
thereunder or pursuant thereto and (B) all
claims of the Pledgor for damages for breach
thereof or default thereunder.
(h) This Agreement and the grant of the security
interest made hereby are for collateral purposes only, and
neither the Pledgee nor the Lenders shall by virtue of this
Agreement or by their exercise of any rights hereunder be deemed
to have any liability for any contractual obligations of the
Pledgor or of the Company.
Section 1.2. Security for Obligations. This Agreement
secures the payment and performance of all Obligations, as
defined in Section 1.1(g) hereof.
Section 1.3. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by the Pledgee on behalf of the Lenders pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, together with an executed Form 4 (the form
of which is attached hereto as Schedule B), all in form and
substance satisfactory to the Pledgee and the Lenders. The
Pledgor hereby instructs the Company, and the Company hereby
agrees, to promptly deliver directly to the Pledgee all stock
certificates, instruments or other documents evidencing or
constituting Pledged Collateral issued by the Company after the
date of this Agreement, marked to show recordation by the Company
of the pledge thereof to the Trustee. If any such certificates,
instruments or documents are delivered to the Pledgor, the
Pledgor shall hold in trust for the Pledgee upon receipt, and
immediately thereafter transfer to the Pledgee, any such
certificates, instruments or documents (except, until the Pledgee
has requested a transfer of the Pledged Collateral pursuant to
Section 1.6(b) hereof, cash dividends and interest paid in
respect of the Pledged Collateral). The Pledgor shall also
promptly deliver to the Company executed Form(s) 4 with respect
to all Pledged Collateral and to the Pledgee duly executed
instruments of transfer or assignment in blank relating to all
Pledged Collateral delivered to the Pledgee.
(b) The Pledgee shall have the right, at any time, in
its discretion and upon notice to the Pledgor, following the
occurrence and continuance of an Event of Default, to file a Form
5 (the form of which is attached hereto as Schedule C) with
respect to the Pledged Collateral with the Company and to
transfer to or to register in the names of the Lenders or any of
their nominees any or all of the Pledged Collateral. In
addition, the Pledgee shall have the right, if an Event of
Default shall have occurred and be continuing, to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
Section 1.4. Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of claims with
a court in the event of receivership or bankruptcy, protests of
any kind, and all setoffs and counterclaims, to the extent
permitted by applicable law. Upon the occurrence and continuance
of an Event of Default, the Pledgee may proceed directly and at
once, upon reasonable prior notice to the Pledgor if practicable
under the circumstances, against the Pledged Collateral to
collect and recover the full amount or any portion of the
Obligations so due and payable, without first proceeding against
the Pledgor or the Company or against any other security or
collateral provided by the Pledgor or the Company with respect to
the Obligations.
Section 1.5. Further Assurances. The Pledgor agrees
that at any time and from time to time, at its expense, the
Pledgor shall promptly execute and deliver all further
instruments and documents (including, without limitation, any
additional pledge agreement or security agreement), and take all
further action that, in the opinion of the Pledgee or the
Lenders, is necessary in order to perfect and protect any
security interest in the Pledged Collateral granted or purported
to be granted hereby or to enable the Pledgee to exercise and
enforce its rights and remedies hereunder with respect to the
Pledged Collateral or any part thereof.
Section 1.6. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred
and be continuing, the Pledgee shall not request the transfer of
the Pledged Shares into its name in the Company's share register
and, until the Pledgee has requested such a transfer in
accordance with Section 1.6(b) hereof:
(i) the Pledgor shall be entitled
to exercise any and all voting and other
consensual rights pertaining to the Pledged
Collateral or any part thereof for any
purpose not inconsistent with the terms of
this Agreement, the Investment Agreement or
the other Loan Documents; and
(ii) the Pledgor shall be entitled
to receive and retain any and all cash
dividends and interest paid in respect of the
Pledged Collateral.
(b) Upon the occurrence and during the continuation of
an Event of Default, the Pledgee may require the Pledged Shares
to be transferred into its name in the Company's share register
and thereupon:
(i) all rights of the Pledgor to
exercise the voting and other consensual
rights which the Pledgor would otherwise be
entitled to exercise pursuant to Section
1.6(a)(i) hereof and to receive the dividends
and interest payments which the Pledgor would
otherwise be authorized to receive and retain
pursuant to Section 1.6(a)(ii) hereof shall
cease, and all such rights shall thereupon
become vested in the Pledgee, which shall
thereupon have the sole right to exercise
such voting and other consensual rights and
to receive and hold as Pledged Collateral
such dividends and interest payments; and
(ii) all dividends and interest
payments which are received by the Pledgor
contrary to the provisions of
Section 1.6(b)(i) hereof shall be received in
trust for the benefit of the Pledgee, shall
be segregated from other funds of the Pledgor
and shall be forthwith paid over to the
Pledgee as Pledged Collateral in the same
form as so received (with any necessary
endorsement).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants as of the
date hereof:
Section 2.1. Power and Authorization; Enforceable
Obligations.
(a) The Pledgor has full power and authority and the
legal right to conduct its business as now conducted and as
proposed to be conducted by it, to execute, deliver and perform
this Agreement and any other Principal Documents to which it is a
party and to take all actions necessary to complete the
transactions contemplated by this Agreement and any such other
Principal Document. The Pledgor has taken all necessary action
to authorize the transactions contemplated hereby on the terms
and conditions of this Agreement and any other Principal Document
to which it is a party, and to authorize the execution, delivery
and performance of this Agreement and any other Principal
Document to which it is a party.
(b) Each of this Agreement and any other Principal
Documents to which the Pledgor is a party has been duly executed
and delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor.
Section 2.2. No Legal Bar. The execution, delivery
and performance of this Agreement and any other Principal
Documents to which the Pledgor is a party will not violate any
requirement of law applicable to, or any contractual obligation
of, the Pledgor. The execution, delivery and performance of this
Agreement or any other Principal Document to which the Pledgor is
a party will not result in, or require the creation or imposition
of any Lien on any of the properties or revenues of the Pledgor
pursuant to any requirement of law or contractual obligation,
except for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
Indebtedness of the Pledgor are required in connection with the
execution, delivery and performance by the Pledgor of this
Agreement or any other Principal Document to which it is a party,
except such approvals or consents as have been duly obtained and
are in full force and effect.
Section 2.3. Government Approval. No Governmental
Approvals or other consents or approvals (except those which have
been obtained or made and are in full force and effect or which
are listed in Schedule 4.1(d) of the General Conditions and are
not now required to be obtained) are required to be obtained by
the Pledgor in connection with the execution, delivery and
performance of this Agreement.
Section 2.4. Ownership. The Pledgor is the legal and
beneficial owner of the Pledged Shares free and clear of any Lien
created by the Pledgor except for the security interest created
by this Agreement. The Pledgor has no knowledge of any Lien,
other than the Lien created by this Agreement, on the Pledged
Collateral.
Section 2.5. First Lien. The pledge of the Pledged
Shares pursuant to this Agreement and delivery thereof to the
Pledgee in Wilmington, Delaware creates a valid and perfected
first priority security interest therein, securing the payment of
the Obligations.
ARTICLE 3
COVENANTS
So long as the Obligations remain outstanding or the
Lenders have any obligation under any Loan Document, the Pledgor
covenants and agrees with the Pledgee and the Lenders as follows:
Section 3.1. Existence. The Pledgor shall preserve
and maintain (a) its legal existence and form and (b) all of its
rights, privileges and franchises necessary for the maintenance
of its existence and the performance of its obligations
hereunder.
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest. The Pledgor shall not without the prior
written consent of the Lenders (i) sell, transfer, convey or
otherwise dispose of, or grant any option with respect to or
pledge any interest in, any ownership interest in the Company,
except if such sale, transfer, conveyance or other disposition is
not prohibited by, and would not result in a breach of, any
Principal Document and the recipient agrees in writing to be
bound by the terms of, and become a party to, this Agreement (or
a separate Share Pledge Agreement in respect of the Pledged
Collateral of such recipient), (ii) consent to or approve (A) the
cancellation of any of the Pledged Shares or other Pledged
Collateral or (B) the creation or authorization of any ownership
interest in the Company other than the interests in existence on
the date hereof, except in accordance with or as contemplated by
the Subscription Agreements, the Share Retention and Project
Funds Agreement, the Shareholders' Agreement and the Investment
Agreement, or (iii) create any Lien upon or with respect to any
of the Pledged Collateral owned by the Pledgor, other than the
Lien created pursuant to this Agreement.
Section 3.3. Defense of Pledged Collateral. The
Pledgor warrants and will defend the Pledgee's right, title and
security interest in and to the Pledged Collateral against the
claims of any Person that purports to have rights created by,
through or under the Pledgor.
Section 3.4. No Modification. The Pledgor shall not
amend or modify, or participate in the amendment or modification
of, any provision of the Company's Memorandum of Association or
Articles of Association (other than amendments to increase the
Company's share capital or as required by law, in either of which
cases prompt written notice of the amendment shall be given to
each of the Lenders) without the express written consent of the
Lenders.
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact. The Pledgor
does hereby make, constitute and appoint the Pledgee, with full
power of substitution, as the Pledgor's attorney-in-fact, with
full power and authority, in its own name or in the name, place
and stead of the Pledgor, or otherwise, (i) if an Event of
Default shall have occurred and be continuing, to exercise all
voting, consent, managerial and other rights related to the
Pledged Collateral, and (ii) if an Event of Default shall have
occurred and be continuing, from time to time, generally to do,
at the Pledgee's request and the Pledgor's expense, all acts and
things which the Pledgee or the Lenders may deem necessary to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to the Pledgor representing any payment or other dividend
in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same, all as fully and effectually as
the Pledgor might or could do; and the Pledgor hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement.
Any attempted revocation of the powers of attorney granted herein
shall be null and void. There are no conditions or requirements
imposed on the Pledgee's exercise of the powers of attorney other
than as set forth herein.
Section 4.2. Pledgee May Perform. If an Event of
Default shall have occurred and be continuing, the Pledgee may
itself perform, or cause performance of, any agreement contained
herein, and the expenses of the Pledgee or such other performing
party incurred in connection therewith shall be payable by the
Pledgor; provided, however, that the Pledgee shall have no
obligation to perform or cause performance of any of the
Pledgor's obligations hereunder or under any other Principal
Document to which it is a party.
Section 4.3. Reasonable Care. The Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to
that which the Pledgee accords its own property.
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor. If an Event of
Default shall have occurred and be continuing, then, in addition
to any other rights and remedies provided for herein or otherwise
available to it under any Loan Document or by law, the Pledgee
may, and upon the request of the Lenders shall, exercise the
powers of attorney set forth in Section 4.1 of this Agreement,
and shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be
commercially reasonable:
Section 5.2. Sale of Pledged Collateral. If an Event
of Default shall have occurred and be continuing, then, in
addition to any other rights and remedies provided for herein or
otherwise available to it, the Pledgee may without any further
demand, advertisement or notice (except as expressly provided in
this Section 5.2), exercise all the rights and remedies of a
secured party under the Code as in effect in any relevant
jurisdiction (whether or not the Code applies to the Pledged
Collateral), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided and may
sell, lease, finance, refinance, mortgage or convey the Pledged
Collateral. The Pledged Collateral may so be sold or otherwise
disposed of in one or more sales, at public or private sale,
conducted by any officer or agent of, or auctioneer or attorney
for, the Pledgee, at any exchange or broker's board or at the
Pledgee's place of business or elsewhere, for cash, upon credit
or for other property, for immediate or future delivery, and at
such price or prices and on such terms (including, without
limitation, a requirement that any purchase of all or any part of
the Pledged Collateral for investment be without any intention to
make a distribution thereof) as the Pledgee shall, in its sole
discretion, deem appropriate. Either of the Lenders may be the
purchasers of any or all of the Pledged Collateral so sold at any
such sale and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind. The Pledgee may in its sole
discretion, at any such sale, restrict the prospective bidders or
purchasers as to their number, nature of business and investment
intention. Upon any such sale, the Pledgee shall have the right
to deliver, assign and transfer to the purchaser thereof
(including either of the Lenders) the Pledged Collateral so sold.
Except if and to the extent otherwise prohibited by law, each
purchaser (including either of the Lenders) at any such sale
shall hold the Pledged Collateral so sold absolutely free from
any claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Pledgee shall give the
Pledgor at least ten (10) days' notice (which the Pledgor agrees
is reasonable notification) of any such public or private sale.
Such notice shall state the time and place fixed for any public
sale and the time after which any private sale is to be made.
Any such public sale shall be held at such time or times within
ordinary business hours as the Pledgee shall fix in the notice of
such sale. At any such sale the Pledged Collateral may be sold
in one lot as an entirety or in separate parcels. The Pledgee
shall not be obligated to make any sale pursuant to any such
notice. The Pledgee may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or
publication. In case of any sale of all or any part of the
Pledged Collateral on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Pledgee until the full
selling price is paid by the purchaser thereof, but the Pledgee
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Collateral so sold,
and, in case of any such failure, such Pledged Collateral may
again be sold pursuant to the provisions hereof.
Section 5.3. Conveyances. The Pledgee may as attorney-
in-fact pursuant and subject to Section 4.1 hereof, in the name
and stead of the Pledgor, make and execute all conveyances,
assignments and transfers of the Pledged Collateral sold pursuant
to Section 5.2 hereof, and the Pledgor hereby ratifies and
confirms all that the Pledgee, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Pledgor shall, if so
requested by the Pledgee, ratify and confirm any sale or sales by
executing and delivering to the Pledgee, or to such purchaser or
purchasers, all such instruments as may, in the judgment of the
Pledgee, be advisable for the purpose.
Section 5.4. Payments Received. Until the Pledgee has
requested a transfer in accordance with Section 1.6(b) hereof,
the Pledgor, subject to the terms of the Loan Documents, shall be
entitled to exercise any and all rights, remedies and powers of
the Pledgor under, and receive and retain any amounts paid or
payable to the Pledgor under or pursuant to, the Project
Agreement; thereafter, the Pledgee shall be entitled to exercise
the Pledgor's rights, remedies or powers, and receive and retain
amounts, under the Project Agreement, and all payments received
by the Pledgor under or in connection with the Project Agreement
shall be held in trust for the Pledgee, shall be segregated from
the other funds of the Pledgor and shall, forthwith upon receipt
by the Pledgor, be turned over to the Pledgee or the Designee in
the same form as received by the Pledgor (duly endorsed by the
Pledgor to the Pledgee or the Designee, as appropriate).
Section 5.5. Application of Proceeds. All cash
proceeds received by the Pledgee in respect of any sale or lease
of, collection from, or other realization upon all or any part of
the Pledged Collateral may be held by the Pledgee as Collateral
for the Obligations and/or applied to the payment of the
Obligations. Any surplus of such cash proceeds held by the
Pledgee in excess of or remaining after payment in full of the
Obligations shall be paid over to the Pledgor or whomsoever the
Pledgee shall determine to be lawfully entitled thereto.
Section 5.6. Discharge of Purchaser. The receipt by
the Pledgee of the purchase money paid at any sale made by it
shall be a sufficient discharge therefor, sold as aforesaid; and
no purchaser (or representative or assign of any purchaser),
after paying such purchase money, shall be bound to see to the
application of such purchase money or any part thereof or in any
manner whatsoever be answerable for any loss, misapplication or
non-application of any such purchase money, or any part thereof,
or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
Section 5.7. No Liability. Neither the Pledgee nor
the Lenders shall incur any liability as a result of the sale of
the Pledged Collateral, or any part thereof, at any private sale
conducted in a commercially reasonable manner. The Pledgor
hereby waives, to the full extent permitted by applicable law,
all claims, damages and demands against the Pledgee and the
Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any claims
against the Pledgee and the Lenders, arising by reason of the
fact that the price at which the Pledged Collateral, or any part
thereof, was sold was less than may have been obtained at a
public sale or was less than the aggregate amount of the
Obligations so long as such sale shall have been conducted in
accordance with this Agreement. The foregoing is not intended to
release any party from liability for any claim, damage or demand
resulting from its gross negligence or willful misconduct.
Section 5.8. Remedies Cumulative. Each and every
right and remedy of the Pledgee shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy
given hereunder or under any other Loan Document or any other
document now or hereafter existing at law or in equity or by
statute.
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances. If the Pledgee shall
determine to exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 5.2 hereof, the Pledgor shall,
upon request of the Pledgee, at the Pledgor's own expense do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any requirement
of law.
Section 6.2. Pledgee. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification.
(a) Subject to the limitations set forth in Section
7.1(c) hereof, the Pledgor shall indemnify each of the Pledgee
and each of the Lenders from and against any and all claims,
losses and liabilities growing out of or resulting from the
failure by the Pledgor to perform or observe any of the
provisions hereof, including, without limitation, (i) the sale
of, collection from, or other realization upon, the Pledged
Collateral, or any part thereof, in connection with such failure,
or (ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders, except for claims, losses or liabilities
resulting from such party's gross negligence or willful
misconduct. Subject as aforesaid, the Pledgor will upon demand
pay to the Pledgee or the Lenders the amount of any and all
expenses, including the fees and expenses of its and their
respective counsel and of any experts and agents, which such
party may incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (i) the sale of, collection from, or other
realization upon, the Pledged Collateral, or any part thereof, or
(ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders.
(b) If any obligation of the Pledgor arising under
this Article 7, as limited by the provisions of Section 7.1(c)
hereof, shall be prohibited or unenforceable in any jurisdiction
then, as to such jurisdiction and subject to such limitations,
the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible
under applicable law.
(c) The Pledgor is willing to enter into this
Agreement and to guarantee the Guaranteed Obligations, and to
secure such guarantee by granting to the Pledgee a Lien on the
Pledged Collateral, only if the Pledgee agrees, on behalf of
itself and the Lenders, to limit the personal liability of the
Pledgor under this Agreement as provided in this Section 7.1(c).
Accordingly, and notwithstanding anything in this Agreement to
the contrary, all payments to be made by the Pledgor under this
Agreement in respect of the Guaranteed Obligations and other
Obligations shall be made or payable only from and to the extent
of the Pledged Collateral and all proceeds, of whatever nature,
of the realization thereof, and the Pledgee, on behalf of itself
and the Lenders, agrees that it and the Lenders will look solely
to the Pledged Collateral and such proceeds for payments to be
made by the Pledgor under this Agreement and that the Pledgor
shall not, save as expressly hereinafter provided in this
Section 7.1(c), be otherwise personally liable under this
Agreement for any Guaranteed Obligations or other Obligations;
provided, however, that (i) the provisions of this Section 7.1(c)
shall not prevent the Pledgee from exercising any and all of its
remedies provided in this Agreement with respect to the Pledged
Collateral or provided in any other agreement or document, and
(ii) the Pledgor shall remain personally liable for, and shall
indemnify the Pledgee and the Lenders against, any and all
claims, losses and liabilities growing out of or resulting from,
(y) the failure by the Pledgor to perform its obligations under
Section 1.3, Article 3 or Section 10.2 hereof or (z) any material
inaccuracy of any representation and warranty set forth in
Article 2 hereof, except to the extent arising out of the gross
negligence or willful misconduct of the Pledgee.
ARTICLE 8
WAIVER
Section 8.1. Waivers. To the fullest extent it may
lawfully so agree, the Pledgor agrees that it will not at any
time insist upon, claim, plead, or take any benefit or advantage
of any appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in order to
prevent, delay or hinder the enforcement hereof or the absolute
sale of any part of the Pledged Collateral; the Pledgor for
itself and all who claim through it, so far as it or they now or
hereafter lawfully may do so, hereby waives the benefit of all
such laws, and all right to have the Pledged Collateral
marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Agreement may order the
sale of the Pledged Collateral as an entirety. Without limiting
the generality of the foregoing, the Pledgor hereby (i)
authorizes the Pledgee, for the benefit of the Lenders, in its
sole discretion and without notice to or demand upon the Pledgor
and without otherwise affecting the obligations of the Pledgor
hereunder, from time to time to take and hold other collateral
for payment of any Obligations, or any part thereof, and to
exchange, enforce or release such other collateral or any part
thereof, and to accept and hold any endorsement or guarantee of
payment of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person granting
security for or in any other way obligated upon any Obligations
or any part thereof and (ii) waives and releases any and all
right to require the Pledgee or the Lenders to collect any of the
Obligations from any specific item or items of the Pledged
Collateral or from any other party liable as guarantor or in any
other manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
ARTICLE 9
TERMINATION
Section 9.1. Termination. If (i) at any time all
Obligations owing to the Lenders have been paid in full and (ii)
a period of one hundred twenty (120) days (or such other period
as may be applicable with respect to preference or similar
periods under applicable bankruptcy, insolvency or similar laws)
has elapsed since the condition set out in clause (i) is
satisfied without any court determining that the Company is
insolvent or, if such determination is made within that time, the
Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters, then this Agreement shall
terminate; provided that the provisions of Article 7 shall
survive such termination. At the time of such termination, the
Pledgee at the request and expense of the Pledgor, will promptly
execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to the
Pledgor such of the Pledged Collateral as has not theretofore
been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the
Pledgee hereunder on account of the Pledged Collateral and not
otherwise applied to the payment of the Obligations.
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, demands, requests
and other communications provided for hereunder shall be in
writing and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Either party may
designate from time to time by written notice to the other party
another address to which notices are to be sent.
For Pledgor:
Address: c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Attention: Sharon Pierson
Facsimile: (345) 949-8080
With a copy to:
Address: Panda Energy International, Inc.
2100 Spring Valley, Suite 1001
Dallas, TX 75244
Attention: General Counsel
Facsimile: (972) 980-6815
For the Company:
Address: c/o Maples & Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Attention: Sharon Pierson
Facsimile: (345) 949-8080
With a copy to:
Address: Panda Energy International, Inc.
2100 Spring Valley, Suite 1001
Dallas, TX 75244
Attention: General Counsel
Facsimile: (972) 980-6815
For Pledgee:
Address: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and
be governed by the laws of the State of New York without regard
to the conflicts of laws provisions thereof (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Pledgor
with respect to this Agreement or any other Principal Document to
which the Pledgor is a party may be brought in the courts of the
State of New York in the Borough of Manhattan or of the United
States for the Southern District of New York and, by execution
and delivery of this Agreement, the Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
Pledgor agrees that a judgment in any such action or proceeding
shall be conclusive and binding upon it, and may be enforced in
any other jurisdiction, including without limitation in Nepal, by
a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. The Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Pledgor
agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Pledgee. The Pledgor further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth opposite its
signature below, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of the
Pledgee to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the
Pledgor in Nepal or in any other jurisdiction.
(b) The Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which it is a party brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any action or
proceeding brought by the Pledgee in any such court has been
brought in an inconvenient forum.
(c) The Pledgor acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 10.3. Benefit of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
Pledgor, the Pledgee, and all future holders of the Pledged
Shares or other Pledged Collateral; provided, however, that the
Pledgor may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Pledgee. Each of the Lenders may transfer, assign
or grant its rights hereunder in connection with an assignment or
transfer of all or any part of its interest in its Commitment or
the IFC Loans or the DEG Loan, as the case may be, in accordance
with the Investment Agreement.
Section 10.4. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in exercising any
right, power or privilege hereunder or under any other Loan
Document, and no course of dealing between the Pledgor and the
Pledgee, shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies
provided under this Agreement or in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Pledgee may otherwise have. No notice to or demand on
the Pledgor in any case shall entitle the Pledgor to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Pledgor to any other or
further action in any circumstances without notice or demand.
Section 10.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 10.6. Language. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language, or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Pledgor or the Pledgee, as the case may be,
which translation shall be the governing version between the
Pledgor and the Pledgee.
Section 10.7. Headings Descriptive. The headings of
the several Articles and sections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 10.8. Amendment or Waiver. Neither this
Agreement nor any of the terms hereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by all of the parties hereto.
Section 10.9. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and acknowledged by their
respective officers or representatives hereunto duly authorized
as of the date first above written.
PANDA BHOTE KOSHI
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee under the Trust and Retention Agreement
By:
Name:
Title:
PANDA OF NEPAL
By:
Name:
Title:
SCHEDULE A
SHAREHOLDINGS*
Par Value No. of
Holder Class of Shares of Shares
Shares
Panda Bhote Koshi Ordinary Shares US $1.00 2
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares
To: Panda of Nepal
c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Sir:
We have mortgaged shares of R.S. 100 each of Panda of Nepal,
registered in the name of _________________ from Share No.
___________ to _______________ totalling ________ shares of the
value of Rs. ____________ to Wilmington Trust Company, not in
its individual capacity but solely as Trustee for International
Finance Corporation and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH. We herewith submit this
application, along with a copy of the related document and the
share certificate(s). Please record the matter of the mortgage of
said shares in the Register of the Company.
Dated:
Yours,
(Signature of the applicant)
Name: Panda Bhote Koshi
Address: c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
SCHEDULE C
Form No. (5)
Application for Transfer of Shares
To: Panda of Nepal
c/o Maples and Calder
P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands, B.W.I.
Sir:
As _____________________________ has duly executed the deed
transferring its right over the shares of R.S. 100 each of Panda
of Nepal registered in its name from Share no. ________ to
___________, having received R.S. ______________ as consideration
for the said shares, in our favor. We, having agreed to be
responsible for the profit and loss relating to those shares,
have submitted this application along with one copy of the said
deed and the share certificate(s). Kindly transfer the ownership
of said shares in our name.
Yours,
(Signature of the purchaser)
Name:
Address:
Date:
_______________________________
* Prior to issuance and pledge of shares at the Financial
Closing Date.
EXHIBIT NO. 10.164
SHARE PLEDGE AGREEMENT
among
PANDA OF NEPAL
as Pledgor,
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Trustee under the
Trust and Retention Agreement,
as Pledgee,
and
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Dated as of the Closing Date
TABLE OF CONTENTS
PRELIMINARY STATEMENTS 1
DEFINITIONS 1
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee 2
Section 1.2. Security for Obligations 3
Section 1.3. Delivery of Pledged Collateral 3
Section 1.4. Waiver 4
Section 1.5. Further Assurances 4
Section 1.6. Voting Rights; Dividends, etc 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Power and Authorization; Enforceable
Obligations 5
Section 2.3. Government Approval 6
Section 2.4. Ownership 6
Section 2.5. First Lien 6
ARTICLE 3
COVENANTS
Section 3.1. Existence 6
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest 6
Section 3.3. Defense of Pledged Collateral 7
Section 3.4. No Modification 7
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact 7
Section 4.2. Pledgee May Perform 7
Section 4.3. Reasonable Care 7
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor 8
Section 5.2. Sale of Pledged Collateral 8
Section 5.3. Conveyances 9
Section 5.4. Payments Received 9
Section 5.5. Application of Proceeds 9
Section 5.6. Discharge of Purchaser 9
Section 5.7. No Liability 9
Section 5.8. Remedies Cumulative 10
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances 10
Section 6.2. Pledgee 10
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification 10
ARTICLE 8
WAIVER
Section 8.1. Waivers 11
ARTICLE 9
TERMINATION
Section 9.1. Termination 12
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices 12
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue 13
Section 10.3. Benefit of Agreement 14
Section 10.4. No Waiver; Remedies Cumulative 14
Section 10.5. Severability 14
Section 10.6. Language 14
Section 10.7. Headings Descriptive 15
Section 10.8. Amendment or Waiver 15
Section 10.9. Counterparts 15
SCHEDULE A
SHAREHOLDINGS 17
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares 18
SCHEDULE C
Form No. (5)
Application for Transfer of Shares 19
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT (this "Agreement"), dated as of
the Closing Date, among PANDA OF NEPAL, an exempted company with
limited liability organized and existing under the laws of the
Cayman Islands (the "Pledgor"), WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Trustee under the Trust and
Retention Agreement (the "Pledgee"), and BHOTE KOSHI POWER
COMPANY PRIVATE LIMITED, a private limited liability company
registered under the Nepalese Company Act, 2021 (the "Company").
PRELIMINARY STATEMENTS
As of the date hereof, the Pledgor is the legal and
beneficial owner of five hundred seventy-four thousand nine
hundred ninety-two (574,992) Shares of the Company, which Shares
are set forth opposite the Pledgor's name in Schedule A attached
hereto (such Shares, collectively, the "Pledged Shares").
The Company has been granted the right to build, own
and operate a 36MW (nominal net) hydroelectric power plant in the
Sindhupalchok District of Nepal.
IFC is willing to provide financing for the power
plant, pursuant to that certain IFC Investment Agreement dated as
of the Closing Date between the Company and IFC (the "IFC
Investment Agreement"), but only if the Pledgor shall pledge its
Shares pursuant to this Agreement.
DEG is willing to provide financing for the power
plant, pursuant to that certain DEG Investment Agreement dated as
of the Closing Date between the Company and DEG (the "DEG
Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreement"), but only if the Pledgor
shall pledge its shares pursuant to this Agreement. (IFC and DEG
are hereinafter collectively referred to as the "Lenders" and
individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each
of IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into by the parties hereto.
NOW, THEREFORE, in consideration of each of the Lenders
entering into the Investment Agreement, and to induce each of the
Lenders to make disbursements thereunder, the Pledgor agrees as
follows:
DEFINITIONS
For all purposes of this Agreement (i) capitalized
terms not otherwise defined herein shall have the meanings set
forth in Schedule A to the General Conditions and (ii) the
principles of construction set forth in Schedule A to the General
Conditions shall apply.
ARTICLE 1
UNDERTAKINGS
Section 1.1. Guarantee.
(a) Subject to Section 7.1(c) hereof, the Pledgor
hereby irrevocably and unconditionally guarantees to the Pledgee,
for the benefit of the Lenders, the timely performance by the
Company of all of its obligations under the Loan Documents and
the other Principal Documents as and when required thereunder and
the payment by the Company when due of any and all sums owed
under the Loan Documents and the other Principal Documents (the
"Guaranteed Obligations").
(b) No compromise, alteration, amendment,
modification, extension, renewal, release or other change of, or
waiver, consent or other action in respect of any liability or
obligation under or in respect of, or of any of the terms,
covenants or conditions of the Investment Agreement or any other
Principal Document, or any Security, shall in any way alter or
affect the obligations of the Pledgor hereunder (other than a
written waiver of any obligation hereunder executed by the
Pledgee at the direction of the Lenders).
(c) The obligations of the Pledgor under this Section
1.1 are absolute and unconditional, subject to the limitations
set forth in Section 7.1(c) hereof.
(d) The Pledgor hereby irrevocably waives, to the
extent it may do so under applicable law, any defense based on
the adequacy of a remedy at law which may be asserted as a bar to
the remedy of specific performance in any action brought against
it.
(e) The Pledgor irrevocably waives, to the extent it
may do so under applicable law, any protection to which it may be
entitled under bankruptcy, liquidation, winding up, insolvency or
similar laws of any jurisdiction in the event of a Company
Bankruptcy. In the event a trustee in bankruptcy or debtor-in-
possession takes any action (including without limitation the
institution of any action, suit or other proceeding) in a Company
Bankruptcy for the purpose of enforcing the obligations of the
Pledgor under this Agreement, the Pledgor hereby agrees, to the
extent it may do so under applicable law, that it will not assert
any defense, claim or counterclaim denying liability hereunder on
the basis that this Agreement is an executory contract that
cannot be assumed, assigned or enforced. If a Company Bankruptcy
shall occur, the Pledgor, to the extent it may do so under
applicable law, shall reconfirm its prepetition waiver of any
protection to which it may be entitled under such laws and, to
give effect to such waiver, the Pledgor consents to the
assumption and enforcement of each provision of this Agreement by
the debtor-in-possession or the Company's trustee in bankruptcy,
as the case may be.
(f) The Pledgor hereby irrevocably waives all rights
of subrogation which may have arisen or may hereafter arise in
connection with this Section 1.1 to the claims of the Trustee or
the Lenders against the Company and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity or
other similar such right from the Company which may otherwise
have arisen in connection with this Section 1.1.
(g) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Pledgee, for the benefit of the
Lenders, as security for its timely and punctual payment and
performance of the Guaranteed Obligations and payment and
performance when due of any and all sums owed by and all
obligations of the Pledgor hereunder (collectively, the
"Obligations") and grants a first lien on, and prior perfected
security interest in, all of the Pledgor's right, title and
interest in, to and under the following, whether now owned or
hereafter acquired (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the
certificates representing such Pledged
Shares, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise distributed
in respect of or in exchange for any or all
of such Pledged Shares;
(ii) all additional Shares of and
other securities of the Company from time to
time acquired by the Pledgor in any manner,
and the certificates representing such
additional Shares and other securities, and
all dividends, cash, instruments, and other
property from time to time received,
receivable or otherwise distributed in
respect of or in exchange for any or all of
such Shares; and
(iii) all the Pledgor's right,
title and interest to, in and under the
Project Agreement, including without
limitation (A) all rights of the Pledgor to
receive moneys due from time to time
thereunder or pursuant thereto and (B) all
claims of the Pledgor for damages for breach
thereof or default thereunder.
(h) This Agreement and the grant of the security
interest made hereby are for collateral purposes only, and
neither the Pledgee nor the Lenders shall by virtue of this
Agreement or by their exercise of any rights hereunder be deemed
to have any liability for any contractual obligations of the
Pledgor or of the Company.
Section 1.2. Security for Obligations. This Agreement
secures the payment and performance of all Obligations, as
defined in Section 1.1(g) hereof.
Section 1.3. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by the Pledgee on behalf of the Lenders pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, together with an executed Form 4 (the form
of which is attached hereto as Schedule B), all in form and
substance satisfactory to the Pledgee and the Lenders. The
Pledgor hereby instructs the Company, and the Company hereby
agrees, to promptly deliver directly to the Pledgee all stock
certificates, instruments or other documents evidencing or
constituting Pledged Collateral issued by the Company after the
date of this Agreement, marked to show recordation by the Company
of the pledge thereof to the Trustee. If any such certificates,
instruments or documents are delivered to the Pledgor, the
Pledgor shall hold in trust for the Pledgee upon receipt, and
immediately thereafter transfer to the Pledgee, any such
certificates, instruments or documents (except, until the Pledgee
has requested a transfer of the Pledged Collateral pursuant to
Section 1.6(b) hereof, cash dividends and interest paid in
respect of the Pledged Collateral). The Pledgor shall also
promptly deliver to the Company executed Form(s) 4 with respect
to all Pledged Collateral and to the Pledgee duly executed
instruments of transfer or assignment in blank relating to all
Pledged Collateral delivered to the Pledgee.
(b) The Pledgee shall have the right, at any time, in
its discretion and upon notice to the Pledgor, following the
occurrence and continuance of an Event of Default, to file a Form
5 (the form of which is attached hereto as Schedule C) with
respect to the Pledged Collateral with the Company and to
transfer to or to register in the names of the Lenders or any of
their nominees any or all of the Pledged Collateral. In
addition, the Pledgee shall have the right, if an Event of
Default shall have occurred and be continuing, to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
Section 1.4. Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of claims with
a court in the event of receivership or bankruptcy, protests of
any kind, and all setoffs and counterclaims, to the extent
permitted by applicable law. Upon the occurrence and continuance
of an Event of Default, the Pledgee may proceed directly and at
once, upon reasonable prior notice to the Pledgor if practicable
under the circumstances, against the Pledged Collateral to
collect and recover the full amount or any portion of the
Obligations so due and payable, without first proceeding against
the Pledgor or the Company or against any other security or
collateral provided by the Pledgor or the Company with respect to
the Obligations.
Section 1.5. Further Assurances. The Pledgor agrees
that at any time and from time to time, at its expense, the
Pledgor shall promptly execute and deliver all further
instruments and documents (including, without limitation, any
additional pledge agreement or security agreement), and take all
further action that, in the opinion of the Pledgee or the
Lenders, is necessary in order to perfect and protect any
security interest in the Pledged Collateral granted or purported
to be granted hereby or to enable the Pledgee to exercise and
enforce its rights and remedies hereunder with respect to the
Pledged Collateral or any part thereof.
Section 1.6. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred
and be continuing, the Pledgee shall not request the transfer of
the Pledged Shares into its name in the Company's share register
and, until the Pledgee has requested such a transfer in
accordance with Section 1.6(b) hereof:
(i) the Pledgor shall be entitled
to exercise any and all voting and other
consensual rights pertaining to the Pledged
Collateral or any part thereof for any
purpose not inconsistent with the terms of
this Agreement, the Investment Agreement or
the other Loan Documents; and
(ii) the Pledgor shall be entitled
to receive and retain any and all cash
dividends and interest paid in respect of the
Pledged Collateral.
(b) Upon the occurrence and during the continuation of
an Event of Default, the Pledgee may require the Pledged Shares
to be transferred into its name in the Company's share register
and thereupon:
(i) all rights of the Pledgor to
exercise the voting and other consensual
rights which the Pledgor would otherwise be
entitled to exercise pursuant to Section
1.6(a)(i) hereof and to receive the dividends
and interest payments which the Pledgor would
otherwise be authorized to receive and retain
pursuant to Section 1.6(a)(ii) hereof shall
cease, and all such rights shall thereupon
become vested in the Pledgee, which shall
thereupon have the sole right to exercise
such voting and other consensual rights and
to receive and hold as Pledged Collateral
such dividends and interest payments; and
(ii) all dividends and interest
payments which are received by the Pledgor
contrary to the provisions of
Section 1.6(b)(i) hereof shall be received in
trust for the benefit of the Pledgee, shall
be segregated from other funds of the Pledgor
and shall be forthwith paid over to the
Pledgee as Pledged Collateral in the same
form as so received (with any necessary
endorsement).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants as of the
date hereof:
Section 2.1. Power and Authorization; Enforceable
Obligations.
(a) The Pledgor has full power and authority and the
legal right to conduct its business as now conducted and as
proposed to be conducted by it, to execute, deliver and perform
this Agreement and any other Principal Documents to which it is a
party and to take all actions necessary to complete the
transactions contemplated by this Agreement and any such other
Principal Document. The Pledgor has taken all necessary action
to authorize the transactions contemplated hereby on the terms
and conditions of this Agreement and any other Principal Document
to which it is a party, and to authorize the execution, delivery
and performance of this Agreement and any other Principal
Document to which it is a party.
(b) Each of this Agreement and any other Principal
Documents to which the Pledgor is a party has been duly executed
and delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor.
Section 2.2. No Legal Bar. The execution, delivery
and performance of this Agreement and any other Principal
Documents to which the Pledgor is a party will not violate any
requirement of law applicable to, or any contractual obligation
of, the Pledgor. The execution, delivery and performance of this
Agreement or any other Principal Document to which the Pledgor is
a party will not result in, or require the creation or imposition
of any Lien on any of the properties or revenues of the Pledgor
pursuant to any requirement of law or contractual obligation,
except for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
Indebtedness of the Pledgor are required in connection with the
execution, delivery and performance by the Pledgor of this
Agreement or any other Principal Document to which it is a party,
except such approvals or consents as have been duly obtained and
are in full force and effect.
Section 2.3. Government Approval. No Governmental
Approvals or other consents or approvals (except those which have
been obtained or made and are in full force and effect or which
are listed in Schedule 4.1(d) of the General Conditions and are
not now required to be obtained) are required to be obtained by
the Pledgor in connection with the execution, delivery and
performance of this Agreement.
Section 2.4. Ownership. The Pledgor is the legal and
beneficial owner of the Pledged Shares free and clear of any Lien
created by the Pledgor except for the security interest created
by this Agreement. The Pledgor has no knowledge of any Lien,
other than the Lien created by this Agreement, on the Pledged
Collateral.
Section 2.5. First Lien. The pledge of the Pledged
Shares pursuant to this Agreement and delivery thereof to the
Pledgee in Wilmington, Delaware creates a valid and perfected
first priority security interest therein, securing the payment of
the Obligations.
ARTICLE 3
COVENANTS
So long as the Obligations remain outstanding or the
Lenders have any obligation under any Loan Document, the Pledgor
covenants and agrees with the Pledgee and the Lenders as follows:
Section 3.1. Existence. The Pledgor shall preserve
and maintain (a) its legal existence and form and (b) all of its
rights, privileges and franchises necessary for the maintenance
of its existence and the performance of its obligations
hereunder.
Section 3.2. Restriction on Sale and Transfer of
Pledged Interest. The Pledgor shall not without the prior
written consent of the Lenders (i) sell, transfer, convey or
otherwise dispose of, or grant any option with respect to or
pledge any interest in, any ownership interest in the Company,
except if such sale, transfer, conveyance or other disposition is
not prohibited by, and would not result in a breach of, any
Principal Document and the recipient agrees in writing to be
bound by the terms of, and become a party to, this Agreement (or
a separate Share Pledge Agreement in respect of the Pledged
Collateral of such recipient), (ii) consent to or approve (A) the
cancellation of any of the Pledged Shares or other Pledged
Collateral or (B) the creation or authorization of any ownership
interest in the Company other than the interests in existence on
the date hereof, except in accordance with or as contemplated by
the Subscription Agreements, the Share Retention and Project
Funds Agreement, the Shareholders' Agreement and the Investment
Agreement, or (iii) create any Lien upon or with respect to any
of the Pledged Collateral owned by the Pledgor, other than the
Lien created pursuant to this Agreement.
Section 3.3. Defense of Pledged Collateral. The
Pledgor warrants and will defend the Pledgee's right, title and
security interest in and to the Pledged Collateral against the
claims of any Person that purports to have rights created by,
through or under the Pledgor.
Section 3.4. No Modification. The Pledgor shall not
amend or modify, or participate in the amendment or modification
of, any provision of the Company's Memorandum of Association or
Articles of Association (other than amendments to increase the
Company's share capital or as required by law, in either of which
cases prompt written notice of the amendment shall be given to
each of the Lenders) without the express written consent of the
Lenders. The Pledgor shall not amend or modify the Shareholders'
Agreement without the express written consent of the Lenders.
ARTICLE 4
POWER OF ATTORNEY
Section 4.1. Pledgee as Attorney-in-Fact. The Pledgor
does hereby make, constitute and appoint the Pledgee, with full
power of substitution, as the Pledgor's attorney-in-fact, with
full power and authority, in its own name or in the name, place
and stead of the Pledgor, or otherwise, (i) if an Event of
Default shall have occurred and be continuing, to exercise all
voting, consent, managerial and other rights related to the
Pledged Collateral, and (ii) if an Event of Default shall have
occurred and be continuing, from time to time, generally to do,
at the Pledgee's request and the Pledgor's expense, all acts and
things which the Pledgee or the Lenders may deem necessary to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to the Pledgor representing any payment or other dividend
in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same, all as fully and effectually as
the Pledgor might or could do; and the Pledgor hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement.
Any attempted revocation of the powers of attorney granted herein
shall be null and void. There are no conditions or requirements
imposed on the Pledgee's exercise of the powers of attorney other
than as set forth herein.
Section 4.2. Pledgee May Perform. If an Event of
Default shall have occurred and be continuing, the Pledgee may
itself perform, or cause performance of, any agreement contained
herein, and the expenses of the Pledgee or such other performing
party incurred in connection therewith shall be payable by the
Pledgor; provided, however, that the Pledgee shall have no
obligation to perform or cause performance of any of the
Pledgor's obligations hereunder or under any other Principal
Document to which it is a party.
Section 4.3. Reasonable Care. The Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to
that which the Pledgee accords its own property.
ARTICLE 5
REMEDIES
Section 5.1. Substitution for Pledgor. If an Event of
Default shall have occurred and be continuing, then, in addition
to any other rights and remedies provided for herein or otherwise
available to it under any Loan Document or by law, the Pledgee
may, and upon the request of the Lenders shall, exercise the
powers of attorney set forth in Section 4.1 of this Agreement,
and shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be
commercially reasonable:
Section 5.2. Sale of Pledged Collateral. If an Event
of Default shall have occurred and be continuing, then, in
addition to any other rights and remedies provided for herein or
otherwise available to it, the Pledgee may without any further
demand, advertisement or notice (except as expressly provided in
this Section 5.2), exercise all the rights and remedies of a
secured party under the Code as in effect in any relevant
jurisdiction (whether or not the Code applies to the Pledged
Collateral), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided and may
sell, lease, finance, refinance, mortgage or convey the Pledged
Collateral. The Pledged Collateral may so be sold or otherwise
disposed of in one or more sales, at public or private sale,
conducted by any officer or agent of, or auctioneer or attorney
for, the Pledgee, at any exchange or broker's board or at the
Pledgee's place of business or elsewhere, for cash, upon credit
or for other property, for immediate or future delivery, and at
such price or prices and on such terms (including, without
limitation, a requirement that any purchase of all or any part of
the Pledged Collateral for investment be without any intention to
make a distribution thereof) as the Pledgee shall, in its sole
discretion, deem appropriate. Either of the Lenders may be the
purchasers of any or all of the Pledged Collateral so sold at any
such sale and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind. The Pledgee may in its sole
discretion, at any such sale, restrict the prospective bidders or
purchasers as to their number, nature of business and investment
intention. Upon any such sale, the Pledgee shall have the right
to deliver, assign and transfer to the purchaser thereof
(including either of the Lenders) the Pledged Collateral so sold.
Except if and to the extent otherwise prohibited by law, each
purchaser (including either of the Lenders) at any such sale
shall hold the Pledged Collateral so sold absolutely free from
any claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Pledgee shall give the
Pledgor at least ten (10) days' notice (which the Pledgor agrees
is reasonable notification) of any such public or private sale.
Such notice shall state the time and place fixed for any public
sale and the time after which any private sale is to be made.
Any such public sale shall be held at such time or times within
ordinary business hours as the Pledgee shall fix in the notice of
such sale. At any such sale the Pledged Collateral may be sold
in one lot as an entirety or in separate parcels. The Pledgee
shall not be obligated to make any sale pursuant to any such
notice. The Pledgee may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or
publication. In case of any sale of all or any part of the
Pledged Collateral on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Pledgee until the full
selling price is paid by the purchaser thereof, but the Pledgee
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Collateral so sold,
and, in case of any such failure, such Pledged Collateral may
again be sold pursuant to the provisions hereof.
Section 5.3. Conveyances. The Pledgee may as attorney-
in-fact pursuant and subject to Section 4.1 hereof, in the name
and stead of the Pledgor, make and execute all conveyances,
assignments and transfers of the Pledged Collateral sold pursuant
to Section 5.2 hereof, and the Pledgor hereby ratifies and
confirms all that the Pledgee, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Pledgor shall, if so
requested by the Pledgee, ratify and confirm any sale or sales by
executing and delivering to the Pledgee, or to such purchaser or
purchasers, all such instruments as may, in the judgment of the
Pledgee, be advisable for the purpose.
Section 5.4. Payments Received. Until the Pledgee has
requested a transfer in accordance with Section 1.6(b) hereof,
the Pledgor, subject to the terms of the Loan Documents, shall be
entitled to exercise any and all rights, remedies and powers of
the Pledgor under, and receive and retain any amounts paid or
payable to the Pledgor under or pursuant to, the Project
Agreement; thereafter, the Pledgee shall be entitled to exercise
the Pledgor's rights, remedies or powers, and receive and retain
amounts, under the Project Agreement, and all payments received
by the Pledgor under or in connection with the Project Agreement
shall be held in trust for the Pledgee, shall be segregated from
the other funds of the Pledgor and shall, forthwith upon receipt
by the Pledgor, be turned over to the Pledgee or the Designee in
the same form as received by the Pledgor (duly endorsed by the
Pledgor to the Pledgee or the Designee, as appropriate).
Section 5.5. Application of Proceeds. All cash
proceeds received by the Pledgee in respect of any sale or lease
of, collection from, or other realization upon all or any part of
the Pledged Collateral may be held by the Pledgee as Collateral
for the Obligations and/or applied to the payment of the
Obligations. Any surplus of such cash proceeds held by the
Pledgee in excess of or remaining after payment in full of the
Obligations shall be paid over to the Pledgor or whomsoever the
Pledgee shall determine to be lawfully entitled thereto.
Section 5.6. Discharge of Purchaser. The receipt by
the Pledgee of the purchase money paid at any sale made by it
shall be a sufficient discharge therefor, sold as aforesaid; and
no purchaser (or representative or assign of any purchaser),
after paying such purchase money, shall be bound to see to the
application of such purchase money or any part thereof or in any
manner whatsoever be answerable for any loss, misapplication or
non-application of any such purchase money, or any part thereof,
or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
Section 5.7. No Liability. Neither the Pledgee nor
the Lenders shall incur any liability as a result of the sale of
the Pledged Collateral, or any part thereof, at any private sale
conducted in a commercially reasonable manner. The Pledgor
hereby waives, to the full extent permitted by applicable law,
all claims, damages and demands against the Pledgee and the
Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any claims
against the Pledgee and the Lenders, arising by reason of the
fact that the price at which the Pledged Collateral, or any part
thereof, was sold was less than may have been obtained at a
public sale or was less than the aggregate amount of the
Obligations so long as such sale shall have been conducted in
accordance with this Agreement. The foregoing is not intended to
release any party from liability for any claim, damage or demand
resulting from its gross negligence or willful misconduct.
Section 5.8. Remedies Cumulative. Each and every
right and remedy of the Pledgee shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy
given hereunder or under any other Loan Document or any other
document now or hereafter existing at law or in equity or by
statute.
ARTICLE 6
ADDITIONAL RIGHTS OF THE PLEDGEE
Section 6.1. Further Assurances. If the Pledgee shall
determine to exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 5.2 hereof, the Pledgor shall,
upon request of the Pledgee, at the Pledgor's own expense do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any requirement
of law.
Section 6.2. Pledgee. Wilmington Trust Company in
acting hereunder shall be entitled to the rights, protections and
immunities of the Trustee under the Trust and Retention
Agreement.
ARTICLE 7
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 7.1. Indemnification.
(a) Subject to the limitations set forth in Section
7.1(c) hereof, the Pledgor shall indemnify each of the Pledgee
and each of the Lenders from and against any and all claims,
losses and liabilities growing out of or resulting from the
failure by the Pledgor to perform or observe any of the
provisions hereof, including, without limitation, (i) the sale
of, collection from, or other realization upon, the Pledged
Collateral, or any part thereof, in connection with such failure,
or (ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders, except for claims, losses or liabilities
resulting from such party's gross negligence or willful
misconduct. Subject as aforesaid, the Pledgor will upon demand
pay to the Pledgee or the Lenders the amount of any and all
expenses, including the fees and expenses of its and their
respective counsel and of any experts and agents, which such
party may incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (i) the sale of, collection from, or other
realization upon, the Pledged Collateral, or any part thereof, or
(ii) the exercise or enforcement of any of the rights of the
Pledgee or the Lenders.
(b) If any obligation of the Pledgor arising under
this Article 7, as limited by the provisions of Section 7.1(c)
hereof, shall be prohibited or unenforceable in any jurisdiction
then, as to such jurisdiction and subject to such limitations,
the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible
under applicable law.
(c) The Pledgor is willing to enter into this
Agreement and to guarantee the Guaranteed Obligations, and to
secure such guarantee by granting to the Pledgee a Lien on the
Pledged Collateral, only if the Pledgee agrees, on behalf of
itself and the Lenders, to limit the personal liability of the
Pledgor under this Agreement as provided in this Section 7.1(c).
Accordingly, and notwithstanding anything in this Agreement to
the contrary, all payments to be made by the Pledgor under this
Agreement in respect of the Guaranteed Obligations and other
Obligations shall be made or payable only from and to the extent
of the Pledged Collateral and all proceeds, of whatever nature,
of the realization thereof, and the Pledgee, on behalf of itself
and the Lenders, agrees that it and the Lenders will look solely
to the Pledged Collateral and such proceeds for payments to be
made by the Pledgor under this Agreement and that the Pledgor
shall not, save as expressly hereinafter provided in this
Section 7.1(c), be otherwise personally liable under this
Agreement for any Guaranteed Obligations or other Obligations;
provided, however, that (i) the provisions of this Section 7.1(c)
shall not prevent the Pledgee from exercising any and all of its
remedies provided in this Agreement with respect to the Pledged
Collateral or provided in any other agreement or document, and
(ii) the Pledgor shall remain personally liable for, and shall
indemnify the Pledgee and the Lenders against, any and all
claims, losses and liabilities growing out of or resulting from,
(y) the failure by the Pledgor to perform its obligations under
Section 1.3, Article 3 or Section 10.2 hereof or (z) any material
inaccuracy of any representation and warranty set forth in
Article 2 hereof, except to the extent arising out of the gross
negligence or willful misconduct of the Pledgee.
ARTICLE 8
WAIVER
Section 8.1. Waivers. To the fullest extent it may
lawfully so agree, the Pledgor agrees that it will not at any
time insist upon, claim, plead, or take any benefit or advantage
of any appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in order to
prevent, delay or hinder the enforcement hereof or the absolute
sale of any part of the Pledged Collateral; the Pledgor for
itself and all who claim through it, so far as it or they now or
hereafter lawfully may do so, hereby waives the benefit of all
such laws, and all right to have the Pledged Collateral
marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Agreement may order the
sale of the Pledged Collateral as an entirety. Without limiting
the generality of the foregoing, the Pledgor hereby (i)
authorizes the Pledgee, for the benefit of the Lenders, in its
sole discretion and without notice to or demand upon the Pledgor
and without otherwise affecting the obligations of the Pledgor
hereunder, from time to time to take and hold other collateral
for payment of any Obligations, or any part thereof, and to
exchange, enforce or release such other collateral or any part
thereof, and to accept and hold any endorsement or guarantee of
payment of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person granting
security for or in any other way obligated upon any Obligations
or any part thereof and (ii) waives and releases any and all
right to require the Pledgee or the Lenders to collect any of the
Obligations from any specific item or items of the Pledged
Collateral or from any other party liable as guarantor or in any
other manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
ARTICLE 9
TERMINATION
Section 9.1. Termination. If (i) at any time all
Obligations owing to the Lenders have been paid in full and (ii)
a period of one hundred twenty (120) days (or such other period
as may be applicable with respect to preference or similar
periods under applicable bankruptcy, insolvency or similar laws)
has elapsed since the condition set out in clause (i) is
satisfied without any court determining that the Company is
insolvent or, if such determination is made within that time, the
Lenders are reasonably satisfied that no payment made to the
Lenders or the Trustee by the Company will be set aside as a
consequence thereof under any law relating to bankruptcy,
insolvency or similar matters, then this Agreement shall
terminate; provided that the provisions of Article 7 shall
survive such termination. At the time of such termination, the
Pledgee at the request and expense of the Pledgor, will promptly
execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to the
Pledgor such of the Pledged Collateral as has not theretofore
been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the
Pledgee hereunder on account of the Pledged Collateral and not
otherwise applied to the payment of the Obligations.
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, demands, requests
and other communications provided for hereunder shall be in
writing and shall be deemed to have been given (a) when presented
personally, (b) when sent by overnight courier service, on the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor, or (c) when transmitted by facsimile, upon
acknowledgment of receipt by the recipient. Either party may
designate from time to time by written notice to the other party
another address to which notices are to be sent.
For Pledgor:
Address: Panda of Nepal
c/o Maples and Calder
P.O. Box 309
Ugland House
Smith Church Street
Grand Cayman
Cayman Islands, R.W.I.
Attention: Sharon Pierson
Facsimile: (809) 949-8080
with a copy to:
Address: Panda Energy International, Inc.
4100 Spring Valley Road
Suite 1001
Dallas, Texas 75244
Attention: General Counsel
Facsimile: (972) 980-6815
For Pledgee:
Address: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Section 10.2. Governing Law; Submission to
Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and
be governed by the laws of the State of New York without regard
to the conflicts of laws provisions thereof (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the state of
New York). Any legal action or proceeding against the Pledgor
with respect to this Agreement or any other Principal Document to
which the Pledgor is a party may be brought in the courts of the
State of New York in the Borough of Manhattan or of the United
States for the Southern District of New York and, by execution
and delivery of this Agreement, the Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
Pledgor agrees that a judgment in any such action or proceeding
shall be conclusive and binding upon it, and may be enforced in
any other jurisdiction, including without limitation in Nepal, by
a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. The Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Pledgor
agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Pledgee. The Pledgor further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it, at its address set forth opposite its
signature below, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of the
Pledgee to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the
Pledgor in Nepal or in any other jurisdiction.
(b) The Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Principal
Document to which it is a party brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any action or
proceeding brought by the Pledgee in any such court has been
brought in an inconvenient forum.
(c) The Pledgor acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 10.3. Benefit of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
Pledgor, the Pledgee, and all future holders of the Pledged
Shares or other Pledged Collateral; provided, however, that the
Pledgor may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Pledgee. Each of the Lenders may transfer, assign
or grant its rights hereunder in connection with an assignment or
transfer of all or any part of its interest in its Commitment or
the IFC Loans or the DEG Loan, as the case may be, in accordance
with the Investment Agreement.
Section 10.4. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in exercising any
right, power or privilege hereunder or under any other Loan
Document, and no course of dealing between the Pledgor and the
Pledgee, shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies
provided under this Agreement or in any other Loan Document are
cumulative and not exclusive of any rights, powers or remedies
which the Pledgee may otherwise have. No notice to or demand on
the Pledgor in any case shall entitle the Pledgor to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Pledgor to any other or
further action in any circumstances without notice or demand.
Section 10.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 10.6. Language. All documents to be furnished
or communications to be given or made under this Agreement shall
be in the English language, or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Pledgor or the Pledgee, as the case may be,
which translation shall be the governing version between the
Pledgor and the Pledgee.
Section 10.7. Headings Descriptive. The headings of
the several Articles and sections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
Section 10.8. Amendment or Waiver. Neither this
Agreement nor any of the terms hereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by all of the parties hereto.
Section 10.9. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and acknowledged by their
respective officers or representatives hereunto duly authorized
as of the date first above written.
PANDA OF NEPAL
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee under the Trust and Retention Agreement
By:
Name:
Title:
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
SCHEDULE A
SHAREHOLDINGS*
Holder Class of Shares Par Value No. of Shares
Panda of Nepal Ordinary Shares 100 Rs. 574,992
SCHEDULE B
Form No. (4)
Application for Recording Mortgage of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
We have mortgaged shares of R.S. 100 each of Bhote Koshi Power
Company Private Limited, registered in the name of
_________________ from Share No. ___________ to _______________
totalling ________ shares of the value of Rs. ____________ to
Wilmington Trust Company, not in its individual capacity but
solely as Trustee for International Finance Corporation and DEG-
Deutsche Investitions-und Entwicklungsgesellschaft mbH. We
herewith submit this application, along with a copy of the
related document and the share certificate(s). Please record the
matter of the mortgage of said shares in the Register of the
Company.
Dated:
Yours,
(Signature of the applicant)
Name: Panda of Nepal
Address: c/o Maples and Calder
P.O. Box 309
Ugland House
Smith Church Street
Grand Cayman
Cayman Islands, R.W.I.
SCHEDULE C
Form No. (5)
Application for Transfer of Shares
To: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tahachal
Kathmandu, Nepal
Sir:
As _____________________________ has duly executed the deed
transferring its right over the shares of R.S. 100 each of Bhote
Koshi Power Company Private Limited registered in its name from
Share no. ________ to ___________, having received R.S.
______________ as consideration for the said shares, in our
favor. We, having agreed to be responsible for the profit and
loss relating to those shares, have submitted this application
along with one copy of the said deed and the share
certificate(s). Kindly transfer the ownership of said shares in
our name.
Yours,
(Signature of the purchaser)
Name:
Address:
Date:
_______________________________
* Prior to issuance and pledge of shares at the Financial
Closing Date.
EXHIBIT NO. 10.165
[Letterhead - Industrial and Commercial Bank of China, Singapore
Branch]
PERFORMANCE GUARANTEE
Irrevocable, Unconditional Guarantee
No. 9711073
TO: Bhote Koshi Power Company Private Limited
(hereinafter referred to as the "Owner")
KHA 1-960, Kalimati, Tachachal
Kathmandu, Nepal
ATTN: Ms Kim Knightstep Monk
10 December 1997
Dear Sirs:
We refer to our Performance Guarantee No. 9705047, for
USDLR3,400,000.00 dated 1 May 1997 and our Performance
Guarantee No. 9610025 for USDLR11,600,000.00 dated 8 Oct 1996.
Please be advised that these two guarantees are hereby
cancelled and replace by the following Guarantee No. 9711073.
Please confirm in writing that the above mentioned two
guarantees have been cancelled and shall cease to be valid and
binding on us upon your receipt of this Guarantee No. PG
9711073 dated 10 December 1997. This Guarantee replaces the
one (bearing the same number) which we sent to you via tested
Telex to Chase Manhattan Bank, New York on 8 December 1997.
Quote
Performance Guarantee No. 9711073
1. By an Amended and Restated Contract for the Engineering,
Procurement and Construction of the Upper Bhote Koshi
Hydroelectric Project on the Bhote Koshi River in the
Sindhupalchok District of Nepal (the "EPC Contract")
dated as of December 19, 1996 between the Owner and China
Gezhouba Construction Group Corporation for Water
Resources and Hydropower (the "Contractor"), the
Contractor shall provide an irrevocable, unconditional
bank guarantee from a financial institution acceptable to
Owner in an amount equal to twenty-five percent (25%) of
the Contract Price, namely US$11,600,000 (subject to
increase or decrease pursuant to Paragraph 2 hereof), and
Industrial and Commercial Bank of China (the
"Guarantor"), acting through its Singapore branch, which
has been requested by the Contractor, hereby agrees to
provide such Guarantee for the Contractor in favor of the
Owner. Terms defined and expressions construed in the
EPC Contract have the same meaning and construction in
this Guarantee.
2. The sum referred to in Paragraph 1 of this Guarantee
shall be amended as follows:
(i) Upon receipt by the Guarantor of a
certificate from the Owner stating that there
has been an increase or decrease of the
Contract Price pursuant to Article 6 of the EPC
Contract and stating the amount of such
increase or decrease, the sum referred to in
Paragraph 1 shall be increased or decreased, as
applicable, by the amount stated in such
certificate from the Owner (it being understood
that the aforesaid certificate shall have a
copy of the relevant change order attached);
(ii) Upon receipt by the Guarantor of a
certificate from the Owner stating that there
has been a drawing under this Guarantee for
amounts due from the Contractor for Performance
Liquidated Damages or Schedule Liquidated
Damages pursuant to Article 12 or Article 13 of
the EPC Contract and stating the amount of such
drawing, the Guarantor shall increase the
amount of this Guarantee by the amount of any
such drawing;
(iii) Promptly, upon receipt of a
certificate at any time and from time to time
pursuant to clause (i) or (ii) above from the
Owner, the Guarantor shall execute and deliver
by international courier to the Owner (or to
its respective order) (with a copy to the
Trustee) an amendment to this Guarantee, in the
form of Annex A (correctly completed),
confirming the adjustment of the amount of the
Guarantee in accordance with the terms hereof.
It is the express understanding and agreement of the
Guarantor, the Owner, and the Contractor that, except on
account of increases pursuant to Clause (i) of Paragraph
2 hereof, the maximum amount of the Contractor's
liability which is being guaranteed by the Guarantor
pursuant to this Guarantee is an amount equal to thirty-
five percent (35%) of the Contract Price, namely
USD16,219,000.00.
3. It is a condition precedent to the Owner's obligation
under the EPC Contract to employ the Contractor or to
continue such employment anytime during the term of the
EPC Contract that the Guarantor enters into this first
demand Guarantee in favor of the Owner of such twenty-
five percent (25%) of the Contract Price (subject to
increase and decrease pursuant to Paragraph 2 hereof).
4. This Guarantee is issued at the request of the Contractor
as per Exhibit G (as revised and agreed upon between the
Owner and the Contractor) of the EPC Contract, and shall
automatically become effective at Financial Closing,
without any further action or confirmation by the
Guarantor or the Contractor. This Guarantee shall be a
continuing guarantee remaining in full force and effect
during the entire term of the EPC Contract and until the
later of (i) the date falling thirty (30) days after WTC
has indicated, in a written notice to the Guarantor, the
agreement (a copy of which agreement does not need to be
presented to the Guarantor) of IFC that the Final
Acceptance of the Facility (as defined in the EPC
Contract) has occurred, and (ii) the date the Contractor
has delivered to the Owner (with a copy to the Trustee) a
Warranty Guarantee (in accordance with the EPC Contract)
in form and substance satisfactory to the Trustee, at
which time the Owner (or, if applicable, the Trustee)
shall return this Performance Guarantee to the Guarantor
with instructions for cancellation.
5. It is acknowledged and agreed that an intended assignee
of this Guarantee is Wilmington Trust Company, or any
substitute or replacement therefor from time to time
(provided IFC (as defined below) has given written notice
to the Guarantor of such substitute or replacement)
(Wilmington Trust Company or, as applicable, any such
substitute or replacement hereinafter referred to as
"WTC"), in each case acting on behalf of and for the
benefit of International Finance Corporation, an
international organization organized and existing by
virtue of the Articles of Agreement among its member
countries ("IFC") and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft mbH, a company organised and
existing under the laws of the Federal Republic of
Germany ("DEG") (WTC, acting on behalf of and for the
benefit of IFC, referred to herein as the "Trustee").
6 This is an irrevocable and unconditional guarantee issued
by the Guarantor, whereby the Guarantor shall assume the
liability of a primary obligor, and not merely as
guarantor under an ordinary guarantee, and shall be
jointly and severally liable with the Contractor to the
Owner for the twenty-five percent (25%) of the EPC
Contract Price, namely US $11,600,000.00 (subject to
increase and decrease pursuant to Paragraph 2 hereof).
Accordingly, the Guarantor hereby unconditionally and
irrevocably guarantees the due and punctual payment by
the Contractor of all sums whatsoever that the Owner
shall certify (in a manner set out in paragraph 6 below)
are due and owing by the Contractor to the Owner, whether
actually or contingently, under or in connection with the
EPC Contract, up to a maximum amount of US$11,600.000.00
(the "Guaranteed Amount") (subject to increase and
decrease pursuant to Paragraph 2 hereof) and the
Guarantor unconditionally and irrevocably agrees that, if
the Owner notifies (in writing) the Guarantor that for
any reason the Contractor has not made payment on first
demand of any such sums, the Guarantor will pay such sums
on first demand by the Owner, up to the Guaranteed
Amount. Should there be any increase or decrease of the
Contract Price pursuant to Paragraph 2 hereof, the
Guaranteed Amount automatically shall be adjusted
accordingly immediately upon the delivery to the
Guarantor of a certificate in accordance with Paragraph 2
hereof, and any delay by the Owner to deliver to the
Guarantor a certificate in accordance with Paragraph 2
hereof shall not affect the increase or decrease of the
Guaranteed Amount immediately upon delivery of such
certificate, nor shall the failure of the Guarantor to
execute and deliver an amendment in accordance with
Paragraph 2(iii) hereof affect the increase or decrease
of the Guaranteed Amount.
7. Under this Guarantee, the Owner is hereby granted with
absolute and unconditional rights to make multiple
drawings from time to time, and in the event that the
Contractor fails to perform its obligations under the EPC
Contract, the Owner shall be entitled to issue a written
demand to the Guarantor for payment up to an aggregate
amount not to exceed the Guaranteed Amount, as increased
or decreased from time to time as aforesaid. Such
written demand shall be in the following form:
"Re: Guarantee No. [___________________]
(i) We refer to the Irrevocable Unconditional
Guarantee No. [______________] (the "Guarantee") for
a maximum amount of US$11,600,000.00 (or such other
amount as may be provided for therein). Terms
defined in the Guarantee shall have the same meaning
in this Certificate.
(ii) We hereby state that the Contractor has failed
to perform its obligations under the EPC Contract.
(iii) We hereby demand from you the sum of
US$[_____________] under the Guarantee.
(iii) We hereby confirm and certify to you that
as at the date of this Certificate, the sum being
drawn is due and owing by the Contractor under the
EPC Contract and the Contractor has not fulfilled
its obligations under the EPC Contract to pay such
sum on first demand and that, accordingly, we are
entitled to make a claim on you under the Guarantee.
(iv) Please pay such amount by wire transfer, in
immediately available funds, in US Dollars, to
Account No. , in the name of ,
at Wilmington Trust Company, [address]."
The Guarantor shall not require that such written demand
be accompanied by any documents from any third parties or
any evidence of the Contractor's non-compliance with the
EPC Contract.
8. Under this Guarantee, the Guarantor is hereby committed
to honor such written demand from the Owner for payment
immediately upon presentation. Each payment by the
Guarantor hereunder shall be made in US Dollars and shall
reduce the cumulative amount of the Guaranteed Amount on
a dollar-for-dollar basis, subject, however, to the
Guarantor's obligation to increase the amount of this
Guarantee pursuant to Paragraph 2 hereof. The Guarantor
shall neither require the Owner to exercise its recourse
against the Contractor first, nor require the Owner to
exhaust its remedies against the Contractor first, and
shall not set such requirements as a precondition of the
Guarantor to effect its payment under this Guarantee. In
particular, the Guarantor shall not raise any contractual
defense by the Contractor under the EPC Contract, but
shall honor its obligations hereunder as an indebtedness
independent of the EPC Contract or any obligations of the
Contractor thereunder. Without limiting the foregoing,
any evidence or assertion submitted or made by the
Contractor or any third party shall not impact in any way
the Guarantor's obligations to make payments under this
Guarantee upon written demand therefor from the Owner.
9. This Guarantee is not assignable by either the Guarantor
or the Owner, except by the Owner to the Trustee or by
the Owner to any person to whom the Trustee or IFC may
sell an interest in the Facility upon delivery to the
Guarantor of a completed notice of assignment, signed by
the assignor and counter-signed by the assignee. This
Guarantee shall be binding on the Guarantor and its
successors and shall inure to the benefit of the Owner
(and its successors and permitted assignees).
10. The obligations of the Guarantor hereunder shall not be
discharged by (i) any time, grace, indulgence, waiver or
consent at any time given to the Contractor, (ii) any
lack of validity or enforceability of, or any termination
of, amendment to or affecting, or waiver of, any clause
of the EPC Contract, provided that any amendment to the
EPC Contract which increases the Contract Price (with the
exception of any increase pursuant to Paragraph 2 hereof)
will not increase the amount guaranteed by the Guarantor
hereunder, (iii) any failure or delay in the enforcement
or release of any rights in connection with or under the
EPC Contract or this Guarantee. The Guarantor further
acknowledges and agrees that it will remain liable
hereunder notwithstanding that the Contractor may cease
to exist or for any other reason the Owner may no longer
be able to deal with the Contractor.
11. The Guarantor hereby represents, warrants and covenants
to the Owner as follows:
(a) The Guarantor is a state-owned bank duly
organized and validly existing under the laws of
China, is duly registered to do business in
Singapore as a branch and has full power, authority
and legal capacity to execute and deliver this
Guarantee and to assume and perform the obligations
provided for herein;
(b) The Guarantor has taken all appropriate and
necessary legal and other actions to authorize the
execution, delivery and performance of this
Guarantee;
(c) This Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable in
accordance with its terms;
(d) The obligations of the Guarantor hereunder rank
and will rank at least pari passu in priority of
payment and in all other respects with all other
unsecured indebtedness of the Guarantor;
(e) The Guarantor shall supply to the Owner and the
Trustee, upon request, copies of the annual
financial statements of the Guarantor; and
(f) There are no conditions precedent to the
obligation of the Guarantor to perform under, or for
the effectiveness of, this Guarantee.
12. This Guarantee is a commercial act of the Guarantor in
relation to a commercial transaction and all obligations
of the Guarantor arising under this Guarantee are
commercial in nature. The Guarantor hereby irrevocably
waives, and agrees not to raise, any claim of immunity
(if any) from suit, attachment or execution in respect of
any claims which may be made against it at any time
concerning its obligations under this Guarantee, and the
Guarantor agrees that the waivers and agreements set
forth herein shall have the fullest scope permitted under
the Foreign Sovereign Immunities Act of 1976 of the
United States and are intended to be irrevocable for the
purposes of such Act.
13. Any demand from the Owner to the Guarantor for payment
must be in written form, in the English language
delivered to the Guarantor at the following address (or
any new address designated by the Guarantor in writing
duly notified to the Owner in the future) in the
following manner:
(a) Method of delivery: (i) personally delivered,
(ii) transmitted by postage prepaid registered mail
(airmail if international), (iii) transmitted by
internationally recognized courier service, or (iv)
transmitted by telex or facsimile.
(b) Address of the Guarantor:
Industrial and Commercial Bank of China
c/o Singapore Branch
6 Raffles Quay, #12-01
John Hancock Tower
Singapore 048580
Telephone Number: (65)538 2780
Fax Number: (65)538 1370
Attn.: General Manager
14. This Guarantee sets out the entire undertaking of the
Guarantor to the Owner.
15. This Guarantee shall be governed by and construed in
accordance with Singapore Law.
IN WITNESS WHEREOF, the undersigned Guarantor has executed
this Guarantee by its duly authorized officer the day and year
first above-written.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
c/o Singapore Branch
6, Raffles Quay, #12-01,
John Hancock Tower
Singapore 048580
By:____________________________________
Name: Wang Dewen
Title: General Manager
Annex A
Form of Letter of Amendment to Amount of Performance Guarantee
To: Bhote Koshi Power Company Private Limited and
Trustee
Amendment to the Performance Guarantee
No. dated [ ] 1997
Whereas we, Industrial and Commercial Bank of China, acting
through its Singapore Branch, as the Guarantor under the
Performance Guarantee, issued such Performance Guarantee in
favour of the Owner on [ ] 1997 and have
received a certificate from the Owner in accordance with
Paragraph 2 of the Performance Guarantee.
NOW THIS AMENDMENT WITNESSETH as follows:
1. The sum set out in Paragraph 1 of the Performance Guarantee
is [increased] [reduced] by the amount of US$ [amount
certified by the Owner, as applicable].
2. As a consequence of the [increase] [decrease] referred to in
Paragraph 1 of this Amendment, the sum set out in Paragraph
1 of the Performance Guarantee is [amount specified in
Paragraph 1 of the Performance Guarantee prior to amendment
increased or decreased, as applicable, by the amount
specified in Paragraph 1 of this Amendment].
3. All other terms and conditions of the Performance Guarantee
shall remain unchanged.
4. A term defined in the Performance Guarantee has the same
meaning in this Annex A.
Yours faithfully
__________________________________
(Authorized Signatories)
For an on behalf of
Industrial and Commercial Bank of China
EXHIBIT NO. 10.166
Equity Letter of Credit Re S269480; On Letterhead of Issuing Bank
- - The Northern Trust Company]
To: Wilmington Trust Company (the "Trustee") of Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, acting not in its individual capacity but solely for
and on behalf of International Finance Corporation ("IFC"),
2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433 and
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
("DEG"), Belvederestrasse 40, D-50933, Koeln (Mungersdorf),
Federal Republic of Germany (IFC and DEG hereinafter
referred to collectively as the "Lenders" and individually
as a "Lender").
December 17, 1997
IRREVOCABLE STANDBY LETTER OF CREDIT NO. S269480
We hereby establish in your favor this irrevocable standby
Letter of Credit No. S269480 (the "Letter of Credit") for the
account of RDC of Nepal (the "Sponsor"), in the stated amount of
USD $1,091,422.00 (US Dollars One Million Ninety One Trhousand
Four Hudred Twenty Two and No/100) (such amount being the "Stated
Amount"), effective immediately and expiring as provided in
Paragraph 3 of this Letter of Credit, unless otherwise extended.
1. A drawing hereunder may be made on any Business Day
prior to the expiration of this Letter of Credit by delivering no
later than 11:00 a.m. (Chicago time) on such Business Day, to The
Northern Trust Company, 50 South LaSalle Street, Chicago,
Illinois 60675 (or at such other address as may be designated by
written notice delivered to the Trustee and each of the Lenders),
(i) a drawing statement of either the Trustee or either of the
Lenders, in the form of Annex 1 attached hereto, appropriately
completed and duly signed by an authorized officer of the Trustee
or either of the Lenders, as the case may be, and (ii) a draft in
the form of Annex 2 attached hereto.
2. We hereby agree to honor a drawing hereunder made in
strict conformity with the terms and conditions of this Letter of
Credit by transferring in immediately available funds in the
amount specified in the drawing statement delivered to us in
connection with such drawing request to such account at such bank
in the United States as specified in such drawing statement
delivered to us pursuant to, and in accordance with, Paragraph 1
hereof, by 1:00 p.m. (New York City time), on the Business Day
following the date of receipt of such drawing request.
3. This Letter of Credit shall expire at the close of
business at our office at 50 South LaSalle Street, Chicago,
Illinois 60675, on the date which is one (1) year from the date
hereof (the "Stated Expiration Date"); provided, however, that
the Stated Expiration Date shall be automatically extended for a
period of one year effective upon the Stated Expiration Date and
each annual anniversary of the Stated Expiration Date (each such
annual anniversary date being referred to herein as the "New
Stated Expiration Date") unless, at least sixty (60) days prior
to the Stated Expiration Date or any such New Stated Expiration
Date, as the case may be, we notify the Trustee and each of the
Lenders, by registered mail or similar overnight courier service
at the above addresses, that this Letter of Credit shall not be
extended beyond the Stated Expiration Date or the New Stated
Expiration Date, as the case may be. If the Trustee or the
Lenders are so notified, the Trustee or either of the Lenders may
at any time on or before the Stated Expiration Date or the
applicable New Stated Expiration Date, as the case may be, draw
the full amount available hereunder.
4. If a demand for payment made hereunder does not, in any
instance, conform to the terms and conditions of this Letter of
Credit, we shall give prompt notice to the person delivering such
drawing request that the demand for payment was not effective in
accordance with the terms and conditions of this Letter of
Credit, stating the reasons therefor, and that we will upon
instructions from such person hold any documents at his disposal
or return the same to him. Upon being notified that the drawing
request was not effected in conformity with this Letter of
Credit, the person who submitted the drawing request may attempt
to correct any such non-conforming drawing request, provided
conforming documents are presented by the Stated Expiration Date
or the applicable New Stated Expiration Date, as the case may be.
5. Partial and multiple drawings are permitted under this
Letter of Credit.
6. Under no circumstances shall we be obliged to honor any
drawing request which does not comply with the terms and
conditions set forth herein, and the maximum liability with
respect to any request for payment made hereunder shall be the
Stated Amount. Upon the payment by us of the amount specified in
a drawing statement presented to us in connection with any
drawing request hereunder, we shall be fully discharged of our
obligations in respect of such drawing request.
7. As used herein, "Business Day" shall mean a day when
banks are open for business in New York, New York.
8. This Letter of Credit is irrevocable and shall not be
assigned by us or by the Trustee, save that we hereby consent to
the transfer by the Trustee of this Letter of Credit to the
Lenders or any one or more other lenders (or to an agent or
trustee acting on their behalf or to any other designee of the
Lenders or any such other lenders) providing financing to the
Company in connection with the construction, equipping, placing
into operation and operation of the Company's proposed run of the
river hydroelectric power facility to be located in the
Sindhupalchok District in Nepal (the "Project") or to any person
acquiring an interest in the Project and undertake following
receipt of notice of any such transfer (in the form attached
hereto as Schedule 1) to make payments hereunder in accordance
with the directions of such transferee. We hereby acknowledge
and agree that this Letter of Credit is transferable to the
transferees specified in any such notice of transfer.
9. This Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (the
"Uniform Customs") which shall in all respects be deemed a part
hereof as fully as if incorporated herein, except as modified
hereby. Notwithstanding Article 17 of the Uniform Customs, if
this Letter of Credit expires during an interruption of business
as described in such Article 17, this Letter of Credit shall be
extended automatically for a period of fifteen (15) Business Days
from the date of resumption of business. We hereby agree to
provide you with prompt written notice of such resumption of
business. This Letter of Credit shall be deemed to be a contract
made under the laws of the State of New York, U.S.A. and shall,
as to matters not governed by the Uniform Customs, be governed by
and construed in accordance with the laws of the State of New
York, U.S.A.
10. This is not a contract of guarantee and all payments
which are to be made by us hereunder will be made free and clear
of and without deduction for or on account of any set-off or
counterclaim or the raising of any defense which would be
available to the Sponsor under the Equity Subscription Agreement
dated as of December 12, 1997, among Bhote Koshi Power Company
Private Limited (the "Company"), the Sponsor and the Trustee (the
"Equity Subscription Agreement"), or otherwise.
11. In the case of any drawing, as of the date any drawing
is honored, the Stated Amount shall automatically be reduced by
an amount equal to 100% of such drawing. Reductions in the
Stated Amount resulting from any drawing shall not be reinstated.
12. Only upon receipt by us of notice from the Trustee or
either of the Lenders in the form of Annex 3 hereto, signed by
the Trustee or either of the Lenders and appropriately completed,
the Stated Amount shall be reduced by the amount specified in
such notice.
13. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein, except for
Schedule 1 and Annexes 1, 2 and 3 hereto and the notices referred
to herein, and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or
agreement except as set forth above.
Yours faithfully,
Authorized Signatures)
For and on behalf of
The Northern Trust Company
Schedule 1 to
Letter of Credit
No. S269480
INSTRUCTION TO TRANSFER
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Letter of Credit Supervisor
Re: Irrevocable Standby Letter of Credit No. S269480
Ladies and Gentlemen:
For value received, the undersigned beneficiary irrevocably
transfers to:
_____________________________
_____________________________
_____________________________
_____________________________
all rights of the undersigned beneficiary to draw under the above-
captioned Letter of Credit (the "Letter of Credit").
By this transfer, all rights of the undersigned beneficiary
in the Letter of Credit are transferred to the transferee, and
the transferee shall hereafter have the sole rights as
beneficiary thereof, including sole rights relating to any
amendments, whether now existing or hereafter made.
We ask that this transfer be effected and that you transfer
the Letter of Credit to our transferee or that, if so requested
by the transferee, you issue a new irrevocable Letter of Credit
in favor of the transferee with provisions consistent with the
Letter of Credit.
Very truly yours,
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Trustee
By:
Its Authorized Signatory
SIGNATURE AUTHENTICATED
For The Northern Trust Company
ACKNOWLEDGED:
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Trustee as Assignor
By:
Its Authorized Signatory
Annex 1 to
Letter of Credit
No. S269480
DRAWING STATEMENT UNDER IRREVOCABLE STANDBY
LETTER OF CREDIT No. S269480
, 199
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
Attention: Letters of Credit Supervisor
Gentlemen and Mesdames:
The undersigned is making a drawing under the above-
referenced Letter of Credit and hereby certifies to you as
follows:
1. The person signing on behalf of the undersigned is a
duly authorized officer of the undersigned.
2. The undersigned hereby makes demand under the above-
referenced Letter of Credit for USD _______________, which amount
is not in excess of the Stated Amount. Such amount is to be
transferred to [insert wire transfer instructions for appropriate
account with Trustee or IFC or DEG].
3. The undersigned has concurrently presented to you its
draft drawn in the amount specified in Paragraph 2 above. The
date of the draft is the date of this certificate, which is not
later than the Stated Expiration Date or the applicable New
Stated Expiration Date, as the case may be.
All terms used herein which are defined in the Letter of
Credit have the same meanings when used herein.
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
Authorized Signatory for
Trustee
or
By:
Authorized IFC Signatory
OR
By:
Authorized DEG Signatory
Annex 2 to
Letter of Credit No. S269480
DRAFT UNDER IRREVOCABLE STANDBY LETTER OF CREDIT NO. S269480
, 199
At sight pay to the order of ________________ the amount of
USD ___________ drawn on The Northern Trust Company, as issuer of
Irrevocable Standby Letter of Credit No. S269480, dated December
16, 1997.
[ ]
By:
Its Authorized Signatory
Annex 3 to
Letter of Credit No. S269480
REDUCTION OF STATED AMOUNT CERTIFICATE
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
Attention: Michael K. Murphy
Re: Irrevocable Standby Letter of Credit No. S269480
The undersigned, a duly authorized officer of [Trustee or
IFC and/or DEG], hereby certifies to The Northern Trust Company,
50 South LaSalle Street, Chicago, Illinois 60675 (the "Bank")
with reference to Irrevocable Standby Letter of Credit No.
S269480 issued by the Bank in favor of the Trustee (the "Letter
of Credit") that:
1. The Company has received immediately available funds
(in addition to prior amounts received) in the amount of USD
_____________ (the "Reduction Amount"), from the Sponsor in
payment of a Subscription Amount Payment (as such term is defined
in the Equity Subscription Agreement, dated as of December 12,
1997, among the Company, the Sponsor and the Trustee).
2. The Bank is hereby authorized to reduce the Stated
Amount of the Letter of Credit by the Reduction Amount pursuant
to Paragraph 13 of the Letter of Credit.
All terms used herein which are defined in the Letter of
Credit have the same meanings when used herein.
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
Its Authorized Signatory
or
[IFC]
By:
Its Authorized Signatory
OR
[DEG]
By:
Its Authorized Signatory
cc: [International Finance Corporation,
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
or Trustee, as appropriate]
EXHIBIT NO. 10.167
[Form of Equity Letter of Credit Re ____; On Letterhead of
Issuing Bank]
To: Wilmington Trust Company (the "Trustee") of Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, acting not in its individual capacity but solely for
and on behalf of International Finance Corporation ("IFC"),
2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433 and
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
("DEG"), Belvederestrasse 40, D-50933, Koeln (Mungersdorf),
Federal Republic of Germany (IFC and DEG hereinafter
referred to collectively as the "Lenders" and individually
as a "Lender").
December 17, 1997
IRREVOCABLE STANDBY LETTER OF CREDIT NO. 00365153
We hereby establish in your favor this irrevocable standby
Letter of Credit No. 00365153 (the "Letter of Credit") for the
account of Panda of Nepal (the "Sponsor"), in the stated amount
of US$ 16,371,325 (Sixteen Million three Hundred Seventy-One
Thousand Three Hundred and Twenty-Five US Dollars) (such amount
being the "Stated Amount"), effective immediately and expiring as
provided in Paragraph 3 of this Letter of Credit, unless
otherwise extended.
1. A drawing hereunder may be made on any Business Day
prior to the expiration of this Letter of Credit by delivering no
later than 11:00 a.m. (Chicago time) on such Business Day, to
First National Bank of Chicago, One First National Plaza, Suite
0236, Chicago, IL 60670 (or at such other address as may be
designated by written notice delivered to the Trustee and each of
the Lenders), (i) a drawing statement of either the Trustee or
either of the Lenders, in the form of Annex 1 attached hereto,
appropriately completed and duly signed by an authorized officer
of the Trustee or either of the Lenders, as the case may be, and
(ii) a draft in the form of Annex 2 attached hereto.
2. We hereby agree to honor a drawing hereunder made in
strict conformity with the terms and conditions of this Letter of
Credit by transferring in immediately available funds in the
amount specified in the drawing statement delivered to us in
connection with such drawing request to such account at such bank
in the United States as specified in such drawing statement
delivered to us pursuant to, and in accordance with, Paragraph 1
hereof, by 1:00 p.m. (New York City time), on the Business Day
following the date of receipt of such drawing request.
3. This Letter of Credit shall expire at the close of
business at our office at One First National Plaza, Suite 0236,
Chicago, IL 60670, on the date which is one (1) year from the
date hereof (the "Stated Expiration Date"); provided, however,
that the Stated Expiration Date shall be automatically extended
for a period of one year effective upon the Stated Expiration
Date and each annual anniversary of the Stated Expiration Date
(each such annual anniversary date being referred to herein as
the "New Stated Expiration Date") unless, at least sixty (60)
days prior to the Stated Expiration Date or any such New Stated
Expiration Date, as the case may be, we notify the Trustee and
each of the Lenders, by registered mail or similar overnight
courier service at the above addresses, that this Letter of
Credit shall not be extended beyond the Stated Expiration Date or
the New Stated Expiration Date, as the case may be. If the
Trustee or the Lenders are so notified, the Trustee or either of
the Lenders may at any time on or before the Stated Expiration
Date or the applicable New Stated Expiration Date, as the case
may be, draw the full amount available hereunder.
4. If a demand for payment made hereunder does not, in any
instance, conform to the terms and conditions of this Letter of
Credit, we shall give prompt notice to the person delivering such
drawing request that the demand for payment was not effective in
accordance with the terms and conditions of this Letter of
Credit, stating the reasons therefor, and that we will upon
instructions from such person hold any documents at his disposal
or return the same to him. Upon being notified that the drawing
request was not effected in conformity with this Letter of
Credit, the person who submitted the drawing request may attempt
to correct any such non-conforming drawing request, provided
conforming documents are presented by the Stated Expiration Date
or the applicable New Stated Expiration Date, as the case may be.
5. Partial and multiple drawings are permitted under this
Letter of Credit.
6. For any amounts paid to the Trustee or either of the
Lenders under this Letter of Credit, that amount ceases to be
available to the remaining Trustee or Lenders. In the event of
multiple demands for payment from the Trustee and the Lenders,
demands in compliance will be honored in the order of receipt at
our counters, not to exceed the Stated Amount.
7. Under no circumstances shall we be obliged to honor any
drawing request which does not comply with the terms and
conditions set forth herein, and the maximum liability with
respect to any request for payment made hereunder shall be the
Stated Amount. Upon the payment by us of the amount specified in
a drawing statement presented to us in connection with any
drawing request hereunder, we shall be fully discharged of our
obligations in respect of such drawing request.
8. As used herein, "Business Day" shall mean a day when
banks are open for business in New York, New York.
9. This Letter of Credit is irrevocable and shall not be
assigned by us or by the Trustee, save that we hereby consent to
the transfer by the Trustee of this Letter of Credit to the
Lenders or any one or more other lenders (or to an agent or
trustee acting on their behalf or to any other designee of the
Lenders or any such other lenders) providing financing to the
Company in connection with the construction, equipping, placing
into operation and operation of the Company's proposed run of the
river hydroelectric power facility to be located in the
Sindhupalchok District in Nepal (the "Project") or to any person
acquiring an interest in the Project and undertake following
receipt of notice of any such transfer (in the form attached
hereto as Schedule 1) to make payments hereunder in accordance
with the directions of such transferee. We hereby acknowledge
and agree that this Letter of Credit is transferable to the
transferees specified in any such notice of transfer.
10. This Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (the
"Uniform Customs") which shall in all respects be deemed a part
hereof as fully as if incorporated herein, except as modified
hereby. Notwithstanding Article 17 of the Uniform Customs, if
this Letter of Credit expires during an interruption of business
as described in such Article 17, this Letter of Credit shall be
extended automatically for a period of fifteen (15) Business Days
from the date of resumption of business. We hereby agree to
provide you with prompt written notice of such resumption of
business. This Letter of Credit shall be deemed to be a contract
made under the laws of the State of New York, U.S.A. and shall,
as to matters not governed by the Uniform Customs, be governed by
and construed in accordance with the laws of the State of New
York, U.S.A.
11. This is not a contract of guarantee and all payments
which are to be made by us hereunder will be made free and clear
of and without deduction for or on account of any set-off or
counterclaim or the raising of any defense which would be
available to the Sponsor under the Equity Subscription Agreement
dated as of December 12, 1997, among Bhote Koshi Power Company
Private Limited (the "Company"), the Sponsor and the Trustee (the
"Equity Subscription Agreement"), or otherwise.
12. In the case of any drawing, as of the date any drawing
is honored, the Stated Amount shall automatically be reduced by
an amount equal to 100% of such drawing. Reductions in the
Stated Amount resulting from any drawing shall not be reinstated.
13. Only upon receipt by us of notice from the Trustee or
either of the Lenders in the form of Annex 3 hereto, signed by
the Trustee or either of the Lenders and appropriately completed,
the Stated Amount shall be reduced by the amount specified in
such notice.
14. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein, except for
Schedule 1 and Annexes 1, 2 and 3 hereto and the notices referred
to herein, and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or
agreement except as set forth above.
Very truly yours,
The First National Bank of Chicago
Authorized Signor
Schedule 1 to
Letter of Credit
No. 00365153
INSTRUCTION TO TRANSFER
First National Bank of Chicago
One First National Plaza, Suite 0236
Chicago, Illinois 60670
Attention: Standby Letter of Credit Unit
Re: Irrevocable Standby Letter of Credit No. 00365153
Ladies and Gentlemen:
For value received, the undersigned beneficiary irrevocably
transfers to:
_____________________________
_____________________________
_____________________________
_____________________________
all rights of the undersigned beneficiary to draw under the above-
captioned Letter of Credit (the "Letter of Credit").
By this transfer, all rights of the undersigned beneficiary
in the Letter of Credit are transferred to the transferee, and
the transferee shall hereafter have the sole rights as
beneficiary thereof, including sole rights relating to any
amendments, whether now existing or hereafter made.
We ask that this transfer be effected and that you transfer
the Letter of Credit to our transferee or that, if so requested
by the transferee, you issue a new irrevocable Letter of Credit
in favor of the transferee with provisions consistent with the
Letter of Credit.
Very truly yours,
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Trustee
By:
Its Authorized Signatory
SIGNATURE AUTHENTICATED
For The First National Bank of Chicago
ACKNOWLEDGED:
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Trustee as Assignor
By:
Its Authorized Signatory
Annex 1 to
Letter of Credit
No. 00365153
DRAWING STATEMENT UNDER IRREVOCABLE STANDBY
LETTER OF CREDIT No. 00365153
, 199
The First National Bank of Chicago
One First National Plaza, Suite 0236
Chicago, IL 60670
Attention: Michael K. Murphy
Gentlemen and Mesdames:
The undersigned is making a drawing under the above-
referenced Letter of Credit and hereby certifies to you as
follows:
1. The person signing on behalf of the undersigned is a
duly authorized officer of the undersigned.
2. The undersigned hereby makes demand under the above-
referenced Letter of Credit for USD _______________, which amount
is not in excess of the Stated Amount. Such amount is to be
transferred to [insert wire transfer instructions for appropriate
account with Trustee or IFC or DEG].
3. The undersigned has concurrently presented to you its
draft drawn in the amount specified in Paragraph 2 above. The
date of the draft is the date of this certificate, which is not
later than the Stated Expiration Date or the applicable New
Stated Expiration Date, as the case may be.
All terms used herein which are defined in the Letter of
Credit have the same meanings when used herein.
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
Authorized Signatory for
Trustee
or
By:
Authorized IFC Signatory
OR
By:
Authorized DEG Signatory
Annex 2 to
Letter of Credit No. 00365153
DRAFT UNDER IRREVOCABLE STANDBY LETTER OF CREDIT NO. 00365153
, 199
At sight pay to the order of ________________ the amount of
USD ___________ drawn on The First National Bank of Chicago, as
issuer of Irrevocable Standby Letter of Credit No. 00365153,
dated _____________, 1997.
[ ]
By:
Its Authorized Signatory
Annex 3 to
Letter of Credit No. 00365153
REDUCTION OF STATED AMOUNT CERTIFICATE
The First National Bank of Chicago
One First National Plaza, Suite 0236
Chicago, IL 60670
Attention: Michael K. Murphy
Re: Irrevocable Standby Letter of Credit No. 00365153
The undersigned, a duly authorized officer of [Trustee or
IFC and/or DEG], hereby certifies to The First National Bank of
Chicago, One First National Plaza, Suite 0236, Chicago, IL 60670
(the "Bank") with reference to Irrevocable Standby Letter of
Credit No. 00365153 issued by the Bank in favor of the Trustee
(the "Letter of Credit") that:
1. The Company has received immediately available funds
(in addition to prior amounts received) in the amount of USD
_____________ (the "Reduction Amount"), from the Sponsor in
payment of a Subscription Amount Payment (as such term is defined
in the Equity Subscription Agreement, dated as of December 12,
1997, among the Company, the Sponsor and the Trustee).
2. The Bank is hereby authorized to reduce the Stated
Amount of the Letter of Credit by the Reduction Amount pursuant
to Paragraph 13 of the Letter of Credit.
All terms used herein which are defined in the Letter of
Credit have the same meanings when used herein.
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
Its Authorized Signatory
or
[IFC]
By:
Its Authorized Signatory
OR
[DEG]
By:
Its Authorized Signatory
cc: [International Finance Corporation,
DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH
or Trustee, as appropriate]
EXHIBIT NO. 10.168
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
BETWEEN
HIMAL INTERNATIONAL POWER CORPORATION LTD.,
PANDA OF NEPAL,
RDC OF NEPAL
and
INTERNATIONAL FINANCE CORPORATION
KATHMANDU, NEPAL
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. FORMATION OF THE COMPANY 6
SECTION 3. MAIN OBJECTIVES 7
SECTION 4. ROLES OF THE PARTIES 7
SECTION 5. ARTICLES OF ASSOCIATION 7
SECTION 6. SHARE CAPITAL 8
SECTION 7. TRANSFER OF SHARES 9
SECTION 8. PRE-EMPTIVE RIGHTS 10
SECTION 9. GENERAL MEETINGS OF SHAREHOLDERS 11
SECTION 10. PROCEEDINGS AT GENERAL MEETINGS 14
SECTION 11. VOTE OF SHAREHOLDERS 15
SECTION 12. DECISIONS 15
SECTION 13. DIRECTORS 21
SECTION 14. CHIEF EXECUTIVE OFFICER 22
SECTION 15. STATUTORY AUDITOR 22
SECTION 16. LOAN/WORKING CAPITAL 23
SECTION 17. FISCAL PERIOD 23
SECTION 18. FINANCIAL PERIOD 23
SECTION 19. ACCOUNTING PRACTICES 23
SECTION 20. PAYMENT AND TAX MATTERS 24
SECTION 21. NON-ASSIGNABILITY 25
SECTION 22. EFFECTIVE DATE 25
SECTION 23. DURATION 25
SECTION 24. TERMINATION 26
SECTION 25. MODIFICATION 26
SECTION 26. GOVERNING LAW 26
SECTION 27. ARBITRATION 26
SECTION 28. NON-COMPETITION 28
SECTION 29. FUTURE PROJECT DEVELOPMENT 28
SECTION 30. CONFIDENTIALITY 29
SECTION 31. CORRUPT PRACTICES 29
SECTION 32. FORCE MAJEURE 30
SECTION 33. APPROVAL AND LICENSE 30
SECTION 34. LANGUAGE 30
SECTION 35. NOTICE 30
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
PREAMBLE
WHEREAS Himal International Power Corporation Ltd.
(hereafter referred to as "HIPC") is a power
generation and distribution Company established in
Nepal having its office at Soaltee Hotel Ltd.
Tachachal, Kathmandu, Nepal.
WHEREAS Panda of Nepal (hereafter referred to as "PANDA OF
NEPAL") is a power generation and distribution
Company established in Cayman Islands, and is a
subsidiary of Panda Energy International, Inc., a
Texas (USA) corporation, having its registered
office at c/o Maples and Calder, P.O. Box 309,
Ugland House, South Church Street, Grand Cayman,
Cayman Islands.
WHEREAS RDC of Nepal (hereafter referred to as "RDC OF
NEPAL") is a power generation and distribution
Company established in Cayman Islands and a having
its registered office at c/o W.S. Walker & Co.,
lst Floor, Caledonian House, Mary Street, P.O. Box
265 G, George Town, Grand Cayman, Cayman Islands,
is a subsidiary of Resource Development
Consultants, a Wyoming (USA) limited liability
company.
WHEREAS International Finance Corporation (hereafter
referred to as "IFC") is an international
organization established by Articles of Agreement
among its member countries having its offices at
2121 Pennsylvania Avenue, N.W., Washington, D.C.
20433, USA.
WHEREAS The Parties hereto have decided to establish a Joint
Venture Company limited by shares through which to
achieve their objective of hydropower generation
at the Upper Bhote Koshi site, in Nepal, for which
HIPC has already received the license.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS
"ACT" means the Company Act, as in effect from
time to time, including any amendments thereto;
"AFFILIATE(S)" shall mean any person or entity
that directly or indirectly (through one or more
intermediaries) controls or is controlled by or
under common control with the Party specified.
For purposes of this definition, control of a
person or entity means the power, direct or
indirect, to cause or determine the direction of
the management and policies of such person or
entity (whether by ownership of securities,
contract or otherwise);
"AGREEMENT" means this Amended and Restated Joint
Venture Agreement dated as of Financial Closing
Date between Nepali Party and Foreign Parties;
"ARTICLES" means the Amended and Restated Articles
of Association of the Company and amendments made
thereto from time to time;
"BUSINESS DAY" shall mean any Day on which the
offices of HMGN are not closed in Kathmandu,
Nepal;
"COMPANY" means Bhote Koshi Power Company Private
Limited incorporated under the Company Act, 2021
(1964);
"CONCERNED DEPARTMENT" means the Department of
Industries, office of the Company Registrar or any
other department or office designated by HMGN from
time to time to regulate companies in Nepal;
"DAY" shall mean the twenty-four hour period
beginning at 0:00 hours Nepalese Standard Time;
"DEG" shall mean DEG-Deutsche Investitions- und
Entwicklungsgesellschaft mbH, a company organized
and existing under the laws of the Federal
Republic of Germany;
"DEG INVESTMENT AGREEMENT" shall mean the DEG
Investment Agreement dated as of the Closing Date
between the Company and DEG and shall include the
DEG Special Conditions and the General Conditions;
"DEG LOAN" shall mean the loan specified in
Section 3.1 (a) of the DEG Special Conditions or,
as the context may require, the principal amount
thereof from time to time outstanding;
"DEG SPECIAL CONDITIONS" shall mean the DEG
Special Conditions dated as of the Closing Date
between the Company and DEG;
"DIRECTOR(S)" means the Director(s) appointed by
the Shareholders pursuant hereto and holding
office from time to time as Director(s);
"DIVIDEND" means a distribution of the profits of
the Company;
"DOCUMENT" means words represented in the form of
type, printing or handwriting;
"FINANCIAL CLOSING DATE" means the date on which
IFC makes an initial disbursement;
"FINANCIAL YEAR" means the period between 1
January and ending 31 December for the purpose of
United States and other foreign tax laws;
"FISCAL YEAR" means the fiscal year pursuant to
the laws of Nepal applying to a Nepali Company to
keep its financial accounts and to file its tax
returns;
"FOREIGN PARTIES" collectively, means RDC OF
NEPAL, a Cayman Islands corporation and subsidiary
of Resource Development Consultants, a limited
liability company, of Wyoming, United States,
PANDA OF NEPAL, a subsidiary of Panda Energy
International, Inc., a Texas, United States
corporation, and IFC, an international
organization, which are parties to the Agreement
and "Foreign Party" means any of the foregoing
individually;
"GENERAL CONDITIONS" shall mean the Investment
Agreement General Conditions dated as of the
Closing Date, among the Company, IFC and DEG;
"GOVERNMENTAL AUTHORITY" means the Investment
Promotion Board of HMGN and such relevant agency
or department of HMGN designated to regulate
foreign investment in Nepal including, without
limitation, the Department of Industries of
HMG/Nepal;
"HMGN" shall mean His Majesty's Government of
Nepal, its agencies or departments;
"IFC" means International Finance Corporation, an
international organization established by Articles
of Agreement among its member countries;
"IFC INVESTMENT AGREEMENT" shall mean the IFC
Investment Agreement dated as of the Closing Date
between the Company and IFC and shall include the
IFC Special Conditions and the General Conditions;
"IFC LOANS" means loans made by IFC pursuant to
the nvestment Agreement IFC Special Conditions;
"IFC SHARES" means Shares of the Company to be
acquired by IFC pursuant to the Investment
AgreementIFC Special Conditons;
"IFC SPECIAL CONDITIONS" shall mean the IFC
Special Conditions dated as of___ the Closing Date
between the Company and IFC;
"INTERNAL REVENUE CODE" means the Internal Revenue
Code of the United States;
"INVESTMENT AGREEMENT" shall mean and include the
IFC Investment Agreement dated as
of_______________, 1997 the Closing Date, between
the Company and IFC and the DEG Investment
Agreement dated as of the Closing Date between the
Company and DEG; means the Investment Agreement
dated as of Financial Closing Date between the
Company and IFC;
"LIENS" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other),
preference, priority or other security agreement
of any kind or nature whatsoever including,
without limitation, (i) any conditional sale or
other title retention agreement, any financing or
similar statement or notice filed under any
recording or notice statute, and any lease having
substantially the same effect as any of the
foregoing, and (ii) any designation (except as
comtemplated by the Investment Agreement) of loss
payees or beneficiaries or additional insureds or
any similar arrangement under any insurance
policy;
"LOANS" shall mean and include the IFC Loans and
the DEG Loan;
"MEMORANDUM" means the Memorandum of Association
of the Company;
"NEA" means the Nepal Electricity Authority and
its successors and assigns;
"NEPALI PARTY" means Himal International Power
Corp. Ltd., a party to the Agreement;
"OFFICE" means the registered office of the
Company;
"PARTIES" means the parties to this Agreement and
each of their assigns and "Party" means any of the
foregoing individually;
"POWER PURCHASE AGREEMENT" means the Power
Purchase Agreement dated July 21, 1996 between the
NEA and the Company concerning the sale of
electrical energy from the Project, as amended
from time to time;
"PROJECT" means the 36 MW hydroelectric power
generation facility known as the Upper Bhote Koshi
Hydroelectric Project to be located on the Bhote
Koshi River in the Sindhupalchok District of
Nepal;
"PROMOTER" means the Shareholders signing the
application for the registration of the Company,
the Memorandum and the Articles (which shall not
include IFC);
"PROXY" means the duly appointed representative of
a Shareholder to attend and vote in any General
Meeting of the Company;
"REGISTER" means the register of the Shareholders
maintained by the Company;
"SCHEDULE A" means the definitions included in
Schedule A to the Investment Agreement as in
effect on the Financial Closing Date;
"SHARE(S)" means the share(s) with a value of
Rupees 100 each in the share capital of the
Company from time to time;
"SHAREHOLDER" means a person whose name has been
registered in the Register of the Company as a
Shareholder;
"SHARE RETENTION AND PROJECT FUNDS AGREEMENT"
means the Share Retention and Projects Funds
Agreement, dated as of _________, 1997, among the
Company, Panda Energy International, Inc., Harza
Engineering Company International, Harza
Engineering Company International L.P., Himal
International Power Corporation Pvt. Ltd., Soaltee
Enterprises Private Ltd., Soaltee Hotel Ltd.,
Surya Enterprises Private Ltd., Panda Bhote Koshi,
Resource Development Consultants, Panda of Nepal,
RDC of Nepal, IFC, and DEG;
"'SPECIAL RESOLUTION" means a resolution as
required under Section 68 of the Company Act,
1997;
"SPECIFIED PROPORTION(S)" means, prior to
Financial Closing Date, where the whole is 100%:
in relation to Nepali Party, 10%; and in relation
to Foreign Parties, 85% to PANDA OF NEPAL and 5%
to RDC OF NEPAL; and after Financial Closing Date,
where the whole is 100%: in relation to Nepali
Party, 10% and in relation to Foreign Parties, 75%
to PANDA OF NEPAL, 5% to RDC OF NEPAL and 10% to
IFC or any of its transferees (and subsequent
transferees), unless otherwise agreed to in
writing between Nepali Party and Foreign Parties
or adjusted pursuant to this Agreement;
"UNITED STATES" or "U.S." means the United States
of America.
Words in singular include the plural. Words
signifying a gender also signify any other gender.
Persons include bodies corporate and other
association of persons. Interpretation of the
words other than words mentioned above shall be
done in accordance with the meaning ascribed to
them in the Agreement.
SECTION 2. FORMATION OF THE COMPANY
2.1 The Parties immediately upon this Agreement
becoming effective, agree to continue the
Company which has been previously
established, which will be jointly owned by
the Parties.
2.2 The name of the Company shall be BHOTE KOSHI
POWER COMPANY PRIVATE LIMITED.
2.3 The head office of the Company shall be
located at Kathmandu, Nepal; branches and
other business offices, etc., may be
established anywhere as required, except that
under no circumstances may a branch or other
business office, etc., be located in the
United States.
2.4 The Parties hereto shall consult and
cooperate with each other as to the
procedures and particulars required for the
establishment and registration of the
Company.
SECTION 3. MAIN OBJECTIVES
The main objectives of the Company shall be as
follows:
3.1 To develop, construct, own and operate the
Upper Bhote Koshi Hydroelectric Project.
3.2 To sell the generated power to the NEA, HMGN
or its representatives, or directly to
consumers both local and foreign, and others.
3.3 To build transmission lines to transmit power
from the Upper Bhote Koshi Hydroelectric
Project to the NEA power grid or other points
of supply whether through the NEA system or
otherwise.
SECTION 4. ROLES OF THE PARTIES
4.1 Subject to the Articles, PANDA OF NEPAL shall
be the lead developer of the Project and
shall be responsible to the Shareholders for
the day-to-day operation and management of
the Project and the Company.
4.2 Subject to the Articles and pursuant to an
engineering services contract, to be
negotiated and executed between RDC OF NEPAL
or its Affiliates and the Company, RDC OF
NEPAL, or one or more of its Affiliates,
shall be retained as the Project owner's
engineer.
4.3 Subject to the Articles, HIPC shall use its
best efforts to provide the Project with its
essential expertise, including, but not
limited to: (i) obtaining local and central
government permits, licenses and approvals
for the Project and (ii) serving as the local
business liaison for the Project and the
Parties.
SECTION 5. ARTICLES OF ASSOCIATION
The Company's Articles shall be as agreed to by
the Parties hereto and approved by the Office of
Company Registrar. If any discrepancy is found
between this Agreement and the Articles, the
Parties shall amend the Articles to make them
coincide with this Agreement.
SECTION 6. SHARE CAPITAL
6.1 The authorized share capital of the Company
shall be Rupees five billion four hundred
fourteen million five hundred thousand
(Rs. 5,414,500,000) divided into one class of
fifty four million one hundred forty-five
thousand (54,145,000) Shares of Rupees 100 each.
The initial issued share capital of the Company
shall be Rupees two billion (Rs. 2,000,000,000)
divided into twenty million (20,000,000) Shares
of Rupees 100 each and that shall be subscribed
for by the parties in Specified Proportions as
applicable prior to Financial Closing Date. The
initial issued capital shall be subscribed by
Foreign Parties and Nepali Party.
6.2 Subject to Section 6.6, the shareholding ratio
shall at all times be in the Specified
Proportions except that it may be changed by the
mutual written agreement of Nepali Party and
Foreign Parties subject to the approval of the
Concerned Department.
6.3 Subject to the transfer restrictions set forth
in Section 7 and subject to Section 6.6, shares
held by an Affiliate of the Nepali Party or an
Affiliate of the Foreign Parties shall be deemed
to be Shares held by that party for the purpose
of determining the Specified Proportions.
6.4 Subject to Section 6.6, the issued and
subscribed share capital of the Company shall be
held in the Specified Proportions. In addition,
it is envisaged that local and international
financial institutions may subscribe to the
share capital of the Company. Except as
expressly set forth herein or in the Articles of
the Company, any local or international
financial institutions which subscribe to the
share capital of the Company shall be required
to comply with all requirements imposed on
Shareholders by this Agreement and the Articles
of the Company.
6.5 Subject to Section 6.6, the percentage initial
subscribed share capital of the Company shall be
subscribed in the following percentages:
HIPC: 10%
PANDA OF NEPAL: 85%
RDC OF NEPAL: 5%
6.6 In the event that any Party does not contribute
its portion of the issued and subscribed share
capital of the Company as required by this
Agreement, the Articles and in accordance with
the procedures set forth in the Act, each other
Party shall have the right to fund that portion
of the share capital in proportion to each
Party's ownership interest.
6.7 The Parties shall pay in cash (which shall be
in the form of US dollars for the Foreign
Parties and shall be in US dollars or Rupees
for the Nepali Party as permitted by HMGN or
applicable law), kind or services. Cash
contributions of share capital shall be made
to the Company through proper banking
channels.
SECTION 7. TRANSFER OF SHARES
7.1 The right to Shares of the Company may only
be transferred in accordance with the
provisions of this Agreement and the
Articles.
7.2 No Shareholder shall transfer its Shares to
any person who is not already a Shareholder
without the prior written consent of all
other Shareholders, which consent may be
withheld in the sole and absolute discretion
of all other Shareholders; provided however,
that nothing in this Section 7 or elsewhere
in this Agreement shall limit the right of
IFC or any of its transferees (or subsequent
transferees) to transfer any of its Shares in
the Company.
7.3 For purposes of these Articles the term
"transfer" means, with respect to any Share
of the Company or any interest therein, the
transfer, sale, assignment or mortgage of the
Share or any interest therein, the creation
or permission to subsist of any pledge, lien,
charge or other encumbrance with respect to
the Share or any interest therein, the grant
of any option, interest or other rights with
respect to the Share or any interest therein,
or any other disposition of the Share or any
interest or rights in the Share or any part
thereof.
7.4 No transfer or purported transfer by a
Shareholder of any Share in violation of the
restriction in Section 7.2 shall be effective
to confer upon the purported transferee
rights (i) to receive dividends, (ii) to
receive a share of the net assets of the
Company upon its winding up, (iii) otherwise
to participate in distributions of the
property or assets of the Company, (iv) to
receive notice of meetings of the Company,
(v) to attend meetings of the Company, (vi)
to vote on any matter, or (vii) to receive
new Shares. Further, any person who receives
Shares in violation of the restriction in
Section 7.2 shall be obliged within 30 days
of receiving such Shares to offer to transfer
the Shares to the remaining Shareholders of
the Company in the Specified Proportions, and
the remaining Shareholders shall be entitled
to purchase the Shares offered to them by the
purported transferee at a price agreed upon
by the Parties.
7.5 Any person who receives Shares in a transfer
which complies with the requirements in this
Agreement and the Articles shall submit to
the other Parties of the Agreement and to the
office of the Company a written deed of
adherence in the form annexed at Annexure 1
of this Agreement stating that the transferee
agrees to be governed by all of the terms and
provisions of the Agreement, the Articles and
the obligations of the Party from whom it
purchased the Shares, along with a copy of
the deed to record the transfer or mortgage
of such Shares.
7.6 The notifications of intention to transfer
Shares, the terms and conditions of a
proposed transfer, and the decision by the
remaining Shareholders either to purchase
Shares or to consent to their transfer to a
person who is not a Shareholder shall be done
in writing. It is understood and agreed that
IFC and its transferees (and subsequent
transferees) are not bound by this
Section 7.6.
7.7 Any Shares transferred under this Section
shall be subject to necessary government
validation or approval in Nepal, if required.
SECTION 8. PRE-EMPTIVE RIGHTS
8.1 The Parties hereto shall have pre-emptive
rights in proportion to the number of Shares
held by each of them with respect to any new
issuance of shares of the Company. However,
upon the consent of all Shareholders, the pre-
emptive rights may be exercised in a ratio
other than the Shareholding ratio,
particularly in the case of a disinvestment
by an existing Party.
8.2 If any Party does not wish to exercise its
pre-emptive rights in whole or in part, such
Party shall notify the Shareholders of such
intention within forty-five (45) days from
the day of notice that new Shares have been
offered. In this case, the other Parties
shall have the pre-emptive right to such
unsubscribed new shares.
8.3 New Shares to which none of the Partners
hereto have subscribed shall be
preferentially allocated to persons who have
agreed to accept all of the terms and
conditions hereunder, pursuant to the
conditions set by the Shareholders.
SECTION 9. GENERAL MEETINGS OF SHAREHOLDERS
9.1 ANNUAL GENERAL MEETING
a. The Annual General Meetings of the
Company shall discuss the Company's profit
and loss account, cash flow of the Company
balance sheet and the report of the Board of
Directors and the auditors, fix the
remuneration of the auditors, declare
dividends and perform all other work of the
General Meeting.
b. The first Annual General Meeting of the
Company shall be convened within one year
from the date of the Preliminary General
Meeting and every other Annual General
Meeting shall be convened within a period of
six months from the date of the expiry of the
Fiscal Year of the Company.
c. The Annual General Meetings of the
Company shall be held in Kathmandu, Nepal or
such other place as the Shareholders may
decide except that under no circumstances
shall an Annual General Meeting be held in
the United States.
9.2. EXTRAORDINARY GENERAL MEETING
a. Both the Concerned Department and any
Shareholder or Shareholders holding at least
10% in the aggregate of all issued and
outstanding Shares may submit an application
to the registered office of the Company for
the convening of an Extraordinary General
Meeting whenever they deem necessary. The
power of the Board of Directors to call an
Extraordinary General Meeting shall be
limited to calling those Extraordinary
General Meetings which the Concerned
Department or the Shareholders have requested
pursuant to this Section.
b. An Extraordinary General Meeting shall be
held in Kathmandu, Nepal or such other place
as the Shareholders may decide except that
under no circumstances shall an Extraordinary
General Meeting be held in the United States.
9.3 NOTICE PERIOD
Every General Meeting of the Shareholders
shall be convened by issuing a notice
specifying the place, date and agenda of the
meeting in advance. In accordance with the
Act, the notice period for the Annual General
Meetings shall be thirty (30) days and shall
be thirty (30) days for all other General
Meetings or as otherwise required by the Act.
The days in the notice period may be reduced
by unanimous consent of the Shareholders. The
notice of the General Meetings shall be
served according to the Act and Articles to
such persons who have the right to receive
it.
9.4 EX-AGENDA ITEMS
At a General Meeting convened in accordance
with the Act, Shareholders may also make
decisions on matters not mentioned in the
agenda which had been sent while calling the
meeting provided that two thirds of the
Shareholders attending the meeting vote in
favor of discussing such matters.
9.5 QUORUM FOR GENERAL MEETING
a. The proceedings of any General Meeting
shall not be conducted nor a resolution be
passed unless 25% of total number of
Shareholders representing 67% of the total
value of Shares of the Company are present
therein either in person or by proxy;
provided that the presence of at least two
Shareholders shall be compulsory for holding
a General Meeting in that manner.
b. In case the meeting cannot be held for
lack of quorum, another meeting shall be
convened with an advance notice of at least
fifteen (15) days. In case another meeting
is convened in this manner if two
Shareholders of the Company, who represent
51% of the total value of Shares and who are
entitled to vote are present there in person,
there shall be no obstacle in holding the
meeting. If within half an hour of the time
appointed, such meeting still cannot be held
due to inadequate quorum, the same meeting
shall stand adjourned to the same day in the
next week at the same time and place. The
presence of 15% of the total number of
Shareholders representing 51% of the total
value of Shares at such adjourned meeting
either in person or by proxy shall constitute
a quorum. Notwithstanding anything contained
herein before, the Company shall have to
recognize such resolutions as are passed at
such a meeting and act accordingly.
c. A Special Resolution shall not be passed
unless 33% of the total number of
Shareholders representing 75% of the total
value of Shares are present either in person
or by proxy.
d. The quorum for holding an Annual General
Meeting shall be as prescribed by the
Articles. However, it will be necessary for
one representative of each Shareholder to be
present at such a meeting for the quorum to
be complete. If a meeting is adjourned as a
result of such representative not being
present, then notwithstanding the provisions
of this clause, the meeting shall be held at
the next appointed date even if such
representative is not present but provided,
the requirement of quorum as per this Section
9.5 is met.
9.6 PROXY
Shareholders desirous of nominating a
representative shall have to submit a proxy
letter as prescribed in the Articles.
9.7 ELECTION OF CHAIRPERSON
The Chairperson of the Board of Directors
shall chair the General Meeting if he is
present and in his absence, the Shareholders
present at a General Meeting shall elect,
according to their proportionate
shareholding, by majority one Shareholder
present to preside as Chairperson of the
meeting.
9.8 RESOLUTIONS
All matters to be discussed at the General
Meeting shall be presented in the form of
resolutions. Except as provided in Section
12, all other resolutions presented at the
meeting shall be deemed to have been passed
if a simple majority of Shareholders present
at the meeting, whether in person or by
proxy, vote in its favor, provided that in
the case of a Special Resolution, it shall be
deemed to have been passed if 75% of
Shareholders present at the meeting, whether
in person or by proxy, vote in its favor.
SECTION 10. PROCEEDINGS AT GENERAL MEETINGS
10.1 The Shareholders shall at all times regulate
the authorized business of the Company by
exercising control, supervision and direction
in the manner deemed appropriate by them and
by delegating such powers, from time to time,
to the Board of Directors as the Shareholders
deem appropriate. The power of managing the
Company shall be vested in the Shareholders
solely in their capacity as Shareholders.
10.2 Without prejudice to the above-mentioned
general arrangements, the Shareholders in a
General Meeting shall have the following
powers and responsibilities:
a. To arrange for payment of all expenses
incurred for the establishment and
registration of the Company, and approve
agreements concluded before the Company is
formally established.
b. To appoint and remove consultants,
advisors, technicians, assistants and other
employees.
c. To manage and supervise all functions of
the Company and make all necessary
arrangements for smoothly running the
business of the Company including taking
loans and advances.
d. To execute and sign contracts on behalf
of the Company.
e. To operate bank accounts and issue or
endorse bills of exchange, promissory notes,
etc., on behalf of the Company, and buy or
sell Government or other bonds to the extent
allowed by law, to accept, sign and deal in
bills of exchange, cheques, drafts and
Government securities and issue debentures on
behalf of the Company.
f. To arrange for all documents relating to
the financial transactions of the Company to
be duly signed by a person designated by the
Shareholders.
g. To exercise powers and fulfill the duties
prescribed by the Act, laws, this Agreement
and the Articles as prevailing from time to
time.
SECTION 11. VOTE OF SHAREHOLDERS
11.1 Subject to Section 9 and to any other special
rights or restrictions as to voting attached
to any Shares by or in accordance with this
Agreement, every Shareholder who is present
either in person or through a duly authorized
representative shall have one vote for every
Share of which he is the holder; provided
that no Shares of one party shall confer any
right to vote upon a resolution for the
removal from office of a Director appointed
by holders of Shares of the other Party.
11.2 Shareholders shall only be entitled to vote
in accordance with the number of Shares held
if all calls on subscription due on those
Shares are paid.
SECTION 12. DECISIONS
The decisions listed below shall require (i) a
95.1% vote of all outstanding Shares of the
Company prior to the commercial operation date of
the Project (such term "Commercial Operation Date"
shall have the meaning defined in Schedule A) and
(ii) 90% vote of all outstanding Shares of the
Company after the Commercial Operation Date.
12.1 Any change in the general nature of the
business of the Company or any subsidiary and
any disposal of the undertaking or assets of
the Company or of any of its subsidiaries or
any substantial part thereof other than in
the ordinary course of business.
12.2 Approval of the remuneration of the President
of the Company, if one is appointed.
12.3 Any transaction, arrangement or agreement
with or for the benefit of any Director of
the Company or his relative or any company or
firm in which he is a partner, director or
shareholder.
12.4 Acquisition or formation of any subsidiary
company and acquisition of the undertaking or
the whole or part of the assets of any other
company or business which in relation to the
Company's business is substantial.
12.5 The conduct of any business by the Company
other than as contemplated under the Articles
or other governing documents of the Company.
12.6 Incurrence of any indebtedness for borrowed
money in excess of Rs. 10,000,000 including,
without limitation, approval of all
development, construction and permanent
financing arrangements for the Project.
12.7 Increase, other than by way of bonus issue,
or reduction, or other alteration whatsoever
in the authorized or issued Share capital of
the Company or any of its subsidiaries, or
any variation of the rights attached to any
of the Shares for the time being in the
capital of the Company or any of its
subsidiaries, or the granting of any new
options to subscribe for Shares or issues of
any securities convertible into Shares of the
Company or any of its subsidiaries, or
entering into any agreement for the same.
12.8 Any issuance or sale of Shares, any voting
securities of the Company or any securities
of the Company which are exercisable, or
convertible into Shares or other voting
securities of the Company.
12.9 Any issuance of any securities of the Company
having a preference as to dividends or
distributions whether during the life of the
Company or under dissolution, liquidation or
winding-up.
12.10 Any reorganization, consolidation, merger, or
other business combination of the Company or
any subsidiary with or into any other
corporation which is not the Company or a
wholly-owned subsidiary of the Company.
12.11 The sale, lease or exchange of all or
substantially all of the assets of the
Company.
12.12 Any amendments or restatement of the
Articles, this Agreement or other governing
documents of the Company.
12.13 Any recapitalization of the Company.
12.14 Any transaction by the Company with any Party
to this Agreement, or any Affiliate of any of
them.
12.15 The mortgage or change of any part of the
Company's assets.
12.16 The acquisition or disposal by the Company of
any asset or the giving or receiving of any
service otherwise than at market value.
12.17 The admission of any new Shareholder to the
Company subject to the proviso contained in
Section 7.2 hereof.
12.18 The entering into any purchase, finance,
lease, hire purchase, other credit sale or
deferred payment terms contract or any
contract of acquisition or use of any assets
of a capital nature having a value of greater
in total than Rs. 5,000,000 in any financial
year of the Company for which purpose the
aggregate payments to be made under any lease
hire purchase or other credit sale or
deferred payment terms contract will be
deemed to be payable in the year in which the
contract is entered into.
12.19 The appointment and removal of auditors of
the Company.
12.20 The making of any loans to Directors or
Shareholders of the Company.
12.21 The payment or making of any interim or final
dividend or any other distribution in
whatever amount the Shareholders deem
appropriate.
12.22 Notwithstanding the foregoing, if prior to
the tenth anniversary of Commercial Operation
Date (as defined in Schedule A) IFC owns 5%
or more of the Shares, then except as
otherwise prohibited by applicable law, the
Company shall not take any action regarding
the following matters without the affirmative
vote of IFC;
i) any material amendment of the Articles or the
Memorandum of the Company or this Agreement, unless
expressly permitted by the Shareholders' Agreement among the
Company, the Foreign Parties and the Nepali Party,
ii) any merger, consolidation, recapitalization or other
reorganization of the Company with or into any other person,
iii) the taking of any corporate or other action by the
Company for the (A) commencement of a voluntary winding up
under any applicable bankruptcy, insolvency or similar law
now or hereafter in effect, (B) consent to the entry of any
order for relief in winding up by a court or under the
supervision of a court under any such law, (C) consent to
the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or of any substantial part
of the property of the Company or (D) making by the Company
of a general assignment for the benefit of creditors,
iv) any sale, lease, exchange, transfer, pledge,
contribution to a joint venture or other disposition of
assets resulting in the diminution of assets or other
properties, or the incurrence or exposure, contingently or
directly, of liability, which individually or in the
aggregate would materially impair the ability of the Company
to construct, own and operate the plant in accordance with
the scope of the Project;
v) any transaction between the Company and any Affiliate,
any officer or director of the company or any Shareholder
(or any Affiliate of any of them), except future arm's
length transactions and except the performance of the
Principal Documents (as defined in Schedule A), as
applicable, in accordance with the terms thereof,
vi) any change in the Company's line of business from the
Project,
vii) any change in the line of business of any of HIPC,
Panda of Nepal or RDC of Nepal from the holding of Shares in
the Company and matters related thereto,
viii) the entering into of any contract which
individually provides for aggregate payments in excess of
$10,000 or together with all other contracts provides for
aggregate payments in excess of $100,000 and which is not in
the ordinary course of business or is on terms less
favorable to the Company than those available in arm's
length transactions between unrelated parties, or
ix) any expansion of the Project,
x) for such time that any portion of the IFC Loans is
outstanding or during which IFC has any commitment with
respect to the IFC Loans, the appointment of a replacement
firm of auditors in the event the firm then engaged resigns
its engagement or such engagement is proposed to be
terminated by the Company,
xi) except as required by the Share Retention and Project
Funds Agreement, any (A) increase or reduction in the
authorized share capital of the Company, or (B) issuance,
sale or reduction by the Company of share capital or
securities convertible into, exchangeable for or otherwise
granting the right to acquire share capital (including
options, warrants and other rights), and
xii) any creation, grant, incurrence or sufferance of any
Liens other than as permitted by the Investment Agreement
(except that the affirmative vote of the Director appointed
by IFC to the Board of Directors or the affirmative vote of
IFC at a meeting of Shareholders shall not be required for
the creation of a Lien in connection with the refinancing of
the IFC Loans).
12.23 With respect to clause (ix) of Section 12.22
(pertaining to expansion of the Project), in
the event that IFC, in its capacity as a
Shareholder, casts a negative vote but all
other necessary votes and corporate action
have been taken to enable the Company to take
the action specified in said clause (ix) were
it not for the negative vote of IFC (in its
capacity as a Shareholder), then the Company
may give notice to IFC that, unless IFC
changes its negative vote to an affirmative
vote, the Company, if and to the extent
permitted by applicable law, will elect to
purchase IFC's Shares (the "Election
Notice"). If, within thirty (30) days after
IFC receives the Election Notice (such thirty
(30) day period referred to herein as the
"Initial Thirty Day Period"), IFC changes the
aforesaid negative vote to an affirmative
vote, then the Company shall not have the
right to purchase IFC's Shares. If, within
the Initial Thirty Day Period, IFC does not
change the aforesaid negative vote to an
affirmative vote, then the Company, if and to
the extent permitted by applicable law, shall
have the right, which must be exercised (if
at all) within sixty (60) days after the
expiration of the Initial Thirty Day Period,
to purchase all (but not less than all) of
IFC's Shares at a purchase price per share
that will provide to IFC a return on equity
taking into account dividends paid and any
prior return of capital, for IFC of twelve
percent (12%) per annum calculated for the
period from the date on which IFC acquired
its Shares through the date on which IFC's
Shares are purchased and measured in constant
U.S. Dollars by adjusting all U.S. Dollar
amounts by the rate of change during the
foregoing calculation period in the U.S.
Consumer Price Index for all urban customers.
It is expressly acknowledged and agreed that
IFC's failure to approve any expansion of the
Project in IFC's capacity as a lender shall
not trigger any rights of the Company to
purchase IFC's Shares as set forth in this
Section 12.23. In the event the Company is
not legally permitted to purchase the Shares
or if the Shareholders (other than IFC) so
decide even if the Company is legally
permitted to purchase the Shares, the right
of the Company contemplated in this
Section 12.23 to purchase all of IFC's Shares
may be exercised by the Shareholders (other
than IFC), pro rata to their then existing
holdings of Shares or in such other
proportion as they may agree.
SECTION 13. DIRECTORS
13.1 The Shareholders of the Company may delegate
such administrative and related duties as
they deem appropriate. The authority of the
Directors shall be limited to the performance
of such duties as authorized by the
Shareholders and as may be necessary to
comply with the provisions of the Act. In no
instance shall the Directors have the
authority to make unauthorized business
decisions on behalf of the Company.
13.2 The Company shall have up to seven (7)
Directors, four (4) to be appointed by PANDA
OF NEPAL and one (1) each by RDC OF NEPAL,
IFC and Nepali Party. It is agreed and
acknowledged that IFC does not have to
appoint a Director and, during any time
period in which IFC has not appointed a
Director, the total number of Directors shall
be six (6).
13.3 The initial Directors shall consist of the
nominees of the subscribers to the Memorandum
of Association.
13.4 Each Shareholder may:
a. appoint any person to serve as the
Director(s) whom it is entitled to appoint
pursuant to Section 13.2; and
b. appoint any person to serve as an
alternate Director, such alternate Director
to serve as Director in the event the
Director(s) appointed pursuant to
Section 13.4(a) becomes unavailable; and
c. remove any Director appointed by it
pursuant to Section 13.4 (a) or (b) from
office with or without cause.
13.5 The remuneration of the Directors shall be
such sum or sums as may from time to time be
determined by the Shareholders in General
Meeting.
13.6 The Directors may be paid such traveling,
hotel and other expenses as may properly be
incurred by them in the execution of their
duties, including any such expenses incurred
in connection with their attendance at
General Meetings or in connection with the
business of the Company carried out in
accordance with this Agreement.
13.7 Subject as herein otherwise provided or to
the terms of any lawful agreement, the office
of a Director shall be vacated:
a. if he is found lunatic or becomes of
unsound mind;
b. if by notice in writing given to the
Company he resigns his office;
c. if he is removed from office under
Section 13.4 (b) hereof; or
d. if he fails to meet any of the other
qualifications provided in the Act.
13.8 In the event a Director or alternate Director
vacates his office under Section 13.7, or if
a Director or alternate Director is otherwise
unable to carry out his duties as described
in this Agreement, the Shareholders shall
within a reasonable period of time appoint
another person to serve as Director or
alternate Director of the Company as provided
in 13.4 (a) and (b). A Director shall have
no authority to appoint an alternate Director
to serve in his place.
13.9 Until such time as the Shareholders appoint a
new Director as described in Section 13.8,
the Shareholders shall exercise all the
powers referred to in this Agreement as
exercisable by the Director.
SECTION 14. CHIEF EXECUTIVE OFFICER
Foreign Parties shall have the right to
nominate, by a majority vote of Shares, the
President of the Company who shall be the
Chief Executive Officer. This appointment
shall be made with the concurrence of the
Nepali Party.
SECTION 15. STATUTORY AUDITOR
It is agreed that the Company shall have joint
statutory auditors being a local auditing firm
from Nepal and an internationally recognized
auditing firm whether or not represented/located
in Nepal.
SECTION 16. LOAN/WORKING CAPITAL
The Nepali Party, PANDA OF NEPAL and RDC OF NEPAL
shall exercise their best efforts to enable the
Company to obtain the necessary Loan/Working
Capital by arranging financing to the Company or
providing guarantees to the banks/lenders of the
Company, etc.
SECTION 17. FISCAL PERIOD
The Fiscal year of the Company shall, commence on
July 16 and end on July 15 of next year, as
provided by Nepalese law, provided that the first
fiscal year shall commence on the date of
incorporation and end on July 15, of the next
year.
SECTION 18. FINANCIAL PERIOD
The Financial year of the Company shall be defined
as the period between 1 January and 31 December
for the purpose of U.S. or other foreign tax laws.
SECTION 19. ACCOUNTING PRACTICES
The Company and its subsidiaries, if any, shall:
19.1 Keep proper, usual and current accounting
records and make true and complete entries of
all their respective dealings and
transactions with respect to their respective
business and make available the accounting
records of the Company and subsidiaries (if
any) at all reasonable times during normal
business hours for inspection by the nominees
of the Shareholders.
19.2 Prepare regular financial and management
accounts and reports in a form acceptable to
each of the Shareholders. Such accounts and
management statements, cash flow projections
and progress reports will be prepared and
dispatched to the Shareholders within 4 weeks
at the end of the period of which the
accounts relate. The Company shall supply
such further information as the nominees of
the Shareholders may from time to time
reasonably require as to all matters relating
to the business or financial position of the
Company and its subsidiaries (if any) or
otherwise relating to the affairs thereof.
SECTION 20. PAYMENT AND TAX MATTERS
20.1 Unless otherwise prescribed hereunder, all of
the payments made by the Company to RDC OF
NEPAL and PANDA OF NEPAL will be made in US$
or convertible foreign currency at the bank
or other address nominated by RDC OF NEPAL or
PANDA OF NEPAL in writing and all of the
payments made by the Company to IFC shall be
made in US$ at the bank or any other address
nominated by IFC in writing. Foreign
currency payments shall also be authorized to
the extent permitted by the proposed Project
Agreement executed between the Company and
HMGN.
20.2 Any withholding tax imposed on the payments
under this Agreement to PANDA OF NEPAL, RDC
OF NEPAL and HIPC shall be withheld from the
payments by the Company and immediately paid
to the competent tax office. The Company
shall obtain from the competent taxation
authorities a certificate of payment of such
withholding tax or other appropriate evidence
in such form as shall be most useful to, and
necessary for tax credit purposes in the
United States and forward the same to PANDA
OF NEPAL or RDC OF NEPAL.
20.3 Within 90 days after the end of each Fiscal
Year, the Company shall prepare and file, or
cause to be prepared and filed, any tax
returns of the Company and shall send to each
person who was a Shareholder at any time
during such fiscal year copies of such
information as may be reasonably required for
the applicable income tax reporting purposes
by such person. The Company shall also
prepare, within the same time period, such
other returns and information as any
Shareholder may reasonably request for the
purposes of complying with requirements
imposed on the Company or the Shareholder by
U.S. or other foreign tax laws.
20.4 Without affecting in any way the
characterization of the Company as a private
limited company in Nepal and the
applicability of the provisions of the Act,
the Shareholders intend that the Company be
treated as a partnership for tax purposes in
the United States without responsibilities to
HMGN and without in any way affecting its tax
status in Nepal. Each Shareholder whose
earnings from the Company are reported to the
U.S. tax authorities will ensure that the
earnings are reported on a basis consistent
with this characterization. The Company and
its Shareholders subject to taxation in the
United States will make an election to be
treated as a partnership for federal income
purposes in the United States if such an
election becomes available. It is
acknowledged and agreed that the preceding
two sentences shall not be applicable to IFC.
If requested by any Shareholder, the Company
will make an election to adjust the basis of
its assets so that such basis will equal the
basis which each Shareholder has in its
Shares in the Company. The purpose for this
adjustment is to ensure that any investors
purchasing Shares in the Company will not be
subject to U.S. taxation on any appreciation
in the value of the Company's assets that
occurred before they purchased their Shares.
SECTION 21. NON-ASSIGNABILITY
Except in connection with the transfer of
Shares in accordance with Section 7
hereinabove, the rights and obligations of
each of the Parties under this Agreement
shall not be assignable directly or
indirectly except with the prior written
consent of the other Parties which consent
may be withheld by the other Parties in their
sole and absolute discretion.
SECTION 22. EFFECTIVE DATE
This Agreement shall come into effect on the
latest to occur of (i) the date of execution
by all the Parties, (ii) the date on which
all necessary approvals and/or licenses are
obtained from HMGN as required and (iii) the
date on which Financial Closing occurs.
SECTION 23. DURATION
This Agreement shall be valid initially for a
period of forty-one years from the Effective
Date and it may be renewed with mutual
consent and with prior approval of the HMGN,
if such approval is required.
SECTION 24. TERMINATION
This Agreement may be terminated at any time
by an instrument signed by all the Parties.
SECTION 25. MODIFICATION
This Agreement may be changed, amended or
otherwise modified only by means of written
agreement executed by the duly authorized
representatives of the Parties. Such a
modification shall be effective only upon the
approval of the relevant authority of HMGN,
Nepal, if such approval is required.
SECTION 26. GOVERNING LAW
This Agreement shall be governed by the Laws
of Kingdom of Nepal.
SECTION 27. ARBITRATION
27.1 All disputes under this Agreement shall be
resolved finally, and without appeal to any
courts, in accordance with the following
procedures.
27.2 At the Preliminary General Meeting, each
Party shall appoint a representative who
shall be principally responsible for
administering the Agreement on behalf of such
Party and representing the Party's interests
in the event of any disputes or disagreements
under this Agreement.
27.3 In the event that a Party has a dispute or
disagreement with another Party or the
Company, such Party shall provide written
notice to the Company and to the other
Parties' representatives setting forth the
alleged facts and issues regarding the
dispute (the "Dispute Notice"). The Parties'
representatives shall have thirty (30) days
from the date of receipt of the Dispute
Notice to resolve the claim.
27.4 Any dispute or disagreement between the
Parties or between a Party and the Company
relating to or in connection with this
Agreement, which is not finally settled by a
discussion between the appointed
representatives shall be submitted to
mediation at the written request of any
Party, specifying the issue or issues in the
dispute and summarizing the Party's claim
with respect thereto.
27.5 A party initiating mediation proceedings may
request that a committee be established and
such committee resolve the dispute or
disagreement. Such committee shall consist
of one representative appointed by each of
the Parties and a chairman acceptable to all
of the Parties. For purposes of such
mediation proceedings, counsel for any Party
or the Company may be present unless the
Parties agree that no counsel shall be
present at such proceedings and the use of
any submissions by any Party or by the
Company shall be restricted to such mediation
proceeding unless raised in a subsequent
proceeding by the same Party as raised it in
the mediation proceeding.
27.6 In the event that the Parties fail to form a
mediation committee, or if the mediation
committee fails to reach a decision with
respect to the dispute within thirty (30)
days of the appointment of a chairman, any
Party may refer such dispute, controversy or
claim to arbitration for settlement in
accordance with the United Nations Commission
on International Trade Law (UNCITRAL) as then
presently in force. For purposes of
application of the UNCITRAL Arbitration Rules
to this Agreement:
(a) The appointing authority shall be the
Singapore International Arbitration Centre
("SIAC").
(b) Each arbitral tribunal shall consist of
three arbitrators. Provided there are only
two parties to any dispute, each party shall
appoint one arbitrator and the third
arbitrator shall be appointed by SIAC. If
there are more than two parties to any
dispute, each of the parties thereto will
work together in good faith to appoint three
arbitrators. If the parties are unable to
agree on such arbitrators within fifteen (15)
days, three arbitrators shall be appointed by
SIAC upon the request of any party to the
dispute. No arbitrator shall be a present
employee or agent of, or consultant or
counsel to, any party or any affiliate of any
party.
(c) The place of the arbitration shall be
Singapore.
(d) The language to be used in the arbitral
proceedings shall be English.
(e) The Parties hereby consent to the
jurisdiction of the arbitration panel. The
arbitration panel acting by majority decision
shall be authorized to order legal or
equitable relief, including specific
performance or injunctive relief. The
arbitration award determined by a majority of
the arbitration panel shall be final and
binding and enforceable in any court of
competent jurisdiction.
(f) Within thirty (30) days of the
conclusion of the arbitration hearing, unless
such time is extended by mutual agreement,
the arbitrators shall notify the Parties in
writing of their decision stating separately
findings of fact and conclusions of law. The
arbitrators shall not have the power to add
to or amend this Agreement. The decision of
the majority of arbitrators shall specify how
the expenses (including reasonable attorneys'
fees) of the arbitration shall be allocated.
SECTION 28. NON-COMPETITION
The Nepali Party, PANDA OF NEPAL, and RDC OF
NEPAL (the "Private Parties") agree that they
or their Affiliates shall not, directly or
indirectly, develop electric generating
plants which are competitive with the Company
without the prior written agreement of the
other Private Parties. The Private Parties
shall promptly disclose any interest in any
power project located in Nepal to the
Shareholders of the Company.
SECTION 29. FUTURE PROJECT DEVELOPMENT
29.1 As long as any of the Private Parties are
Shareholders in the Company, such Parties
agree to develop any future power projects
located in Nepal solely in cooperation with
the other Private Parties that are
Shareholders in the Company (unless a Private
Parties elects not to pursue such future
project, in which case, the remaining other
Private Parties may locate a third party or
parties to substitute for the
nonparticipating Private Party).
29.2 RDC OF NEPAL and its Affiliates shall not be
required to comply with Section 29.1 where a
third party initially solicits RDC OF NEPAL
to act as owner's engineer or in an
Engineering, Procurement and Construction
Contract ("EPC") or consulting engineer
capacity on any project. As long as RDC OF
NEPAL is a Shareholder in the Company, RDC OF
NEPAL shall not assist any third party
private developer with respect to any power
project located in Nepal, unless such
developer holds the rights to such project
prior to any such assistance, or the other
Parties elect not to participate in such
project as provided above. In such case, the
Private Parties shall be bound by the
confidentiality requirements set forth in
Section 30 of this Agreement.
SECTION 30. CONFIDENTIALITY
Each Private Party agrees that it shall, and
shall cause each of its Affiliates, agents,
designee(s), representatives and employees to
(a) maintain in confidence any and all
proprietary and confidential information
designated in writing concerning the Project
and (b) refrain from using any such
information in competition with or otherwise
to the detriment of the Project. No Private
Party shall have any liability hereunder for
disclosure or use of any such information
which (i) is in or, through no fault of such
Private Party, its Affiliates, agents,
representatives or employees, comes into the
public domain or (ii) was acquired by such
Private Party from other sources after the
date hereof, provided such sources are not
prohibited from disclosing such information
by legal, contractual or fiduciary obligation
to the Company or (iii) such Private Party is
compelled by legal, regulatory, or
administrative process to disclose
confidential information or (iv) such Private
Party is otherwise required by applicable
law, including, but not limited to United
States security laws to disclose confidential
information. The provisions of this Section
30 shall survive any termination of this
Agreement.
SECTION 31. CORRUPT PRACTICES
Each Party agrees that it will not pay,
promise, offer or authorize payment of
anything of value (in any form) to any person
or organization either directly or indirectly
(including, as applicable under law, through
an agent, representative, sub-contractor or
other third party) to obtain or retain any
contract, permit or any other concession,
where such payment, promise, offer or
authorization is contrary to applicable law
or laws including, but not limited to, as
applicable, the Foreign Corrupt Practices Act
of the United States.
SECTION 32. FORCE MAJEURE
No Party shall be liable for any breach or
nonobservance of any term or condition of
this Agreement on account of force majeure
which shall mean fire, explosion, act of
Government and other similar circumstances
beyond the control of a Party.
SECTION 33. APPROVAL AND LICENSE
HIPC shall extend its best cooperation in
obtaining any necessary approvals or license
for the incorporation of the Company from
HMGN.
SECTION 34. LANGUAGE
This Agreement is executed in the English
Language which shall be deemed to be the
original. In case of any discrepancy between
any translation and the above version, the
English version shall be binding in all
respects.
SECTION 35. NOTICE
35.1 Any notice required or given hereunder shall
be in writing and may be given by registered
airmail, hand-delivery, or by telex,
facsimile transmission or cable at the
address for the Parties given hereinabove.
35.2 Any Party may amend its address set forth
above by written notice, made pursuant to any
of the above methods to the other Parties and
the Company.
SECTION 36. PRIOR JOINT VENTURE AGREEMENT
This Agreement supercedes, in its entirety,
the Joint Venture Agreement among the Nepali
Party, Panda of Nepal and RDC of Nepal.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement on the ________________, 1997.
HIMAL INTERNATIONAL POWER PANDA OF NEPAL
CORP. LTD a Cayman Islands company
and a subsidiary of Panda
Energy International, Inc.,
a Texas (USA) corporation
RDC OF NEPAL, INTERNATIONAL FINANCE
a Cayman Islands company and CORPORATION
a subsidiary of Resource
Development Consultants, a
Wyoming (USA) limited
liability company
Authorized Representative
ANNEXURE - 1
(Annexure attached to the Joint Venture Agreement of Bhote
Koshi Power Company Private Limited dated _________, 1997).
By this Deed I/we of whose
registered office is at
intending to become the holder of ( ) shares of Rs.
( ) each in the Capital of Bhote Koshi Power
Company Private Limited (the "Company") hereby agree(s),
subject to my/our becoming a holder of such shares, with the
Company and each of its shareholders to observe and be bound
by all the provisions of an Agreement made on _________,
1997 between (1) Himal International Power Corporation
Private Limited, (2) Panda of Nepal, (3) RDC of Nepal and
(4) International Finance Corporation (a copy of which
Agreement is attached hereto and has been initialed by me/us
for identification) in all respects as if I/we was/were a
party to such Agreement and were named therein as a
Shareholder or a party thereto.
IN WITNESS whereof, the Parties hereto have set their hands
to these presents on the day and date mentioned herein above
earlier.
EXHIBIT NO. 10.169
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Incorporated under the Company Act, 2021 (1964)
ARTICLE 1. NAME OF THE COMPANY
The name of the Company shall be Bhote Koshi Power
Company Private Limited.
ARTICLE 2. REGISTERED OFFICE OF THE COMPANY
The registered office of the Company will be located at
Tahachal, Kathmandu District, Nepal. The registered
office may be changed with the approval of the
Concerned Department of His Majesty's Government of
Nepal (HMGN). Branches and other business offices etc.
may be established as required. However, under no
circumstances may a registered office, branch or other
business office of the Company be established in the
United States.
ARTICLE 3. MAIN OBJECTIVES
The main objective of the Company shall be generation
and distribution of hydroelectric power. The detailed
objectives of the Company are stipulated in the
Memorandum of Association of the Company.
ARTICLE 4. DEFINITIONS
In these Articles of Association unless repugnant to
the subject or context:
"ACT" means the Company Act, as in effect from time to
time, including any amendments thereto;
"AFFILIATE(S)" shall mean any person or entity that
directly or indirectly (through one or more
intermediaries) controls or is controlled by or under
common control with the party specified. For purposes
of this definition, control of a person or entity means
the power, direct or indirect, to cause or determine
the direction of the management and policies of such
person or entity (whether by ownership of securities,
contract or otherwise);
"AGREEMENT" means the Amended and Restated Joint
Venture Agreement dated as of the Financial Closing
Date between Nepali Party and Foreign Parties;
"ARTICLES" means these Amended and Restated Articles of
Association of the Company and amendments made hereto
from time to time;
"BUSINESS DAY" shall mean any Day on which the offices
of HMGN are not closed in Kathmandu, Nepal;
"COMPANY" means Bhote Koshi Power Company Private
Limited incorporated under the Company Act, 2021
(1964);
"CONCERNED DEPARTMENT" means the Department of
Industries, office of the Company Registrar or any
other department or office designated by HMGN from time
to time to regulate companies in Nepal;
"DAY" shall mean the twenty-four hour period beginning
at 0:00 hours Nepalese Standard Time;
"DIRECTOR(S)" means the Director(s) appointed by the
Shareholders pursuant hereto and holding office from
time to time as Director(s);
"DIVIDEND" means a distribution of the profits of the
Company;
"DOCUMENT" means words represented in the form of type,
printing or handwriting;
"FINANCIAL CLOSING DATE" means the date on which IFC
makes an initial disbursement;
"FINANCIAL YEAR" shall mean the period beginning
1 January and ending 31 December for the purpose of
United States and other foreign tax laws;
"FISCAL YEAR" means the fiscal year pursuant to the
laws of Nepal applying to a Nepali Company to keep its
financial accounts and to file its tax returns;
"FOREIGN PARTIES," collectively, means RDC OF NEPAL, a
Cayman Islands corporation and subsidiary of Resource
Development Consultants, a limited liability company,
of Wyoming, United States, PANDA OF NEPAL, a subsidiary
of Panda Energy International, Inc., a Texas, United
States, corporation, and IFC, an international
organization, which are parties to the Agreement and,
"Foreign Party" means any of the foregoing
individually;
"GOVERNMENTAL AUTHORITY" means the Investment Promotion
Board of HMGN and such relevant agency or department of
HMGN designated to regulate foreign investment in Nepal
including, without limitation, the Department of
Industries of HMG/Nepal;
"IFC" means International Finance Corporation, an
international organization established by Articles of
Agreement among its member countries;
"IFC LOANS" means loans made by IFC pursuant to the
Investment Agreement;
"IFC SHARES" means Shares of the Company to be acquired
by IFC pursuant to the Investment Agreement;
"INTERNAL REVENUE CODE" means the Internal Revenue Code
of the United States;
"INVESTMENT AGREEMENT" means the Investment Agreement
dated as of the Financial Closing Date between the
Company and IFC;
"LIENS" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other
security agreement of any kind or nature whatsoever
including, without limitation, (i) any conditional sale
or other title retention agreement, any financing or
similar statement or notice filed under any recording
or notice statute, and any lease having substantially
the same effect as any of the foregoing, and (ii) any
designation (except as contemplated by the Investment
Agreement) of loss payees or beneficiaries or
additional insureds or any similar arrangement under
any insurance policy;
"MEMORANDUM" means the Memorandum of Association of the
Company;
"NEA" means the Nepal Electricity Authority and its
successors and assigns;
"NEPALI PARTY" means Himal International Power Corp.
Ltd., a party to the Agreement;
"OFFICE" means the registered office of the Company;
"POWER PURCHASE AGREEMENT" means the Power Purchase
Agreement dated July 21, 1996 between the NEA and the
Company concerning the sale of electrical energy from
the Project, as amended from time to time;
"PROJECT" means the 36 MW hydroelectric power
generation facility known as the Upper Bhote Koshi
Hydroelectric Project to be located on the Bhote Koshi
River in the Sindhupalchok District of Nepal;
"PROMOTER" means the Shareholders signing the
application for the registration of the Company and the
Memorandum and the Articles (which shall not include
IFC);
"PROXY" means the duly appointed representative of a
Shareholder to attend and vote in any General Meeting
of the Company;
"REGISTER" means the register of the Shareholders
maintained by the Company;
"SCHEDULE A" means the definitions included in Schedule
A to the Investment Agreement as in effect on the
Financial Closing Date;
"SHARE(S)" means the share(s) with a value of
Rupees 100 each in the share capital of the Company
from time to time;
"SHAREHOLDER" means a person whose name has been
registered in the Register of the Company as a
Shareholder;
"SHARE RETENTION AND PROJECT FUNDS AGREEMENT" means the
Share Retention and Projects Funds Agreement, dated as
of the Financial Closing Date, among the Company, the
Sponsors and IFC;
"SPECIAL RESOLUTION" means a resolution as required
under Section 68 of the Company Act, 1997;
"SPECIFIED PROPORTION(S)" means, prior to Financial
Closing Date, where the whole is 100%: in relation to
Nepali Party, 10%; and in relation to Foreign Parties,
85% to PANDA OF NEPAL and 5% to RDC OF NEPAL; and after
Financial Closing Date, where the whole is 100%: in
relation to Nepali Party, 10% and in relation to
Foreign Parties, 75% to PANDA OF NEPAL, 5% to RDC OF
NEPAL and 10% to IFC or any of its transferees (and
subsequent transferees), unless otherwise agreed to in
writing between Nepali Party and Foreign Parties or
adjusted pursuant to these Articles;
"UNITED STATES" or "U.S." means the United States of
America.
Words in singular include the plural. Words signifying
a gender also signify any other gender. Persons
include bodies corporate and other association of
persons. Interpretation of the words other than words
mentioned above shall be done in accordance with the
meaning ascribed to them in the Agreement.
ARTICLE 5. LIMITED LIABILITY
5.1 The Company is a private limited company
registered under the Company Act, 2021. The
liability of its Shareholders is limited and a
Shareholder shall not be liable to pay any
liability of the Company except for the face value
of the Shares subscribed by him.
5.2 The total number of Shareholders shall not be more
than 50 and Shares shall not be sold or purchased
publicly nor transferred by way of sale, mortgage
or otherwise to any other person except in
accordance with the provisions of these Articles
and the Agreement.
5.3 The Company shall be an incorporated body having
perpetual succession and shall have its own seal
for all its business purposes.
ARTICLE 6. SHARE CAPITAL
6.1 The authorized share capital of the Company shall
be Rupees five billion four hundred fourteen
million five hundred thousand (Rs. 5,414,500,000)
divided into one class of fifty four million one
hundred forty-five thousand (54,145,000) Shares of
Rupees 100 each. The initial issued share capital
of the Company shall be Rupees two billion
(Rs. 2,000,000,000) divided into twenty million
(20,000,000) Shares of Rupees 100 each and that
shall be subscribed for by the parties in
Specified Proportions as applicable prior to the
Financial Closing Date. The issued capital shall
be subscribed by Foreign Parties and Nepali Party.
6.2 The shareholding ratio shall at all times be in
the Specified Proportions except that it may be
changed by the mutual written agreement of Nepali
Party and Foreign Parties subject to the approval
of the Concerned Department.
6.3 Subject to the transfer restrictions set forth in
Article 9, shares held by an Affiliate of the
Nepali Party or an Affiliate of the Foreign
Parties shall be deemed to be Shares held by that
party for the purpose of determining the Specified
Proportions.
ARTICLE 7. SHARES
7.1 Unissued Shares of the Company shall remain under
the control of the Company. The Company will make
an allotment of Shares, record transfer of the
Shares and make calls on Shares subject to the
provisions of the Agreement or the provisions in
these Articles where the Agreement is silent.
7.2 The particulars of allotment of Shares and the
making of calls on the Shares shall be submitted
to the Concerned Department.
7.3 When making calls under Article 7.1 the Company
shall send a notice in writing to every
Shareholder, prescribing a time limit of 30 days
and the place and time for payment.
7.4 The subscriber shall remit the due amount of the
Shares to reach the Company on or before the
prescribed date of the call for the Shares issued
to and subscribed by it. In the event the due
amount does not reach the Company on the date
prescribed by the call, the subscriber may be
required to forfeit the Shares and the forfeited
Shares may be sold by the Company, but only with
the unanimous approval of the Shareholders.
7.5 Shares shall be allotted subject to the provisions
of the Agreement.
7.6 The person in whose name the Shares are registered
shall be treated as the owner of such Shares.
However, if the Company receives an order from a
competent court of law or a Governmental Authority
regarding the ownership of any Share, the person
or persons mentioned as owner in such order shall
be treated as the real owner provided, however,
that no person shall be treated as the real owner
of the Shares if he has not complied with the
requirements for transfers of Shares in Article 9.
7.7 Each Shareholder shall abide by the Articles, the
Agreement and the Act, and it shall be each
Shareholder's duty to act in accordance with those
provisions.
ARTICLE 8. SHARE CERTIFICATE
8.1 Every Shareholder shall be given a certificate for
the Shares subscribed to by him. The Share
certificate shall mention the name of the Company,
the serial number, the number of Shares and the
value thereof, and shall be signed by one (1)
Director from each Foreign Party and Nepali Party.
In case any Shareholder has made only partial
payments, the amount actually paid as well as the
balance to be paid shall be explicitly mentioned
on the front of the Share certificate.
8.2 The Company may issue a new Share certificate in
lieu of a certificate which is damaged or torn if
the relevant Shareholder submits an application to
the Company along with such damaged certificate.
A new Share certificate may also be issued if the
Share certificate is lost and evidence to that
effect is submitted to the best satisfaction of
the Shareholders. The Company shall fix a fee
payable for issuing new certificates.
ARTICLE 9. TRANSFER OF SHARES
9.1 The right to Shares of the Company may only be
transferred in accordance with the provisions of
these Articles and the Agreement.
9.2 No Shareholder shall transfer its Shares to any
person who is not already a Shareholder without
the prior written consent of all other
Shareholders, which consent may be withheld in the
sole and absolute discretion of all other
Shareholders; provided, however, that nothing in
this Article 9 or elsewhere in these Articles
shall limit the rights of IFC or any of its
transferees (or subsequent transferees) to
transfer any of its Shares in the Company.
9.3 For purposes of these Articles the term "transfer"
means, with respect to any Share of the Company or
any interest therein, the transfer, sale,
assignment or mortgage of the Share or any
interest therein, the creation or permission to
subsist of any pledge, lien, charge or other
encumbrance with respect to the Share or any
interest therein, the grant of any option,
interest or other rights with respect to the Share
or any interest therein, or any other disposition
of the Share or any interest or rights in the
Share or any part thereof.
9.4 No transfer or purported transfer by a Shareholder
of any Share in violation of the restriction in
Article 9.2 shall be effective to confer upon the
purported transferee rights (i) to receive
dividends, (ii) to receive a share of the net
assets of the Company upon its winding up, (iii)
otherwise to participate in distributions of the
property or assets of the Company, (iv) to receive
notice of meetings of the Company, (v) to attend
meetings of the Company, (vi) to vote on any
matter, or (vii) to receive new Shares. Further,
any person who receives Shares in violation of the
restriction in Article 9.2 shall be obliged within
30 days of receiving such Shares, to offer to
transfer the Shares to the remaining Shareholders
of the Company in the Specified Proportions, and
the remaining Shareholders shall be entitled to
purchase the Shares offered to them by the
purported transferee at a price agreed upon by the
Parties.
9.5 Any person who receives Shares in a transfer which
complies with the requirements in these Articles
and the Agreement shall submit to the other
Parties of the Agreement and to the office of the
Company a written deed of adherence in the form
prescribed at Annexure 1 of the Agreement stating
that the transferee agrees to be governed by all
of the terms and provisions of these Articles, the
Agreement and the obligations of the party from
whom it purchased the Shares, along with a copy of
the deed to record the transfer or mortgage of
such Shares.
9.6 The notifications of intention to transfer Shares,
the terms and conditions of a proposed transfer,
and the decision by the remaining Shareholders
either to purchase Shares or to consent to their
transfer to a person who is not a Shareholder
shall be done in writing. It is understood and
agreed that IFC and its transferees (and
subsequent transferees) are not bound by this
Article 9.6.
9.7 Any Shares transferred under this Article shall be
subject to necessary government validation or
approval in Nepal, if required.
ARTICLE 10. PRE-EMPTIVE RIGHTS
10.1 The Shareholders hereto shall have pre-emptive
rights in proportion to the number of Shares held
by each of them with respect to any new issuance
of Shares of the Company. However, upon the
consent of all Shareholders, the pre-emptive
rights may be exercised in a ratio other than the
Shareholding ratio, particularly in the case of a
disinvestment by an existing Shareholder.
10.2 If any Shareholder does not wish to exercise its
pre-emptive rights in whole or in part, such
Shareholder shall notify the Shareholders of such
intention within forty-five (45) days from the day
of notice that new Shares have been offered. In
this case, the other Shareholders shall have the
pre-emptive right to such unsubscribed new Shares.
10.3 New Shares to which none of the Shareholders
hereto have subscribed shall be preferentially
allocated to persons who have agreed to accept all
of the terms and conditions set by the
Shareholders.
ARTICLE 11. CHANGE OF SHARE CAPITAL
The Company may increase or decrease its Share capital,
issue Shares with preference or with special rights,
change or revoke such rights, or issue Shares having
lower or higher denomination by passing a Special
Resolution at a General Meeting as per the Company Act
at which all Shareholders of the Company are in
attendance and at which such Shareholders shall have
voted unanimously in favor. Notwithstanding the above,
special rights afforded IFC which the Shareholders have
agreed upon may not be changed or revoked, and special
rights of any other Shareholder which the Shareholders
have not agreed upon may not be added, without IFC's
consent.
ARTICLE 12. LOANS
12.1 The Shareholders may instruct the Board of
Directors to enter into loans for executing the
Company's business or any other purpose within the
objectives of the Company, from a bank or
financial institution against the security of the
Company's assets. The Directors are permitted to
enter into only those loans specifically approved
by the Shareholders in a General Meeting.
12.2 The Company shall keep a register for recording
the amount of loans, the names and addresses of
the creditors and any other relevant details.
ARTICLE 13. GENERAL MEETINGS
13.1 ANNUAL GENERAL MEETING
a. The Annual General Meetings of the Company
shall discuss the Company's profit and loss
account, cash flow of the Company balance sheet
and the report of the Board of Directors and the
auditors, fix the remuneration of the auditors,
declare dividends and perform all other work of
the General Meeting.
b. The first Annual General Meeting of the
Company shall be convened within one year from the
date of the Preliminary General Meeting and every
other Annual General Meeting shall be convened
within a period of six months from the date of the
expiry of the Fiscal Year of the Company.
c. The Annual General Meetings of the Company
shall be held in Kathmandu, Nepal or such other
place as the Shareholders may decide except that
under no circumstances shall an Annual General
Meeting be held in the United States.
13.2. EXTRAORDINARY GENERAL MEETING
a. Both the Concerned Department and any
Shareholder or Shareholders holding at least 10%
in the aggregate of all issued and outstanding
Shares may submit an application to the registered
office of the Company for the convening of an
Extraordinary General Meeting whenever they deem
necessary. The power of the Board of Directors to
call an Extraordinary General Meeting shall be
limited to calling those Extraordinary General
Meetings which the Concerned Department or the
Shareholders have requested pursuant to this
Article.
b. An Extraordinary General Meeting shall be held
in Kathmandu, Nepal or such other place as the
Shareholders may decide except that under no
circumstances shall an Extraordinary General
Meeting be held in the United States.
13.3 NOTICE PERIOD
a. Every General Meeting of the Shareholders
shall be convened by issuing a notice specifying
the place, date and agenda of the meeting in
advance. In accordance with the Act, the notice
period for the Annual General Meetings shall be
thirty (30) days and shall be thirty (30) days for
all other General Meetings or as otherwise
required by the Act. The days in the notice
period may be reduced by unanimous consent of the
Shareholders. The notice of the General Meetings
shall be served according to the Act and Articles
to such persons who have the right to receive it.
b. Any notice required or given as per these
Articles shall be in writing and may be given by
registered airmail, hand delivery or by telex,
facsimile transmission or cable at the address of
the Shareholders registered at the office of the
Company.
13.4 EX-AGENDA ITEMS
At a General Meeting, convened in accordance with
the Act, Shareholders may also make decisions on
matters not mentioned in the agenda which had been
sent while calling the meeting provided that two
thirds of the Shareholders attending the meeting
vote in favor of discussing such matters.
13.5 QUORUM FOR GENERAL MEETING
a. The proceedings of any General Meeting shall
not be conducted nor a resolution be passed unless
25% of total number of Shareholders representing
67% of the total value of Shares of the Company
are present therein either in person or by proxy;
provided that the presence of at least two
Shareholders shall be compulsory for holding a
General Meeting in that manner.
b. In case the meeting cannot be held for lack of
quorum, another meeting shall be convened with an
advance notice of at least fifteen (15) days. In
case another meeting is convened in this manner if
two Shareholders of the Company, who represent 51%
of the total value of Shares and who are entitled
to vote are present there in person, there shall
be no obstacle in holding the meeting. If within
half an hour of the time appointed, such meeting
still cannot be held due to inadequate quorum, the
same meeting shall stand adjourned to the same day
in the next week at the same time and place. The
presence of 15% of the total number of
Shareholders representing 51% of the total value
of Shares at such adjourned meeting either in
person or by proxy shall constitute a quorum.
Notwithstanding anything contained herein before,
the Company shall have to recognize such
resolutions as are passed at such a meeting and
act accordingly.
c. A Special Resolution shall not be passed
unless 33% of the total number of Shareholders
representing 75% of the total value of Shares are
present either in person or by proxy.
d. The quorum for holding an Annual General
Meeting shall be as prescribed by the Articles.
However, it will be necessary for one
representative of each Shareholder to be present
at such a meeting for the quorum to be complete.
If a meeting is adjourned as a result of such
representative not being present, then
notwithstanding the provisions of this clause, the
meeting shall be held at the next appointed date
even if such representative is not present but
provided the requirement of quorum, as described
in this Article 13.5, is met.
13.6 PROXY
Shareholders desirous of nominating a
representative shall have to submit a proxy letter
in the form as shown below or as applicable
pursuant to the Act:
PROXY FORM
In the capacity of a Shareholder of the Company,
I/We______________ resident(s) of ______________
hereby appoint ______________, a Shareholder of
the Company, to attend and vote on my/our behalf
in the General Meeting to be held on
________________ and other meetings to be held in
course thereof.
Signature:
Date:
Name:
Address:
13.7 ELECTION OF CHAIRPERSON
The Chairperson of the Board of Directors shall
chair the General Meeting if he is present and in
his absence, the Shareholders present at a General
Meeting shall elect, according to their
proportionate shareholding, by majority one
Shareholder present to preside as Chairperson of
the meeting.
13.8 RESOLUTIONS
All matters to be discussed at the General Meeting
shall be presented in the form of resolutions.
Except as provided in Article 16, all other
resolutions presented at the meeting shall be
deemed to have been passed if a simple majority of
Shareholders present at the meeting, whether in
person or by proxy, vote in its favor, provided
that in the case of a Special Resolution, it shall
be deemed to have been passed if 75% of
Shareholders present at the meeting, whether in
person or by proxy, vote in its favor.
ARTICLE 14. PROCEEDINGS AT GENERAL MEETINGS
14.1 The Shareholders shall at all times regulate the
authorized business of the Company by exercising
control, supervision and direction in the manner
deemed appropriate by them and by delegating such
powers, from time to time, to the Board of
Directors as the Shareholders deem appropriate.
The power of managing the Company shall be vested
in the Shareholders solely in their capacity as
Shareholders.
14.2 Without prejudice to the above-mentioned general
arrangements, the Shareholders in a General
Meeting shall have the following powers and
responsibilities:
a. To arrange for payment of all expenses
incurred for the establishment and registration of
the Company, and approve agreements concluded
before the Company is formally established.
b. To appoint and remove consultants, advisors,
technicians, assistants and other employees.
c. To manage and supervise all functions of the
Company and make all necessary arrangements for
smoothly running the business of the Company
including taking loans and advances.
d. To execute and sign contracts on behalf of the
Company.
e. To operate bank accounts and issue or endorse
bills of exchange, promissory notes, etc., on
behalf of the Company, and buy or sell Government
or other bonds, to accept, sign and deal in bills
of exchange, cheques, drafts and Government
securities and issue debentures on behalf of the
Company.
f. To arrange for all documents relating to the
financial transactions of the Company to be duly
signed by a person designated by the Shareholders.
g. To exercise powers and fulfill the duties
prescribed by the Act, laws, the Agreement and the
Articles as prevailing from time to time.
ARTICLE 15. VOTE OF SHAREHOLDERS
15.1 Subject to Article 13 and to any other special
rights or restrictions as to voting attached to
any Shares by or in accordance with these
Articles, every Shareholder who is present either
in person or through a duly authorized
representative shall have one vote for every Share
of which he is the holder; provided that no Shares
of one party shall confer any right to vote upon a
resolution for the removal from office of a
Director appointed by holders of Shares of the
other Party.
15.2 Shareholders shall only be entitled to vote in
accordance with the number of Shares held if all
calls on subscription due on those Shares are
paid.
ARTICLE 16. DECISIONS
The decisions listed below shall require (i) a 95.1%
vote of all outstanding Shares of the Company prior to
the commercial operation date of the Project (such term
"Commercial Operation Date" shall have the meaning
defined in Schedule A) and (ii) a 90% vote of all
outstanding Shares of the Company after the Commercial
Operation Date.
16.1 Any change in the general nature of the business
of the Company or any subsidiary and any
disposal of the undertaking or assets of the
Company or of any of its subsidiaries or any
substantial part thereof other than in the
ordinary course of business.
16.2 Approval of the remuneration of the President of
the Company, if one is appointed.
16.3 Any transaction, arrangement or agreement with
or for the benefit of any Director of the
Company or his relative or any company or firm
in which he is a partner, director or
shareholder.
16.4 Acquisition or formation of any subsidiary
company and acquisition of the undertaking or
the whole or part of the assets of any other
company or business which in relation to the
Company's business is substantial.
16.5 The conduct of any business by the Company other
than as contemplated under the Articles of
Association, by-laws or other governing
documents of the Company.
16.6 Incurrence of any indebtedness for borrowed
money in excess of Rs. 10,000,000 including,
without limitation, approval of all development,
construction and permanent financing
arrangements for the Project.
16.7 Increase, other than by way of bonus issue, or
reduction, or other alteration whatsoever in the
authorized or issued Share capital of the
Company or any of its subsidiaries, or any
variation of the rights attached to any of the
Shares for the time being in the capital of the
Company or any of its subsidiaries, or the
granting of any new options to subscribe for
Shares or issues of any securities convertible
into Shares of the Company, or any of its
subsidiaries, or entering into any agreement for
the same.
16.8 Any issuance or sale of Shares, any voting
securities of the Company or any securities of
the Company which are exercisable or convertible
into Shares or other voting securities of the
Company.
16.9 Any issuance of any securities of the Company
having a preference as to dividends or
distributions whether during the life of the
Company or under dissolution, liquidation or
winding-up.
16.10 Any reorganization, consolidation, merger, or
other business combination of the Company or any
subsidiary with or into any other corporation
which is not the Company or a wholly-owned
subsidiary of the Company.
16.11 The sale, lease or exchange of all or
substantially all of the assets of the Company.
16.12 Any amendments or restatement of the Articles,
the Agreement, or other governing documents of
the Company.
16.13 Any recapitalization of the Company.
16.14 Any transaction by the Company with any Party to
this Agreement, or any Affiliate of any of them.
16.15 The mortgage or change of any part of the
Company's assets.
16.16 The acquisition or disposal by the Company of
any asset or the giving or receiving of any
service otherwise than at market value.
16.17 The admission of any new Shareholder to the
Company subject to the proviso contained in
Article 9.2 hereof.
16.18 The entering into any purchase, finance, lease,
hire purchase, other credit sale or deferred
payment terms contract or any contract of
acquisition or use of any assets of a capital
nature having a value of greater in total than
Rs. 5,000,000 in any financial year of the
Company for which purpose the aggregate payments
to be made under any lease hire purchase or
other credit sale or deferred payment terms
contract will be deemed to be payable in the
year in which the contract is entered into.
16.19 The appointment and removal of auditors of the
Company.
16.20 The making of any loans to Directors or
Shareholders of the Company.
16.21 The payment or making of any interim or final
dividend or any other distribution in whatever
amount the Shareholders deem appropriate.
16.22 Notwithstanding the foregoing, if prior to the
tenth anniversary of the Commercial Operation
Date (as defined in Schedule A) IFC owns 5% or
more of the Shares, then except as otherwise
prohibited by applicable law, the Company shall
not take any action regarding the following
matters without the affirmative vote of IFC;
i) any material amendment of these Articles, the
Memorandum of the Company or the Joint Venture Agreement,
unless expressly permitted by the Shareholders' Agreement
among the Company, the Foreign Parties and the Nepali Party,
ii) any merger, consolidation, recapitalization or other
reorganization of the Company with or into any other person,
iii) the taking of any corporate or other action by the
Company for the (A) commencement of a voluntary winding up
under any applicable bankruptcy, insolvency or similar law
now or hereafter in effect, (B) consent to the entry of any
order for relief in winding up by a court or under the
supervision of a court under any such law, (C) consent to
the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or of any substantial part
of the property of the Company or (D) making by the Company
of a general assignment for the benefit of creditors,
iv) any sale, lease, exchange, transfer, pledge,
contribution to a joint venture or other disposition of
assets resulting in the diminution of assets or other
properties, or the incurrence or exposure, contingently or
directly, of liability, which individually or in the
aggregate would materially impair the ability of the Company
to construct, own and operate the plant in accordance with
the scope of the Project;
v) any transaction between the Company and any Affiliate,
any officer or director of the Company or any Shareholder
(or any Affiliate of any of them), except future arm's
length transactions and except the performance of the
Principal Documents (as defined in Schedule A), as
applicable, in accordance with the terms thereof,
vi) any change in the Company's line of business from the
Project,
vii) any change in the line of business of any of HIPC,
Panda of Nepal or RDC of Nepal from the holding of Shares in
the Company and matters related thereto,
viii) the entering into of any contract which
individually provides for aggregate payments in excess of
$10,000 or together with all other contracts provides for
aggregate payments in excess of $100,000 and which is not in
the ordinary course of business or is on terms less
favorable to the Company than those available in arm's
length transactions between unrelated parties, or
ix) any expansion of the Project,
x) for such time that any portion of the IFC Loans is
outstanding or during which IFC has any commitment with
respect to the IFC Loans, the appointment of a replacement
firm of auditors in the event the firm then engaged resigns
its engagement or such engagement is proposed to be
terminated by the Company,
xi) except as required by the Share Retention and Project
Funds Agreement, any (A) increase or reduction in the
authorized share capital of the Company, or (B) issuance,
sale or reduction by the Company of share capital or
securities convertible into, exchangeable for or otherwise
granting the right to acquire share capital (including
options, warrants and other rights), and
xii) any creation, grant, incurrence or sufferance of any
Liens other than as permitted by the Investment Agreement,
(except that the affirmative vote of the Director appointed
by IFC to the Board of Directors or the affirmative vote of
IFC at a meeting of Shareholders shall not be required for
the creation of a Lien in connection with the refinancing of
the IFC Loans).
16.23 With respect to clause (ix) of Article 16.22
(pertaining to expansion of the Project), in the
event that IFC, in its capacity as a
Shareholder, casts a negative vote but all other
necessary votes and corporate action have been
taken to enable the Company to take the action
specified in said clause (ix) were it not for
the negative vote of IFC (in its capacity as a
Shareholder), then the Company may give notice
to IFC that, unless IFC changes its negative
vote to an affirmative vote, the Company, if and
to the extent permitted by applicable law, will
elect to purchase IFC's Shares (the "Election
Notice"). If, within thirty (30) days after IFC
receives the Election Notice (such thirty (30)
day period referred to herein as the "Initial
Thirty Day Period"), IFC changes the aforesaid
negative vote to an affirmative vote, then the
Company shall not have the right to purchase
IFC's Shares. If, within the Initial Thirty Day
Period, IFC does not change the aforesaid
negative vote to an affirmative vote, then the
Company, if and to the extent permitted by
applicable law, shall have the right, which must
be exercised (if at all) within sixty (60) days
after the expiration of the Initial Thirty Day
Period, to purchase all (but not less than all)
of IFC's Shares at a purchase price per share
that will provide to IFC a return on equity
taking into account dividends paid and any prior
return of capital, for IFC of twelve percent
(12%) per annum calculated for the period from
the date on which IFC acquired its shares
through the date on which IFC's Shares are
purchased and measured in constant U.S. Dollars
by adjusting all U.S. Dollar amounts by the rate
of change during the foregoing calculation
period in the U.S. Consumer Price Index for all
urban customers. It is expressly acknowledged
and agreed that IFC's failure to approve any
expansion of the Project in IFC's capacity as a
lender shall not trigger any rights of the
Company to purchase IFC's Shares as set forth in
this Section 16.23. In the event the Company is
not legally permitted to purchase the Shares or
if the Shareholders (other than IFC) so decide
even if the Company is legally permitted to
purchase the Shares, the right of the Company
contemplated in this Section 16.23 to purchase
all of IFC's Shares may be exercised by the
Shareholders (other than IFC), pro rata to their
then existing holdings of Shares or in such
other proportion as they may agree.
ARTICLE 17. DIRECTORS
17.1 The Shareholders of the Company may delegate such
administrative and related duties to the Directors
as they deem appropriate. The authority of the
Directors shall be limited to the performance of
such duties as authorized by the Shareholders and
as may be necessary to comply with the provisions
of the Act. In no instance shall the Directors
have the authority to make unauthorized business
decisions on behalf of the Company.
17.2 The Company shall have up to seven (7) Directors,
four (4) to be appointed by PANDA OF NEPAL and one
(1) each by RDC OF NEPAL, IFC and Nepali Party.
It is agreed and acknowledged that IFC does not
have to appoint a Director and, during any time
period in which IFC has not appointed a Director,
the total number of Directors shall be six (6).
17.3 The initial Directors shall consist of the
nominees of the subscribers to the Memorandum of
Association.
17.4 Each Shareholder may:
a. appoint any person to serve as the Director(s)
whom it is entitled to appoint pursuant to Article
17.2; and
b. appoint any person to serve as an alternate
Director, such alternate Director to serve as
Director in the event the Director(s) appointed
pursuant to Article 17.4(a) becomes unavailable;
and
c. remove any Director appointed by it pursuant to
Article 17.4 (a) and (b) from office with or
without cause.
17.5 The remuneration of the Directors shall be such
sum or sums as may from time to time be determined
by the Shareholders in General Meeting.
17.6 The Directors may be paid such traveling, hotel
and other expenses as may properly be incurred by
them in the execution of their duties, including
any such expenses incurred in connection with
their attendance at General Meetings or in
connection with the business of the Company
carried out in accordance with this Agreement.
17.7 Subject as herein otherwise provided or to the
terms of any lawful agreement, the office of a
Director shall be vacated:
a. if he is found lunatic or becomes of unsound
mind;
b. if by notice in writing given to the Company
he resigns his office;
c. if he is removed from office under Article
17.4 (b) hereof; or
d. if he fails to meet any of the other
qualifications provided in the Act.
17.8 In the event a Director or alternate Director
vacates his office under Article 17.7, or if a
Director or alternate Director is otherwise unable
to carry out his duties as described in these
Articles, the Shareholders shall within a
reasonable period of time appoint another person
to serve as Director or alternate Director of the
Company as provided in Article 17.4 (a) and (b).
A Director shall have no authority to appoint an
alternate Director to serve in his place.
17.9 Until such time as the Shareholders appoint a new
Director as described in Article 17.8, the
Shareholders shall exercise all the powers
referred to in these Articles as exercisable by
the Director.
ARTICLE 18. MANAGING AGENT
Under no circumstances shall a managing agent be
appointed for the Company.
ARTICLE 19. DIVIDEND AND RESERVE
19.1 Subject to the Articles, the Shareholders in
General Meeting shall declare and approve
dividends.
19.2 While distributing dividends among the
Shareholders, the Company may deduct call amounts
or any other outstanding amounts to be paid in
respect to Shares without formal prior notice.
19.3 Dividends shall be paid only out of profit of the
Company. The Company may create a reserve fund or
depreciation fund out of the profit of the Company
to operate the Company's business smoothly and
efficiently, to meet contingency expenses, to
repay loans, to raise funds for depreciation of
the Company's assets, to acquire buildings,
machinery or other property, to meet the cost of
the development projects and to meet other
liabilities of the Company. Any recommendation by
the Board of Directors as to the amount of profits
which shall be maintained in the reserve fund
shall be subject to the approval of the
Shareholders.
19.4 The Shareholders in General Meeting may authorize
interim dividends to the Shareholders from time to
time after taking into consideration the financial
conditions of the Company.
ARTICLE 20. ACCOUNTS AND RECORDS
20.1 ACCOUNTS
The Company shall maintain its accounts in both
Nepali and English. The accounts of the Company
shall be maintained in such a way that the actual
and current position of the company is clearly
depicted. The accounts shall also contain
detailed particulars of each head of income and
expenditure, sale or purchase of goods and
services and the assets and liabilities of the
Company. The Company shall also prepare other
accounts and reports as mentioned in the
Agreement.
20.2 PLACE OF KEEPING BOOKS
The accounts and records of the Company shall be
kept at the Registered Office of the Company and
the records may be available for inspection to the
nominees of the Shareholders during normal office
hours.
ARTICLE 21. TAX MATTERS
21.1 The Fiscal Year of the Company shall be such
period of twelve (12) months as provided by
Nepalese law.
21.2 Within 90 days after the end of each Fiscal Year,
the Company shall prepare and file, or cause to be
prepared and filed, any tax returns of the Company
and shall send to each person who was a
Shareholder at any time during such fiscal year
copies of such information as may be reasonably
required for the applicable income tax reporting
purposes by such person. The Company shall also
prepare within the same time period such other
returns and information as any Shareholder may
reasonably request for the purposes of complying
with requirements imposed on the Company or the
Shareholders by U.S. or other foreign tax laws.
21.3 Without affecting in any way the characterization
of the Company as a private limited company in
Nepal and the applicability of the provisions of
the Act, the Shareholders intend that the Company
be treated as a partnership for tax purposes in
the United States without in any way affecting its
tax status in Nepal. Each Shareholder whose
earnings from the Company are reported to the U.S.
tax authorities will ensure that the earnings are
reported on a basis consistent with this
characterization. The Company and its
Shareholders subject to taxation in the United
States will make an election to be treated as a
partnership for federal income purposes in the
United States if such an election becomes
available. It is acknowledged and agreed that the
preceding two sentences shall not be applicable to
IFC. If requested by any Shareholder, the Company
will make an election to adjust the basis of its
assets so that such basis will equal the basis
which each Shareholder has in its Shares in the
Company. The purpose for this adjustment is to
ensure that any investors purchasing Shares in the
Company will not be subject to U.S. taxation on
any appreciation in the value of the Company's
assets that occurred before they purchased their
Shares.
ARTICLE 22. STATUTORY AUDITOR
Subject to the provisions of the Agreement:
22.1 The appointment of the auditors and determination
of their renumeration shall be made by the
Shareholders in General Meeting.
22.2 The auditor shall audit the accounts of the
Company at least once in every Fiscal Year.
22.3 In case the office of the duly appointed auditor
falls vacant for any reason, the Shareholders in
General Meeting may appoint another Auditor in
such vacant post, and the remuneration of the
auditor so appointed shall be fixed by the
Shareholders.
ARTICLE 23. BALANCE SHEET/ACCOUNT
The Shareholders shall cause to be prepared a statement
of profit and loss account, a cash flow statement and
balance sheet for every Fiscal Year. The accounts for
the Fiscal Year shall be prepared in accordance with
the Act and shall be certified by the Auditors and
signed by the Directors.
ARTICLE 24. LIQUIDATION
In case of the liquidation of the Company, the
liability of the Company shall be settled in accordance
with Section 101 of the Act. If there is any residue
after the payment of expenditures incurred during the
winding up of the Company and any other loans and
liabilities, it shall be distributed to the
Shareholders in proportion to their holdings in the
paid-up share capital of the Company. However, if such
liquidation results from the Company's intentional or
grossly negligent actions, the Company shall declare a
dividend in the maximum amount permitted by applicable
law to IFC.
ARTICLE 25. SIGNATURES
We, the undersigned persons, whose name and address are
subscribed below, are subscribed below, are desirous of
being incorporated into a private limited Company in
pursuance to this Articles of Association and we
respectively agree to take the number of shares in the
capital of the Company set opposite our respective
names.
SIGNATURE OF
S. NO. OF PROMOTER OR DULY
No. NAMES, ADDRESS OF SHARES AUTHORIZED
PROMOTER SUBSCRIBED REPRESENTATIVE WITNESS
1. HIMAL INTERNATIONAL 18,000
POWER CORP. LTD.
Post Box No. 3800
Tahachal, Kathmandu,
Nepal Prabhakar SJB
Rana
Attn: Authorized
Prabhakar SJB Rana Representative
2. PANDA OF NEPAL 153,000
c/o Maples & Calder
P.O. Box 309, Ugland
House
South Church Street
Grand Cayman,
Cayman Islands
British West Indies Robert L. Ransom
Attn: Authorized
Robert W. Carter Representative
3. RDC OF NEPAL 9,000
c/o W.S. Walker & Co.
1st Floor, Caledonian
House, Mary Street,
P.O. Box 265 G,
George Town,
Grand Cayman,
Cayman Islands
British West Indies Noel Cocoran,
Attn: Authorized
Frank M. Dickerson Representative
Dated: August 22, 1997
EXHIBIT NO. 10.170
FIRST AMENDED
MEMORANDUM OF ASSOCIATION
OF THE
BHOTE KOSHI POWER COMPANY
PRIVATE LIMITED
KATHMANDU, NEPAL
FIRST AMENDED
MEMORANDUM OF ASSOCIATION
OF
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
Incorporated under the Company Act, 2021 (1964)
1. NAME OF THE COMPANY
The name of the Company shall be Bhote Koshi Power
Company Private Limited.
2. REGISTERED OFFICE OF THE COMPANY
The registered office of the Company will be located in
Tahachal Kathmandu District, Nepal. The registered
office may be changed with the approval of the
concerned department of His Majesty's Government of
Nepal (HMGN). Branches and other business offices, may
be established at other locations as required.
However, under no circumstances may a registered
office, branch or other business office of the Company
be established in the United States.
3. DEFINITIONS:
In this Memorandum of Association unless repugnant to
the subject or context
"AFFILIATE(S)" shall mean any person or
entity that directly or indirectly
(through one or more intermediaries)
controls or is controlled by or under
common control with the party specified.
For purposes of this definition, control
of a person or entity means the power,
direct or indirect, to cause or determine
the direction of the management and
policies of such person or entity (whether
by ownership of securities, contract or
otherwise);
"AGREEMENT" means the Amended and Restated
Joint Venture Agreement dated as of the
Financial Closing Date, among the Nepali
Party and Foreign Parties;
"ARTICLES" means the Amended and Restated
Articles of Association of the Company and
amendments made thereto from time to time;
"FINANCIAL CLOSING DATE" means the date on
which IFC makes an initial disbursement.
"FOREIGN PARTIES" means Panda of Nepal,
International Finance Corporation and RDC
of Nepal;
"HMGN" means His Majesty's Government of
Nepal, its agencies or departments;
"IFC" means International Finance
Corporation, an international organization
established by Articles of Agreement among
its member countries.
"NEA" means the Nepal Electricity
Authority and its successors and assign;
and
"NEPALI PARTY" means Himal International
Power Corp. Ltd., a Party to the
Agreement.
4. MAIN OBJECTIVES
4.1 The main objectives of Bhote Koshi Power Company
Private Limited shall be as follows:
a. To develop, construct, own and operate the
Upper Bhote Koshi Hydroelectric Project.
b. To sell the generated power to NEA, HMGN or
its representatives, directly to consumers,
both local and foreign, and others.
c. To build transmission lines to transmit power
from the Upper Bhote Koshi Hydroelectric
Project to the NEA power grid or other points
of supply whether through the NEA system or
otherwise.
4.2 Activities to be carried out for fulfillment of
the above-mentioned objectives.
a. To carry out the activities which are related
to the objectives or the functions of the
Company as provided in Section 4.1, and such
other activities which the Company deems
necessary for the fulfillment of its
objectives, subject to the prevailing laws of
Nepal;
b. To purchase or acquire buildings and land on
mortgage, lease, exchange, contract or
otherwise for the purposes of the Company and
to use and deal with them in such manner as
the Company deems fit;
c. To import, purchase and maintain goods, raw
materials, machines and equipment required by
the Company subject to the prevailing laws of
Nepal;
d. To acquire, possess and use movable or
immovable properties for the purpose of the
Company;
e. To borrow money to fulfill the need for the
required funding of the Company from national
and foreign banks and financial institutions
and to conclude necessary agreements for the
same, subject to the prevailing laws of
Nepal;
f. To obtain consultancy services on any matter
relating to the business of the Company and
to conclude appropriate management or other
agreements with national or foreign
institutions, firms and companies;
g. To purchase, lease or otherwise obtain
vehicles required for the purpose of the
Company and to use them for the business of
the Company;
h. To pay all expenses incurred for the
incorporation of the Company;
i. To bear all expenditures for advertisement
required for promotion of the Company;
j. Subject to the prevailing laws of Nepal, to
establish a public relations and business
promotion arm for furthering of the business
of the Company, to bear required expenses for
the same and to correspond and otherwise deal
with national and international organizations
and institutions in this regard;
k. To open bank accounts with national and, with
prior approval, foreign banks and operate
such accounts with them;
l. To employ managers, staff and workers
required for the efficient and effective
operation of the Company, and subject to the
prevailing laws to determine their service
conditions and facilities (including salaries
and allowances), to prescribe their
functions, rights and duties, and to suspend
or dismiss such employees;
m. To file or defend a suit on behalf or against
the Company, its officers and employees in
matters where the Company's interest is
involved and to compromise such suit or
claim and to settle the dues or claims made
for or against the Company, and to grant or
obtain extension time for such settlement;
n. To purchase and invest in shares and
debentures of any other company;
o. To arrange for appropriate study and training
programs within and outside Nepal for the
career development of employees, technicians
and other and as required for the Company's
business; and
p. To perform all such other functions required
for the attainment of all or any of the
objectives as mentioned above, subject to the
prevailing laws of Nepal.
5. LIMITED LIABILITY:
This Company is a private limited company registered
under the Company Act, 2021. The liability of its
shareholders is limited and a shareholder shall not be
liable to pay any liability of the Company except for
the face value of the share subscribed by him. The
total number of its shareholders shall not be more than
50 and its shares shall not be sold or purchased
publicly and its shares shall not be transferred by way
of sale, mortgage or otherwise to any other persons
except in accordance with the provisions of the
Agreement and Articles.
6. SHARE CAPITAL:
6.1 The authorized share capital of the Company shall
be Rupees five billion four hundred fourteen
million five hundred thousand (Rs. 5,414,500,000)
divided into one class of fifty four million one
hundred forty five thousand (54,145,000) shares of
Rupees 100 each. The initial issued share capital
of the Company will be Rupees two billion
(Rs. 2,000,000,000) divided into twenty million
(20, 000,000) shares of Rupees 100 each. The
initial issued capital shall be subscribed by
Nepali Party 10%, Panda of Nepal 85% and RDC of
Nepal 5%.
6.2 The Foreign Parties (other than IFC) and/or their
Affiliates and the Nepali Party and/or its
Affiliates shall be the primary promoters.
6.3 The initial issued and subscribed share capital of
the Company shall be held as follows:
Nepali Party 10%
Panda of Nepal 85%
RDC of Nepal 5%
6.4 The Company may, by passing a special resolution
in general meeting in accordance with the
provisions of the Agreement and by following the
procedure established under the prevailing Company
Act as in effect at such time, increase or
decrease the share capital of the Company or issue
shares with preference or with special rights,
change or revoke such rights and issue shares
having lower or higher denomination.
THIS SPACE INTENTIONALLY LEFT BLANK
We, the undersigned persons, whose names and addresses
are subscribed below, are desirous of being
incorporated into a private limited company in
pursuance to this Memorandum of Association and we
agree to respectively take the number of shares in the
capital of the Company set opposite our respective
names:
Number of
S. Names and Address Subscribed Signature of Witness
No. of Promoter Shares Promoters
1. Himal International 18,000
Power Corp. Ltd. Prabhakar SBJ
Post Box No. 3800 Rana
Tahachal, Kathmandu, Authorized
NEPAL Representative
2. Panda of Nepal 153,000
c/o Maples & Calder
P.O. Box 309,
Ugland House
South Church Street
Grand Cayman, Robert L. Ransom
Cayman Islands Authorized
British West Indies Representative
3. RDC of Nepal 9,000
c/o W.S. Walker & Co.
1st Floor,
Caledonian House,
Mary Street,
P.O. Box 265 G,
George Town,
Grand Cayman, Noel Cocoran
Cayman Islands Authorized
British West Indies Representative
Dated: August 22, 1997
EXHIBIT NO. 10.171
ENGINEERING SERVICES AGREEMENT
between
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
HARZA ENGINEERING COMPANY INTERNATIONAL L.P.
for
THE INSTALLATION OF A FLOOD WARNING SYSTEM
FOR
THE BHOTE KOSHI HYDROELECTRIC PROJECT
This Agreement is entered into this 30th day of November,
1997, by and between Bhote Koshi Power Company Private
Limited, hereinafter referred to as the Client, and Harza
Engineering Company International L.P., hereinafter referred
to as the Engineer.
INDEX TO SERVICES AGREEMENT
Article I Definitions
Article II Purpose
Article III General Terms and Conditions
Article IV Schedule
Article V Scope of Services and Additional Services
Article VI Compensation to the Engineer
Article VII Nepalese Registration Fees, Duties, and Taxes
Article VIII Engineer's Employees
Article IX Ownership of Documents
Article X Changes in the Scope of Services
Article XI Subcontracts
Article XII Assignment
Article XIII Authorization to Purchase
Article XIV Force Majeure
Article XV Arbitration
Article XVI Official Language and Units of Weights and Measure
Article XVII Termination and Suspensions
Article XVIII Law Governing Agreement
Article XIX Review and Modification of Agreement
Article XX Notices
Article XXI Entire Understanding of Agreement
Article XXII Waiver of Contract Breach
Article XXIII Severability of Invalid Provisions
Article XIV Designation of Authorized Representatives
Article XV Indemnification
Article XVI Effective Date
Article XVII Independent Contractor
Article XVIII Representations and Warranties
Article XXIX Insurance
Attachment 1 Price of Engineering Services
Attachment 2 Scope of Engineering Services
ARTICLE I - DEFINITIONS
Project: Upper Bhote Koshi Hydroelectric Project
Client:Bhote Koshi Power Company Private Limited
Engineer: Harza Engineering Company International L.P.
ARTICLE II - PURPOSE
The purpose of this Agreement is to set forth the terms and
conditions under which the Engineer shall provide technical
engineering consulting services related to the Project for
the Client. The services to be provided are described in
Article V, Scope of Services.
ARTICLE III - GENERAL TERMS AND CONDITIONS
A. Appointment of the Engineer
The Client hereby appoints the Engineer and the Engineer
accepts the appointment on the terms and conditions set
forth hereinafter.
B. Engineer's Responsibility
The Engineer will render engineering services in accordance
with generally accepted and currently recognized engineering
practices, procedures and principles. The Engineer makes no
other warranty, either express or implied, with respect to
its services.
Notwithstanding anything to the contrary which may be
contained in this Agreement or any other material
incorporated herein by reference, or in any agreement
between Client and any other party concerning the Project,
the Engineer shall not have control or be in charge of, and
shall not be responsible for the means, methods, techniques,
sequences or procedures of construction, or the safety,
safety precautions or programs of the Client, the
construction contractor, other contractors or subcontractors
performing any of the work or services on the Project. Nor
shall the Engineer be responsible for the acts or omissions
of Client, or for the failure of Client, or for its other
consultants, contractors or subcontractors to carry out
their respective responsibilities in accordance with the
Project documents, this Agreement, or any other agreement
concerning the Project. Any provision which purports to
amend this provision shall be without effect unless it
contains a reference that the content of this Article III.B
is expressly amended for the purposes described in such
amendment and is signed by both parties.
ARTICLE IV - SCHEDULE
A. Initiation of Services
The Engineer will commence the services on May 1, 1997.
B. Schedule of Services
1. The Engineer has planned its services to achieve
essential completion of the Services by June 1, 1998.
2. The Engineer agrees to adhere to the time schedule with
respect to all portions of the services which are
solely under the direct control of the Engineer. The
Client accepts responsibility for facilitating the
services of the Engineer and the progress of the
Project with respect to all portions of the services
over which the Client retains control.
C. Completion of Services
The services to be provided under this Agreement shall be
considered complete when the equipment has been installed,
tested, commissioned and accepted by the Client.
Completion by the Engineer and acceptance by the Client of
all outstanding reports and drawings under each Phase of
this Agreement shall be considered accepted if neither the
Client nor Client's lenders' independent engineer raises
any objections within ninety (90) days after certification
by the Engineer of completion of all outstanding reports and
drawings.
D. Terms of Agreement
Unless terminated under Article XIX, this Agreement shall
terminate on the later of June 1, 1999 or one year after
the date the equipment has been accepted by the Client. A
revised termination date may be included by Amendment.
ARTICLE V - SCOPE OF SERVICES AND ADDITIONAL SERVICES
The Scope of Services is presented in Attachment 2 to this
Agreement.
The Engineer shall supply such additional services as
requested by the Client in connection with the Project and
for which the Engineer is qualified but which are not
otherwise included in this Agreement. Separate proposals
shall be submitted by the Engineer for furnishing these
services. Compensation for such additional services shall
be negotiated by the parties and included in this Agreement
by Amendment.
ARTICLE VI - COMPENSATION TO THE ENGINEER
A. Compensation
In consideration of the engineering services rendered by the
Engineer under this Agreement, the Engineer shall be
reimbursed in four lump sum payments corresponding to
milestones as indicated on Attachment 1.
The Engineer and the Client shall meet in person or by a
conference call monthly to discuss the progress for the
following month's services. The Engineer at the Client's
request agrees to delay any activities provided that the
Client shall be responsible for any increased cost resulting
from the delay and the schedule shall be adjusted for the
effects of the requested delay.
B. Mode of Payment
The Engineer shall submit invoices to the Client in US
dollars, consistent with Attachment 1.
The Client shall pay the Engineer within 45 days of the
receipt of the invoice.
1. Settlement of Disputed Amounts. In the case of
disputed amounts, the Client shall request
clarification from the Engineer of the queried part at
the same time the Client transmits acceptance for the
approved part of the statement. Within 30 days of
receipt of clarification, the Client shall state
whether or not the queried part is accepted or rejected
in full or in part. For all portions accepted, the
Client shall immediately transmit acceptance to the
Engineer. For portions not accepted by Client, Article
XV of this Agreement, Arbitration, shall apply, if
invoked by the Engineer.
2. Interest on Overdue Accounts. If for any reason
payments due the Engineer have not been paid within 45
days of delivery of the invoice to the Client, interest
on the overdue amount(s) shall be applied at an annual
rate one percent higher than the prime rate charged by
the Northern Trust Company, Chicago, Illinois.
ARTICLE VII - NEPALESE REGISTRATION FEES, DUTIES AND TAXES
In the event that the Engineer, its expatriate personnel, or
its non-Nepalese Consultants or subcontractors are subject
to payment of registration fees, customs and duties, income
taxes or other taxes, all such fees, duties and taxes shall
either be paid directly by the Client or reimbursed to the
Engineer. The Engineer shall promptly inform the Client of
any fees, duties, or any tax on fees earned for the services
in Nepal or tax on income of expatriate staff in Nepal paid
in the U.S. to enable the Client to obtain tax reductions
allowable under the laws of Nepal. Existence of any such
fees or levies has not been determined and therefore is not
provided for in Attachment 1, Price of Engineering
Services.
ARTICLE VIII - ENGINEER'S EMPLOYEES
A.Client's Approval
The Engineer shall obtain the approval of Client for the
long term assignment in Nepal of each employee assigned to
serve under this Agreement. Such approval shall not be
unreasonably withheld by the Client.
B.Replacement
Upon the written request of the Client, the Engineer shall
remove or replace any of its long-term or short-term
employees present in Nepal. In the event of removal of any
employee for cause, any replacement shall be an individual
with at least equivalent professional qualifications and
shall be subject to the same approvals as the individual
replaced.
C. Employee Conduct
All Engineer's and subcontractor employees and their
authorized dependents shall at all times while in Nepal
conduct themselves within the laws, respect the customs of
Nepal and refrain from any political activity. The Engineer
shall solely be responsible for conduct of its employees
while in Nepal or traveling to Nepal.
ARTICLE IX - OWNERSHIP OF DOCUMENTS
A. Documents Property of Client
Technical data, recommendations, notes, memoranda, drawings
or other graphic representations prepared by the Engineer
pursuant to or developed in connection with this Agreement
shall become the property of the Client. This provision
shall not be interpreted to limit the right of the Engineer
or its personnel to make, keep and use copies of personal
and professional records, notes, reports or other data. The
Engineer shall have the right to retain copies of all
documents and drawings for its files. The Engineer shall not
publish any information obtained or developed pursuant to
the Agreement without Client's prior consent.
B. Reuse of Documents
All documents, including drawings and specifications
furnished by the Engineer pursuant to this Agreement are
intended for use on this Project only. They should not be
used by the Client or others on extensions of the Project or
any other project without specific written verification or
adaptation by the Engineer. Any reuse without the Engineer's
written verification or adaptation shall be at the Client's
sole risk, and Client shall indemnify and hold harmless the
Engineer from all claims damages, losses, and expenses,
including attorneys' fees and arising out of or resulting
from such unauthorized reuse.
Any computer disks provided by Engineer to Client may
develop errors because of hardware and software combinations
differing from those used by Engineer in preparing the
disks, other failure of Client's or third parties' hardware,
or the limited life expectancy and integrity of the disk and
its contents for which Engineer bears no responsibility. In
case of discrepancies between documents ("hard copy")
prepared by Engineer and such computer disks, the hard copy
shall be the governing medium and copy of record.
ARTICLE X - CHANGES IN THE SCOPE OF SERVICES
A.Making Changes
The Client may at any time, by written order, make changes
within the scope and duration of the services required under
this Agreement. If any such change is made, an equitable
adjustment shall be made (1) in the Price of Engineering
Services (Attachment 1) or the Schedule of Services (Article
IV. B), or both, and (2) in such other provisions of the
Agreement as may be affected, and the Agreement shall be so
modified in writing.
B.Revised Estimates
In the case of an increase or decrease in the Scope of
Services ordered by the Client, the Engineer shall within
fifteen (15) working days provide a cost estimate for the
increase or decrease in services and indicate the effect of
this change in the overall Scope of Services and the
estimated completion date and its effects on the Price of
Engineering Services (Attachment 1).
ARTICLE XI - SUBCONTRACTS
The Engineer may subcontract with individuals or firms
qualified to perform specialized services necessary for the
performance of the services. All such subcontracts shall be
approved in advance in writing by the Client and such
approval, if given, shall not relieve the Engineer from any
liability or obligation under this Agreement. In the event
any single subcontract exceeds $200,000, or subcontracts
exceed $500,000 in the aggregate, Engineer shall also obtain
the lenders' approval. All subcontracts issued pursuant to
this clause shall be subject to all obligations hereunder
and the Engineer agrees to include all appropriate provision
of this Agreement in all subcontracts hereunder.
All subcontracts entered into by the Engineer in performance
of its services shall be billed at cost to the Client.
ARTICLE XII - ASSIGNMENT
The Engineer may not assign its obligation to perform under
this Agreement except with the prior written consent of the
Client and its lenders. The Engineer's right to receive
payment under this Agreement may not be assigned without
prior written consent of the Client and its lenders.
The Client may assign the rights and obligations under this
Agreement to its lenders, or to any other party with the
prior written consent of the Client's lenders.
ARTICLE XIII - AUTHORIZATION OF PURCHASE
Except for the flood warning system to be installed, the
Engineer may purchase any engineering, testing, surveying
and other equipment, literature, computer programs and
vehicles required for performance of its Services. The
Client will purchase the flood warning system equipment.
ARTICLE XIV - FORCE MAJEURE
In the event the Engineer is rendered unable, wholly or in
part, by Force Majeure, to perform its duties under this
Agreement, then the Engineer shall notify with full
particulars of such Force Majeure, in writing, facsimile or
by telegram, to the Client as soon as practicable after the
occurrence of the case. The duties of the Engineer, as it
is affected by such Force Majeure shall be suspended during
the continuance of any inability so caused and the effects
of such cause shall, as far as possible, be reduced, with
all reasonable dispatch. The term "Force Majeure" employed
hereunder, shall mean events beyond the control of the
Party, including but not limited to acts of God, strikes,
lockouts, or other industrial disturbances, tribal and war-
blockades, insurrections, riots and civil disturbances in
Nepal, the effects of which by the exercise of due
diligence, the Engineer is unable to overcome. Unless the
services of the Engineer are terminated pursuant to the
provision of Article XVII, Termination, thereof, then during
the period the duties of the Engineer are suspended, the
Client shall continue to reimburse the Engineer for the cost
of services incurred hereunder, in the same manner as if
such duties had not been suspended, to the extent otherwise
reimbursable under this Agreement plus any additional costs
incurred due to temporary relocation of the employees and/or
their dependents. It is understood that the Engineer shall
use his best efforts to minimize his cost and expenditures
during any period of Force Majeure.
ARTICLE XV - ARBITRATION
All disputes under this Agreement shall be resolved finally,
and without appeal to any courts, in accordance with the
following procedures.
Each Party shall appoint a representative who shall be
principally responsible for administering the Agreement on
behalf of such Party and representing the Party's interests
in the event of disputes under this Agreement. Any dispute
or disagreement between the Parties relating to or in
connection with this Agreement, which is not finally settled
by a discussion between the appointed representatives within
thirty (30) days shall be submitted to arbitration at the
written request of any Party, specifying the issue or issues
in dispute and summarizing the Party's claim with respect
thereto.
A Party initiating arbitration proceedings may request that
an arbitration committee be established and such committee
resolve the dispute or disagreement. Such committee shall
consist of one representative appointed by each of the
Parties and a chairman acceptable to all of the Parties.
In the event that the Parties fail to form an arbitration
committee, or if the arbitration committee fails to resolve
the dispute within thirty (30) days, either Party may refer
such dispute, controversy or claim to arbitration for
settlement in accordance with the United Nations Commission
on International Trade Law (UNCITRAL) as then presently in
force.
For purposes of application of the UNCITRAL Arbitration
Rules to this Agreement:
The appointing authority shall be the authority as
designated by UNCITRAL Arbitration Rules.
The number of arbitrators shall be three. No arbitrator
shall be an employee, agent, shareholder, former employee
or agent of any of the Parties.
The place of the arbitration shall be Washington, D.C.
The language to be used in the arbitral proceedings shall
be English.
The Parties hereby consent to the jurisdiction of the
arbitration panel. The arbitration panel shall be
authorized to order equitable relief, including specific
performance or injunctive relief. The arbitration award
shall be final and binding and enforceable in any court
of competent jurisdiction.
Within thirty (30) days of the hearing, unless such time
is extended by mutual agreement, the arbitrators shall
notify the Parties in writing of their decision stating
separately findings of fact and conclusions of law. The
arbitrators shall not have the power to add to or amend
this Agreement. The decision of the arbitrators shall
specify how the expenses of the arbitration shall be
allocated.
ARTICLE XVI - OFFICIAL LANGUAGE AND UNITS OF WEIGHTS AND
MEASURE
The official language of this Agreement and of all
documents prepared by the Engineer under the terms of
this Agreement shall be the English language. The units
of weights and measure in which the design and contract
documents shall be prepared shall be metric units.
ARTICLE XVII - TERMINATION AND SUSPENSION
A.Termination
This Agreement may be terminated by either Party upon 30
(thirty) days' written notice in the event of a material
default by the other Party in performing its obligations
in accordance with the terms hereof through no fault of
the terminating Party upon mutual agreement.
B. Force Majeure
In the event of Force Majeure, as defined in Article
XIV, Force Majeure, the Client shall have the right to
terminate this Agreement as stated above, and such
termination may be made on 30 (thirty) days notice in
writing.
If for any reasons of Force Majeure, in accordance with
and as defined in Article XIV, Force Majeure, services of
the Engineer are suspended, either Party may terminate
the Agreement one hundred eighty (180) days after having
given notice of the Force Majeure event. The Client
shall pay to the Engineer an equitable amount for
services performed up to the date of termination.
Similarly, if for reasons of Force Majeure the
performance of the services by the Engineer shall be
delayed, or extra disbursements incurred in continuing
the services, the Client shall pay to the Engineer all
reasonable costs previously approved by the Client
resulting from the delay, or extra disbursements,
including, if necessary, disbursements for round trip
travel and subsistence during temporary evacuation for
personnel normally resident in Nepal while performing
their duties and for the dependents normally residing
with such personnel.
ARTICLE XVIII - LAW GOVERNING AGREEMENT
This Agreement shall, in all respects, be read and
construed, and shall operate as a contract, in conformity
with the laws of New York and its Courts shall have
jurisdiction for adjudicating any dispute arising
hereunder.
ARTICLE XIX - REVIEW AND MODIFICATION OF AGREEMENT
The Terms of this Agreement shall be reviewed on the
anniversary of the effective date every year that it is
in force. Additions, deletions, and changes mutually
agreeable to the parties thereto shall be incorporated
therein per written amendment. No modification of this
Agreement shall be made except by amendment signed by the
parties.
ARTICLE XX - NOTICES
Any notice given by any of the parties hereto shall be
sufficient only if in writing and delivered in person,
facsimile, telex or through registered mail as follows:
TO: Bhote Koshi Power Company Private Limited
KHA 1-960
Kalimati, Tachachal
Kathmandu, Nepal
Attn: Project Manager
(T&F) 977 1 27 00 27
TO: Harza Engineering International L.P.
c/o Harza Engineering Company
Sears Tower
233 S. Wacker Drive
Chicago, Illinois 60606 USA
Attn: Patrick Hartel, Project Manager
(T) 312-831-3000
(F) 312-831-3999
or to such other address as either of these parties shall
designate by notice given as required herein. Notices
hereunder shall be effective when delivered.
ARTICLE XXI - ENTIRE UNDERSTANDING OF AGREEMENT
This Agreement represents and incorporates the entire
understanding by the parties hereto, and each Party
acknowledges that there are no warranties,
representations, covenants or understandings of any kind,
matter or description whatsoever, made by either Party to
the other except as expressly set forth herein. The
parties agree that any purchase orders, invoices,
confirmations, acknowledgments or other similar documents
executed or delivered with respect to the subject matter
hereof that conflict with the terms of this Agreement
shall be null, void, and without effect to the extent
that they conflict with the terms of this Agreement.
ARTICLE XXII - WAIVER OF CONTRACT BREACH
The waiver of one Party of any breach of this Agreement
or the failure of one Party to enforce at any time, or
for any period of time, any of the provisions hereof, and
shall be limited to the particular instance, shall not
operate of be deemed to waive any future breaches of this
Agreement, and shall not be construed to be a waiver of
any provision, except for the particular instance.
ARTICLE XXIII - SEVERABILITY OF INVALID PROVISIONS
If any provisions of the Agreement shall be held to
contravene or be invalid under the laws of any particular
state, country or jurisdiction where used, such
contravention shall not invalidate the entire Agreement,
but the Agreement shall be construed as if not containing
the particular provisions or provisions held to be
invalid in the particular state, country or jurisdiction
and the rights or obligations of the parties hereto shall
be construed and enforced accordingly.
ARTICLE XXIV - DESIGNATION OF AUTHORIZED REPRESENTATIVES
Each Party shall designate one or more persons to act
with authority in its behalf in respect to appropriate
aspects of the Project. The persons designated shall
review and respond promptly to all communications
received from the other Party.
ARTICLE XXV - INDEMNIFICATION
The Engineer shall indemnify and hold harmless the Client
up to the amount of the compensation paid by the Client
to the Engineer for its services rendered under this
Agreement (excluding costs and subcontract expenses) from
the Client's loss or expense, including reasonable
attorneys' fees, for claims for personal injury
(including death) or property damage arising out of the
sole negligent act, error or omission of the Engineer.
The Client shall indemnify and hold harmless the Engineer
up to the amount of the compensation paid by the Client
to the Engineer for its services rendered under this
Agreement (excluding costs and subcontract expenses) from
the Engineer's loss or expense, including reasonable
attorneys' fees, for claims for personal injury
(including death) or property damage arising out of the
sole negligent act, error or omission of the Client.
Subject to the Engineer's and the Client's limited
obligation of indemnification hereunder, in the event of
joint or concurrent negligence of the Engineer and the
Client, each shall bear that portion of the loss or
expense that its share of the joint or concurrent
negligence bears to the total negligence (including that
of third parties) which caused the personal injury or
property damage.
In no event shall the Engineer or the Client be liable
for special, incidental or consequential damages,
including, but not limited to loss of profits, revenue,
use of capital, claims of customers, cost of purchased
power or replacement power, or for any other loss of any
nature, whether based on contract, tort, negligence,
strict liability or otherwise, by reason of the services
rendered under this Agreement.
The trustees, directors, officers, employees, agents and
consultants of the respective parties are deemed to be
included in the term "Engineer" and "Client" for the
purposes of this section.
ARTICLE XXVI - EFFECTIVE DATE
This Agreement shall become effective May 1, 1997.
Initiation of services and termination shall be in
accordance with the terms of Article IV.
ARTICLE XXVII - INDEPENDENT CONTRACTOR
At all times, Engineer shall serve as Client's
professional engineering consultant in those phases of
the Project to which this Agreement applies. Engineer
shall have full responsibility for the control and
direction of its employees, contractors, servants, and
agents and shall be fully and solely responsible for the
payment of all obligations incurred by Engineer in
performing the requirements of this Agreement. Engineer
shall not be an agent for and may not bind Client.
Client shall not be an agent for and may not bind
Engineer. The relationship is that of a buyer and seller
of professional services and it is understood that this
Agreement does not create a joint venture, agency or
partnership relationship.
ARTICLE XXVIII - REPRESENTATIONS AND WARRANTIES
Engineer represents and warrants, as of the date hereof,
as follows:
A. It is a limited partnership duly organized,
validly existing and in good standing under the
laws of Delaware;
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 Engineer, enforceable in
accordance with its terms;
C. The execution, delivery and performance of this
Agreement do not violate (i) its partnership
agreement or bylaws or any resolution of its
Board of Managers or other committees charged
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 Engineer 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 could materially
affect its business or its ability to perform
its obligations hereunder;
F. To the best of Engineer's knowledge, no
authorization of 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 Engineer
of this Agreement which have not been obtained.
Engineer shall use reasonable efforts to obtain
any other material governmental approval in a
timely manner and to seek that such approvals
shall not expire without being renewed in a
timely manner or shall not be revoked,
suspended, held invalid or limited in effect;
G. It or one of its Affiliates, through its
management and personnel, is experienced in the
performance of engineering services in
accordance with generally accepted and
currently recognized engineering practices, has
complied with the provisions of all applicable
laws, and has not been and is not currently
subject to any judgment or settlement of any
claim imposing liability on it for
noncompliance with law or mismanagement in
rendered engineering services; and
H. It is familiar with the terms of the Power
Purchase Agreement and EPC Contract which
affect or relate to Engineer's rendering design
services in connection with the Project.
ARTICLE XXIX -INSURANCE
Before commencing Services under this Agreement,
Engineer shall procure and maintain insurance
policies for the duration of the Agreement of the
kind and for the limits hereinafter provided in
this Article. Upon Client's request, Engineer
shall submit certificates of insurance certifying
the issuance of the pertinent insurance policy.
The companies issuing the policies and the form of
the policies will be subject to the Client's
acceptance, but such acceptance shall not be
unreasonably withheld. The insurance coverages
shall be as follows:
A. Commercial General Liability
This insurance shall include contractual
liability and completed operations coverage.
Coverage shall be not less than:
$1,000,000 Per occurrence for Bodily Injury and
Property Damage combined;
$1,000,000 Aggregate.
B. Professional Liability
This insurance shall include coverage for errors,
omission and negligent acts, with a contractual
liability provision, in the minimum amount of
$1,000,000 per claim, $10,000,000 aggregate.
C. Workers' Compensation and Auto Liability
Workers' Compensation and Auto Liability coverage
shall be in accordance with statutory
requirements.
IN WITNESS WHEREOF, the parties have executed this
Agreement.
HARZA ENGINEERING BHOTE KOSHI POWER COMPANY
COMPANY INTERNATIONAL L.P. PRIVATE LIMITED
By: By:
Harza Engineering Company (Title)
International L.P.
a limited liability company
(the General Partner)
Witness: Witness:
Date: Date:
Attachment 1
PRICE OF ENGINEERING SERVICES
Milestone Payments
Milestone Price
1. Complete the conceptual design of $80,000
a flood warning system
2. Prepare the system design and $110,000
procurement specifications, and
obtain firm price quotes
3. Monitor vendor's manufacturing; $105,000
equipment delivery to site
4. Monitor vendor's installation, testing $55,000
and operational training for equipment;
equipment accepted by Client
Total (Excludes Equipment*) $350,000**
* The equipment cost, its installation, and training are
not included in the Price of Engineering Services. Such
additional costs for equipment supply and services to be
performed by others in connection with the installation,
testing and training shall be identified by the Engineer and
equipment vendor, agreed upon between the Client, equipment
vendor and Engineer prior to equipment procurement.
** Includes amounts previously incurred.
Attachment 2
SCOPE OF SERVICES
The Engineer's design services are intended to be an
integral part of BKPC's overall and coordinated approach to
dealing with flood risk management for the Upper Bhote Koshi
Hydroelectric Project. The flood warning system will
include one or more river water level sensing stations
designed to detect rapidly rising water levels. When a
potentially dangerous flood is detected, the system will
sound an alarm at the powerhouse and headworks areas and
automatically activate specific system functions. In
developing the conceptual design for the warning system,
possible interconnections with the planned national system
will be considered.
The Engineer shall perform the services in three phases: (1)
formulate the conceptual design of a flood warning system
and present such design to the Client for discussion, review
and approval; (2) based on the mutually agreed concept,
design a system, prepare equipment procurement
specifications, including warranty requirements, and obtain
firm price quotes; and (3) monitor the vendor's
installation, testing and provision of operational training
for such equipment.
Approach
During phase one, a remote monitoring and sensing expert
will review project documents, examine the project site and
upstream river condition and will develop a conceptual
design of a flood warning system. Topographic maps, project
documents and satellite imagery (to the extent that it is
available and can be acquired for the project
investigations) will be reviewed to establish site
conditions, constraints and approximate flood travel times.
A visual survey or inspection of the area will be made to
establish preferred locations for sensors, the preferred
communication media, and to develop alternatives to
alleviate politically sensitive problems. Two options will
be developed: one assuming no access restriction, and second
assuming that access to China is prohibited. For both
alternatives, permitting requirements will be identified.
Possible interconnection with the panned Nepalese system and
international donor funding will be discusses with local
Nepalese agencies currently involved in GLOF warning
systems. Equipment procurement costs will be estimated.
The conceptual design will be documented in the form of a
written description including preliminary drawings of
possible locations of sensors and sketches of the measuring
station configuration. The concept will be submitted to the
Client for review and discussion. A final report will be
prepared incorporating comments.
During phase two, a flood warning system will be designed
and equipment procurement specifications will be developed.
The specifications will include warranty and testing
requirements, requirements for providing as-built
documentation, as well as operation and maintenance
documentation. Bids for supply, installation, testing and
training will be obtained from equipment vendors. Harza will
evaluate vendor submittals. The equipment supply,
installation, testing and training budget will be finalized
and submitted to the Client for approval.
In the third phase, BKPC will procure the equipment under a
separate agreement with the selected equipment supplier. The
equipment supplier will also install, field test and provide
training. To verify compliance with the design, Harza will
review manufacturer's drawings, design data and
specifications prior to equipment manufacturing. Harza will
witness a factory test of the equipment to verify compliance
with the specifications. Harza will provide surveillance and
monitoring during the installation and testing of the
equipment. Personnel for operation and maintenance will be
provided by BKPC. Permits necessary for the implementation
of the system will be acquired by BKPC.
Deliverables
Deliverables are (1) draft and final report entitled "Flood
Warning System Conceptual Design Report", (2) tendering
documents, including specifications and drawings, for use in
obtaining equipment supply, installation, testing and
training prices, (3) a recommendation report identifying the
preferred equipment supply contractor, and (4) monthly
reports on the progress of equipment installation, supply,
testing and training. Harza will be available to participate
in telephone meetings with the lenders and/or the lenders'
engineer. BKPC will procure equipment and services for the
installation of and operational training in the use of the
equipment. The equipment supplier, in addition to supplying,
installing, and commissioning equipment, and conducting the
testing and training, will also be required to furnish
operation and maintenance documentation.
EXHIBIT NO. 12.00
PANDA GLOBAL HOLDINGS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Income (loss) before minority
interest and extraordinary items $ 4,346 $ 4,839 $ 2,316 $ (8,916) $(32,468)
Interest expense 11,066 11,018 11,716 19,414 55,329
Amortization of debt issue costs 502 600 554 494 1,418
Capitalized interest 803 5,793 11,055 2,057
----------------------------------------------------
Total fixed charges 11,568 12,421 18,063 30,963 58,804
Earnings before fixed charges 15,914 16,457 14,586 10,992 24,279
Ratio of earnings to fixed charges 1.38 1.32 0.81 0.36 0.41
Deficiency in coverage of
fixed charges $(3,477) $(19,971) $(34,525)
</TABLE>
EXHIBIT 21.00
SUBSIDIARIES OF PANDA GLOBAL HOLDINGS, INC.
Name of Entity: Jurisdiction of Organization:
Panda Energy Corporation Texas
Lakeland Water Company Delaware
Panda-Kathleen Corporation Delaware
Panda/Live Oak Corporation Delaware
Panda-Kathleen, L.P. Delaware
Panda Interfunding Corporation Delaware
Panda Interholding Corporation Delaware
Panda Funding Corporation Delaware
Panda-Rosemary Corporation Delaware
PRC II Corporation Delaware
Panda-Rosemary, L.P. Delaware
Panda-Rosemary Funding Co. Delaware
Rosemary Water Company Delaware
Panda-Brandywine Corporation Delaware
Panda Energy Corp. Delaware
Brandywine Water Company Delaware
Panda-Brandywine, L.P. Delaware
Panda Cayman Interfunding Corporation Cayman Islands
Pan-Sino Energy Development Company, L.L.C. Cayman Islands
Pan-Western Energy Corporation, L.L.C. Cayman Islands
Panda Global Energy Company Cayman Islands
Panda Bhote Koshi Cayman Islands
Panda of Nepal, L.L.C. Cayman Islands
Tangshan Panda Heat & Power Company, Ltd. People's Republic of China
Tangshan Pan-Western Heat & Power Company, Ltd. People's Republic of China
Tangshan Cayman Heat & Power Company, Ltd. People's Republic of China
Tangshan Pan-Sino Heat Company, Ltd. People's Republic of China
Bhote Koshi Power Co., Pvt. Ltd. Nepal
27.01 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SEC Form 10-K and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 DEC-31-1997
<CASH> 19,145,007 95,757,371
<SECURITIES> 0 0
<RECEIVABLES> 9,402,685 9,786,837
<ALLOWANCES> 0 0
<INVENTORY> 7,913,777 6,264,549
<CURRENT-ASSETS> 36,626,374 112,066,634
<PP&E> 295,264,490 331,122,400
<DEPRECIATION> (26,539,539) (38,114,058)
<TOTAL-ASSETS> 345,470,212 491,881,769
<CURRENT-LIABILITIES> 19,667,144 25,994,144
<BONDS> 209,830,918 349,667,769
0 0
0 0
<COMMON> 10 10
<OTHER-SE> (101,516,505) (133,940,235)
<TOTAL-LIABILITY-AND-EQUITY> 345,470,212 491,881,769
<SALES> 32,776,493 65,628,307
<TOTAL-REVENUES> 34,294,499 73,678,663
<CGS> 12,050,495 26,245,012
<TOTAL-COSTS> 17,237,843 37,824,923
<OTHER-EXPENSES> 6,558,401 12,992,872
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 19,414,012 55,329,157
<INCOME-PRETAX> (11,320,917) (32,468,289)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (11,320,917) (32,468,289)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (21,336,550) 0
<CHANGES> 0 0
<NET-INCOME> (32,657,467) (32,468,289)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
