CONTRACT
Date: January 31st 1999
Parties:
The Partners of ZAHES LTD, incorporated and acting in compliance with the
Georgian legilsation (hereinafter "the Company"), jointly holding 100% of the
total outstanding equity of the Company, which partners are hereinafter referred
to as "the Georgian Partners", represented by the director of the Company
Xxxxxxxx Xxxxxxxxx;
IDM Foreign Power, incorporated and acting in compliance with the legislation of
the British Virgin Islands, (hereinafter "IDM"), represented by the director Xxx
xx Xxxx,
hereinafter jointly referred to as "the Parties",
1. Subject of the Contract
1.1 IDM invests in the Company from the view of rehabilitation and upgrade of
the hydroelectric power station ZAHES (hereinafter "the Station") and the
Georgian Parnters assign, convey, transfer to IDM 80% (eighty per cent) of
the total outstanding equity of the Company on fully diluted basis against
the above mentioned investment.
2. Obligations of the Parties
2.1 The Parties undertake the obligation to ensure by joint efforts
prolongation of the existing lease contract of the Station dd. March 23,
1993.
2.2 The parties are obliged to utilize the above-mentioned investment strictly
in compliance with the purpose of investment.
2.3 The parties agree to act jointly towards collecting the existing
receivables of the Company amounting to GEL 3.5 million approximately,
which will be reinvested into the Company.
2.4 The Georgian Partners undertake to assign to IDM 80% (eighty per cent) of
the total outstanding equity of the Company and register such assignment in
compliance with the Georgian legislation.
2.5 IDM undertakes to invest into the Company up to the total amount of USD
9000000 (nine million) gradually:
2.5.1 Within 45 days from the date of registration of the named assignment
of the share of equity to invest up to the amount of USD 75000 (seventy five
thousand) for rehabilitation of the 6th unit (15 MW) subject to technical
examination approved by IDM.
2.5.2 To invest the amount of up to USD 1000000 (one million) for repair of
derivation canal in compliance with the technical examination to be approved by
IDM by July 1st 1999.
2.5.3 The total investment in the amount up to USD 9000000 (nine million)
for rehabilitation and upgrade of the Station will be carried out in compliance
with the technical examination data to be approved by IDM and subject to the
extention of the current Lease term for a 25 year period.
2.5.4 In the event the Lease term is extended for an additional 5 year term
only, IDM shall invest up to US$1000000 (one million) subject to technical
examination to be approved by IDM.
2.5.5 Within the current Lease term IDM shall invest up to US$200000 (two
hundred thousand) in the general rehabilitation of Zages Power Station subject
to technical examination to be approved by IDM.
2.5.6 IDM hereby guaranties that all technically approved decisions by IDM
will be financially sufficient to execute such decisions.
2.5.7 IDM shall have the rights to establish its own representation
separated from ZAHES LTD. Such representation shall have the rights to control
all financial and economic matters regarding Zages and other matters via the
existing ZAHES LTD bank account. IDM shall have the sole right as majority owner
to control such representation. All income to be derived from the sell of
electricity or otherwise shall be controlled by such representation.
3. Rights of the Parties
3.1 The Parties agree that the managerial group of the organizational structure
of the Company (ZAHES LTD) is represented by and limited to the following
persons: Xxxxxxxx Xxxxxxxxx (Director), Xxxx Xxxxxxxxxxxx (1st Deputy
Director - Chief Engineer), Xxxxx Xxxxxxxx (Deputy Director in Aggregate
Repair Sphere), Xxxxxx Xxxxxxxxxxx (Deputy Director in Hydro Technical and
Construction Sphere), Xxxxxx Xxxxxxx (Deputy Director in Legal and Economic
Spheres), and the said managerial group will remain unchanged and none of
this above mentioned group will be dismissed or transferred to another
position, no changes will be introduced to their job functions and rights,
neither any position of a managerial level higher then of members of the
above-mentioned group of persons will be introduced to the personnel
structure of the company (ZAHES LTD), nor any other position will be added
to the structure of the said managerial group without being adopted
unanimously by all partners of the Company (ZAHES LTD), despite any other
organization structure or personnel structure changes different from
above-mentioned changes or alternations as long that the above-mentioned
personnel will oblige to all decisions made by the majority Partners or
their representatives on the meeting.
3.2 All other decisions different from the issues mentioned in 3.1 of the
present contract are binding and enforceable upon the director of the
Company and his deputies providing that such decisions do not contradict
the Georgian legislation and/or the interests of the Company. Otherwise
they will lose their immunity. In case the decision is not enforced despite
the consent of the director and his deputies, due to objective or
subjective reasons independent from the director and his deputies, their
immunity will be kept unchanged.
3.3 Personnel's salary and wage payment can be changed only with the approval
by the director of the Company (Xxxxxxxx Xxxxxxxxx).
4. Responsibilities of the Parties
4.1 The Georgian Partners agree to reimburse the expenses born by IDM in
connection to preparation of the present contract in case the Georgian
Partners fail to perform their obligations provided by or arising from the
present contract.
4.2 IDM agrees, in case it fails to perform its obligations provided by or
arising from the present contract, to unconditionally and on a free basis
return 80% (eighty per cent) of the total outstanding equity of the Company
to the Georgian Partners and reimburse the loss caused by such failure to
the Georgian Partners and the Company.
5. Term of the Contract
5.1 The contract is signed for an indeterminate term.
5.2 The contract enters into force from the moment it is signed by the Parties.
6. Cessation of the Contract
6.1 The contract can be ceased by a mutual agreement of the parties.
7. Force Majeure
7.1 For the purpose of this contract, Force Majeure and Force Majeure Event
means in relation to any Party any event or circumstance which is beyond
the reasonable control of such Party which, despite the exercise of
reasonable diligence by such Party cannot be prevented, avoided or removed
and which results in or causes the failure of that Party to perform any of
its obligations under this contract including but not limited to:
7.1.1 war, blockade, mobilization, requisition or embargo;
7.1.2rebellion, revolution, insurrection, other military acts, unsurped
power or civil war;
7.1.3 riot, civil commotion or sabotage;
7.1.4 act of public enemies or terrorists;
7.1.5 lighting, fire, explosion, storm, wind, flying debris, flood, tidal
wave, earthquake, tempest or other natural disasters and other acts of God.
7.2 either Party shall be excused from performance and shall not be construed
to be in default in respect of their obligations under this contract for so
long as their failure to perform such obligations is due to Force Majeure
Event.
7.3 In the event of Force Majeure, the Party affected by such event shall as
soon as reasonably practicable notify the other Party of such event and
provide suitable evidence of the occurrence of such event and an estimate
of its duration and affect and both Parties shall:
7.3.1 make all reasonable efforts to prevent and to reduce to a minimum and
mitigate the effect of any delay occasioned by a Force Majeure Event;
7.3.2 use all reasonable efforts to ensure resumption of normal performance
of this contract after the termination of any Force Majeure Event and shall
perform their obligations to the maximum extent practicable between the Parties;
7.3.3 Take all reasonable measures to reduce the losses of the Party
occasioned by a Force Majeure Event.
8. Dispute Resolution
8.1 If any dispute or difference between any of the Parties arises in relation
to this contract and/or the transactions contemplated by it (including any
question regarding such transaction(s), existence, validity or
termination), the Party seeking resolution of the dispute shall give the
Party alleged to be in breach and/or against whom relief is sought, a
notice and in the notice shall give sufficient details to allow the
recipient to understand the substance of the dispute and the relief sought.
8.2 The authorized person of the Parties of the dispute or their appointed
representatives shall within 30 calendar days after the date on which the
notice is deemed to be have been delivered, meet together and negotiate in
good faith in order to try to resolve the dispute as quickly and
economically as possible.
8.3 If the Parties have not resolved the dispute within 30 calendar days after
this meeting or within such longer period as the Parties to the dispute
agree in writing, the dispute shall be resolved by arbitration under the
Rules of the ICSID (International Court for the Settlement of Disputes) in
force at the time of the referral.
8.4 The seat of the arbitration shall be in London and the arbitration will be
carried out and conducted in London, England.
9. Miscellaneous
9.1 From the moment of signing the present contract all various agreements,
contracts and correspondence between the Parties become void.
10. Addresses of the Parties
Georgian Partners: 0 Xxxxxxx Xxx., Xxxxxxxx, Xxxxxxx
IDM:Xxxxxxxxx Xxxxxxxx, P.O. Box 71, Road Town, Tortola, British Virgin Islands.
Signatures:
From Georgian Partners side:
/s/
Teimuraz Chkheidze
From IDM side:
/s/
Xxx Xx Xxxx
