EXHIBIT 10.87
LOAN AGREEMENT
The Parties to this Loan Agreement, dated February 10, 1996.
North China Power Group Company (hereinafter referred to as
"Party A"), and Tangshan Panda Heat and Power Co., Ltd. ("Panda")
and Tangshan Pan-Western Heat and Power Co., Ltd. ("Pan-Western")
(collectively referred to as "Party B"). Party A and Party B are
collectively referred to as the "Parties." Panda has been
appointed agent of Pan-Western to act on behalf of Pan-Western
for all matters under this Loan Agreement.
The Parties have entered into a General Interconnection
Agreement dated September 22, 1995 (the "General Interconnection
Agreement") and the Sub-Agreements described therein. This Loan
Agreement is subject to and complies with the "Approval Notice on
the Interconnection System Design Hearing of the Luannan Heat and
Power Plant" (Document - Huabeidianshe [1995] No. 65 dated July
13, 1995 issued by North China Electric Power Administration of
the Ministry of Electric Power) and "Approval Comments on the
Scope of Work of the 110 kV Transmission and Substation System
for 2 x 50 MW Units of the Luannan Heat and Power Plant"
(Document - Huabeidianshe [1995] No. 75 dated August 24, 1995
issued by Party A) (collectively the "Approvals"). Copies of
such Approvals are attached hereto.
The Parties agree as follows:
1. Party B shall lend to Party A, and Party A shall borrow from
Party B, the U.S. dollar equivalent of RMB Yuan 78,218,000
adjusted by the change in the Price Index for Investment
determined by the State Planning Commission from December 31,
1994 to the date of issuance of the Notice to Proceed with
Preliminary Design (the "Total Construction Cost"). The RMB Yuan
amount shall be converted into U.S. dollars on the date of the
applicable loan advance at the then prevailing exchange rate as
quoted by State Administration for Foreign Exchange Control. The
proceeds of such loan shall be used solely to pay the cost of the
"Work" as described in the Construction Agreement dated as the
date hereof between the Parties (the "Construction Agreement").
Evidence of such usage shall be presented to Party B by Party A
at the request of Party B.
2. Party B shall make loan advances to Party A in accordance
with the following schedule:
(i) 10% of the Total Construction Cost on the date Party B
gives Party A the Notice to Proceed with Preliminary Design under
the Construction Agreement.
(ii) 50% of the Total Construction Cost six (6) months after
Party B gives Party A the Notice to Proceed with Preliminary
Design.
(iii) 30% of the Total Construction Cost twelve (12) months
after Party B gives Party A the Notice to Proceed with
Preliminary Design.
(iv) 10% of the Total Construction Cost upon completion of
the Facilities.
3. All loans made under this Loan Agreement by Party B to Party
A shall accrue and pay interest (from each date advanced) at the
actual rate of interest charges by international lenders to Party
B (excluding commitment and other fees), which interest rate
shall not exceed 10% simple interest per annum. Principal and
interest on all outstanding amounts shall be amortized over a
period of ten (10) years in 20 equal consecutive semi-annual
payments commencing on the September 30th or March 31st
immediately following the Commercial Operation Date of both Power
Plants (the "Repayment Commencement Date"). Starting on the
Repayment Commencement Date and each September 30th or March 31st
thereafter, semi-annual payments of principal and interest shall
be due and payable on or before each September 30th or March 31st
(or the next business day thereafter if such date is a Saturday,
Sunday or legal holiday recognized by the Central Bank in the
People's Republic of China). Payments shall be made by Party A
in U.S. dollars and in immediately available funds (or other
method of payment acceptable to Party B) to a foreign exchange
account located in the People's Republic of China designated by
Party B. A preliminary estimate of payments on the loan amount
is attached hereto based on a cost of RMB Yuan 78,218,000 and a
simple interest rate of 12% as a reference only. This estimate
will change due to actual changes in cost, interest rate or other
assumptions. In the event Party A is unable to borrow and repay
loan amounts in U.S. dollars (after making its best efforts to
obtain approvals for U.S. dollar borrowing), the Parties agree to
permit Party A to borrow and repay amounts in RMB Yuan. In the
event of the latter case of RMB Yuan loans, the Parties agree to
meet and negotiate in good faith for an equitable allocation of
the exchange rate risk.
4. Liability for Breach of Contract.
4.1 Any amounts not paid when due shall bear default interest
from the date due at a rate of 18% per annum until paid. Party A
shall pay or reimburse Party B for all its reasonable costs for
the collection of any amounts past due hereunder (including
attorney's fees).
4.2 Party A shall notify Party B at least 15 days before the
date of any advance. In the event that Party B fails to make any
advance (excluding amounts disputed in good faith) within 15 days
after the date such advance is due, Party A may suspend
performance of its work under the Construction Agreement until
such advance is made and be entitled to schedule relief and
damages for all direct losses from such delay from Party B.
5. This Loan Agreement and the construction Agreement shall
constitute Sub-Agreements under the General Interconnection
Agreement signed between the Parties on September 22, 1995.
IN WITNESS WHEROF, the Parties, intending to be legally
bound, have caused this Loan Agreement to be signed by their duly
authorized representatives, as of the day and year above written.
Legal Representative of Party A
North China Power Group Company
BY: ____________________________
Name:
Title:
Legal Representative of Party B
Tangshan Panda Heat and Power Co. Ltd.
BY: ____________________________
Name:
Title:
Tangshan Pan-Western Heat and Power Co Ltd.
BY: ____________________________
Name:
Title:
