Common use of Performance Guarantee/Security Clause in Contracts

Performance Guarantee/Security. 7.1 The Operation and Maintenance Performance Security: The Successful Bidder shall, at the time of issuance of Letter of Award from the Authority, has to submit the O&M Performance Security in form of the Bank Guarantee. The O&M performance security shall be for an amount of Rs. 1.25 crores (Rs One Crore and Twenty-Five Lakhs) for an initial period as defined in this section. It is hereby clarified that the Operator will supplement/enhance the O&M Performance Security at the time of Handover Date of the Project if the actual project cost (as determined and informed by the Authority to the Operator) exceeds the Estimated Project Cost so that the O&M Performance Security is at least 5% of the actual project cost. The Performance Security will be 5% of the actual project cost or 1.25 crores (whichever is higher) for the initial 6.5 (Six and a Half) years from date of issuance of Letter of Award from the Authority and the same will be reduced to 2% of the actual project cost or 50 Lakhs (whichever is higher) for remaining period of the Term. Once the Operator submits Performance Security of 2% of the actual project cost before the completion of 6.5 years of period, the initial Performance Security of 5% will be released back to the Operator by the Authority. All charges, fees, costs and expenses related to the Bank Guarantee shall be borne and paid by the Operator. 7.2 In the event the Authority draws on the Performance Security, in part or in full, liquidated damages/ losses, payable/recoverable in accordance with the Agreement, the Operator shall forthwith restore the value of the Performance Guarantee to such value which existed prior to such drawl by the Authority. In the event the Operator fails to restore the Performance Security, the Authority shall be entitled to encash the same and the Operator shall, within the time so granted at the sole discretion of the Authority, shall have to submit a fresh Performance Guarantee. 7.3 In the event, the Operator is in default in the due and faithful performance of its obligations under this Agreement and failing to remedy such default within the Cure Period of ninety days as set out in this Agreement, the Authority shall without prejudice to its other rights and remedies hereunder be entitled to encash and appropriate the Performance Security as damages for such default. Upon such encashment and appropriation of the Performance Guarantee, the Authority shall grant such time in its sole discretion to the Operator to replenish the said Performance Security. 7.4 In the event the Operator fails to replenish or submit a fresh Performance Security to the Authority within the time as aforementioned, the Authority shall be entitled to terminate this Agreement in accordance with the provisions mentioned hereunder. 7.5 Upon expiry or earlier termination of this Agreement, if there are any dues payable by the Operator, or in the event of default of payment of any sums determined by the Authority, the Authority shall have the right to encash and apportion such amount due from the Performance Security before returning the same. 7.6 In case this Agreement is terminated due to Operator’s default, the Authority shall have the right to invoke the Performance Security. Provided if the Agreement is terminated due to any event other than the Operator’s Event of Default or any other reason in which, as per terms hereof, the Performance Security may be invoked, the Performance Security, subject to the Authority’s right to receive amounts, if any, due from the Operator under this Agreement, shall be refunded to the Operator.

Performance Guarantee/Security. 7.1 The Operation and Maintenance Performance Security: The Successful Bidder shall, at the time of issuance of Letter of Award from the Authority, has to submit the O&M Performance Security in form of the Bank Guarantee. The O&M performance security shall be for an amount of Rs. 1.25 crores 62 lakhs (Rs One Crore and TwentySixty-Five Two Lakhs) for an initial period as defined in this section. It is hereby clarified that the Operator will supplement/enhance the O&M Performance Security at the time of Handover Date of the Project if the actual project cost (as determined and informed by the Authority to the Operator) exceeds the Estimated Project Cost so that the O&M Performance Security is at least 5% of the actual project cost. The Performance Security will be 5% of the actual project cost or 1.25 crores 62 lakhs (whichever is higher) for the initial 6.5 13 (Six and a HalfThirteen) years from date of issuance of Letter of Award from the Authority and the same will be reduced to 2% of the actual project cost or 50 25 Lakhs (whichever is higher) for remaining period of the Term. Once the Operator submits Performance Security of 2% of the actual project cost before the completion of 6.5 13 (Thirteen) years of period, the initial Performance Security of 5% will be released back to the Operator by the Authority. All charges, fees, costs and expenses related to the Bank Guarantee shall be borne and paid by the Operator. 7.2 In the event the Authority draws on the Performance Security, in part or in full, liquidated damages/ losses, payable/recoverable in accordance with the Agreement, the Operator shall forthwith restore the value of the Performance Guarantee to such value which existed prior to such drawl by the Authority. In the event the Operator fails to restore the Performance Security, the Authority shall be entitled to encash the same and the Operator shall, within the time so granted at the sole discretion of the Authority, shall have to submit a fresh Performance Guarantee. 7.3 In the event, the Operator is in default in the due and faithful performance of its obligations under this Agreement and failing to remedy such default within the Cure Period of ninety days as set out in this Agreement, the Authority shall without prejudice to its other rights and remedies hereunder be entitled to encash and appropriate the Performance Security as damages for such default. Upon such encashment and appropriation of the Performance Guarantee, the Authority shall grant such time in its sole discretion to the Operator to replenish the said Performance Security. 7.4 In the event the Operator fails to replenish or submit a fresh Performance Security to the Authority within the time as aforementioned, the Authority shall be entitled to terminate this Agreement in accordance with the provisions mentioned hereunder. 7.5 Upon expiry or earlier termination of this Agreement, if there are any dues payable by the Operator, or in the event of default of payment of any sums determined by the Authority, the Authority shall have the right to encash and apportion such amount due from the Performance Security before returning the same. 7.6 In case this Agreement is terminated due to Operator’s default, the Authority shall have the right to invoke the Performance Security. Provided if the Agreement is terminated due to any event other than the Operator’s Event of Default or any other reason in which, as per terms hereof, the Performance Security may be invoked, the Performance Security, subject to the Authority’s right to receive amounts, if any, due from the Operator under this Agreement, shall be refunded to the Operator.