Exhibit 10.1.6
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EXIMBANK CREDIT AGREEMENT
by and between
ORMAT LEYTE CO. LTD.
as Borrower
and
EXPORT-IMPORT BANK OF THE UNITED STATES
Xxxxxxxx Xxxxxx Xx. XX000000 - Xxxxxxxxxxx
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Exhibit 10.1.6
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION............................................................1
Section 1.01. General Definitions.......................................................................1
Section 1.02. Principles of Construction ...............................................................4
SECTION 2. THE EXIMBANK CREDIT...................................................................................4
Section 2.01. Amount of the Eximbank Credit.............................................................4
Section 2.02. Cash Payment..............................................................................5
Section 2.03. Credit Availability Date..................................................................5
SECTION 3. TERMS OF THE EXIMBANK CREDIT..........................................................................5
Section 3.01. Principal Repayment.......................................................................5
Section 3.02. Interest Payment..........................................................................6
Section 3.03. Commitment Fee............................................................................6
Section 3.04. Credit Exposure Fee ......................................................................6
Section 3.05. Voluntary Prepayment......................................................................6
Section 3.06. Mandatory Prepayment......................................................................7
Section 3.07. Eximbank Note.............................................................................7
Section 3.08. Method of Payment.........................................................................8
Section 3.09. Application of Payments...................................................................8
SECTION 4. CANCELLATION..........................................................................................9
Section 4.01. Mandatory Cancellation....................................................................9
Section 4.02. Cancellation by the Borrower..............................................................9
Section 4.03. Suspension by Eximbank....................................................................9
SECTION 5. CONDITIONS PRECEDENT.................................................................................10
Section 5.01. Conditions Precedent to Lender Disbursement..............................................10
Section 5.02. Conditions Precedent to Eximbank Disbursement............................................16
Section 5.03. Request for Eximbank Disbursement........................................................19
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................................................................19
Section 6.01. Representations and Warranties with Respect to Guarantee
Operative Date.....................................................................19
Section 6.02. Representations and Warranties with Respect to the Disbursement
Date...............................................................................30
Section 6.03. Acknowledgment...........................................................................30
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SECTION 7. AFFIRMATIVE COVENANTS................................................................................30
Section 7.01. Information Covenants....................................................................30
Section 7.02. Books, Records and Inspections; Accounting and Audit Matters.............................37
Section 7.03. Maintenance of Property, Insurance.......................................................38
Section 7.04. Maintenance of Existence; Privileges; Etc................................................40
Section 7.05. Compliance with Statutes.................................................................40
Section 7.06. Consultations Regarding Independent Engineer's Report....................................40
Section 7.07. Project Implementation; Use of Proceeds..................................................41
Section 7.08. Auditors.................................................................................42
Section 7.09. Taxes, Duties, Proper Legal Form.........................................................42
Section 7.10. Independent Engineer; Insurance Consultant...............................................42
Section 7.11. Performance of Obligations...............................................................43
Section 7.12. Additional Documents; Filings and Recordings.............................................43
Section 7.13. Bank Accounts............................................................................44
Section 7.14. Debt Reserve Cash Collateral Account.....................................................44
Section 7.15. Availability and Transfer of Foreign Currency............................................44
Section 7.16. Privatization of NAPOCOR or PNOC-EDC.....................................................44
Section 7.17. Spares...................................................................................45
SECTION 8. NEGATIVE COVENANTS...................................................................................45
Section 8.01. Liens ...................................................................................45
Section 8.02. Consolidation, Merger, Sale of Assets, Etc...............................................46
Section 8.03. Dividends; Restricted Payments...........................................................46
Section 8.04. Leases...................................................................................47
Section 8.05. Indebtedness.............................................................................47
Section 8.06. Guarantees...............................................................................49
Section 8.07. Subsidiaries, Advances, Investments and Loans............................................49
Section 8.08. Transactions.............................................................................50
Section 8.09. Other Transactions.......................................................................50
Section 8.10. Modifications to Partnership Agreement of Borrower; Additional Agreements;
Assignments and Modifications of Agreements, Etc...................................50
Section 8.11. No Other Business........................................................................52
Section 8.12. Abandonment..............................................................................52
Section 8.13. Improper Use.............................................................................53
Section 8.14. Budgets..................................................................................53
Section 8.15. Press Releases; Advertising..............................................................54
Section 8.16. Employees and Employee Plan..............................................................54
Section 8.17. Name Changes; Etc. ......................................................................54
Section 8.18. Equity Ratio.............................................................................54
Section 8.19. Payments on Subordinated Debt............................................................54
Section 8.20. Limitation on Sale or Re-Export of the Items.............................................55
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SECTION 9. EVENTS OF DEFAULT....................................................................................55
Section 9.01. Payments.................................................................................55
Section 9.02. Representations, Etc.....................................................................55
Section 9.03. Covenants................................................................................55
Section 9.04. Default Under Other Agreements...........................................................56
Section 9.05. Bankruptcy, Etc..........................................................................58
Section 9.06. Project Events ..........................................................................58
Section 9.07. Material Adverse Effect..................................................................59
Section 9.08. Project Documents; Security Documents....................................................59
Section 9.09. Ownership of the Borrower................................................................60
Section 9.10. Judgments................................................................................61
Section 9.11. Governmental Action......................................................................61
Section 9.12. Permits..................................................................................62
Section 9.13. Transfer of Collateral; Event of Loss; Diminution of Property
Rights.............................................................................62
Section 9.14. Regulatory Status........................................................................62
Section 9.15. ERISA ...................................................................................62
Section 9.16. Funding Agreement........................................................................63
SECTION 10. GOVERNING LAW AND JURISDICTION......................................................................64
Section 10.01. Governing Law ..........................................................................64
Section 10.02. Submission to Jurisdiction; Service of Process..........................................64
Section 10.03. Waiver of Sovereign Immunity............................................................65
SECTION 11. MISCELLANEOUS.......................................................................................65
Section 11.01. Transportation..........................................................................65
Section 11.02. Transportation Costs....................................................................65
Section 11.03. Insurance...............................................................................65
Section 11.04. Disposition of Indebtedness.............................................................66
Section 11.05. Taxes ..................................................................................66
Section 11.06. Disclaimer..............................................................................67
Section 11.07. Indemnities and Expenses................................................................67
Section 11.08. Right of Setoff.........................................................................69
Section 11.09. Benefit of Agreement....................................................................69
Section 11.10. No Waiver; Remedies Cumulative..........................................................69
Section 11.11. Severability........................................................................... 70
Section 11.12. English Language........................................................................70
Section 11.13. Calculations; Computations .............................................................70
Section 11.14. Survival................................................................................70
Section 11.15. Amendments..............................................................................70
Section 11.16. Counterparts............................................................................70
Section 11.17. Notices.................................................................................71
Section 11.18. Judgment Currency.......................................................................73
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Section 11.19. Headings Descriptive....................................................................73
Section 11.20. Prior Agreements Superseded.............................................................73
Section 11.21. No Recourse.............................................................................73
Schedules:
Schedule X: Additional Defined Terms and Principles of Construction
Schedule 5.01(b): Legal Opinions
Schedule 5.01(t): Governmental Approvals
Schedule 6.01(h): Litigation
Schedule 6.01(t): Foreign Exchange Control Approvals
Schedule 6.01(u): Construction Budget
Schedule 7.03: Insurance
Schedule 7.07(c): O&M Parameters
Schedule 8.05(c): Subordination Terms
Annexes:
A - Form Promissory Note
B - Request for Eximbank Disbursement to Account of Borrower C - Form
of Post-Completion Ormat Guaranty
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EXIMBANK CREDIT AGREEMENT, dated as of May 13, 1996 (this "Agreement"),
between ORMAT LEYTE CO. LTD., a limited partnership organized and existing under
the laws of the Republic of the Philippines (the "Borrower") and EXPORT-IMPORT
BANK OF THE UNITED STATES ("Eximbank"), an agency of the United States.
Capitalized terms used herein shall be defined as provided in Section 1.01.
BACKGROUND
WHEREAS, the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders are entering into the Lender Credit Agreement, pursuant to which the
Lenders have agreed, subject to the terms and conditions set forth therein, to
finance, inter alia, exports from the United States to the Borrower's Country
for construction of the Project and, in connection therewith, the Guaranteed
Lenders (as defined in the Eximbank Guarantee Agreement referred to below) have
requested Eximbank to provide a limited guaranty of the Loans pursuant to a
guarantee agreement dated as of the date hereof among Eximbank, the Guaranteed
Lenders and the Administrative Agent (the "Eximbank Guarantee Agreement");
WHEREAS, the Borrower has requested Eximbank to establish a credit (the
"Eximbank Credit") in the maximum amount of $49,763,955 (as the same may be
reduced pursuant to Section 4.01, the "Maximum Eximbank Credit Amount") in favor
of the Borrower as part of the overall debt financing for construction of the
Project and it is contemplated that the proceeds of the Eximbank Credit shall be
applied by the Borrower to repay in part the Loans made by the Guaranteed
Lenders;
WHEREAS, Eximbank is prepared (i) issue its guarantee subject to the terms
and conditions of the Eximbank Guarantee Agreement and (ii) to establish the
Eximbank Credit and to make the Eximbank Credit available to the Borrower on or
after the Project Completion Date, subject the terms and conditions set forth in
this Agreement;
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
Section 1.01. General Definitions. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned
thereto in Schedule X attached hereto. In addition, wherever used in this
Agreement or any Annex, Exhibit or Schedule hereto, unless the context otherwise
requires, the following terms shall have the following meanings:
"Agreement" shall mean this Credit Agreement, including any Annex,
Exhibit, Schedule and other attachment hereto, as amended or otherwise modified
from time to time.
"Borrower" shall have the meaning specified in the first paragraph of this
Agreement.
"Borrower's Country" shall mean the Republic.
"Business Day" shall mean any day on which the Federal Reserve Bank of New
York is open for business.
"Cash Payment" shall have the meaning set forth in Section 2.02.
"Commitment Fee" shall have the meaning specified in Section 3.03.
"Completion Date" shall have the meaning specified in the BOT Agreement.
"Construction Note" shall mean the promissory note executed and delivered
by the Borrower pursuant to Section 2.4 of the Lender Credit Agreement.
"Covered Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, withholdings, duties, fees, commissions or other charges,
of whatsoever nature and all liabilities paid with respect thereto imposed by
any Governmental Authority or taxing or monetary authority thereof, other than
any tax imposed on or measured by the net income or capital of a Person pursuant
to the laws of the jurisdiction of its place of incorporation or in which the
principal office is located or the office from which such Person books any
assigned interest of the Eximbank Credit.
"Credit Exposure Fee" shall mean an exposure fee in the amount equal to
9.57% of the amount of the Eximbank Disbursement that represents: (i) the
Financed Portion of the Items; (ii) the IDC Financed Portion of IDC; and (iii)
the aggregate amount of the Guarantee Exposure Fee.
"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
Section 9, would constitute an Event of Default.
"Disbursement Date" shall mean the date on which the Eximbank Disbursement
is made by to the Borrower.
"Eximbank Credit" shall have the meaning specified in the second WHEREAS
clause hereof.
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"Eximbank Disbursement" shall mean the disbursement made under the
Eximbank Credit in accordance with the terms of this Agreement and evidenced by
the Eximbank Note.
"Eximbank Note" shall have the meaning specified in Section 3.07(a).
"Event of Default" shall have the meaning specified in Section 9.
"Final Disbursement Date" shall mean the earlier of (i) June 15, 1998;
provided that (x) if on or before such date, the Completion Date for the entire
Power Plant shall have actually occurred pursuant to Section 6.1 of the BOT
Agreement, or shall have been deemed to have occurred pursuant to Section 5.4(h)
of the BOT Agreement, or (y) if on June (15) 1998, Force Majeure (as defined in
any of the BCE Agreement, the Construction Contract or the Supply Contract) or
default by PNOC-EDC under the BOT Agreement shall exist, or shall have existed
prior to June 15, 1998, for an aggregate period m excess of fifteen (15) days,
the date specified in clause (i) of this definition shall extended to March 15,
1999; and (ii) the date on which the Eximbank Credit is cancelled in full in
accordance with Section 4.02.
"Guarantee Exposure Fee" shall have the meaning set forth in the Eximbank
Guarantee Agreement.
"Guarantee Operative Date" shall mean the date designated by Eximbank on
or after which Utilizations may be made under the Lender Credit Agreement.
"IDC" shall have the meaning specified in the Eximbank Utilization
Procedures.
"IDC Financed Portion" shall have the meaning specified in the Eximbank
Utilization Procedures.
"Items" shall have the meaning specified in the Eximbank Utilization
Procedures.
"Lender Disbursement" shall mean each of the Loans disbursed from time to
time pursuant to Section 2 or 3 of the Lender Credit Agreement.
"Local Cost Financed Portion" shall have the meaning specified in the
Eximbank Utilization Procedures.
"Local Cost Item" shall have the meaning Specified in the Eximbank
Utilization Procedures.
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"Maximum Eximbank Credit Amount" shall have the meaning specified in the
second clause of this Agreement.
"Payment Date" shall mean July 30, 1996 and, thereafter, each succeeding
October 30, January 30, April 30, and July 30.
"Payment Default Date" shall have the meanings in Section 3.02(b).
"Principal Amortization Commencement Date" shall mean the earlier of (i)
the Completion Date (as defined in the BOT Agreement) for the initial Plant to
be constructed and tested in accordance with the terms of the Construction
Contract, the Supply Contract and the BOT Agreement and (ii) September 25, 1997.
"Reconciliation Certificate" shall mean a reconciliation certificate in
the form of Exhibit 1 to Annex B hereto.
"Request for Eximbank Disbursement" shall mean a request for disbursement
in the form of Annex B hereto.
"Taxes" shall mean any and all present and future taxes, fees, levies,
imposts, duties or charges of whatsoever nature (whether imposed by withholding
or deduction or otherwise) imposed by any Governmental Authority (including
without limitation any and all liabilities with respect thereto).
"U.S." or "United States" shall mean the United States of America.
Section 1.02. Principles of Construction. The principles of construction
set forth in Schedule X apply.
SECTION 2. THE EXIMBANK CREDIT
Section 2.01. Amount of the Eximbank Credit. (a) Eximbank hereby
establishes the Eximbank Credit, upon the terms and conditions set forth in this
Agreement, in favor of the Borrower to enable the Borrower to (i) refinance, in
an aggregate amount not to exceed $35,457,750, the Financed Portion of the costs
incurred on or after March 1, 1995 by the Borrower for the purchase m the United
States and export to the Republic of the Items; (ii) refinance, in an aggregate
amount not to exceed $5,832,000, the Local Cost Financed Portion of the costs
incurred on or after March 1, 1995 by the Borrower for the purchase m the
Republic of the Local Cost Items; (iii) refinance in an aggregate amount not to
exceed $3,124,000, the IDC Financed Portion of IDC; (iv) refinance the Guarantee
Exposure Fee; and (v) finance the Credit Exposure Fee.
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(b) On the terms and conditions hereof, Eximbank shall make the Eximbank
Credit available to the Borrower in a single Eximbank Disbursement, subject to
the satisfaction of the conditions precedent to such disbursement under Section
5.02 hereof, and otherwise in accordance with Section 5.03 hereof.
(c) The Eximbank Credit shall not under any circumstances exceed in
aggregate amount the lesser of:
(i) the sum of (a) the aggregate amount of the Financed Portion for
all Items; (b) the aggregate amount of the Local Cost Financed Portion for
all Local Cost Items; (c) the aggregate amount of the IDC Financed Portion
for all IDC; (d) 100% of the Guarantee Exposure Fee paid to Eximbank under
the Eximbank Guarantee Agreement in respect of each of the above; and (e)
100% of the Credit Exposure Fee payable to Eximbank under this Agreement;
and
(ii) the Maximum Eximbank Credit Amount.
(d) All amounts due to Eximbank under this Agreement, the Eximbank Note
and the other Financing Documents are entitled to the benefit of the Security.
Any amount of the Eximbank Credit not disbursed on the Disbursement Date shall
automatically be canceled upon and as of the close of business on the
Disbursement Date.
Section 2.02. Cash Payment. The Borrower shall have made or caused to be
made a cash payment for the purchase of each Item in an amount equal to not less
than fifteen percent (15%) of the Contract Price of such Item (the "Cash
Payment").
Section 2.03. Credit Availability Date. The Eximbank Credit will not be
disbursed after, and Eximbank's commitment to make available the Eximbank Credit
shall terminate upon, the close of business on the Final Disbursement Date.
SECTION 3. TERMS OF THE EXIMBANK CREDIT
Section 3.01. Principal Repayment. Subject to Section 4.01, the Borrower
shall repay all principal amounts disbursed under the Eximbank Credit in
approximately equal, successive quarterly installments (of which the maximum
number shall be 38), the first such installment being due on the first Payment
Date occurring on or after the date falling two hundred ten (210) days after the
Principal Amortization Commencement Date and on each succeeding Payment Date
thereafter, and ending on the Payment Date immediately preceding the Transfer
Date (as such term is defined in the BOT Agreement as in effect on the date
hereof); provided, that on the last such Payment Date the Borrower shall repay
in full the principal amount of the Eximbank Credit then outstanding. Eximbank
has determined the initial Payment Date by adding 180 days to
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its calculation of the weighted midpoint of the projected Completion Date for
each of the four Plants.
Section 3.02 Interest Payment. (a) The Borrower shall pay interest on each
Payment Date, and on the date that all amounts disbursed under the Eximbank
Credit are paid in full, on all amounts disbursed and outstanding from time to
time under the Eximbank Credit, beginning on the first Payment Date which is
after the Disbursement Date, calculated at an interest rate per annum of 6.54%,
computed on the basis of the actual number of days elapsed (including the first
day but including the last day), using a 365-day year.
(b) If ay amount of principal, accrued interest, fees or other amounts
owing by the Borrower to Eximbank under this Agreement, the Eximbank Note or any
other Financing Document is not paid in full when due (whether at stated
maturity, by acceleration or otherwise), the Borrower shall pay to Eximbank on
demand interest on the unpaid amount (to the extent permitted by applicable law)
for the period from the date such amount was due (the "Payment Default Date")
until the date such amount was paid in full, at an interest rate per annum equal
to the higher of: (i) the then applicable New Borrowing Rate (such rate to
remain in effect until such amount is paid in full); and (ii) the rate specified
in Section 3.02(a) above plus one percent (1.0%) per annum. For the purposes of
this Agreement and the Eximbank Note, "New Borrowing Rate" shall mean the
specified on the Commerce Department Economic Bulletin Board, under the heading
"Interest Rate for Credit Reform Act", for the year and calendar quarter in
which the Payment Default Date occurs, and under the "Maturity Ranges" category
which covers the total period of repayment described in Section 3.01.
Section 3.03. Commitment Fee. The Borrower shall pay or cause to be paid
to Eximbank a commitment fee of one-half of one percent (0.5%) per annum on the
uncancelled amount of the Maximum Eximbank Credit (the "Commitment Fee"),
computed on the basis of the actual number of days elapsed (including the first
day hut excluding the last day), using a 365-day year, accruing from June 8,
1996 to the earlier of (i) the Disbursement Date and (ii) the Final Disbursement
Date, and payable quarterly on each Payment Date, beginning on July 30, 1996,
and on the Disbursement Date.
Section 3.04. Credit Exposure Fee. No later than the Disbursement Date,
the Borrower shall pay or cause to be paid to Eximbank the Credit Exposure Fee.
The Credit Exposure Fee may be financed by the Borrower by the inclusion of the
request for such financing the Borrower's Request for Eximbank Disbursement.
Section 3.05. Voluntary Prepayment. The Borrower may from time to tine
prepay all or any part of the outstanding principal amount of the Eximbank
Credit, provided that the Borrower (i) shall have given Eximbank ten (10)
Business Days prior
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written notice of the proposed amount and date of prepayment; (ii) shall have
paid in full all interest which has accrued to the date of prepayment on the
principal amount so prepaid, together with all other amounts then due to
Eximbank under this Agreement, the Eximbank Note, the Eximbank Guarantee
Agreement or any other Financing Document as of the date of such prepayment; and
(iii) shall pay to Eximbank a prepayment premium. The prepayment premium shall
be equal to the amount by which the prepaid principal amount is less than the
sum of the present values, discounted from the scheduled payment dates, of (A)
the installments of principal being prepaid, plus (B) the amounts of interest
which otherwise would have accrued on such principal amounts to the scheduled
repayment dates. The discount rate used to calculate such present values shall
be that rate of interest specified in the weekly Federal Reserve Statistical
Release, H.15 (519) Selected Interest Rates, in the category "U.S. government
securities; Treasury bills, Secondary market" for a Maturity Period (as
hereafter defined) through one year, or in the category "U.S. government
securities; Treasury constant maturities" for a Maturity Period of greater than
one year, in the column for Business Day which is five (5) Business Days prior
to the date of prepayment. "Maturity Date" shall mean the weighted average of
the periods between the date of prepayment and the scheduled repayment dates of
the installments of principal of the Eximbank Credit that are prepaid. All
prepayments shall be applied to the installments of principal of the Eximbank
Credit in the inverse order of their maturities.
Section 3.06. Mandatory Prepayment. On the applicable dates set forth in
Sections 3.05(a) and 3.05(d) of the Disbursement Agreement, the Borrower shall,
without demand or notice, make prepayments to Eximbank using funds then made
available for such purpose from the Contingency Account by the Collateral
Trustee pursuant to Sections 3.05(a) and 3.05(d) of the Disbursement Agreement.
In addition, on the date of receipt of funds from any Buyout, the Borrower
shall, without demand or notice, make a prepayment to Eximbank in the amount of
the then outstanding principal amount of the Eximbank Credit, together with all
interest accrued thereon and all other amounts then payable to Eximbank by the
Borrower under any of the Financing Documents. In the case of any partial
payments, such prepayments shall be applied to the installments of principal of
the Eximbank Credit in the inverse order of their maturity. No prepayment
premium is payable in connection with a mandatory prepayment pursuant to this
Section 3.06.
Section 3.07. Eximbank Note. (a) The Borrower agrees that to evidence
further its obligation to repay all amounts disbursed under the Eximbank Credit,
with interest accrued thereon, it shall issue and deliver to Eximbank a
promissory note dated the Disbursement Date in the form of Annex A (together
with replacements and substitutions therefor, the "Eximbank Note"). The Eximbank
Note shall be valid and enforceable as to its principal amount at any time only
to the extent of the amount then
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disbursed and outstanding under the Eximbank Credit and, as to interest, only to
the extent of the interest accrued thereon.
(b) If requested by Eximbank pursuant Section 11.05(a)(ii), the Borrower
shall issue and deliver to Eximbank a new Eximbank Note in exchange for the
Eximbank Note previously issued and delivered in accordance with this Agreement,
whereupon Eximbank shall surrender such previously issued Eximbank Note to the
Borrower for cancellation.
(c) If the Eximbank Note is mutilated, lost, stolen or destroyed, the
Borrower shall issue and deliver a new Eximbank Note of the same date, maturity
and denomination as the Eximbank Note so mutilated, lost, stolen or destroyed;
provided that, in the case of any mutilated Eximbank, not such mutilate Eximbank
Note shall be returned to the Borrower, and, in the case of any lost, stolen or
destroyed Eximbank Note, the Borrower shall have first received such evidence of
loss, theft or destruction as shall reasonably be considered satisfactory to the
Borrower.
Section 3.08. Method of Payment. (a) All payments to be made to Eximbank
under this Agreement, the Eximbank Note or any other Financing Document (whether
at stated maturity, by reason of acceleration or prepayment, or otherwise) shall
be made without set-off or counterclaim in Dollars in immediately available and
freely transferable funds no later than 11:00 a.m. (New York City time) on the
date on which due (each such payment made after such time shall be deemed to
have been made on the next succeeding Business Day) at the Federal Reserve Bank
of New York for credit to the following Eximbank account as identified below:
U.S. Treasury Department
021030004
TREAS NYC/CTR/
BNF = /AC-4984 OBI =
EXPORT-IMPORT BANK
DUE _____________ ON EIB CREDIT NO. AP069121 - PHILIPPINES
FROM ORMAT LEYTE CO. LTD.
(b) Whenever any payment under this Agreement or the Eximbank Note shall
be stated to be due and payable on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in the computation of any interest or fee due thereon.
Section 3.09. Application of Payments. Eximbank shall apply payments
received by it under this Agreement, the Eximbank Note or any other Financing
Document (whether at stated maturity, by reason of acceleration or prepayment or
8
otherwise) in the following order of priority: (i) interest due pursuant to
Section 3.02(b), (ii) Commitment Fee, Credit Exposure Fee, Guarantee Exposure
Fees and all other amounts due to Eximbank under this Agreement, the Eximbank
Note or any other Financing Document and not otherwise provided for under this
Section 3.09, (iii) interest due pursuant to Section 3.02(a) and (iv)
installments of principal due.
SECTION 4. CANCELLATION; SUSPENSION
Section 4.01. Mandatory Cancellation. In the event any scheduled Payment
Date for the repayment of principal of the Eximbank Credit falls on a date that
is on or prior to the final Completion Date to occur in respect of the Plants
comprising the Power Plant, the Maximum Eximbank Credit Amount shall be reduced,
in respect of each such scheduled Payment Date occurring prior to such final
Completion Date, by an amount equal to one thirty-eighth (1/38th) of the Maximum
Eximbank Credit Amount.
Section 4.02. Cancellation by the Borrower. The Borrower may cancel at any
time all or any part of the undisbursed and uncanceled amount of the Eximbank
Credit, provided that thirty (30) days' prior written notice is given to
Eximbank. In the event of a cancellation of all or any part of the Eximbank
Credit by the Borrower, the Borrower shall pay to Eximbank, on or before the
proposed date of cancellation, all Commitment Fees accrued and unpaid under
Section 3.03 in respect of the cancelled amount and all other amounts due and
payable to Eximbank under this Agreement, the Eximbank Note or any other
Financing Document as of the proposed date of cancellation. Cancellation in full
of the Eximbank Credit shall not terminate any provision of this agreement other
than Sections 7, 8 and 9 hereof.
Section 4.03. Suspension by Eximbank.
(a) In the event that:
(i) prior to the Disbursement Date, the Borrower shall fail to pay
when due any Commitment Fee payable by the Borrower to Eximbank hereunder
or any other amount payable by the Borrower to Eximbank hereunder, under
the Eximbank Guarantee Agreement or under any other Financing Document; or
(ii) at any time, any Lender suspends the right of the Borrower to
request disbursements in accordance with the Lender Credit Agreement; or
(iii) at any time, Lenders with twenty-five percent (25%) or more of
the total Commitments provided for in respect of the Lender Credit (such
25%, the "Cancelled Commitments") cancel their respective Commitments
(other than
9
any such cancellation pursuant to any undrawn Commitment at the Project
Completion Date);
then Eximbank, by written notice to the Borrower and the Administrative Agent,
may:
(x) in the case of clause (i) above, suspend disbursement of the
Eximbank Credit until all such amounts due and owing to Eximbank shall
have been paid in full to Eximbank (whether by or on behalf of the
Borrower or by another Person, including any Lender or Lenders);
(y) in the case of clause (ii) above, suspend disbursement of the
Eximbank Credit until it is satisfied that the cause of such suspension
has been removed; and
(z) in the case of clause (iii) above, suspend disbursement of the
Eximbank Credit until such time as another lender or lenders, with the
consent of Eximbank, such consent not to be unreasonably withheld (it
being understood that each of the Lenders is acceptable to Eximbank for
this purpose), shall enter into a binding commitment with the Borrower to
replace the Cancelled Commitments.
(b) The terms of Section 4.03(a) above shall be in addition to and not in
limitation of any other rights of Eximbank under this Agreement or any other
Financing Document.
SECTION 5. CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Lender Disbursement. The
applicability of the Eximbank Guarantee to any Utilization shall be subject to
the satisfaction of the following conditions on or prior to the Guarantee
Operative Date (or, if so specified, the Credit Date); provided that if any such
conditions shall have been satisfied on or prior to the Guarantee Operative
Date, then on the Credit Date the Borrower shall supply such evidence indicating
that such condition continues to be satisfied as Eximbank may reasonably
require, including, without limitation, bring-down opinions and certificates:
(a) Project Documents. Each of the Project Documents, excluding (i) the
Governmental Approvals set forth in Part B of Schedule 5.01(t) hereto, (ii) the
BOT Operation Performance Security, (iii) the BOT Construction Performance
Security, (iv) the Post-Completion Ormat Guaranty and (v) agreements and
instruments pertaining to Permitted Indebtedness not then incurred shall have
been entered into by the respective parties thereto, shall be unconditional and
fully effective in accordance with their
10
respective terms (except for this Agreement or the Eximbank Guarantee Agreement
having become unconditional and fully effective, if such is a condition of
effectiveness of any of such documents), shall be in form and substance
satisfactory to Eximbank and Eximbank and the Collateral Trustee shall each have
received a true, original copy thereof or, if a true, original copy is
unavailable, a certified true copy thereof.
(b) Opinions of Counsel. Eximbank shall have received signed legal
opinions of counsel to each Person listed on Section A of Schedule 5.01(b)
hereto, each of which shall be in form and substance and by counsel satisfactory
to Eximbank and shall be dated the Guarantee Operative Date; provided that the
opinion of counsel to PNOC-EDC may be dated the Effectivity Date (as defined in
the BOT Agreement).
(c) Organization Documents; Proceedings.
(i) Eximbank shall have received a certificate, dated not earlier
than the Guarantee Operative Date, signed by a Financial Officer of the
General Partner, and attested to by the Secretary or any Assistant
Secretary of the General Partner, in form and substance satisfactory to
Eximbank, together with copies of the Partnership Agreement and other
Organization Documents of the Borrower and such resolutions of the Board
of Directors of the General Partner as are reasonably requested by
Eximbank.
(ii) Eximbank shall have received a certificate, dated not earlier
than the Guarantee Operative Date, signed by a Financial Officer of each
Obligor (other than the Borrower, PNOC-EDC, the BOT Construction
Performance Security Issuer and the BOT Operation Performance Security
Issuer) and attested to by the Secretary or any Assistant Secretary of
such Obligor, in form and substance satisfactory to Eximbank, together
with copies of the Articles of Incorporation and By-Laws of such Obligor
and resolutions of such Obligor reasonably requested by Eximbank.
(iii) Arrangements satisfactory to Eximbank shall have been made for
the appointment of SyCip Gorres Velayo & Co. or such other firm of
independent public accountants acceptable to Eximbank, as Auditors.
(iv) Eximbank shall have received a certificate from each Obligor
(other than PNOC-EDC, the BOT Construction Performance Security Issuer and
the BOT Operation Performance Security Issuer) signed by an authorized
officer certifying the incumbency of parties executing any Project
Document or related document on behalf of such Obligor.
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(d) Auditors. Eximbank shall have received copies of the authorization of
the Auditors referred to in Section 6.2(b) of the Lender Credit Agreement and
Section 7.02(b) hereof.
(e) Pledged Certificates of Partnership Interests; Subordinated Notes. The
Partners shall have delivered to the Collateral Trustee, as pledgee, (i) the
partnership certificates representing all of their respective general and
limited partnership interests in the Borrower, together with executed and
undated partnership interest transfer powers, and (ii) the Subordinated Notes
evidencing all outstanding Required Subordinated Loans, Standby Subordinated
Loans and Post-Completion Standby Subordinated Loans.
(f) Consent Letters. Eximbank shall have received a letter, in form and
substance satisfactory to Eximbank, from CT Corporation System, presently
located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, indicating the consent of CT
Corporation System to its appointment by the Borrower, Ormat, Ormat
International, Orleyte Company, the Construction Contractor and the Construction
Supplier as their agent to receive service of process as specified in Section
10.02 hereof, in the case of the Borrower; as specified in the Funding
Agreement, the Keystone Agreement and the Ormat EPC Guarantee, in the case of
Ormat; as specified in the Funding Agreement, the Keystone Agreement and the
International EPC Guarantee in the case of Ormat International; as specified in
the Funding Agreement and the Mortgage, Assignment and Pledge Agreement in the
case of Orleyte Company; as specified in that Funding Agreement, the Pledge
Agreement, the Construction Contract and the Keystone Agreement in the case of
the Construction Contractor; and as specified in the Supply Contract and the
Keystone Agreement in the case of the Construction Supplier.
(g) Environment Matters. Arrangements satisfactory to Eximbank shall have
been made for the Borrower and the Project to comply with Eximbank Environmental
Procedures and Guidelines (effective February 1, 1995) and Philippine law and
guidelines relating to occupational health and safety and to the environment.
(h) BOT Agreement Effectiveness. Each of PNOC-EDC and the Borrower shall
have issued to Eximbank a certification confirming that the Effective Date (as
defined in the BOT Agreement) has occurred.
(i) Certificates. Eximbank shall have received copies of each executed
Project Document, together with a certificate of a Financial Officer of the
Borrower certifying that (i) the Borrower is not in default in the performance,
observance or fulfillment of any of its obligations, covenants or conditions
contained therein and, to the best of the Borrower's and the General Partner's
knowledge, no other party to any such Project Document is in default in the
performance, observance or fulfillment of any of its material obligations,
covenants or conditions contained therein and (ii) in the case of each
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such document to which Eximbank is not a party, (x) that such document is in
full force and effect, (y) that to the best of the Borrower's and the General
Partner's knowledge no event of Force Majeure (as defined in such Project
Document) has occurred thereunder and (z) that the copy thereof delivered to
Eximbank is true, correct and complete. Eximbank shall have received evidence or
copies of all Governmental Approvals set forth in Schedule 5.01(t) hereto (other
than those set forth in Part B thereof), certified by a Financial Officer of the
Borrower as being in full force and effect and except as disclosed in such
Schedule 5.01(t), not the object of a currently pending appeal.
(j) Construction Budget; Base Case Forecast. Eximbank shall have received
the Construction Budget and the Base Case Forecast, each of which shall be in
form and substance satisfactory to Eximbank.
(k) Reports of Consultants. Eximbank shall have received the Independent
Engineer's Report, a report prepared by the Insurance Consultant and such other
information as shall be reasonably requested by Eximbank.
(l) Financial Statements. Eximbank shall have received copies of the most
recent audited financial statements of Ormat and Ormat International and shall
have received copies of the most recent unaudited financial statements (if
audited financial statements are not otherwise available) of the Borrower and
each other Obligor (other than the Borrower, Ormat, Ormat international,
PNOC-EDC, the BOT Construction Performance Security Issuer and the BOT Operation
Performance Security Issuer), showing, for each such Person, no material adverse
change in the financial condition of such Person since the date of the last
financial statements provided to Eximbank prior to the date of this Agreement,
and certificates dated the Guarantee Operative Date and signed by a Financial
Officer of each such Person stating that (x) such financial statements are true,
complete and correct and (y) no material adverse change in the financial
condition, operations, properties, business or prospects of such Person has
occurred since the date of such financial statements.
(m) Evidence of Authority. Eximbank shall have received evidence of the
authority of the Borrower to enter into this Agreement, the Eximbank Note, the
Lender Credit Agreement, the Disbursement Agreement, the Collateral Trust
Agreement and the Security Documents and the other documents required by this
Agreement and the Lender Credit Agreement as of the date hereof, and the names,
specimen signatures and evidences of authority of the person signing this
Agreement, the Eximbank Note, the Eximbank Guarantee Agreement, the Lender
Credit Agreement, the Funding Agreement, the Disbursement Agreement, the
Collateral Trust Agreement and the Security Documents, the Partnership Agreement
and the other documents required by this Agreement and the Lender Credit
Agreement as of the date hereof, or who, as of the date
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hereof, will otherwise act as representatives of the Borrower in the operation
of the Eximbank Guarantee Agreement and the Eximbank Credit.
(n) Notice to Proceed and Construction Contractor's and Construction
Supplier's Representation. Eximbank shall have received a certified copy of the
Notice to Proceed under (and as defined in) the Construction Contract and the
Notice to Proceed under (and as defined in) the Supply Contract, each of which
shall have been issued on or prior to the Credit Date Eximbank shall have
received certificates signed by authorized representatives of each of the
Construction Contractor and the Construction Supplier to the effect that (i) the
Construction Contract and the Supply Contract, respectively, are effective and
work has commenced thereunder, (ii) as of the date hereof the Scheduled
Completion Date for each of Plant A, Plant B and Plant C is September 1, 1997
and for Plant D is January 1, 1998, or such later dates (which Eximbank has
confirmed in writing are acceptable to it) as shall correspond to any extension
of the milestone dates set forth in Section 4.1(a) of the BOT Agreement for the
achievement of the Completion Date for the relevant Plant, (iii) the Borrower is
not in default under the Construction Contract or the Supply Contract,
respectively, (iv) the Construction Contractor is not entitled to any change
orders under the Construction Contract and the Construction Supplier is not
entitled to any change orders under the Supply Contract (in each case, other
than change orders previously disclosed to Eximbank in writing) on such date and
is not then aware of any other change orders required under the Construction
Contract or the Supply Contract, respectively, and (v) to the best of the
Construction Contractor's or the Construction Supplier's (as the case may be)
respective knowledge, after reasonable inquiry, no Force Majeure event (as
defined in each of the Construction Contract and the Supply Contract) has
occurred.
(o) Project Site. Eximbank shall have received (i) an opinion of counsel
to the Borrower to the effect that the Republic has valid legal title to the
Site free of Liens (other than Liens of or arising through the Borrower, the
Construction Contractor or the Construction Supplier) and that PNOC-EDC has the
valid legal authority to use the Site and delegate unencumbered use of the Site
to the Borrower on the terms and conditions set forth in the BOT Agreement,
which opinion shall be from counsel and in form and substance satisfactory to
Eximbank, and (ii) a certificate of the Borrower that PNOC-EDC has granted the
Borrower and its designees full access to and the ability to use the Site, so
that the Borrower and/or the Construction Contractor and their respective
designees may fully perform their respective obligations under the BOT Agreement
and their respective related obligations.
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(p) No Default; Representative and Warranties. Immediately before and
after the initial Utilization:
(i) no Lender Credit Default or Lender Credit Event of Default shall
have occurred and be continuing; and
(ii) all representations and warranties made by the Borrower and any
Obligor which is an Affiliate of the Borrower and contained herein or in
the Project Documents (other than the Insurance Contracts, Governmental
Approvals or any other agreement, commitment or understanding referred to
in subsection (xiv) of the definition of "Operating Agreements" in
Schedule X) 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 Guarantee Operative Date except where expressed to be made
only as of an earlier date.
(q) Security. The Security, in form and substance satisfactory to
Eximbank, shall have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge over the
Collateral in existence at the date hereof. Without limitation to the preceding
sentence, the Borrower shall have duly authorized, executed and delivered or, as
the case may be, provided:
(i) acknowledgment copies of proper financing statements or other
instruments duly filed under the Applicable Law of each jurisdiction as
may be necessary or, in the reasonable opinion of Eximbank, desirable to
perfect the charges and security interests purported to be created by the
Security Documents;
(ii) certified copies of requests, for information or copies, or
equivalent reports, listing the financing statements and instruments
referred to in clause (i) above and all other effective financing
statements that name the Borrower as debtor and that are filed in the
jurisdictions referred to in said clause (i), together with copies of such
other financing statements and instruments (none of which shall cover the
Collateral except to the extent evidencing Lender Credit Permitted Liens);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Documents as may be necessary or, in
the reasonable opinion of Eximbank, desirable to perfect the security
interests purported to be created by the Security Documents;
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(iv) evidence that all other actions necessary or, in the reasonable
opinion of Eximbank, desirable to perfect and protect the security
interests purported to be created by the Security Documents have been
taken;
(v) the Borrower shall have established the Blocked Account; and
(vi) the Required Funding Amount shall have been fully funded either
through a cash deposit pursuant to Section 2(j)(i) of the Funding
Agreement and/or a Required Letter of Credit pursuant to Section 2(k)(i)
of the Funding Agreement.
(r) Consent and Approvals. There shall have been obtained, or there shall
have been made arrangements, satisfactory to Eximbank, for obtaining during the
period prior to the Project Completion Date, in addition to the Project
Documents, the governmental, corporate, creditors', shareholders', partners' and
other licenses, approvals or consents listed in Schedule 5.01(t) hereto and all
other governmental, corporate, creditors, shareholders', partners' and other
necessary licenses, approvals or consents (other than with respect to Eximbank)
for: (i) the financing by each of the Lenders and the Issuing Bank under the
Lender Credit Agreement; (ii) the carrying on of the business of the Borrower as
it is presently carried on and is contemplated to carried on; (iii) the carrying
out of the Project; (iv) the due execution and delivery of, and performance
under, each Project Document which has been entered into at the date hereof, the
Security, and any documents in implementation of any thereof; and (v) the
remittance to Eximbank and the Collateral Trustee and by the Collateral Trustee
to the Secured Parties or the respective assignees, in Dollars, of all monies
payable pursuant to each Project Document which has been entered into on the
date hereof, and any documents in implementation of any thereof.
(s) No Project Document Default; Governmental Approvals. Each of the
Project Documents which has been entered into or which is required to have been
entered into on the Guarantee Operative Date shall be in full force and effect
and no material breach or default shall have occurred under such Project
Document. No event of Force Majeure (as defined in any of the BOT Agreement, the
Supply Contract and the Construction Contract) shall have occurred which has
had, or in the reasonable judgment of Eximbank is reasonably likely to have, a
Material Adverse Effect. No events shall have occurred pursuant to which a claim
could be made by the Administrative Agent on behalf of the Lenders under the
Eximbank Guarantee Agreement.
(t) Costs; Construction Progress. Eximbank and the Independent Engineer
shall have received from the Borrower a certificate in the form of Schedule
5.2(h) to the Lender Credit Agreement signed by an authorized representative of
the Borrower and expressed to be effective on the date of the relevant
Utilization that (i) the costs and
16
expenses theretofore incurred by the Borrower and to be incurred by the Borrower
prior to the latest date on which the Final Disbursement Date can be expected to
occur will not exceed [$68,469,000] and (ii) the sum of (A) the aggregate
Financed Portion of the costs incurred by the Borrower after March 1, 1995 and
before the Final Disbursement Date for the purchase in the United States and
export to the Borrower's Country of the Items and (B) the aggregate Local Cost
Financed Portion of the costs incurred by the Borrower for the purchase in the
Republic of the Local Cost items and (C) the aggregate IDC Financed Portion of
IDC will not exceed the difference between (x) the Total Commitment and (y) 100%
of the Guarantee Exposure Fee.
(u) Fees and Expenses. On or before the Credit Date, the Borrower shall
have paid or arranged for payment of fees, expenses and other charges (including
any and all Attorney Costs) then due and payable by it under this Agreement.
(v) No Change in Contract Price. The contract price set forth in the
Supply Contract, the Construction Contract and the Keystone Agreement shall not
have been amended, changed or otherwise modified and Eximbank shall have
received a certificate from each of the Construction Supplier and the
Construction Contractor to such effect in form and substance satisfactory to
Eximbank.
(w) Insurance. Eximbank shall have received a certificate from the
Insurance Consultant stating that the insurance policies required under the
Lender Credit Agreement to be in effect on the Credit Date are in full force and
effect.
(x) Other Instrument, Conditions, Etc. The delivery of any other
instruments and agreements and the satisfaction of any other condition as
Eximbank may reasonably request.
Section 5.02. Conditions Precedent to Eximbank Disbursement. As conditions
precedent to the Eximbank Disbursement, the documents described in paragraphs
(a) through (h) below shall have been received by Eximbank, each in form and
substance satisfactory to Eximbank and dated the Disbursement Date, and the
conditions described in paragraphs (i) through (n) shall have been fulfilled as
of the date on which the Eximbank Disbursement is requested by the Borrower to
be made, in a manner satisfactory to Eximbank:
(a) Eximbank Note. The executed Eximbank Note in the principal amount of
the Eximbank Credit.
(b) Opinions of Counsel. Signed legal opinions of counsel to each Person
listed on Section B of Schedule 5.01(c) hereto, each of which shall be in form
and
17
substance and by counsel satisfactory to Eximbank and shall be dated the
Disbursement Date.
(c) Evidence of Authority. Evidence of the authority of the Borrower to
execute, deliver and perform the terms and conditions of this Agreement, the
Eximbank Note and the other documents requested by this Agreement, and the names
and evidence of authority (including specimen signatures) of each person who, on
behalf of the Borrower, signed or will sign this Agreement, the Eximbank Note
and the other documents required by this Agreement, or will otherwise act as
representatives of the Borrower in the operation of the Eximbank Credit.
(d) BOT Agreement. A certification signed by an authorized representative
of the Borrower and expressed to be effective as of the Disbursement Date,
stating that the Borrower is in compliance with the BOT Agreement and that such
agreement is in full force and effect.
(e) Security. A certification signed by an authorized representative of
the Borrower and expressed to be effective as of the Disbursement Date, stating
that the Security Documents are in full force and effect and that the Security
granted therein shall have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge over the
Collateral in existence on the Disbursement Date in favor of the Collateral
trustee for the benefit of Eximbank.
(f) Agent for Service of Process. Evidence that the Borrower and each
other Obligor (other than PNOC-EDC, the BOT Operation Performance Security
Issuer and the BOT Construction Performance Security Issuer) has irrevocably
appointed as its agent for service of process the Person or Persons so specified
in Section 5.01(f), and that each such agent has accepted the appointment and
has agreed to forward forthwith to the Borrower, or the relevant Obligor, as the
case may be, all legal process addressed to the Borrower or such Obligor,
received by such agent.
(g) Insurance. A certification from the Insurance Consultant stating that
the insurance policies required pursuant to Section 7.03 to be in effect on the
Disbursement Date, as such provisions may have been modified since the date of
this Agreement and as such provisions are in effect on such date, axe in full
force and effect.
(h) Financial Completion Test. A certification signed by an authorized
representative of the Borrower and expressed to be effective as of the
Disbursement Date, attaching relevant calculations, and reasonably acceptable to
Eximbank, stating that, after giving effect to the Eximbank Disbursement:
18
(1) The aggregate principal amount of all Senior Debt of the
Borrower then outstanding shall not exceed [$51,263,955].
(2) The outstanding principal amount of all Required Subordinated
Loans shall have been converted into common equity in the
Borrower on terms and conditions satisfactory to Eximbank.
(3) The Equity Ratio shall not be less than 25:75.
(4) The equity contributions to the Borrower aggregate no less
than $16,705,045.
(i) Project Completion. The Project Completion Date shall have occurred.
(j) No Event of Default. Both before and after giving effect to the
Eximbank Disbursement, no Lender Credit Default, Lender Credit Event of Default,
Default or Event of Default exists or will exist that has not been cured or
waived.
(k) Representations and Warranties. All the representations and warranties
made by the Borrower in Section 6.02 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 such date by reference to the facts and circumstances
existing on such date, except where such representation or warranty is expressed
to be made as of a specified date.
(l) Fees and Costs. The fees due pursuant to Section 3.03 and all costs
and expenses required to be paid pursuant to Section 11.07 shall have been paid
by the Borrower, and (i) Eximbank has been paid the Credit Exposure Fee, or (ii)
arrangements satisfactory to Eximbank shall have been entered into for providing
payment to Eximbank of the Credit Exposure Fee. For the purposes of the
foregoing sentence, "arrangements satisfactory to Eximbank" shall include,
without limitation, the direct payment of the Credit Exposure Fee by the
Borrower to Eximbank prior to the Disbursement Date or the submission to
Eximbank by the Borrower of a Request for Eximbank Disbursement that includes a
request for Eximbank financing of the Credit Exposure Fee.
(m) Debt Reserve Cash Collateral Account. The Debt Reserve Cash Collateral
Account shall be funded in an amount not less than $4,200,000 (if the principal
of the Eximbank Credit shall be repayable in 38 installments) and an amount
equal to the Senior Debt Service due and payable during the next succeeding six
months (if the principal of the Eximbank Credit shall be repayable in fewer than
38 installments).
19
(n) No Material Adverse Effect. No Material Adverse Effect shall exist or
shall have occurred that has not been waived by Eximbank.
(o) Payment of Buy Down Amounts. All liquidated damages accruing under
Sections 14.2 and 14.3 of the Construction Contract and Sections 12.2 and 12.3
of the Supply Contract shall have been paid in full, irrespective of any
limitation on liability therefor set forth in the Construction Contract, the
Supply Contract or the Keystone Agreement.
(p) Post-Competition Ormat Guaranty. The Post-Completion Ormat Guaranty
shall have been entered into by the respective parties thereto, shall be
unconditional and fully effective in accordance with its terms, shall be
substantially in the form of Annex C hereto, and Eximbank and the Collateral
Trustee shall have each received a true, original copy thereof or, if a true,
original copy is unavailable, a certified true copy thereof.
(q) Lender Financing Termination Date. After giving effect to the Eximbank
Disbursement, the Lender Financing Termination Date shall have occurred.
Section 5.03. Request for Eximbank Disbursement. The Borrower may, no
earlier than ten (10) and no later than five (5) Business Days prior to the
proposed Disbursement Date, submit to Eximbank a completed and duly executed
Request for Eximbank Disbursement; provided, however, that no Eximbank
Disbursement shall be made in respect of such Request for Eximbank Disbursement
until the conditions set forth in Section 5.02 have been fulfilled or waived by
Eximbank. The Request for Eximbank Disbursement shall be executed by an
authorized representative of the Borrower, and shall be accompanied by (i) true,
correct and complete copies of each Eximbank Certificate; (ii) a true, correct
and complete Reconciliation Certificate; and (iii) a written undertaking from
the Administrative Agent in the form of Exhibit 1 to Annex B hereto. In no event
shall the maximum amount of the Eximbank Disbursement exceed the aggregate of
the Dollar amounts certified by Eximbank in the accompanying Eximbank
Certificates as amounts eligible for Eximbank support and 100% of the Credit
Exposure Fee. Notwithstanding anything to the contrary contained herein, the
Borrower may only submit one (1) Request for Eximbank Disbursement under this
Agreement. The Borrower shall apply the proceeds of the Eximbank Disbursement to
the payment of amounts owed to the Lenders under the Lender Credit Agreement and
the payment of the Credit Exposure Fee in accordance with the terms of Section
6.30(d) of the Lender Credit Agreement and this Agreement.
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SECTION 6. REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties with Respect to Guarantee
Operative Date. In order to induce Eximbank to enter into this Agreement and
each of the other Financing Documents to which it is a party, to issue the
Eximbank Guarantee Agreement and to establish the Eximbank Credit, the Borrower
makes the following representations, warranties and agreements as of the date of
execution hereof and as of the Guarantee Operative Date, which shall survive the
execution and delivery of this Agreement and the other Financing Documents to
which Eximbank is a party and the disbursement and repayment of the Eximbank
Credit:
(a) Limited Partnership Status. The Borrower (i) is a limited partnership
duly organized and validly existing and in good standing under the laws of the
Republic, (ii) is duly qualified to do business under the laws of each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as presently conducted or proposed to
be conducted makes such qualification necessary and (iii) has full power and
authority to own the property and assets owned by it and to lease the properties
leased by it 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 Project Documents
in effect or required to be in effect as of each date this representation is
made or deemed made. Orleyte Company is the sole general partner of the
Borrower, and Ormat Philippines and Orleyte Company are the sole limited
partners of the Borrower. Each Partner (a) is a limited life company duly
organized, validly existing and in good standing under the laws of the Cayman
islands, (b) is duly qualified to do business and is in good standing under the
laws of each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business as presently conducted
or as proposed to be conducted makes such qualification necessary or desirable,
and (c) has full power and authority to own the property an d assets owned by it
and to lease the properties leased by it and to transact the business in which
it is engaged or proposes to be engaged.
(b) Power and Authority. The Borrower and each Partner has the full power
and authority to execute and deliver, and to perform the terms and provisions
of, each of the Project Documents to which it is party and has taken all
necessary partnership or corporate action, as the case may be, to authorize the
execution, delivery and performance by it of each of such Project Documents as
have been executed and delivered as of each date this representation and
warranty is made. The General Partner has the corporate power and authority to
execute and deliver in the name of the Borrower, and to perform on behalf of the
Borrower the terms and provisions of, each of the Project Documents to which the
Borrower is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it on the Borrower's behalf of each
of such Project Documents as of each date this representation and warranty is
made.
21
The Borrower and each Partner has, or in the case of the Project Documents other
than this Agreement, by the Guarantee Operative Date will have, duly executed
and delivered each of the Project Documents to which it is party, and each of
such Project Documents constitutes or, in the case of each such other Project
Document when executed and delivered, will constitute, the legal, valid and
binding obligations of the Borrower or such Partner, as the case may be, and
enforceable in accordance with its respective terms, except as the
enforceability thereof may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general equitable principles, regardless of
whether the issue of enforceability Is considered in a proceeding in equity or
at law.
(c) No Violation. None of the execution and delivery by the Borrower of
the Project Documents to which it is a party, nor the Borrower's compliance with
or performance of the terms and provisions thereof, nor the use of the proceeds
of the Loans or the Eximbank Credit as contemplated by the respective Financing
Documents, nor the execution, delivery and performance on behalf of the Borrower
by the General Partner of the Project Documents to which the Borrower is a party
(i) will contravene or violate any provision of any Applicable Law to which the
Borrower or the General Partner, any of their respective assets or the Project
is subject, (ii) will conflict or be inconsistent with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (except any Permitted Liens) upon any of the property
or assets of the Borrower or the General Partner pursuant to the term of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower or the General
Partner is a party or by which either of them or any of any of their respective
property or assets is bound or to which either of them may be subject, (iii)
will violate any provision of the Partnership Agreement or any other
Organization Document of the Borrower or (iv) will require any consent or
approval of any Governmental Authority or any other Person which has not been
obtained.
(d) Organization. The general and limited partnership interests of Orleyte
Company and the limited partnership interests of Ormat Philippines in the
Borrower and the respective interests of Orleyte Company and Ormat Philippines
in the capital and the profits and distributions of the Borrower are as set
forth in the Partnership Agreement. All such partnership interests in the
Borrower have been duly and validly authorized and issued. Orleyte Company and
Ormat Philippines own the general and limited partnership interests in the
Borrower set forth in the Partnership Agreement free and clear of any Liens of
any-nature on such partnership interests except for the Liens created pursuant
to the Mortgage, Assignment and Pledge Agreement. The Borrower does not have
outstanding any certificates or securities that evidence interests in the
Borrower (except for certificates representing the respective general and
limited partnership interests of
22
Orleyte Company and Ormat Philippines in the Borrower), or any securities
convertible into or exchangeable for any of its partnership interests or any
rights to subscribe for or to purchase, or any warranties or options to
purchase, or any agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to, any such
partnership interests, except for those rights established pursuant to the
Mortgage, Assignment and Pledge Agreement, the Partnership Agreement, the Itochu
MOU, and agreements (certified copies of which shall have been delivered to
Eximbank) relating to a sale or assignment to EPDCI or an Affiliate thereof of
limited partnership interests in the Borrower representing not more than 10% of
the aggregate partnership interests in the Borrower.
(e) Subsidiaries. The Borrower has no Subsidiaries and owns no equity
interest in any other Person.
(f) Singe-Purpose Borrower. The Borrower has not incurred any liabilities
other than in connection with its participation in the transactions contemplated
by the Project Documents. The Borrower (i) has not engaged in any business other
than the design, development, ownership, financing, construction and operation
of the Project and (ii) has not a party to any agreement, contract or commitment
(other than (w) the agreements identified in clauses (i) through (xiv),
inclusive, (xvii) and (xviii) of the definition of the term Operating Agreements
set forth in Schedule X hereto, (x) the Financing Documents, (y) agreements,
contracts or commitments contemplated by the O&M Parameters (including those
relating to employee training, secondment of employees and vehicle rentals), the
then-current Construction Budget or the then-current Annual Budget and (z)
agreements, contracts and commitments in respect of Permitted Indebtedness)
which, individually, creates an annual financial obligation of the Borrower in
excess of $75,000 (or the equivalent in other currency) or which would cause the
aggregate annual financial obligations of the Borrower under all agreements,
contracts and commitments (other than those specified in clauses (w) through (z)
immediately above) to which the Borrower is a party to exceed $150,000 (or the
equivalent in other currency).
(g) Financial Statements; Financial Condition; Undisclosed Liabilities;
Etc.
(i) The statements of financial condition of the Borrower and the
General Partner most recently furnished to Eximbank present fairly the
financial condition of the Borrower or the General Partner, as the case
may be, at the date of such statements of financial condition and the
results of the operations of the Borrower or the General Partner, as the
case may be, for such fiscal year. Such financial statements have been
prepared in accordance with Philippine (in the case of the Borrower) and
Cayman Islands (in the case of the General Partner) generally accepted
accounting principles and practices consistently applied.
23
Since the date of such financial statements, no event, condition or
circumstance (including without limitation Force Majeure as defined in
Articles 13.1(a) and 13.1(b) of the BOT Agreement) has existed or has
occurred which is reasonably likely to have a Material Adverse Effect.
(ii) Except as fully reflected in the financial statements referred
to in Section 6.01(g)(i), there are no liabilities or obligations with
respect to the Borrower or the General Partner 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, is reasonably likely to have a
Material Adverse Effect. Neither the Borrower nor the General Partner
knows of any reasonable basis for the assertion against the Borrower or
the General Partner 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 6.01(g)(i) which, either
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
(h) Litigation; Labor Duties.
(i) Except as disclosed in Schedule 6.01(h) hereto, there is no
action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority
(including without limitation any appeal by any Person of a Governmental
Approval) pending or, to the best of the Borrower's knowledge, threatened
against or affecting the Borrower or any of its properties, revenues or
assets or the Project or the Site which has had or is reasonably likely to
have a Material Adverse Effect. The Borrower is not in default with
respect to any order of any court, arbitrator, administrative agency or
other Governmental Authority. There is no injunction, writ, preliminary
restraining order of any nature issued by an arbitrator, court or other
Governmental Authority directing that any of the material transactions
provided for in any of the Project Documents not be consummated as herein
or therein provided. To the best of the Borrower's knowledge, there is no
action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority
(including without limitation any appeal by any Person of a Governmental
Approval) pending or threatened against or affecting any party to any
Project Document which is an Affiliate of the Borrower or any of their
properties, revenues or assets, and the Borrower does not have knowledge
of any such action, suit, investigation or proceeding pending or
threatened against or affecting any other party to any Project Document or
any of their properties, revenues or assets, in each case
24
described in this sentence which has had or is reasonably likely to have a
Material Adverse Effect.
(ii) There are no strikes, slowdowns or work stoppages by the
Borrower's employees on-going or, to the knowledge of the Borrower,
threatened which are reasonably likely to have a Material Adverse Effect.
(i) True and Complete Disclosure. All factual information (taken as a
whole, which, for the avoidance of doubt (i) shall not include any information
by way of projections, estimates or other expressions of view as to future
circumstances provided that such projections, estimates or other expressions of
view are expressed in good faith and on the basis of reasonable assumptions and
(ii) shall be qualified by any disclaimers with respect to such factual
information provided by the Borrower to Eximbank) heretofore or
contemporaneously furnished by or on behalf of the Borrower, Ormat or any other
Affiliate of the Borrower in writing to Eximbank (including without limitation
such factual information as contained in the information Memorandum and the
Project Documents), and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of the Borrower, Ormat or any other
Affiliate of Ormat in writing to Eximbank will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided.
There are in existence no documents or agreements which have not been disclosed
to Eximbank which are material in the context of the Project Documents or which
have the effect of varying any of the Project Documents.
(j) Tax Returns and Payments. The Borrower has filed all tax returns
required by Applicable Law to be filed by it and has paid all income taxes
payable by it which have become due pursuant to such tax returns and all other
taxes and assessments 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. The Borrower has paid, or has provided
adequate reserves (in the good faith judgment of the management of the Borrower)
for the payment of, all national, regional or local income taxes applicable for
all prior Fiscal Years and for the current Fiscal Year to the date hereof.
(k) Governmental Approvals. All Governmental Approvals necessary under
Applicable Law in connection with (i) the due execution and delivery of, and
performance by the Borrower of its obligations and the exercise of its rights
under, the Project Documents in effect or required to be in effect as of each
date this representation is made or deemed made, (ii) the investment by the
Partners in the Borrower, (iii) the due execution, delivery and performance by
the General Partner on behalf of the Borrower of
25
each of the Project Documents to which the Borrower is a party, (iv) the grant
by each of the Borrower, the Partners, and Ormat International of the Liens
created pursuant to the Security Documents and the Funding Agreement and the
validity, enforceability and perfection thereof and the exercise by Eximbank or
the Collateral Trustee of its rights and remedies thereunder and (v) the
construction and operation of the Project as contemplated by the Project
Documents, to be obtained by the Borrower or any Affiliate of the Borrower are,
and to be obtained by any other Person (to the best knowledge of the Borrower)
are, set forth in Schedule 5.01(t). Each of the Governmental Approvals set forth
in Part A of Schedule 5.01(t) and each other Governmental Approval obtained by
the Borrower after the date of this Agreement but on or prior to the date this
representation is made, has duly obtained or made, is validly issued, is in full
force and effect, is not the object of a currently pending appeal, is held in
the name of the Person identified in Schedule 5.01(t) and is free from any
condition or requirement compliance with which is reasonably likely to have a
Material Adverse Effect or which the Borrower does not reasonably expect to be
able to satisfy. There is no proceeding (including without limitation any appeal
by any Person) pending or, to the best knowledge of the Borrower, threatened
which is reasonably likely to result in the rescission, termination, material
modification, suspension or determination of invalidity or lack of effectiveness
of any such Governmental Approval. The information set forth in each application
and other written material submitted by the Borrower to the applicable
Governmental Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental Approvals set
forth in Part B of Schedule 5.01(t) are required solely in connection with later
stages of construction and operation of the Project. The Borrower has no reason
to believe that any Governmental Approval that has not been obtained by the
Borrower, but which will be required in the future, will not be granted to it in
due course, on or prior to the date when required and free from any condition or
requirement compliance with which is reasonably likely to have a Material
Adverse Effect or which the Borrower does not reasonably expect to be able to
satisfy. The Project, if constructed in accordance with the Construction
Contract, the Supply Contract and the other Project Documents, will conform to
and comply with all covenants, conditions, restrictions and reservations in the
Governmental Approvals and the Project Documents applicable thereto and all
Applicable Laws. The Borrower has no reason to believe that the Collateral
Trustee will not be entitled, without undue expense or delay, to the benefit of
each Governmental Approval set forth on Schedule 5.01(t) upon the exercise of
remedies under the Security Documents Eximbank has received a true and complete
copy of each Governmental Approval heretofore obtain or made by the Borrower.
(l) Compliance with Statutes, Etc.
(i) Each of the Borrower and, with respect to its ownership interest
in and management of the Borrower, the General Partner is in compliance
with all
26
Applicable Laws in respect of the conduct of its business and the
ownership of its property (including, without limitation, Applicable Laws
relating to environmental standards and controls and resettlements and
Applicable Laws relating to the maintenance of debt to equity ratios).
(ii) Without limitation to the foregoing clause (i), the Borrower's
business and the Project are being carried out in compliance with
applicable Republic environmental guidelines.
(m) Environmental Matters. To the best of the Borrower's knowledge,
neither the Site nor the Power Plant (nor any other property with respect to
which the Borrower has retained or assumed liability either contractually or by
operation of the law) has been affected by any Hazardous Material in a manner
that is reasonably likely to give rise to any material liability of the Borrower
under any Environmental Law or which has had or is reasonably likely to have an
Adverse Effect.
(n) Patents, Licenses, Franchises and Formulas. The Borrower owns or has
the right to use all the patents, trademarks, permits, service marks, trade
names, copyrights, licenses, franchises and formulas, 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 in the manner contemplated by the Project Documents,
without any known conflict with the fights of others which, or the failure to
obtain which, as the case may be, is reasonably likely to result in a Material
Adverse Effect.
(o) Submission to Law and Jurisdiction. As of the Guarantee Operative
Date, the choice of governing law for each of the respective Project Documents
in effect or required to be in effect as of the Guarantee Operative Date will be
recognized in the courts of the Republic, and those courts will recognize and
give effect to any judgment in respect of such Project Document obtained by or
against the Borrower in the courts of the jurisdictions to which the Borrower
has submitted.
(p) Status of the Loans and the Eximbank Credit. The Lender Financing
Secured Obligations constitute, and the Eximbank Secured Obligations will
constitute, direct, unconditional, and general obligations of the Borrower and
rank senior as to priority of payment and security to all Subordinated Secured
Obligations and Affiliated Reimbursement Obligations of the Borrower and not
less than pari passu as to priority of payment to all other Indebtedness of the
Borrower. Except as permitted by Section 8.01 of this Agreement, the Borrower
has not secured or agreed to secure any such other Indebtedness by any Lien upon
any of its present or future revenues, assets or properties or upon any general
or limited partnership interests in the Borrower.
27
(q) Documents; Sufficiency of Project Documents.
(i) Eximbank has received a complete copy of each Project Document
in effect or required to be in effect as of each date this representation
is made or deemed made (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if any).
(ii) To the best of the Borrower's knowledge, the services to be
performed, the materials to be supplied and easements, licenses and other
rights granted or to be granted to the Borrower pursuant to the terms of
the Project Documents provide or will provide the Borrower with all rights
and property interests required to enable the Borrower to obtain all
services, materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of the Project,
including the Borrower's full and prompt performance of its obligations,
and full and timely satisfaction of all conditions precedent to the
performance by others of their obligations, under the Project Documents,
other than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business without
material additional expenses or material delay.
(r) Fees and Enforcement. Other than amounts that have been paid in full
or will have been paid in full by the Guarantee Operative Date (or, for the
purposes of Section 6.02 hereof, the Disbursement Date), 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 other Project Documents in effect or required to be in
effect as of each date this representation is made or deemed made. This
Agreement and each of such Project Documents executed and delivered as of the
date this representation is made or deemed made are each in proper legal form
under the laws of the Republic, and under the respective governing laws selected
in such Project Documents, for the enforcement thereof in such jurisdiction
without any further action on the part of the Collateral Trustee or Eximbank.
(s) Utility Availability. Arrangements reflected accurately and completely
in the Construction Budget have been made under the Construction Contract, the
Supply Contract, the BOT Agreement or otherwise on commercially reasonable terms
for the provision of all services, materials and utilities reasonably necessary
for the construction of the Project.
(t) Availability and transfer of Foreign Currency. Except as disclosed in
Schedule 6.01(t) to this Agreement, all requisite foreign exchange control
approvals and other authorizations, if any, by the Republic or any department or
agency thereof have been duly obtained and validly issued and are in full force
and effect to assure (i) the
28
ability of the Borrower to receive, and the ability of any other Person to make,
any and all payments to the Borrower contemplated by the Project Documents, (ii)
the availability of Dollars to enable the Borrower to perform all of its
obligations under the Financing Documents or any of the other Project Documents,
as the case may be, in accordance with their respective terms, and (iii) the
ability of the Borrower to convert all sums received in Peso amounts from
PNOC-EDC under the BOT Agreement and the PNOC-EDC Consent Agreement and from the
Republic under the Performance Undertaking and the Republic Consent Agreement,
including any Peso amounts representing SFRI Fees, from Pesos to Dollars,
immediately upon receipt thereof, and to use the Dollars as necessary to perform
all of its obligations under the Project Documents, in accordance with their
respective terms. None of such foreign exchange control approvals and other
authorizations are subject by its respective terms as currently in effect to
modification or revocation. Except as disclosed in Schedule 6.01(t) to this
Agreement, there are no restrictions or requirements which limit the
availability or transfer of foreign exchange, or the conversion to a foreign
exchange, for the purpose of the performance by the Borrower of its obligations
under the Financing Documents, this Agreement or under any of the other Project
Documents.
(u) Construction Budget.
(i) The Construction Budget as in effect on the date hereof is
attached as Schedule 6.01(u) to this Agreement. The Construction Budget
accurately specifies all costs and expenses incurred and, to the best of
the Borrower's knowledge, anticipated to be incurred, prior to the latest
date on which the Maturity Date can be expected to occur to construct and
finance the construction of the Project in the manner contemplated by the
Project Documents. In addition, to the best of the Borrower's knowledge,
the amount of all costs and expenses required to be paid or incurred prior
to the latest date on which the Maturity Date can be expected to occur to
construct and finance the construction of the Project in the manner
contemplated by the Project Documents does not exceed the amount reflected
in the Construction Budget
(ii) To the best of the Borrower's knowledge, all projections and
budgets (including the Construction Budget and the Base Case Forecast)
furnished or to be furnished to the Administrative Agent, the Collateral
Trustee, the Issuing Bank, the Lenders or Eximbank by or on behalf of the
Borrower and the summaries of significant assumptions related thereto (w)
have been and will be prepared with due care, (x) fairly present, and will
fairly present, the Borrower's expectations as to the matters covered
thereby as of their date, (y) are based on, and will be based on,
reasonable assumptions as to all factual and legal matters material to the
estimates therein (including interest rates and costs)
29
and (z) are in all materials respects consistent with, and will be in all
material respects consistent with, the provisions of the Project
Documents.
(v) Title; Liens. The Borrower has good and valid title to all of its
other properties and assets, in each case, free and clear of all Liens other
than Permitted Liens, including without limitation, on and subject to the terms
and conditions of the BOT Agreement, an unconditional and unencumbered right to
use the Site for the duration of the Cooperation Period (as defined in the BOT
Agreement). No mortgage or financing statement or other instrument or
recordation covering all or any part of the property or assets of the Borrower
is on file in any recording office, except such as relate to Liens described in
paragraphs (a) and (b) of Section 8.01 hereof.
(w) Transactions with Affiliates. The Borrower is not a party to any
contracts or agreements with, or any other commitments to, whether or not in the
ordinary course of business, any Affiliate, which are individually valued in
excess of $50,000 or in the aggregate valued in excess of $100,000 except for
the Lender Credit Agreement, the Construction Contract, the Supply Contract, the
Funding Agreement, the Mortgage, Assignment and Pledge Agreement, the Keystone
Agreement, the Assignment and Assumption Agreement, the O&M Support Undertaking
and any other contracts, agreements or commitments that are contemplated in the
O&M Parameters (including those relating to employee training, vehicle rentals
and secondment of employees) or in the Funding Agreement.
(x) No Additional Fees. Other than as expressly set forth in the Base Case
Forecast and the Construction Budget, the Borrower has not paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of arranging the financing of the transactions contemplated by the
Project Documents.
(y) Regulation of Parties. None of the Borrower, its Affiliates nor any of
the Secured Parties or Eximbank is or will be, solely as a result of the
participation by such parties separately or as a group in the transactions
contemplated hereby or by any other Project Document, or as a result of the
ownership, use or operation of the Project, subject to regulation by any
Governmental Authority of the United States as a "public utility", an "electric
utility holding company", a "public utility holding company", a "holding
company", or an "electrical corporation" or a subsidiary or affiliate of any of
the foregoing under any Applicable Law of the United States (including, without
limitation, PUHCA and FPA) or by any Governmental Authority of the Republic as a
"public utility" under any Applicable Law of the Republic. So long as the owner
and operator of the Project is an "exempt wholesale generator" under Section 32
of PUHCA or a "foreign utility company" under Section 33 of PUHCA, none of the
Secured Parties will by reason of its or their ownership or operation of the
Project upon the exercise or remedies under the Security Documents be subject to
regulation by any Governmental Authority of the
30
United States as a "public utility", an "electric utility", an "electric utility
holding company", a "holding company", or an "electric corporation" or a
subsidiary or affiliate of any of the foregoing under any Applicable Law of the
United States (including, without limitation, PUHCA and FPA).
(z) Regulatory Status. The Borrower is not subject to regulation as a
"subsidiary company" of a holding company under PUHCA.
(aa) ERISA and Employees. The Borrower does not sponsor, maintain,
administer, contribute to, participate in, or have any obligation to contribute
to or any liability under, any Plan nor since the date which is six years
immediately preceding the Guarantee Operative Date has the Borrower established,
sponsored, maintained, administered, contributed to, participated in, or had any
obligation to contribute to or liability under, any Plan. A Termination Event
has not occurred with respect to any Plan the occurrence of which has had or to
the Borrower's knowledge is reasonably likely to result in a Material Adverse
Effect. Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due, the failure
of which has had or to the Borrower's knowledge is reasonably likely to result
in a Material Adverse Effect. To the Borrower's knowledge, no accumulated
funding deficiency as defined in Section 412 of the Code has been incurred nor
has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due and owing as
required by Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan, nor has there been any event requiring disclosure under Section
404l(c)(3)(C) or Section 4063 of ERISA with respect to any Pension Plan, the
event or occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the Borrower's
knowledge, the Borrower and each ERISA Affiliate has met its minimum funding
requirements under ERISA and the Code with respect to the Plans and all benefit
liabilities under each Pension Plan are being funded in accordance with
applicable legal requirements and reasonable actuarial assumptions and methods
as set forth in ERISA and the Code. To the Borrower's knowledge, no material
proceeding, claim, lawsuit and/or investigation exists or, to the best of the
Borrower's knowledge, is threatened concerning any (i) Pension Plan, or (ii)
Multiemployer Plan, the occurrence of which has had or is reasonably likely to
result in a Material Adverse Effect. Neither the Borrower nor, to the Borrower's
knowledge, any ERISA Affiliate has incurred any liability to the PBGC other than
for insurance premiums with respect to a Pension Plan, the payment of which is
not yet due.
(bb) Investment Company Act. Neither the Borrower nor any of its
Affiliates is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
31
Section 6.02. Representations and Warranties with Respect to the
Disbursement Date. In order to induce Eximbank to make the Eximbank Credit
available to the Borrower on the Disbursement Date, the Borrower confirms the
representations and warranties set forth in Section 6.01 as if made as of the
Disbursement Date (except where specified to be made as of a special date).
Section 6.03. Acknowledgment. The Borrower acknowledges that it has made
the foregoing representations and warranties with the intention of persuading
Eximbank to enter into this Agreement, the Eximbank Guarantee Agreement and the
other Financing Documents to which Eximbank is a party, and that Eximbank has
entered into this Agreement, the Eximbank Guarantee Agreement and the other
Financing Documents to which Eximbank is a party on the basis of, and in full
reliance on, each of such representations and warranties. The Borrower warrants
to Eximbank 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 necessary to make such representation not misleading in any material
respect. The rights and remedies of Eximbank in relation to any
misrepresentations or breach of warranty on the part of the Borrower shall not
be prejudiced by any investigation by or on behalf of Eximbank into the affairs
of the Borrower, by the execution, delivery or performance of this Agreement or
any other Financing Document or by any other act or thing which may be done by
or on behalf of Eximbank in connection with this Agreement or any other
Financing Document and which might, apart from this Section, prejudice such
rights or remedies. The representations referred to in this Section 6 shall
survive the execution and delivery of this Agreement and the making of the
Eximbank Disbursement.
SECTION 7. AFFIRMATIVE COVENANTS
With respect to provisions of this Section 7 so specifying, from and after
the Disbursement Date and, with respect to all remaining provisions of this
Section 7, from and after the execution and delivery of this Agreement, in each
case until the Eximbank Credit is paid in full, except as otherwise waived
pursuant to the next two succeeding sentences, the Borrower covenants and agrees
as provided in this Section 7. Provisions of this Section 7 specifying effect
from and after the Disbursement Date and provisions requiring consultations with
or the furnishing of documents or other information to Eximbank or requiring the
consent or approval of Eximbank to the taking or omission of any action may only
be waived by Eximbank and in writing. All other provisions of this Section 7 may
be waived with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by Eximbank and in
writing.
Section 7.01. Information Covenants. The Borrower shall furnish to shall
furnish to Eximbank:
32
(a) Quarterly Financial Statements. As soon as available but, in any
event, within ninety (90) days (or one hundred twenty (120) days in the case of
the fourth quarterly accounting period) after the close of each quarterly
accounting period in each Fiscal Year:
(i) two copies of complete unaudited statements of financial
condition of the Borrower and the General Partner as at the end of such
quarterly period with related statements of income and retained earnings
and statements of changes in financial position for such quarterly period
and for the elapsed portion of the Fiscal Year ended with the last day of
such quarterly period, in each case setting forth comparative figures for
the related periods in the prior Fiscal Year, which shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time (A) in the case of the Borrower, in the Republic and (B) in
the case of the General Partner, in the United States and which, in either
case, shall otherwise be in form satisfactory to Eximbank and certified by
the chief financial officer of the Borrower or the General Partner, as the
case may be, subject to normal year-end audit adjustments;
(ii) a report on any event or condition which has had or which is
reasonably likely to have a Material Adverse Effect; and
(iii) a statement, in form reasonably satisfactory to Eximbank, of
all financial transactions in such Quarter between the Borrower and any
Affiliate of the Borrower, including a certification that such
transactions were on ordinary commercial terms negotiated on an
arms-length basis.
(b) Annual Financial Statement. 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 prepared in accordance with generally accepted
accounting principles as in effect in the Republic from time to time and
otherwise in form satisfactory to Eximbank: (i) statements of financial
condition of the Borrower as at the end of such Fiscal Year with the related
statements of income and retained earnings and statements of changes in
financial position for such Fiscal Year, setting forth comparative figures for
the preceding Fiscal Year and certified by the Auditors, together with (if
applicable) consolidated statements and all adjustments thereto (all such
statements being in agreement with the Borrower's books of account and prepared
in accordance with Republic generally accepted accounting principles
consistently applied), (ii) a report of the Auditors (x) stating that in the
course of its regular audit of the financial statements of the Borrower, which
audit was conducted in accordance with Republic generally accepted auditing
standards, the Auditors obtained no knowledge of any Incipient Default Event or
Default Event which has occurred and is continuing or, in the opinion of the
33
Auditors such an Incipient Default Event or Default Event has occurred and is
continuing, a statement as to the nature thereof and (y) certifying that, based
on said financial statements, the Borrower was in compliance with the financial
covenant contained in Section 8.18 as of the end of the relevant Fiscal Year
and, during the last fiscal quarter of such Fiscal Year, did not receive any
distributions or make any payments of principal of or interest on any
Subordinated Secured Obligations or Affiliated Reimbursement Obligations in
violation of such covenant or of the Debt Reserve Annual Coverage Ratios set
forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH, as the case may be, of
Section 3.02(d)(ii) of the Disbursement Agreement or, as the case may be,
detailing any non-compliance therewith and (iii) a certificate of the chief
financial officer of the Borrower setting forth comparative figures for such
statements of financial condition and the pro forma financial projections
submitted to Eximbank in connection with the Borrower's application for credit
approval.
(c) Other Financial Statements.
(i) Within one hundred twenty (120) days (or, with respect to Ormat,
one hundred fifty (150) days) of the end of each fiscal year, copies of
the audited (or unaudited, if audited are not available) annual financial
statements (consisting of a balance sheet and the related statements of
income, equity and cash flows) of Ormat, Ormat International, Orleyte
Company and Ormat Philippines certified by the respective chief financial
officer of each such person and within ninety (90) days after the end of
each of the first three fiscal quarters of each fiscal year, copies of the
unaudited quarterly financial statements (consisting of a balance sheet
and the related statements of income, equity and cash flows) of Ormat,
Ormat International, Orleyte Company and Ormat Philippines, certified by
the respective chief financial officer of each such person that such
financial statements are true and correct and have been prepared in
accordance with United States (or, in the case of Ormat, Israeli)
generally accepted accounting principles (subject to normal year-end
adjustments); provided, however, that the Borrower shall have no
obligation hereunder to provide to Eximbank the financial statements of
either Ormat or Ormat International after such entity is no longer an
Obligor.
(ii) Within one hundred (115) days after the close of the second
fiscal quarter of each Fiscal Year of the Borrower, a report of the
Auditors certifying that, as of the end of such fiscal quarter, the
Borrower was in compliance with the financial covenant contained in
Section 8.18 and, during such fiscal quarter, did not receive any
distributions or make any payments of principal of or interest on any
Subordinated Secured Obligations or Affiliated Reimbursement Obligations
in violation of such covenant or of the Debt Reserve Annual Coverage
Ratios set forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH,
34
as the case may be, of Section 3.02(d)(ii) of the Disbursement Agreement
or, as the case may be, detailing any non-compliance therewith.
(iii) Within ninety (90) days after the close of each of the first
and third fiscal quarters of each Fiscal Year of the Borrower, a
certificate of the chief financial officer of the Borrower, accompanied by
calculations in reasonable detail supporting the conclusions set forth
therein, to the effect as of the end of each such fiscal quarter, the
Borrower was in compliance with the financial covenant contained in
Section 8.18 and, during each such fiscal quarter, did not receive any
distributions or make any payments of principal of or interest on any
Subordinated Secured Obligations or Affiliated Reimbursement Obligations
in violation of such covenant or of the Debt Reserve Annual Coverage
Ratios set forth in priorities SIXTH, SEVENTH, EIGHTH or NINTH, as the
case may be, of Section 3.02(d)(ii) of the Disbursement Agreement or, as
the case may be, detailing any non-compliance therewith.
(iv) Contemporaneously with the delivery thereof to the Collateral
Trustee, copies of each certificate requesting a distribution or payment
of principal of or interest on any Subordinated Secured Obligations or
Affiliated Reimbursement Obligations in accordance with priorities SIXTH,
SEVENTH, EIGHTH or NINTH, as the case may be, of Section 3.02(d)(ii) of
the Disbursement Agreement.
(d) Management Letters. Promptly after the Borrower's receipt thereof, a
copy of any "management letter" or other similar communication received by the
Borrower from the Auditors in relation to the Borrower's financial, accounting
and other systems, management and accounts.
(e) Annual Operating Budget. As soon as available but, in any event,
within sixty (60) days prior to (i) the Cooperation Period Commencement Date in
respect of the initial Plant to be completed and, thereafter, (ii) the
commencement of each Fiscal Year, an annual operating budget (the "Annual
Budget") (including budgeted statements of income and sources and uses of cash
and balance sheets) prepared by the Borrower and accompanied by a statement of
the chief financial officer of the Borrower to the effect that, the best of his
or her knowledge, the budget is a reasonable estimate for the period covered
thereby. The first Annual Budget shall cover the period from the Cooperation
Period Commencement Date through the end of the Fiscal Year in which the
Cooperation Period Commencement Date occurs, and, if such period consists of
less than six (6) months, for the immediately succeeding Fiscal Year. Each
Annual Budget shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and Maintenance Costs and Debt Service
for each Month covered by such Annual Budget based on the Borrower's best
projections at such time. Unless otherwise
35
consented to by Eximbank, the Annual Budget from year to year shall be based on
the same format as the Base Case Forecast, including any amounts allocated for
contingencies, and be maintained on the same basis and provide sufficient detail
to permit a meaningful comparison. For each Annual Budget that is expected to
cover any period occurring after the Disbursement Date, Eximbank (in
consultation with the Independent Engineer) shall review such Annual Budget, and
Eximbank's response shall not be unreasonably delayed. If Eximbank does not
approve an Annual Budget, Eximbank shall notify the Borrower of the items which
are disapproved and the reason for such disapproval. Until such Annual Budget is
so approved, the Annual Budget most recently in effect shall continue to apply,
except that any items of the then proposed Annual Budget that have been approved
shall also be given effect. From time to time, but not more frequently than once
per Quarter, the Borrower may propose amendments to an Annual Budget, and
Eximbank (in consultation with the Independent Engineer) may reject such
proposal within thirty (30) Business Days from the date the Borrower submits
such proposal if in Eximbank's reasonable judgment such amendment is not
reasonably necessary or advisable for operation of the Project and, if no such
rejection is made, such amendments shall become effective. Not later than three
(3) Business Days after the effective date of each Annual budget and of any
amendment thereto, the Borrower shall provide a copy of the same to the
Collateral Trustee.
(f) Officer's Certificates. At the time of the delivery of the financial
statements provided for in Section 7.01(a) and (b), a certificate of a Financial
Officer of the Borrower to the effect that, to the best of his or her knowledge,
no Incipient Default Event or Default Event has occurred and is continuing or,
if any Incipient Default Event or Default Event has occurred and is continuing,
specifying the nature and extent thereof and what action the Borrower is taking
or proposes to take in response thereto, which certificate shall (without
duplication of the Borrower's obligations under Section 7.03(c)(iii)), from and
after the Disbursement Date, set forth the calculations required to establish
whether the Borrower was in compliance with the provisions of Section 7.14, 8.03
and 8.18 and Section 3.02(d)(ii) of the Disbursement Agreement.
(g) Notice of Default, Litigation, etc. (i) Immediately upon the Borrower
obtaining knowledge thereof, notice, by facsimile, cable or telex, of any event
which constitutes an Incipient Default Event or Default Event, specifying the
nature of such Incipient Default Event or Default Event and any steps the
Borrower is taking to remedy the same; and (ii) promptly, and in any event
within twenty (20) Business Days (or such shorter period as may be specified
below) after an officer of the Borrower or the General Partner, as the case may
be, obtains knowledge thereof:
(A) notice of any litigation or governmental proceeding pending (x)
against the Borrower or the General Partner (i) involving a claim in
excess of $125,000 (or the equivalent thereof in other currency) or (ii)
which is
36
reasonably likely to have a Material Adverse Effect or (y) with respect to
any Project Document;
(B) notice of any proposal by any Governmental Authority to acquire
compulsorily the Borrower or the General Partner, any of the Collateral or
a substantial part of the Borrower's or the General Partner's business or
assets;
(C) notice of any substantial dispute between the Borrower or any
Affiliate of the Borrower and any Governmental Authority relating to the
Project;
(D) notice of any change in the authorized officers or directors
referred to in Section 5.01(m) above, giving certified specimen signatures
of any new officer or director so appointed and, if requested by Eximbank,
satisfactory evidence of the authority of such new officer or director;
(E) (x) as promptly as practicable and in any event not later than
two Business Days after becoming aware thereof notice of any actual or
proposed termination, rescission, discharge (otherwise than by
performance) under any material provision of any Project Document (other
than by Eximbank) and (y) as promptly as practicable and in any event not
later than ten Business Days after becoming aware thereof notice of any
actual or proposed amendment, waiver or indulgence under any material
provision of any Project Document (other than by Eximbank);
(F) copies of any material notice or correspondence received or
initiated by the Borrower or the General Partner relating to a
Governmental Approval or other license or authorization necessary for the
Performance by the Borrower or the General Partner of its respective
obligations under the Project Documents;
(G) notice of any Lien (other than a Permitted Lien) becoming
enforceable over any of the Borrower's assets;
(H) notice of any proposed material change in the nature or scope of
the Project or the business or operations of the Borrower and any one or
more events, conditions or circumstances (including without limitation
Force Majeure as defined in Sections 14.1(a) and 14.1(b) of the BOT
Agreement) that exist or have occurred which are reasonably likely to have
a Material Adverse Effect;
(I) until the Eximbank Guarantee Agreement has terminated in
accordance with its terms, notice of the occurrence of any event or act
which
37
could reasonably qualify as a Political Risk (as defined in the Eximbank
Guarantee Agreement);
(J) notice of or (in the case of items described in the immediately
succeeding clause (x)) copies of: (x) each funding waiver request filed
with respect to any Pension Plan and all communications received or sent
by the Borrower or any ERISA Affiliate with respect to such request, and
(y) the failure of the Borrower or any ERISA Affiliate to make a required
installment or payment under Section 412 of the Code, Section 302 of ERISA
or the terms of any Pension Plan by the due date (other than the quarterly
contributions described in Section 302(e) of ERISA or Section 412(m) of
the Code);
(K) notice of the occurrence of any Termination Event which has had
or is reasonably likely to result in a Material Adverse Effect in
connection with any Pension Plan or any trust thereunder, specifying the
nature thereof, what action the Borrower or the ERISA Affiliate has taken,
is taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the United States Internal Revenue Service,
the United States Department of Labor or the PBGC with thereto;
(L) copies of: (x) all notices of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan; and (y) all notices from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA; or
(M) notice of the filing of an intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of
ERISA; or
(N) a copy of each agreement, commitment or understanding (whether
or not subject to the approval of Eximbank pursuant to any other provision
of this Agreement) executed by or on behalf of the Borrower (excluding (x)
the agreements set forth in clauses (i) through (xiii), inclusive, (xvi),
(xvii) and (xviii) of the definition of the term "Operating Agreements" in
Schedule X hereto but including replacements thereof and (y) agreements,
commitments or understandings entered into in the ordinary course of
business which are required to perform the O&M Parameters and which (1) do
not, individually, create a financial obligation of the Borrower in excess
of $75,000 and (2) would not, in the aggregate, result in the expenditure
of funds in any Fiscal Year in excess of the amount budgeted for Operating
and Maintenance Costs (including the Contingent O&M Amount) in the
then-current Annual Budget for such Fiscal Year) in connection with the
Project, which notice shall specifically refer to this Section
7.01(g)(ii)(N) and, with respect to any such agreement,
38
commitment or understanding extending by its terms beyond the Disbursement
Date, request that Eximbank confirm (prior to the Disbursement Date, after
consultation with the Administrative Agent) whether or not such agreement,
commitment or understanding shall constitute an Operating Agreement, in
which case such agreement, commitment or understanding shall only
constitute an Operating Agreement if Eximbank shall so designate it as an
Operating Agreement in a writing delivered to the Borrower within 60 days
of Eximbank's receipt thereof; or
(O) notice of the occurrence of any event of default or default
under Section 19.1 of the Construction Contract or under the Assignment
and Assumption Agreement.
(h) Implementation Reports. Prior to the Project Completion Date, within
twenty-one (21) days of the end of each Month, a report, in a form satisfactory
to Eximbank, on the implementation and progress of the Project, including (i)
any factors materially and adversely affecting or which are reasonably likely to
materially and adversely affect the carrying out of the Project and (ii) copies
of any reports received by the Borrower from any outside technical consultant
identifying any matter that is or may prove to be of material adverse
significance to the operation of the Plant.
(i) Completion Date and Operation Date Notices. The Borrower shall provide
Eximbank with not more than ten (10) or less than two (2) Business Days' prior
notice of the scheduled occurrence of the Completion Late for each Plant. The
Borrower shall provide Eximbank with not more than ten (10) or less than two (2)
Business Days' prior notice of the scheduled occurrence of (i) each Operation
Date and (ii) the date on which the Borrower expects to satisfy the conditions
precedent to Eximbank Disbursement specified in Section 5.02 hereof (other than
those conditions that may only be satisfied on and as of the Disbursement Date).
The Borrower shall provide Eximbank with notice of the Completion Date for each
Plant and the Operation Date for each Plant not more than five (5) Business Days
after the occurrence of any thereof.
(j) Other Information. From time to time, such other information or
documents (financial or otherwise) as Eximbank may reasonably request including,
without limitation, (1) advance notice of the commencement of all performance
tests under the Construction Contract and (2) if the Completion Date for any
Plant in the BOT Agreement shall have been deemed to have occurred pursuant to
Section 5.4(h) of the BOT Agreement, information as to the circumstances giving
rise to the same, the action(s) which the Borrower (and, to the extent known by
the Borrower, PNOC-EDC) is taking or proposes to take with respect to the same
and periodic reports of the status of such actions and the implementation
thereof.
39
Section 7.02. Books, Records and Inspections; Accounting and Audit
Matters.
(a) The Borrower will keep proper books of record and account adequate to
reflect truly and fairly the financial condition and results of operations of
the Borrower (including the progress of the Project) in which full, true and
correct entries in conformity with Philippine generally accepted accounting
principles consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will permit officers and designated representatives of Eximbank to
visit and inspect, under guidance of officers of the Borrower, any of the
properties of the Borrower, and to examine and make copies of the books of
record and account of the Borrower and discuss the affairs, finances and
accounts of the Borrower with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such reasonable
extent as Eximbank may request.
(b) The Borrower shall (i) authorize the Auditors (whose fees and expenses
shall be for the account of Borrower) to communicate directly with Eximbank at
reasonable intervals, but if an Incipient Default Event or a Default Event has
occurred or is continuing, then at any time, regarding the Borrower's accounts
and operations and (ii) furnish to Eximbank a copy of such authorization, which
shall be in the form of Schedule 6.2(b) to the Lender Credit Agreement;
provided, however, that Eximbank will (i) provide the Borrower with copies of
any correspondence between Eximbank and the Auditors, and (ii) provide the
Borrower with reasonable notice of any meeting between Eximbank and the
Auditors, with a description of the matters to be discussed at such meeting, and
allow the Borrower to attend any such meeting.
(c) The Borrower will at all times cause a complete set of the current and
(when available) as-built plans (and all supplements thereto) relating to each
Plant to be maintained at such Plants or the Construction Contractor's office
for inspection by the independent Engineer and Eximbank.
Section 7.03. Maintenance of Property, Insurance. (a) The Borrower will
(i) keep all property useful and necessary (other than property that has become
obsolete) in its business in good working order and condition and (ii) keep its
present and future properties and business insured with financially sound and
reputable insurers satisfactory to Eximbank against loss or damage in such
manner and to the same extent as required in Section A of Schedule 7.03 hereto
until the expiration of such policies and immediately thereafter as required in
Section C of Schedule 7.03 hereto, including in each case pursuant to policies
naming the Collateral Trustee as sole loss payee thereunder, permitting the
Collateral Trustee to make claims thereunder, and containing cut-through
endorsements to reinsurers, provisions requiring that the Collateral Trustee and
Eximbank shall receive notices of extensions or renewals of insurance policies
and notice
40
of any non-payment of premiums and that such policy may only be canceled for
non-payment of premiums, if cancelable, upon sixty (60) days prior notice to the
Collateral Trustee and Eximbank. On or prior to the dates required pursuant to
Section A or Section C, as the case may be, of Schedule 7.03, the Borrower will
submit to Eximbank certificates of insurance relating to the insurances required
by Section A and Section C of Schedule 7.03 (together with copies of such
insurance policies if then available) from the Borrower's insurers or insurance
brokers (including confirmation of premium payments then due), which
certificates shall indicate the properties insured, amounts and risks covered,
names of the expiration dates, names of the insurers and special features of the
insurance policies. The Borrower shall provide Eximbank with copies of insurance
policies relating to the insurances required by Section A and Section C of
Schedule 7.03 hereto on or prior to the date such policies are required to be
delivered to Eximbank in accordance with such Section A or Section C, as the
case may be Prior to the Disbursement Date, the Borrower shall provide Eximbank
with copies of the insurance policies relating to the insurances required by
Section C of Schedule 7.03 hereto, such policies to be in form and substance,
and issued by companies, satisfactory to Eximbank (in consultation with the
Insurance Consultant).
(b) The Borrower will cause the Construction Contractor and the
Construction Supplier, as applicable, to (i) keep the insurances described in
Section B of Schedule 7.03 hereto with financially sound and reputable insurers
satisfactory to, prior to the Disbursement Date, the Administrative Agent and,
thereafter, Eximbank, in each case against loss or damage in such manner and to
the same extent as so described, in each case pursuant to policies of insurance
naming the Collateral Trustee as sole loss payee thereunder, permitting the
Collateral Trustee to make claims thereunder, and containing cut-through
endorsements to reinsurers and provisions requiring that the Collateral Trustee
and Eximbank shall receive notices of any non-payment of premiums and that such
policy may only be canceled (x) as provided in Section B of Schedule 7.03 hereto
or (y) if not therein provided, for non-payment of premiums, if cancelable, upon
thirty (30) days prior written notice to the Collateral Trustee Eximbank. On or
prior to the dates required pursuant to Section B of Schedule 7.03, the Borrower
will cause the Construction Contractor or the Construction Supplier, as
applicable, to submit to Eximbank certificates of insurance relating to the
insurances required by Section B of Schedule 7.03 (together with copies of such
insurance policies if then available) from the insurers or insurance brokers for
such insurances (including confirmation of premium payments then due), which
certificates shall indicate the type of insurance, amounts and risks covered,
names of the beneficiaries, expiration dates, names of the insurers and special
features of the insurance policies. The Borrower will cause the Construction
Contractor or the Construction Supplier, as applicable, to provide Eximbank with
copies of insurance policies relating to the insurances described in Section B
of Schedule 7.03 hereto on or prior to the date such policies are required to be
delivered to Eximbank in
41
accordance with such Section B of Schedule 7.03 hereto, such policies to be in
form and substance, and issued by companies, satisfactory to Eximbank in
consultation with the Insurance Consultant. The Borrower will cause the
Construction Contractor to establish the BOT Construction Performance Security
in favor of PNOC-EDC within the time required by PNOC-EDC in connection with the
BOT Agreement and will deliver evidence reasonably satisfactory to Eximbank of
PNOC-EDC's acceptance of the BOT Construction Performance Security within
fifteen (15) calendar days after the same is so established.
(c) In the event any insurance (including the limits or deductibles
thereof) hereby required to be maintained by the Borrower or for which the
Borrower is responsible, or required to be maintained by the Construction
Supplier or the Construction Contractor or for which the Construction Supplier
or the Construction Contractor is responsible, other than insurance required by
Applicable Law to be maintained, shall not be available on commercially
reasonable terms in the commercial insurance market, the Administrative Agent,
prior to the Lender Financing Termination Date, or, thereafter, Eximbank, shall
not unreasonably withhold its consent to waive such requirement to the extent
the maintenance thereof is not so available; provided, however, that (i) the
Borrower shall first request any such waiver in writing, which request shall be
accompanied by a written report prepared by the Borrower's insurance adviser
certifying that such insurance is not reasonably available and commercially
feasible in the commercial insurance market for electric generating plants of
similar type and capacity and, with respect to catastrophic perils, located in
Southeast Asia, and (ii) the Insurance Consultant shall confirm in writing the
conclusions contained in such report. The failure at any time to satisfy the
condition to any waiver of an insurance requirement set forth in the proviso to
the preceding sentence shall not impair or be construed as a relinquishment of
the Borrower's ability to obtain a waiver of an insurance requirement pursuant
to the preceding sentence at any other time upon satisfaction of such
conditions.
(c) The provisions of this Section 7.03 shall be deemed to be supplemental
to, but not duplicative of, the provisions of any of the Security Documents that
require the maintenance of insurance. In the event that any insurance whatsoever
is purchased, taken or otherwise obtained by the Borrower with respect to the
Project otherwise than as required hereunder or if not properly endorsed to the
Collateral Trustee as the sole loss payee or beneficiary or otherwise made upon
the terms required in this Section 7.03, without limitation to any provision of
the Mortgage, Assignment and Pledge Agreement, such insurance shall be
considered assigned hereunder to the Collateral Trustee with the right of the
Collateral Trustee to make, settle, compromise and liquidate any and all claims
thereunder, without prejudice to the exercise of any other rights and remedies
that the Collateral Trustee may have under any of the Financing Documents, or
under any Applicable Law.
42
Section 7.04. Maintenance of Existence; Privileges; Etc. The Borrower
shall, and with respect to clauses (a)(i), (a)(iii) and (b) of this Section 7.04
shall cause the General Partner to, at all times (a) preserve and maintain in
full force and effect (i) its existence as a limited partnership or a
corporation, as the case may be, in each case duly authorized, validly existing
and in good standing under the laws of the Republic or the Cayman Islands, as
the case may be (ii) its qualification to do business in each other jurisdiction
in which the character of the properties owned or leased by it or in which the
transaction of its business as conducted or proposed to be conducted makes such
qualification necessary and (iii) all of its powers, rights, privileges and
franchise necessary for the construction, ownership, maintenance and operation
of the Project and the maintenance of its existence, (b) obtain in a timely
manner and maintain in full force and effect (or where appropriate, renew) all
Governmental Approvals (including, without limitation, those under Environmental
Laws) and all other licenses, registrations, waivers, consents and approvals
required at any time in connection with the construction, maintenance, ownership
or good and orderly operation of the Project and all licenses, consents and
approvals necessary for the conversion to Dollars of all Peso amounts
(including, without limitation, Peso amounts representing SFRI Fees) payable
under the BOT Agreement, the PNOC-EDC Consent Agreement, the Performance
Undertaking and the Republic Consent Agreement and for the remission to the
United States in Dollars of any amounts paid or payable to the Secured Parties
in connection with any Financing Document or the transactions contemplated
thereby or the partnership interests of the Borrower and (c) preserve and
maintain good and marketable title to its properties and assets (it being
understood that the Borrower's rights with respect to the Site are solely as set
forth in the BOT Agreement and the Accession Undertaking) subject to no Liens
other than Permitted Liens.
Section 7.05. Compliance with Statutes. The Borrower will comply with all
Applicable Laws in respect of the conduct of its business and the ownership,
operation and use of its property (including, without limitation, Applicable
Laws relating to environmental standards and controls and Applicable Laws
relating to the maintenance of debt to equity ratios). The Borrower will cause
the General Partner to comply with all Applicable Laws in respect of the General
Partner owning its equity interest in, and acting in its capacity as general
partner of, the Borrower.
Section 7.06. Consultations Regarding Independent Engineer's Report. The
Borrower agrees that (i) in addition to any other consultation required
hereunder, following the end of each Month, upon the request of the
Administrative Agent or Eximbank, the Borrower shall consult with such Person
regarding any materially adverse event or condition identified by the
Independent Engineer in the reports provided by the Independent Engineer for
such Month pursuant the Representative Agreement, and (ii) in the event the
Borrower fails to hold such consultations within 30 days of such request, such
event or condition shall be deemed to have a Material Adverse Meet.
43
Section 7.07. Project Implementation; Use of Proceeds.
(a) The Borrower shall (i) carry out the Project and conduct its business
with due diligence and efficiency and in accordance with sound engineering,
financial, and business practices and in accordance with the Annual Budget as
specified in Section 7.01(e); and (ii) use the proceeds of the Loans and the
Eximbank Credit only for the purpose set forth in Section 2.01.
(b) Without limiting the generality of the preceding clause (a), the
Borrower will cause the construction of the Project to be prosecuted and
completed with due diligence and continuity (except for interruptions due to
events of Force Majeure (as defined in any of the BOT Agreement, the
Construction Contract and the Supply Contract), which the Borrower will use its
best efforts to mitigate), in good and workmanlike manner and in accordance with
(i) sound generally accepted budding and engineering practices, (ii) all
Governmental Approvals and Applicable Laws applicable to the Site, the Plants or
the Borrower, (iii) the Construction Contract, (iv) the Supply Contract and (v)
the Construction Budget.
(c) Without limiting the generality of clause (a) of this Section 7.07,
from and after the Cooperation Period Commencement Date, the Borrower will
operate and maintain the Project, and retain and maintain the staff sufficient
to operate and maintain the Project, in accordance with the O&M Parameters and
will otherwise comply with and fully satisfy all of the requirements of the O&M
Parameters.
(d) Without limiting the generality of clauses (a) and (b) of this Section
7.07, in order to avoid a deemed abandonment under Section 15.4.1(d) of the BOT
Agreement, if the conditions precedent specified in clauses (a) and (b) of
Section 13.3 of the Construction Contract have been satisfied the Borrower
shall, within ten (10) Business Days prior to the date of potential abandonment
under the BOT Agreement, exercise the right granted to it under the last
sentence of Section 13.3 of the Construction Contract and certify to PNOC-EDC
that the Power Plant (as defined in the Construction Contract) has achieved BOT
Completion in accordance with Section 6.1(a) of the BOT Agreement.
(e) The Borrower shall provide Eximbank with notice immediately upon
becoming aware that the conditions to enforcing any of the Ormat EPC Guaranty,
the Ormat International EPC Guaranty, the Post-Completion Ormat Guaranty or the
O&M Support Undertaking have been met.
(f) The Borrower agrees that it shall not designate an arbitrator or
engineering firm under either the Construction Contract or the Supply Contract
with respect to any disputes thereunder without obtaining the prior written
consent of the Required Secured Parties, such consent not to be unreasonably
withheld.
44
(g) Without the prior written consent of Eximbank, which approval shall
not be unreasonably withheld, the Borrower shall not direct that Geothermal
Fluid (as defined in the Construction Contract) be run through any GU (as
defined in the Construction Contract) under circumstances which would give rise
to the commencement of any of the Warranty Periods (as defined in the
Construction Contract) pursuant to clause (a) of Section 17.10 of the
Construction Contract.
Section 7.08. Auditors. In the event that SyCip Gorres Velayo & Co. should
cease to be the Auditors of the Borrower for any reason, the Borrower shall
appoint and maintain as the Auditors another firm of independent public
accountants approved by Eximbank.
Section 7.09. Taxes, Duties, Proper Legal Form. The Borrower will pay and
discharge all taxes, duties, fees, assessments or other governmental charges
imposed on it, on its income or profits, on any of its property, or in
connection with any such charges imposed on it with respect to any payment made
under this Agreement or the execution, issue, delivery, registration,
notarization, assignment or transfer of any interest in or for the legality,
validity, or enforceability, of any Project Document prior to the date on which
penalties attach thereto, and all claims, levies or liabilities (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which have or, if unpaid, might become a
Lien upon the property of Borrower (or any part thereof). The Borrower shall
have the right, however, to contest in good faith the validity or amount of any
such tax, assessment, governmental charge or claim by proper proceedings timely
instituted, and may permit the taxes, assessments, governmental charges or
claims so contested to remain unpaid during the period of such contest if (i)
the Borrower diligently prosecutes such contest, (ii) during the period of such
contest the enforcement of any contested item is effectively stayed, (iii) the
Borrower sets aside on its books adequate reserves with respect to the contested
items and (iv) such contest does not, in the reasonable discretion of, prior to
the Disbursement Date, the Administrative Agent and thereafter, Eximbank,
involve a material risk of the sale, forfeiture or loss of any of the
Collateral. The Borrower will promptly pay or cause to be paid any valid, final
judgment enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.
Section 7.10. Independent Engineer; Insurance Consultant. The Borrower (i)
agrees to the Independent Engineer carrying out the role described in the
Representative Agreement, (ii) confirms and agrees to the terms of its
Acknowledgment appended to the Representative Agreement, which terms are
incorporated herein by reference as if fully set forth herein and (iii) will
ensure that the Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will exercise due care to
ensure that any information which it may supply the Insurance Consultant is
45
materially accurate and not, by omission of information or otherwise, misleading
in any material respect.
Section 7.11. Performance of Obligations. The Borrower will 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 (i) all of its
obligations under the terms of the Financing Documents and the BOT Agreement and
(ii) such of its obligations under the terms of the Project Documents (other
than the Financing Documents and the BOT Agreement) the non-performance of which
is reasonably likely to have a Material Adverse Effect. The Borrower will
maintain in full force and effect each of the Project Documents to which it is a
party. The Borrower will preserve, protect, defend and enforce the rights
granted to it under or in connection with the Project Documents. The Borrower
shall take all action within its control required or in the reasonable opinion
of Eximbank advisable to ensure that, unless otherwise consented to in writing
by Eximbank, each of the Project Documents is in proper legal form under the
laws of the Republic or under the respective governing laws selected in such
Project Documents, for the enforcement thereof in such jurisdictions without any
further action on the part of Eximbank or the Lenders, as the case may be.
Section 7.12. Additional Documents; Filings and Recordings. The Borrower
shall execute, and deliver, from time to time as reasonably requested by
Eximbank or the Collateral Trustee, at the Borrower's expense, such other
documents as shall be necessary or advisable or that Eximbank or the Collateral
Trustee may reasonably request in connection with the rights and remedies of the
Secured Parties granted or provided for by the Project Documents, as applicable,
and to consummate the transactions contemplated therein. The Borrower shall, at
its own expense, take all reasonable actions that have been or shall be
requested by Eximbank or the Collateral Trustee or that the Borrower knows are
necessary to establish, maintain, protect, perfect and continue the perfection
of the first priority security interests of the Secured Parties created by the
Security Documents and shall furnish timely notice of the necessity of any such
action, together with such instruments, in execution form, and such other
information as may be required to enable Eximbank and any other appropriate
Secured Party to effect any such action. Without limiting the generality of the
foregoing, the Borrower shall (a) execute or cause to be executed and shall file
or cause to be filed such financing statements, continuation statements, fixture
filings, mortgages or deeds of trust and mortgage supplements in all places
necessary or advisable (in the opinion of counsel for Eximbank or the Collateral
Trustee) to establish, maintained perfect such security interests and in all
other places that Eximbank or the Collateral Trustee shall reasonably request
and (b) do everything necessary in the reasonable judgement of Eximbank or the
Collateral Trustee to (i) create and perfect the Security with respect to future
assets covered by the Mortgage, Assignment and Pledge Agreement, (ii) maintain
the Security in full force and effect at all times and (iii) preserve and
protect the Collateral and protect and enforce its rights and
46
title and the rights and title of the Secured Parties to the Collateral. In
connection with the registration of each mortgage supplement required pursuant
to Section 5 of Part B of the Mortgage, Assignment and Security Agreement, the
Borrower shall deliver to Eximbank a certified true copy of the legal opinion
required pursuant to Section 5.01(c) of Part B of the Mortgage, Assignment and
Security Agreement.
Section 7.13. Bank Accounts. The Borrower shall maintain all its bank
accounts with the Collateral Trustee.
Section 7.14. Debt Reserve Cash Collateral Account. On or before the
Disbursement Date, the Debt Reserve Cash Collateral Account shall be fully
funded in an amount equal to at least $4,200,000 (if the principal of the
Eximbank Credit shall be repayable in 38 installments) and an amount equal to
the Senior Debt Service due and payable during the next succeeding six months
(if the principal of the Eximbank Credit shall be repayable in fewer than 38
installments) in addition to all amounts required to be deposited at such time
in accordance with clause "FOURTH" of 3.02(d)(ii) of the Disbursement Agreement.
Section 7.15. Availability and Transfer of Foreign Currency. The Borrower
will ensure that all requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency thereof will
be kept current and in full force and effect to assure (i) the ability of the
Borrower to receive, and the ability of any other party to make, any and all
payments to the Borrower contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Borrower to perform all of its obligations
under the Financing Documents or any of the other Project Documents, as the case
may be, in accordance with their respective terms, and (iii) (on and after the
Disbursement Date) the ability of the Borrower to convert all sums received in
Peso amounts from PNOC-EDC under the BOT Agreement and the PNOC-EDC Consent
Agreement and from the Republic under the Performance Undertaking and the
Republic Consent Agreement, including any Peso amounts representing SFRI Fees,
from Pesos to Dollars, immediately upon receipt thereof, and to use the Dollars
as necessary to perform all of its Obligations under the Project Documents, in
accordance with their respective terms.
Section 7.16. Privatization of NAPOCOR or PNOC-EDC. The Borrower shall
promptly upon becoming aware thereof notify Eximbank of the occurrence of any
event or events that give rise to any rights or benefits to the Borrower under
Article 20 of the BOT Agreement. The Borrower agrees to consult with Eximbank
prior to requesting or accepting any assurances, or making any determinations,
in accordance with such Article 20. Any such consultation shall include, without
limitation, a reasonably detailed explanation (which shall be provided to
Eximbank in writing if so requested) of the
47
economic rationale for any determination or proposed course of action made or
proposed to be made under or pursuant to such Article 20.
Section 7.17. Spares. On or before the Disbursement Date, the Borrower
shall purchase all spare parts identified on the Acquisition List (as defined in
the Eximbank Guarantee Agreement).
SECTION 8. NEGATIVE COVENANTS.
With respect to provisions of this Section 8 so specifying, from and after
the Disbursement Date and, with respect to all remaining provisions of this
Section 8, from and after the execution and delivery of this Agreement, in each
case until the Eximbank Credit is paid in full, except as otherwise waived
pursuant to the next two succeeding sentences, the Borrower covenants and agrees
as provided in this Section 8. Provisions of this Section 8 specifying effect
from and after the Disbursement Date and provisions requiring consultations with
or the furnishing of documents or other information to Eximbank or requiring the
consent or approval of Eximbank to the taking or omission of any action may only
be waived by Eximbank and in writing. All other provisions of this Section 8 may
be waived with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by Eximbank and in
writing.
Section 8.01. Liens. The Borrower 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 Borrower,
whether now owned or hereafter acquired, provided that the provisions of this
Section 8.01 shall not prevent the creation, incurrence, assumption or existence
of, prior to the Disbursement Date, Lender Credit Permitted Liens and,
thereafter, the following Liens (each, a "Post-Completion Permitted Lien"):
(a) any tax or other statutory Lien, provided that such lien shall be
discharged within sixty (60) days after the Borrower or the General Partner
becomes aware or reasonably should have been aware of such Lien (unless
contested in good faith by the Borrower, in which case it shall be discharged
within thirty (30) days after final adjudication, and provided that during the
period of such contest the Borrower sets aside on its books adequate reserves
with respect to the contested items);
(b) Liens created pursuant to the Security Documents;
(c) purchase-money Liens on any property acquired after the Operation Date
provided, however, that (i) any property subject to such purchase-money Lien is
acquired by the Borrower in the ordinary course of its business and such
purchase-money Lien attaches to such property concurrently or within ninety (90)
days after the acquisition
48
thereof; (ii) the Indebtedness secured by such purchase-money Lien shall not
exceed ninety percent (90%) of the lesser of the cost or the fair market value
as of the time of the acquisition of the property covered thereby by the
Borrower; (iii) each such purchase-money Lien shall attach only to the property
so acquired and fixed improvements thereon; (iv) the Indebtedness secured by all
such purchase-money Liens shall not at any time exceed $500,000 (or an
equivalent amount in other currency); and (v) the Indebtedness secured by such
purchase-money Lien is not otherwise prohibited by the provisions of Section
8.05;
(d) Liens on property and equipment constituting leases permitted by
Section 8.04; and
(e) mechanics', materialmen's, carrier's and similar Liens securing
obligations incurred in the ordinary course of business which (i) are not past
due or which are the subject of a Good Faith Contest by the Borrower (unless
during the pendency of such contest or as a result thereof the Liens of the
Security Documents could reasonably be expected to be materially endangered or
any material portion of the Site, any Plant, the Power Plant or the Project
could reasonably be expected to become subject to loss or forfeiture) and (ii)
which do not in the aggregate materially detract from the value of the Site, any
Plant, the Power Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that, upon the commencement of any
proceeding to foreclose or enforce any such Post-Completion Permitted Lien,
Eximbank or the Collateral Trustee may take such action as it reasonably deems
necessary to protect its interest in the Site, any Plant, the Power Plant or the
Project including, without limitation, payment of amounts reasonably necessary
to release any such Lien, and in such event the Borrower shall reimburse
Eximbank or the Collateral Trustee, as the case may be, upon demand for the cost
thereof together with interest thereon at a rate per annum equal to (in the case
of Eximbank) the higher of (x) the New Borrowing Rate (as defined the Section
3.02(b)) that would be applicable to ____ such amounts if such amounts paid by
Eximbank were deemed to be due from the Borrower on the date paid by Eximbank
and not paid by the Borrower when due and (y) the rate specified in Section
3.02(a) plus 1.0% or (in the case of the Collateral Trustee) the Base Rate plus
3.75%.
Section 8.02. Consolidation, Merger, Sale of Assets, Etc. The Borrower
will not, and will not permit the General Partner to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation.
The Borrower will not (a) 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 and any chemical by-products produced by the
Power Plant) except in the ordinary course of business, or sales of equipment
which is uneconomic or obsolete or sales of assets that are no longer used by or
useful to the Borrower and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the replaced assets;
or (b) purchase or
49
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 the ordinary course of
business).
Section 8.03. Dividends; Restricted Payments. The Borrower will not
declare or pay any partnership distributions, or return any capital, to the
Partners or authorize or make any other distribution, payment or delivery of
property or cash to the Partners as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for consideration, any general or
limited partnership interests now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to any partnership interests)
(collectively, "Restricted Payments") unless:
(i) such Restricted Payment is permitted by Applicable Law;
(ii) no Default or Event of Default is then in existence (or would
be in existence after giving effect to such Restricted Payment);
(iii) such Restricted Payment is made in accordance with the
provisions of Section 3.02(d)(ii) of the Disbursement Agreement; and
(iv) such Restricted Payment is made only after the Disbursement
Date.
Section 8.04. Leases. The Borrower will not enter into any agreement or
arrangement to acquire by lease the use of any property or equipment of any
kind, except leases as contemplated by the O&M Parameters, the Construction
Budget or the Annual Budget (in each case as then in effect), or except leases
of operating equipment and premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as additional rent or
lease payment) do not exceed the equivalent of $400,000 in any Fiscal Year.
Section 8.05. Indebtedness. (i) The Borrower will not contract, create,
incur, assume or suffer to exist any Indebtedness, except for, prior to the
Disbursement Date, Lender Credit Permitted Indebtedness and, thereafter, the
following types of Indebtedness ("Post-Completion Permitted Indebtedness"):
(a) Indebtedness of the Borrower incurred under this Agreement;
(b) Indebtedness incurred after the Operation Date which is not in a
principal amount in excess, in the aggregate of $500,000, at any time and is
accrued expenses or current trade accounts payable incurred in the ordinary
course of business or obligations under trade letters of credit incurred by the
Borrower in the ordinary course of business,
50
which are to be repaid in full not more than ninety (90) days after the date on
which such Indebtedness is originally incurred to finance the purchase of goods
by the Borrower;
(c) Unsecured Senior Working Capital Indebtedness and Subordinated Secured
Working Capital Indebtedness incurred after the Operation Date not exceeding in
the aggregate at any one time outstanding $1,500,000, provided that (i)
Unsecured Senior Working Capital Indebtedness shall not exceed $500,000 at any
one time outstanding; (ii) any and all Subordinated Secured Working Capital
Indebtedness shall be subordinated to the payment of the Eximbank Credit in
accordance with the provisions of Schedule 8.05(c); (iii) any and all
Subordinated Working Capital Lenders shall, prior to the date on which any
Subordinated Secured Working Capital Indebtedness is incurred, become party to
the Collateral Trust Agreement and deliver to the Collateral Trustee and
Eximbank an opinion of counsel to such Subordinated Working Capital Lender
reasonably satisfactory to Eximbank to the effect that the subordination terms
set forth in Schedule 8.05(c) hereto constitute the binding obligations of such
Subordinated Working Capital Lender enforceable in accordance with their
respective terms (subject to customary qualifications); and (iv) any
Subordinated Working Capital Lender consisting of Ormat or an Affiliate of Ormat
shall (if it is not a party thereto) accede to the Mortgage, Assignment and
Pledge Agreement and pledge and deliver to the Collateral Trustee the executed
original of the Subordinated Note evidencing its Subordinated Working Capital
Loans;
(d) Third Party Subordinated indebtedness in an outstanding principal
amount not to exceed $2,500,000 at any time; provided, however, that (i) any and
all Third Party Subordinated Indebtedness shall be subordinated to the payment
of the Eximbank Credit in accordance with the provisions of Schedule 8.05(c) and
(ii) any and all Third Party Subordinated Lenders shall, prior to the date on
which such Indebtedness is incurred, become party to the Collateral Trust
Agreement and deliver to the Collateral Trustee and Eximbank an opinion of
counsel to such Third Party Subordinated Lender reasonably satisfactory to
Eximbank to the effect that the subordination terms set forth in Schedule
8.05(c) hereto constitute the binding obligations of such Third Party
Subordinated Lender enforceable in accordance with their respective terms
(subject to customary qualifications);
(e) Indebtedness secured by purchase money Liens incurred after the
Operation Date and otherwise permitted under Section 8.01(c);
(f) Indebtedness constituting lease obligations permitted under Section
8.04;
(g) Optional Subordinated Loans, Standby Subordinated Loans and Post-
Completion Standby Subordinated Loans in an aggregate outstanding principal
amount not to exceed at any time the sum of $5,000,000 plus the outstanding
principal amount of
51
any Optional Subordinated Loans made by Ormat pursuant to the terms of the
Development Agreement, and which bear interest at a rate not in excess of 10%
per annum; provided, that (i) any and all Optional Subordinated Loans, Standby
Subordinated Loans and Post-Completion Standby Subordinated Loans shall be
subordinated to the payment of the Eximbank Credit in accordance with the
provisions of Schedule 8.05(c) and the Collateral Trust Agreement; (ii) all
requirements of the Collateral Trust Agreement shall have been satisfied prior
to (or contemporaneous with) the incurrence thereof; and (iii) the Person making
such Optional Subordinated Loans, Standby Subordinated Loans and Post-Completion
Standby Subordinated Loans shall (if it has not previously done so) pledge
(pursuant to an instrument substantially similar in form and scope to Part D of
the Mortgage, Assignment and Pledge Agreement) and deliver to the Collateral
Trustee the executed original of the Subordinated Note or Subordinated Notes
evidencing its Optional Subordinated Loans, Standby Subordinated Loans or
Post-Completion Standby Subordinated Loans, as the case may be;
(h) Affiliated Reimbursement Obligations; and
(i) Contingent Obligations permitted under Section 8.06.
(ii) The Borrower agrees that it will not obligate itself to make
regularly scheduled payments during the period when the Eximbank Credit is
outstanding of or on any Permitted Indebtedness that is Indebtedness for
Borrowed Money other than quarterly and other than on a Permitted Payment
Date or a date occurring no earlier than eight (8) days after and no later
than fifteen (15) days after a Permitted Payment Date.
Section 8.06. Guarantees. Without limitation to the restrictions of
Section 8.05 hereof, from and after the Disbursement Date, the Borrower will not
enter into or have outstanding 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
obligation of another Person, except that, notwithstanding the restrictions of
this Section 8.06 or Section 8.05 hereof, the Borrower may enter into (a) the
Accession Undertaking, (b) Contingent Obligations set forth in the then-current
Construction Budget or Annual Budget and identified as Contingent Obligations in
any such budget so as to permit a determination of the Borrower's compliance
with this Section 8.06, (c) an obligation, not secured by any Lien, to (i)
reimburse the BOT Operation Performance Security Issuer for amounts paid to
PNOC-EDC under the BOT Operation Performance Security, provided that such
obligation is subordinated to the prior payment in full of the Eximbank Secured
Obligations on the terms set forth in Schedule 8.05(c), or (ii) reimburse Ormat
International or one or both of the Affiliated Funding Entities for Affiliated
Reimbursement Obligations, provided that such obligation is subordinated to the
prior payment in full of the Eximbank Secured
52
Obligations on the terms set forth in Schedule 8.05(c) and payment is made
solely out of funds available to the Borrower for the payment of Affiliated
Reimbursement Obligations as set forth in Section 3.02(d)(ii) of the
Disbursement Agreement, and (d) other Contingent Obligations to the extent that
the amount of all such other Contingent Obligations does not exceed, in the
aggregate, $50,000 (or the equivalent in other currency).
Section 8.07. Subsidiaries; Advances, Investments and Loans. The Borrower
will not form or have any Subsidiaries, lend money or credit or make deposits
(other than deposits in relation to the payment for goods and equipment in the
ordinary course of business) with or advances (except as specifically required
by the Construction Contract or the Supply Contract) to any Person, or purchase
or acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any other Person, except that the Borrower may
use idle cash to acquire and hold Cash Equivalents solely to give employment to
its idle resources in accordance with the Disbursement Agreement.
Section. 8.08. Transactions. From and after the Disbursement Date, the
Borrower will not (a) enter into or have in effect 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 or (b) establish or have in effect any
sole and exclusive purchasing or sales agency, or enter into any transaction
whereby the Borrower might receive less than the full ex-works commercial price
(subject to normal trade discounts) for electricity or pay more than ex-works
commercial price for products of others, provided, however, that nothing in this
Section 8.08 shall be deemed to prohibit the execution, delivery, declaring
effective and performance by the Borrower of the BOT Agreement, the Construction
Contract, the Supply Contract, the Keystone Agreement, the O&M Support
Undertaking, the Assignment and Assumption Agreement, contracts contemplated by
the O&M Parameters (including those relating to employee training and secondment
of employees), the Funding Agreement or the Lender Credit Agreement.
Section 8.09. Other Transactions. From and after the Disbursement Date,
the Borrower will not enter into or have in effect any partnership,
profit-sharing, or royalty agreement or other similar arrangement whereby the
Borrower's income or profits are, or might be, shared with any other Person, or
enter into or have in effect any management contract or similar arrangement
whereby its business or operations are managed by any other Person, provided,
however, that nothing in this Section 8.09 shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the Borrower of the
contracts contemplated by the O&M Parameters and the Funding Agreement.
Section 8.10. Modifications to Partnership Agreement of Borrow; Additional
Agreements; Assignments and Modifications of Agreements; Etc.
53
(a) The Borrower will not (i) amend or modify its Partnership Agreement or
other Organization Documents (ii) change its Fiscal Year or (iii) materially
change the nature of its present business.
(b) The Borrower will not become a party to any agreement, contract or
commitment (other than (i) (w) the agreements identified in clauses (i) through
(xiv), inclusive, (xvi), (xvii) and (xviii) of the definition of the term
Operating Agreements set forth in Schedule X hereto, but not replacements
thereof, (x) the Financing Documents, (y) agreements, contacts or commitments
contemplated by the O&M Parameters (including those relating to employee
training, secondment of employees and vehicle rentals), the then-current
Construction Budget, the then-current Annual Budget or the Funding Agreement and
(z) agreements, contracts or commitments in respect of Post-Completion Permitted
Indebtedness) which, individually, creates after the Disbursement Date an annual
financial obligation of the Borrower in excess of $75,000 (or the equivalent in
other currency) or (ii) which would cause the aggregate annual financial
obligations of the Borrower after the Disbursement Date under all agreements,
contracts and commitments (other than those specified in clauses (w) through (z)
immediately above) to which the Borrower is a party to exceed $150,000 (or the
equivalent in other currency).
(c) Except as contemplated by the Assignment and Assumption Agreement, the
Borrower shall not, directly or indirectly, terminate, cancel or suspend, or
permit or consent to any termination, cancellation or suspension of, or enter
into or consent to or permit the assignment of the rights or obligations of any
party to, any of the Project Documents; provided, however, that prior to the
Disbursement Date and without the prior written consent of the Required Secured
Parties or Eximbank the Borrower may do, permit to be done or consent to any of
the foregoing if (i) the Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is an Insurance Contract
(other than an Insurance Contract pertaining to the operation of the Power
Plant) pertaining to the construction of the Power Plant and the Administrative
Agent, after consultation with the Insurance Consultant, shall have consented
thereto or (ii) the Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is a non-material
Governmental Approval or an agreement, commitment or understanding described in
clause (xv) of the definition of the term "Operating Agreements" set forth in
Schedule X hereto and, in each case, the Administrative Agent shall have
reasonably determined that such termination, cancellation, suspension or
assignment is not reasonably likely to have a Material Adverse Effect and so
notified Eximbank. The Borrower shall not, directly or indirectly amend, modify,
supplement or waive, or permit or consent to the amendment, modification,
supplement or waiver of, or request a waiver of, any of the provisions of, or
give any consent under, any of the Project Documents (except for change orders
under the Construction Contract or the Supply Contract or Change in the Work and
54
amendments, modifications, supplements or waivers that, in any such case, have
no, or could not reasonably be expected to have any, adverse effect on the
rights, benefits, obligations or duties of the Borrower existing on or arising
after the Disbursement Date, or the current or prospective operation of any of
the Plants or the value of any of the Collateral) without first obtaining the
written consent of Eximbank to such proposed or requested amendment, supplement,
waiver, or consent (provided, however, that if in any Project Document the
consent of the Borrower to an assignment by the other party thereto cannot be
unreasonably withheld, the consent of Eximbank to such an assignment shall not
be unreasonably withheld). Notwithstanding the foregoing, the Borrower shall
not, without the prior written consent of Eximbank (i) directly or indirectly,
amend, modify, supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, (x) any provision of Article 9 of the BOT
Agreement or (y) any other provision of the BOT Agreement governing the terms
and conditions of, or the events or circumstances giving rise to the Borrower's
or PNOC-EDC's right to require, a buyout of the Power Plant (as defined in the
BOT Agreement); (ii) enter into or permit or grant any amendment or modification
of the BOT Agreement or any supplement to or waiver thereunder which is
reasonably likely to have an adverse financial impact on the Borrower
(including, without limitation, on the amounts of or timing of payments to the
Borrower under the BOT Agreement); (iii) the definitions of Guaranteed Net Plant
Steam Rate, Net Plant Steam Rate, Performance Tests, Net Deliverable Capacity
Guarantee and Reliability Guarantee, set forth in the Construction Contract; or
(iv) Exhibit E to the Construction Contract.
(d) Other than the assignment as security of the Project Documents to the
Collateral Trustee as security for the benefit of the Secured Parties, the
Borrower will not assign (except with respect to Permitted Liens) any of its
rights or obligations under any Project Document without the prior written
consent of Eximbank.
(e) The Borrower will not take any action under Article 9 of the BOT
Agreement to require a Buyout without the prior written consent of Eximbank.
(f) From and after the Disbursement Date, without the prior written
consent of Eximbank, the Borrower will not refund to PNOC-EDC (but may credit to
PNOC-EDC) any amount described in the penultimate paragraph of Section 5.4 of
the BOT Agreement.
(g) From and after the Disbursement Date, the Borrower shall not claim for
itself Force Majeure as provided in Article 14 of the BOT Agreement, Section 22
of the Construction Contract or Section 22 of the Supply Contract without the
prior written consent of Eximbank (in consultation with the Independent
Engineer).
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(i) The Borrower shall not agree to any proposed revised testing protocols
in accordance with the final paragraph of Section 13.5 of the Construction
Contract without the prior written consent of Eximbank.
Section 8.11. No Other Business. Without the prior written consent of
Eximbank and except as contemplated by Section 8.07 hereof, the Borrower 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 or the nature or scope of the Project.
Section 8.12. Abandonment. From and after the Disbursement Date, the
Borrower will not abandon or agree to abandon the Project or place it or agree
to place it on a "care and maintenance" basis for more than fourteen (14) days
in any calendar year, provided, however, that (i) nothing in this Section shall
prevent the Borrower from shut-downs necessary for repairs and maintenance at
any of the Plants or from putting any of the Plants on a "care and maintenance
basis" during any Force Majeure (as defined in the BOT Agreement) not within the
control of the Borrower which Force Majeure prevents the Borrower from
developing, constructing or operating such Plant; and (ii) nothing in this
Section 8.12 shall be deemed to waive or limit in any way the right of Eximbank
to declare an Event of Default as provided in Section 9 hereof, including
without limitation Sections 9.06 and 9.07 hereof.
Section 8.13. Improper Use. The Borrower will not use, maintain, operate
or occupy, or allow the use, maintenance, operation or occupancy of, any portion
of the Site or any Plant for any purpose:
(a) which may be dangerous, unless safeguarded as required by Applicable
Law (provided, however, that this clause (a) shall not be deemed to prohibit the
Borrower from carrying out the Project in accordance with the terms of the BOT
Agreement and the Construction Contract in a reasonable and prudent manner);
(b) which violates any Applicable Law in any material respect;
(c) which may constitute a public or private nuisance resulting in a
Material Adverse Effect;
(d) which may 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 Borrower gives proof
of payment of such increase; or
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(e) otherwise than for the intended purpose thereof in the construction,
operation and maintenance of the Plants.
Section 8.14. Budgets. From and after the Disbursement Date the Borrower
will not make expenditures in any Fiscal Year in excess of the projected annual
Operating and Maintenance Costs (including Contingent O&M Amount) set forth in
the Annual Budget for such Fiscal Year except for:
(a) emergency operating costs amounts funded with funds available to the
Borrower pursuant to payment of priorities SIXTH, SEVENTH, EIGHTH or NINTH of
Section 3.02(d)(ii) of the Disbursement Agreement and, to the extent that such
funds are not sufficient for such purpose: (i) proceeds of Unsecured Senior
Working Capital Indebtedness or Subordinated Secured Working Capital
Indebtedness permitted under Section 8.05; (ii) proceeds of Optional
Subordinated Loans or Third Party Subordinated Loans permitted under Section
8.05; (iii) proceeds of additional capital contributions to the Borrower; or
(iv) withdrawals from the Debt Reserve Cash Collateral Account permitted under
Section 3.03(b) of the Disbursement Agreement;
(b) provided no Event of Default has occurred and is continuing,
expenditures not to exceed in any Fiscal Year in the aggregate $400,000 (or the
equivalent in other currency) required as a result of casualties for which the
Borrower is, in its good faith judgment, insured; provided that (A) the Borrower
promptly files a claim or claims for reimbursement under such insurance for any
such casualty, (B) the Borrower uses its best efforts to expedite payment of
such claims, and (C) the proceeds from any such insurance claims, shall be paid
into the Contingency Account; and
(c) provided no Event of Default has occurred and is continuing,
non-budgeted payments of amounts for which the Borrower is liable to PNOC-EDC
under Article 4.11 of the BOT Agreement, not to exceed, without the consent of
the Required Secured Parties, $5,700.000.
Section 8.15. Press Releases; Advertising. If the Borrower shall issue, or
if the Borrower shall obtain knowledge that any other Person has issued, any
press release or other announcement or advertisement that refers to the
provision of financing or other support by Eximbank for the Project, the
Borrower shall promptly notify Eximbank thereof and promptly deliver to Eximbank
a copy of such press release or other announcement or advertisement.
Section 8.16. Employees and Employee Plan. The Borrower shall not adopt,
establish, maintain, sponsor, administer, contribute to, participate in, or
incur any liability under or obligation to contribute to, any Plan or incur any
liability to provide post-
57
retirement welfare benefits, except such liability to provide post-retirement
welfare benefits as required by Applicable Law.
Section 8.17. Name Changes; Etc. The Borrower shall not change its name
without the prior written consent of Eximbank. The Borrower shall not adopt or
change any trade name or fictitious business name without the prior written
consent of Eximbank. The Borrower shall execute and deliver to Eximbank and the
Collateral Trustee any additional documents or certificates necessary or
advisable to reflect any permitted adoption of or change in its name, trade name
or fictitious business name.
Section 8.18. Equity Ratio. On and after the Disbursement Date, the
Borrower shall not permit the Equity Ratio at any time to be less than 25:75
(which, for the avoidance of doubt, shall be calculated in accordance with
generally accepted accounting principles as in effect in the United States from
time to time).
Section 8.19. Payments on Subordinated Debt. Without the prior written
consent of Eximbank, the Borrower will not make any payment or delivery of
property or cash to any Person on account of any Subordinated Secured Obligation
or other subordinated debt or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any Subordinated Secured Obligations
or other subordinated debt now or hereafter outstanding, or set aside any funds
for any of the foregoing purposes collectively, "Subordinated Debt Payments")
unless:
(i) such Subordinated Debt Payment is permitted by Applicable Law;
(ii) no Default or Event of Default is then in existence (or would be in
existence after giving effect to such Subordinated Debt Payment);
(iii) such Subordinated Debt Payment is made only after the Disbursement
Date; and
(iv) such Subordinated Debt Payment is made in accordance with the
provisions of Section 3.02(d)(ii) of the Disbursement Agreement.
Section 8.20. Limitation on Sale or Re-Export of the Items. The Borrower
shall not, without the prior written consent of Eximbank, sell the Items or use
or permit the use of the Items in any country other than the Borrower's Country.
In no event shall the Borrower sell, use or permit the use of any Item in any
Excluded Country.
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SECTION 9. EVENTS OF DEFAULT
Notwithstanding anything herein or in any of the Financing Documents or
elsewhere to the contrary, upon the occurrence of any of the following events
(each of the following events, an "Event of Default"):
Section 9.01. Payment. The Borrower shall (a) default in the payment when
due of any principal of or interest on the Eximbank Note or any other amount
owing under this Agreement or the Eximbank Note, (b) default in the payment when
due (after giving effect to any grace periods provided in the relevant Financing
Document) of any principal of or interest on, or any other amount owing under,
any other Financing Document save for any default arising by reason of a failure
of the Collateral Trustee to make any payment where funds are available and
payable pursuant to the Disbursement Agreement to meet such payment; or
Section 9.02. Representations, Etc. Any representation or warranty
confirmed or made in any Project Document by the Borrower or any Obligor which
is an Affiliate of the Borrower, or in any writing provided by any of the them
in connection with the execution and delivery of, or in connection with any
disbursement under any of the Lender Credit Agreement or this Agreement or for a
payment of monies from any Account by the Collateral Trustee, shall be found to
have been incorrect in any material respect when made or deemed to be made and,
if remediable, shall continue to be incorrect for a period of thirty (30) days
after note thereof shall have been given to the Borrower by Eximbank; or
Section 9.03. Covenants. (a) The Borrower shall fail to perform or observe
any covenant, term or agreement contained in Sections 2.01 (Amount of the
Eximbank Credit; Use of Proceeds), 7.03 (Maintenance of Property; Insurance),
7.14 (Debt Reserve Cash Collateral Account), 8.01 (Liens), 8.02 (Consolidation,
Merger, Sale of Assets, Etc.), 8.03 (Dividends; Restricted Payments), 8.04
(Leases), 8.05 (Indebtedness), 8.06 (Guarantees), 8.07 (Subsidiaries; Advances,
Investments and Loans), 8.10(a), (f) and (g) (Modifications to Partnership
Agreement of Borrower; Additional Agreements; Assignments and Modifications of
Agreements; Etc.), 8.11 (No Other Business); 8.18 (Equity Ratio); Section 8.19
(Payments on Subordinated Debt); or
(b) The Borrower or any Obligor which is an Affiliate of the Borrower
shall fail to perform or observe any other covenant, term or agreement contained
in this Agreement or any other Project Document and such failure shall not be
remediable or, if remediable, shall continue unremedied for a period of thirty
(30) days after the earlier of (i) the date on which such failure shall have
first become known to the Borrower and (ii) the date on which written notice
thereof shall have been received by the Borrower from Eximbank; provided that if
(A) such failure cannot be cured within such thirty (30)
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day period, (B) such failure in the reasonable judgment of the Independent
Engineer or Eximbank is susceptible of cure, (C) the Borrower is proceeding with
diligence and in good faith to cure such failure, (D) the existence of such
failure in the reasonable judgment of Eximbank has not had and is not reasonably
likely to have a Material Adverse Effect and (E) Eximbank shall have received an
officer's certificate signed by a Financial Officer of the Borrower to the
effect of clauses (A), (B) and (C) above, certifying that the existence of such
failure has not had and is not reasonably likely to have a Material Adverse
Effect and stating what action the Borrower is taking to cure such failure,
then, such thirty (30) day cure period shall be extended by up to an additional
sixty (60) days as shall be necessary for the Borrower diligently to cure such
failure; or
Section 9.04. Default Under Other Agreements. (a) The Borrower shall (i)
default in any payment of any Indebtedness For Borrowed Money (other than as
provided in Section 9.01) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed Money was
created or (ii) default (other than in the manner referred to in clause (i)) in
the observance or performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than as provided in Section 9.01) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
such default or other event or condition is to (x) cause any such Indebtedness
For Borrowed Money to become due prior to its stated maturity or (y) if such
Indebtedness For Borrowed Money ranks pari passu in right of payment with the
Eximbank Secured Obligations, permit the Person to whom such Indebtedness For
Borrowed Money is owed to declare the same due and payable prior to the stated
maturity thereof; or
(b) any Indebtedness For Borrowed Money of the Borrower 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
(c) any Obligor (other than PNOC-EDC, Ormat and the BOT Operation
Performance Security Issuer) shall (i) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding the
equivalent of $2,000,000 beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed Money was
created or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding the equivalent of $2,000,000 or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity; or
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(d) Ormat shall (i) default in any payment of any Indebtedness For
Borrowed Money in an aggregate principal amount exceeding $4,000,000 beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness For Borrowed Money was created or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness For Borrowed Money in an aggregate principal amount exceeding
$4,000,000 or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause any such Indebtedness
For Borrowed Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause (d) shall
occur after the date on which Ormat shall cease to be an Obligor, the occurrence
of such event or events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence of such
event or events has had or is reasonably likely to have a material adverse
effect on the operations, business, condition (financial or otherwise) or
property of the Borrower; or
(e) any indebtedness For Borrowed Money in an aggregate principal amount
exceeding the equivalent of $2,000,000 of any Obligor (other than PNOC-EDC,
Ormat and the BOT Operation Performance Security Issuer), or any Indebtedness
for Borrowed Money in an aggregate principal amount exceeding $4,000,000 of
Ormat, 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, and, if such Obligor is the Construction Supplier, the existence of
such Indebtedness For Borrowed Money that has been declared due and payable
prior to the stated maturity thereof, in the reasonable judgment of Eximbank,
has had or is reasonably likely to have a Material Adverse Effect; provided,
however, that if one or more of the events described in this clause (e) with
respect to the Indebtedness For Borrowed Money of Ormat or Ormat International,
as the case may be, shall occur after the date on which Ormat or Ormat
International, as the case may be, shall cease to be an Obligor, the occurrence
of such event or events shall not be deemed an Event of Default unless, in the
reasonable judgment of Eximbank, the occurrence of such Event or events has had
or is reasonably likely to have a Material Adverse Effect; or
(f) a default shall have occurred in the performance of any material
obligation by (i) any Obligor (other than the BOT Operation Performance Security
Issuer) or the Republic under any of the Project Documents to which such Person
is a party and such default shall continue unremedied beyond the period of
grace, if any, extended to such Person with respect to such default, as
specified in the Project Document under which such obligation was created or
(ii) any other party (other than the Persons referred to in clause (i) of this
Section 9.04(f)) under any of the Project Documents and the existence of such
default in the reasonable judgment of Eximbank has had or is reasonably likely
to have a Material Adverse Effect (and has not been cured within 60 days); or
61
Section 9.05. Bankruptcy, Etc. (a) There shall have been entered against
the Borrower or any Obligor (other than the BOT Operation Performance Security
Issuer or PNOC-EDC) a decree or order by a court adjudging the Borrower or such
Obligor bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Borrower or such Obligor under any Applicable Law; or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Borrower or such Obligor or of any substantial part of its property or other
assets, or ordering the winding up or liquidation of its affairs, or the
institution by the Borrower or such Obligor of 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 any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Borrower or any such Obligor 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 subsection with respect to the Borrower or any such Obligor; or
any corporate action is taken by the Borrower or any such Obligor for the
purpose of effecting any of the foregoing; provided that any reorganization or
reconstruction of a company while solvent with the prior consent of Eximbank
shall not be held to constitute any event mentioned in this paragraph; and
provided, further, that in connection with any Obligor, no Event of Default
shall be declared under this Section 9.05 if (x) such Person has fully complied
and continues to fully comply with all of its obligations under all Project
Documents to which such Person is a party and (y) in the reasonable judgment of
Eximbank, such Event of Default has not had and is not reasonably likely to have
a Material Adverse Effect; or
(b) The General Partner shall convene a meeting of creditors, or shall
convene a meeting of its board of directors (or such other applicable
controlling body or persons) to determine whether to commence voluntary
bankruptcy proceedings; or
Section 9.06. Project Events. (a) The Borrower shall cease to have the
right to possess and use all or any portion of the Site; or
(b) any event shall have occurred which entitles the Borrower or PNOC-EDC
to give a notice under Section 9.1 of the BOT Agreement; or
(c) the Borrower shall (except as permitted by Section 8.02 hereof) sell
or otherwise dispose of any of its interest in the Project; or
62
(d) an event or circumstance described in subclause (a), (b), (c) or (d)
of Section 15.4.1 of the BOT Agreement shall have occurred, it being understood
that for purposes of this Section 9.06(d), the words "one-hundred twenty (120)"
or "120" contained in subclauses (b) and (c) of Section 15.4.1 of the BOT
Agreement shall be replaced with the words "sixty (60)" in each place where such
words appear and the words "one hundred fifty (150)" or "150" contained in
subclause (d) of Section 15.4.1 of the BOT Agreement shall be replaced by the
words "ninety (90)" in each place where such words appear; or
(e) an event or circumstance described in subclause (a), (b) or (c) of
Section 15.4.2 of the BOT Agreement shall have occurred, it being understood
that for purposes of this Section 9.06(e), the words "one-hundred twenty (120)"
contained in subclauses (b) and (c) of Section 15.4.2 of the BOT Agreement shall
be replaced with the words "sixty 60" in each place where such words appear; or
(f) the Borrower shall have received notice from PNOC-EDC under Section
15.2(c) of the BOT Agreement and shall have failed to cure the underlying BOT
Agreement default giving rise to such notice within 15 days after Borrower's
receipt thereof; provided, however, that if following the receipt of such notice
and prior to Eximbank taking action pursuant to an Event of Default under this
Section 9.06(f), (i) the Borrower and PNOC-EDC shall have agreed in writing to
one or more fixed extensions of the period provided for in Section 15.2(c) of
the BOT Agreement and (ii) the Borrower shall have provided Eximbank, in the
case of each such extension, with an opinion of Philippine counsel reasonably
satisfactory to Eximbank to the effect that such extension is legal, valid,
binding and enforceable, then an Event of Default under this Section 9.06(f)
shall have occurred only if the Borrower shall have failed to cure the
underlying BOT Agreement default giving rise to such notice from PNOC-EDC on or
prior to the date falling 15 days prior to the expiry of any such extended
period; or
Section 9.07. Material Adverse Effect. One or more events, conditions or
circumstances (including without limitation Force Majeure as defined in Sections
14.1(a) and 14.1(b) of the BOT Agreement) shall exist or shall have occurred
which, in the reasonable judgment of Eximbank is reasonably likely to have a
Material Adverse Effect; or
Section 9.08. Project Documents; Security Document. (a) This Agreement or
any of the other Financing Documents or any of the BOT Agreement, the Supply
Contract, the Construction Contract, the Keystone Agreement or any provision
hereof or thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other than Eximbank or any Lender Financing Secured Party) shall
so assert, or (ii) ceases to be in full force and effect, or shall cease to give
the Secured Parties the Liens, rights, powers
63
and privileges purported to be created thereby or hereby or any party thereto
(other than Eximbank or any Lender Financing Secured Party) shall so assert; or
(b) any of the Project Documents (other than the Financing Documents or
any of the BOT Agreement, the Supply Contract, the Construction Contract or the
Keystone Agreement) or any material provision thereof (i) is or becomes invalid,
illegal or unenforceable or any party thereto (other than Eximbank or any Lender
Financing Secured Party) shall so assert, and such default shall have continued
for a period of thirty (30) days after notice thereof shall have been given to
the Borrower by Eximbank, or (ii) ceases to be in full force and effect, or
shall cease to give the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby such that the interests of the Secured Parties
are adversely affected to a material extent; or
(c) except as permitted by Section 8.01 hereof, the Security or any
component part thereof for any reason fails to constitute a valid and perfected
first priority Lien or ceases to be in full force and effect or the Borrower or
the grantor or pledgor thereof shall so assert; or
Section 9.09. Ownership of the Borrower. (a) Orleyte Company shall cease
to be the sole general partner of the Borrower; or
(b) Ormat shall cease to maintain Control (as defined below) of the
Borrower or Orleyte Company or, without the prior written consent of Eximbank,
one or more sales or other transfers, directly or indirectly, of any limited
partnership interest in the Borrower, shall have occurred such that, after
giving effect thereto, either (x) Ormat would own, directly or indirectly, less
than 66 2/3% of the aggregate partnership interests in the Borrower free and
clear of all Liens (other than the Liens created by the Security Documents) or
(y) Ormat and any of its Affiliates would have received, directly or indirectly,
aggregate gross proceeds on account of the sale or other transfer of limited
partnership interests of the Borrower exceeding an amount equal to 40% of the
capitalization of the Borrower as at the Disbursement Date (for purposes of this
Section 9.09, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, including operating and maintenance decisions, whether through ownership
of voting interests, by contract, or otherwise); or
(c) The Borrower shall, without the prior consent of Eximbank, permit or
suffer to occur any sale, assignment or transfer of any limited partnership
interest in the Borrower, or issue or have outstanding any securities
convertible into or exchangeable for limited partnership interests in the
Borrower or issue or grant or have outstanding any rights to subscribe for or to
purchase, or any options or warrants for the purchase of, or any agreements,
arrangements or understandings providing for the issuance (contingent
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or otherwise) of, or any calls, commitments or claims of any character relating
to any limited partnership interest in the Borrower; provided, however, that, if
at all times 100% of the general and limited partnership interests in the
Borrower remain subject to a Lien in favor of the Collateral Trustee pursuant to
the terms of the Mortgage, Assignment and Pledge Agreement (or any similar
security document acceptable to Eximbank) and the Collateral Trustee remains in
possession of all of the certificates evidencing partnership interests in the
Borrower together with undated transfer powers endorsed in blank, an Event of
Default shall not be deemed to have occurred under this Section 9.09(c) if (i)
at any time after the date hereof Orleyte Company sells, assigns or transfers
limited partnership interests in the Borrower representing not more than 10% of
the aggregate partnership interests in the Borrower to each of (x) Itochu
pursuant to the terms of the Itochu MOU and (y) EPDCI (or an Affiliate thereof)
on terms no less favorable to Ormat and its Affiliates than those in the Itochu
MOU and (ii) at any time from and after the Disbursement Date (A) any sale,
assignment or transfer referred to in this Section 9.09(c), (B) full dilution of
the limited partnership interests in the Borrower by the methods noted above in
this Section 9.09(c) or (C) any combination thereof would not have the effect of
reducing below 66 2/3% the aggregate direct or indirect ownership of Ormat in
the Borrower; or
Section 9.10. Judgments. One or more judgments or decrees shall be entered
(i) against the Borrower or any Partner involving in the aggregate a liability
not paid or fully covered by insurance) of $2,000,000 or more; or (ii) prior to
the date on which Ormat shall cease to be an Obligor, against Ormat involving in
the aggregate a liability (not paid or fully covered by insurance) of $4,000,000
or (ii) prior to the date on which Ormat International shall cease to be an
Obligor, against Ormat International involving in the aggregate a liability (not
paid or fully covered by insurance) of $2,000,000 or more; or (iv) prior to the
date on which the Construction Contractor shall cease to be an Obligor, against
the Construction Contractor involving in the aggregate a liability (not paid or
fully covered by insurance) of $2,000,000 or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is reasonably
likely to have a Material Adverse Effect; or (v) prior to the date on which the
Construction Supplier shall cease to be an Obligor, against the Construction
Supplier involving in the aggregate a liability (not paid or fully covered by
insurance) of $2,000,000 or more, which liability, in the reasonable judgment of
the Required Secured Parties, has had or is reasonably likely to have a Material
Adverse Effect; or (vi) prior to the date on which any other Obligor ceases to
be an Obligor, against such Obligor involving in the aggregate a liability (not
paid or fully discharged by insurance) of $2,000,000 or more, which liability in
the reasonable judgment of the Required Secured Parties has had or is likely to
have a Material Adverse Effect; and in any such case all such judgments or
decrees shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days after the entry thereof; or
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Section 9.11. Governmental Action. Any government or Governmental
Authority shall have condemned, nationalized, seized, or otherwise expropriated
all or any substantial part of the property or other assets of the Borrower or
of its general or limited partnership interests or shall have assumed custody or
control of such property or other assets or of the business or operations of the
Borrower or of its general or limited partnership interests or shall have taken
any action for the dissolution or disestablishment of the Borrower or any action
that would prevent the Borrower or its officers from carrying on its business or
operations or a substantial part thereof; or
Section 9.12. Permits. The Borrower or any Obligor shall fail to obtain,
renew, maintain or comply in all material respects with any Governmental
Approval set forth in Schedule 5.01(t) hereof or any license, approval or
consent referred to in Section 5.2(c) of the Lender Credit Agreement; or any
such Governmental Approval or license, approval or consent shall be rescinded,
terminated, suspended, modified or withheld or shall be determined to be invalid
or shall cease to be in full force and effect; or any proceeding shall be
commenced by or before any Governmental Authority for the purpose of rescinding,
terminating, suspending, modifying or withholding any such Governmental Approval
or license, approval or consent and such proceeding is not dismissed within 60
days; and such failure, rescission, determination of invalidity, termination,
suspension, modification, withholding, cessation or commencement is reasonably
likely to have a Material Adverse Effect; or
Section 9.13. Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (a) Title to or any right in all or any part of (i) the
Mortgage Collateral, (ii) any of the Plants or (iii) any other collateral
purported to be covered by the Security Documents (other than as permitted
pursuant to this Agreement, including Section 8.02 hereof) shall become vested
in any party other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or otherwise, or (iv)
there shall have occurred an Event of Loss; or
(b) Except as otherwise permitted pursuant to this Agreement, the Borrower
hereafter grants any easement or dedication, files any plat, declaration or
restriction or enters into any lease or sub-lease concerning the Site or any
portion thereof, the Mortgage Collateral or any of the Plants and the effect
thereof is determined by Eximbank, in its reasonable discretion, to be material
and adverse to the Site or such portion, the Mortgage Collateral, such Plant or
Plants or the Borrower; or
Section 9.14. Regulatory Status. The Borrower shall fail to remain
continuously exempt from all regulation under PUHCA as a result of being a
"foreign utility company" under Section 33 of PUHCA or otherwise; or
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Section 9.15. ERISA. Any of the following events occur or exist with
respect to the Borrower or, in the case of (a) through (e) below, any ERISA
Affiliate: (a) any Termination Event with respect to any Plan; (b) any event or
circumstance that is reasonably likely to constitute grounds entitling the PBGC
to institute proceedings under Section 4042 of ERISA for the imposition of
liability in respect of any Pension Plan (other than a liability to the PBGC for
insurance premiums the payment of which is not yet due); (c) any Pension Plan
shall have an accumulated funding deficiency as defined in Section 412 of the
Code or Section 302 of ERISA; (d) any Plan intended to be qualified under
Section 401(a) or 401(k) of the Code shall be disqualified; (e) any Plan shall
be subject to an excise tax pursuant to Code Section 4980B or shall fail to
comply with Sections 601-606 (inclusive) of ERISA; (f) the Borrower provides
employee welfare benefits to retirees other than statutorily required or
pursuant to Section 601 et seq. of ERISA and Section 4980B of the Code; or (g)
the Borrower incurs liability under or relating to any Plan resulting from a
violation of ERISA, the Code and/or any other applicable law, including without
limitation the Age Discrimination in Employment Act, the Americans With
Disabilities Act and Title VII of the Civil Rights Act, each as amended; and in
each case above, such event or condition, individually or in the aggregate,
together with all other such events or conditions, if any, is reasonably likely
to subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate has had or is reasonably likely to have a Material Adverse Effect;
or the Borrower or any ERISA Affiliate shall fail to pay when due an amount or
amounts which it shall have become liable to pay under Title IV or ERISA or as a
contribution to a Pension Plan and/or Multiemployer Plan which, as a result, has
had or is reasonably likely to have a Material Adverse Effect; or
Section 9.16. Funding Agreement. Ormat International, Inc. shall fail to
cause the Affiliated Funding Entities to make any Post-Completion Standby
Subordinated Loan or Post-Completion Standby Equity Contribution or shall fail
to cause the Affiliated Funding Entities to pay any amount required to be paid
by either of them under, or otherwise to comply with any of the terms of, the
Funding Agreement required to be performed after the Eximbank Disbursement Date;
provided that no Event of Default under this Section 9.16 shall be declared as a
result of any such failure of the Affiliated Funding Entities to make a
Post-Completion Standby Subordinate Loan or a Post-Completion Standby Equity
Contribution if within 30 days after such failure Ormat shall have paid all such
defaulted amounts pursuant to the terms of the Post-Completion Ormat Guaranty;
then, (a) in the event that an Event of Default described in Section 9.01(a)
with respect to any amount owing to Eximbank shall occur and be continuing on or
prior to the Disbursement Date, Eximbank shall have the right to suspend
disbursement of the Eximbank Credit in accordance with Section 4.03(a), and (b)
in the event that any Event
67
of Default (including any Event of Default described in Section 9.01(a) with
respect to any amount owing to Eximbank) shall occur, and at any time
thereafter, if such Event of Default is continuing on and/or after the
Disbursement Date, Eximbank shall have the right to (i) take any actions
necessary to cure such Event of Default and/or declare an Event of Default, (ii)
declare, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by Borrower, the entire amount of Borrower's
outstanding Eximbank Secured Obligations to be immediately due and payable,
irrespective of any other provision of any Financing Document, whereupon the
same shall be and become immediately due and payable (provided that if an Event
of Default specified in Section 9.05 shall have occurred or a Buyout shall have
occurred, the entire amount of Borrower's outstanding Eximbank Secured
Obligations shall be automatically immediately due and payable without any
declaration, presentment, demand, protest or notice or other act of any kind by
Eximbank or any of the other Secured Parties whatsoever), and (iii) proceed to
enforce or cause or instruct the Collateral Trustee to enforce any remedies
provided under any of the Financing Documents. If an event or occurrence
constitutes an Event of Default or Default under more than one of the provisions
of this Section 9, Eximbank may during the continuance of such Event of Default
take all actions and remedies provided hereunder upon expiration of the shortest
grace period, if any, applicable to such Default or Event of Default.
SECTION 10. GOVERNING LAW AND JURISDICTION
Section 10.01. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, 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 CONFLICT OF LAWS RULES THEREOF.
Section 10.02. Submission to Jurisdiction; Service of Process. (a) The
Borrower irrevocably agrees that any legal action or proceeding against the
Borrower with respect to this Agreement, the Eximbank Note or any Financing
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 Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower agrees
that a judgment, after exhaustion of all available appeals, in any such action
or proceeding shall be conclusive and binding upon the Borrower, and may be
enforced in any other jurisdiction, including without limitation the Republic,
by a suit upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. The Borrower hereby irrevocably designates, appoints
and empowers CT Corporation System, with offices on the date hereof at 0000
Xxxxxxxx, Xxx Xxxx, Xxx
00
Xxxx 00000, 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 Borrower 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 Eximbank, advise Eximbank
thereof, and deliver to Eximbank evidence in writing of the successor agent's
acceptance of such appointment. The Borrower 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 Borrower, at its address set forth opposite its
signature below, such service to become effective 30 days after such mailing.
The foregoing provisions constitute, among other things, a special arrangement
for service between the parties to this Agreement for the purposes of 28 U.S.C.
(section) 1608. Nothing herein shall affect the right of the Collateral Trustee
or Eximbank to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in the Republic or
in any other jurisdiction.
(b) The Borrower 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, the Eximbank
Note or any other Financing 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 10.03. Waiver of Sovereign Immunity. The Borrower acknowledges and
agrees that the activities contemplated by the provisions of this Agreement, the
Eximbank Note and the Financing Documents are commercial in nature rather than
governmental or public, and therefore acknowledges and agrees that it is not
entitled to any right of immunity on the grounds of sovereignty or otherwise
with respect to such activities or in any legal action or proceeding arising out
of or relating to this Agreement, the Eximbank Note or the other Financing
Documents. The Borrower, in respect of itself, its process agents, and its
properties and revenues, expressly and irrevocably waives any such right of
immunity which may now or hereafter exist (including any immunity from any legal
process, from the jurisdiction of any court or from any execution or attachment
in aid of execution prior to judgment or otherwise) or claim thereto which may
now or hereafter exist, and agrees not to assert any such right or claim in any
such action or proceeding, whether in the United States or otherwise.
69
SECTION 11. MISCELLANEOUS
Section 11.01. Transportation. All items which are financed under the
Eximbank Credit and which are exported by ocean vessel must be transported from
the United States in vessels of U.S. Registry as required by 46 U.S.C.
(section)1241-1 (Public Resolution No. 17 of the 00xx Xxxxxxxx xx xxx Xxxxxx
Xxxxxx, as amended), except to the extent that a waiver of this requirement is
obtained from the U.S. Maritime Administration ("MARAD"). If shipments are made
on non-U.S. vessels without a waiver or contrary to the provisions of the
waiver, the Items will not be eligible for financing under the Eximbank Credit
or for coverage under the Eximbank Guaranty Agreement.
Section 11.02. Transportation Costs. The costs of ocean or air freight for
shipment of any item on a vessel or aircraft of non-U.S. registry pursuant to a
waiver from MARAD will constitute Foreign Cost associated with such Item if such
costs are included in the Contract Price of such Item. If such freight costs are
for shipment of an Item on a vessel or aircraft of U.S. registry, such costs
will constitute U.S. Content.
Section 11.03. Insurance. The Borrower shall obtain insurance against
marine and transit hazards on all shipments of the Items in an amount not less
than the amount of the Disbursements made with respect to those shipments.
United States insurers shall be given a nondiscriminatory opportunity to bid for
such insurance business related to the Items. The cost of the premiums for such
insurance may be included in the U.S. content of the insured Item if the
insurance is placed in the United States with a United States company. In all
other cases, the cost of the premiums shall be included in the Foreign Cost
associated with the Item.
Section 11.04. Disposition of Indebtedness. Eximbank may sell, transfer,
pledge, negotiate, grant participations in or otherwise dispose of all or any
part of the Borrower's indebtedness under this Agreement and the Eximbank Note
to any party, and any such party shall enjoy all the rights and privileges of
Eximbank under this Agreement and the Eximbank Note. The Borrower shall, at the
request of Eximbank, execute and deliver to Eximbank or to any party that
Eximbank may designate any such further instruments as may be necessary or
desirable to give full force and effect to the disposition by Eximbank.
Notwithstanding anything to the contrary contained herein, the Borrower may not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of Eximbank.
Section 11.05. Taxes. (a) The Borrower agrees to pay all amounts owing by
it to Eximbank under this Agreement, the Eximbank Guarantee Agreement, the
Eximbank Note or any other Financing Document free and clear of and without
deduction for any Taxes. The Borrower further agrees:
70
(i) that if it is prevented by operation of law from paying any Taxes,
then the interest rate or fees required to be paid under this Agreement, the
Eximbank Guarantee Agreement, the Eximbank Note or any other Financing Document
shall increase by the amount necessary to yield to Eximbank interest, fees or
expenses in the amounts provided for in this Agreement, the Eximbank Guarantee
Agreement, the Eximbank Note or such other Financing Document after provision
for the payment of all such Taxes;
(ii) that it shall at the request of Eximbank execute and deliver to
Eximbank such further instruments as may be necessary or desirable to effect the
increased in the interest or fees as provided for in clause (i) immediately
above, including new Eximbank Notes to be issued in exchange for any Eximbank
Note previously issued;
(iii) that it shall hold Eximbank harmless from and against any
liabilities with respect to any such Taxes (whether or not properly or legally
asserted);
(iv) to provide Eximbank with the original or a certified copy of evidence
of the payment of any Taxes by the Borrower as Eximbank may reasonably request,
or, if no Taxes have been paid, to provide Eximbank, at Eximbank's request, with
a certificate from the appropriate taxing authority or an opinion of counsel
acceptable to Eximbank stating that no Taxes are payable.
(v) In the event that it is necessary for Eximbank to cooperate with the
Borrower in order for the Borrower to fulfill its obligations under this Section
11.05, Eximbank shall cooperate to the extent necessary, provided Eximbank shall
incur no expense or other liability in connection therewith.
(b) In the event Eximbank assigns or transfers its rights, title and
interest under this Agreement to a Person which is not a Person entitled to tax
exemptions on its assets, revenues and operations substantially similar to the
tax exemptions applicable to Eximbank, then the definite n of "Taxes" applicable
to such Person for purposes of this Agreement shall be the definition of
"Covered Taxes" set forth herein.
Section 11.06. Disclaimer. Eximbank shall not be responsible in any way
for the performance of the Purchase Contracts, and no claim against the supplier
of any Item or any other person with respect to the performance of the Purchase
Contracts will affect the obligations of the Borrower under this Agreement, the
Eximbank Note or any Financing Document.
Section 11.07. Indemnities and Expenses. (a) The Borrower shall, whether
or not the transactions herein contemplated are consummated, pay the reasonable
fees and expenses of the Independent Enginier, the Insurance Consultant, Winston
& Xxxxxx, special counsel to Eximbank, and Xxxxxxxx Xxxxx Tan Panteleon & San
Xxxx, special
71
Philippine counsel to Eximbank and the law firms referred to in Sections 5.01(b)
and 5.02(b), and all reasonable costs and expenses incurred by Eximbank,
incurred in connection with (i) the preparation, printing, execution, delivery,
administration, registration (where appropriate) or enforcement of this
Agreement, the Eximbank Note, the Eximbank Guarantee Agreement and the other
Financing Documents and any other documents related thereto (including the Legal
Opinions); (ii) any amendment or modification to, preservation of rights under,
or waiver in connection with, the Financing Documents or any such other
document; and (iii) the registration (where appropriate) and the delivery of the
evidences of Indebtedness relating to the Eximbank Credit and the Disbursement
thereof.
(b) The Borrower Shall, whether or not the transactions herein
contemplated are consummated, (i) pay and hold Eximbank harmless from and
against any and all present and future stamp and other similar taxes and
documentary or registration fees with respect to the matters referred to in the
foregoing clause (a) and save Eximbank harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to Eximbank) to pay such taxes or fees; and (ii)
indemnify Eximbank and each of its respective officers, directors, employees,
representatives, attorneys and agents from and hold each of them harmless
against any and all liabilities 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 Eximbank is a party thereto)
related to the entering into and/or performance of this Agreement, the Eximbank
Note, the Eximbank Guarantee Agreement or any other Project Document or the use
of the proceeds of the Eximbank Credit or the consummation of any transactions
contemplated herein or in any other Project Document, including, without
limitation, the reasonable 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 11.07(b) (but excluding any such liabilities, obligations or losses, to
the extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified or its officers, directors, employees,
representatives, attorneys or agents, as the case may be as determined by a
court of competent jurisdiction). Without limitation to the foregoing provisions
of this paragraph, the indemnity provided hereunder shall cover any loss,
liability or expense reasonably incurred other than by reason of gross
negligence or wilful misconduct on behalf of Eximbank arising out of or in
connection with claims by third parties (including without limitation any Lender
or the Administrative Agent) to whom a copy of the Information Memorandum has
been distributed with the knowledge of the Borrower against Eximbank relating to
any alleged inaccuracy of the factual information (taken as a whole) which, for
the avoidance of doubt shall not include any information by way of projections,
estimates or other expressions of view as to future circumstances (provided that
such projections, estimates or other expressions of view are
72
expressed in good faith and on the basis of assumptions which when made were
viewed by the Borrower in good faith to be reasonable) contained in, or any
alleged omission of information which will render such aforesaid factual
information (taken as a whole) inaccurate or misleading in a material respect
from, the Information Memorandum and the Project Documents. Eximbank shall (1)
use reasonable efforts to, upon its becoming aware of any event which may result
in the Borrower being required to perform any of its indemnity obligations under
this paragraph (b), promptly notify the Borrower (provided that failure to so
notify shall not mitigate the obligations of the Borrower hereunder), (2) upon
request from the Borrower consult with the Borrower regarding any step
(including any step which may mitigate the effect of such event) it proposes to
take in respect of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims, actions or
suits.
(c) Without limitation to the provisions of paragraph (b) above, the
Borrower agrees to defend, protect, indemnify and hold harmless Eximbank and
each of its officers, directors, employees, representatives, attorneys and
agents from and hold each of them harmless against any and all liabilities
(including removal and remedial actions), obligation, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and disbursements)
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 any of the Plants or any portion of the Site, (ii) any
Environmental Claim relating to the Borrower or the Project or arising out of
the use of any of the Plants or any portion of the Site, or (iii) the exercise
of Eximbank's rights under any of the provisions of this Section regardless of
when any such matters arise, but excluding any matter based solely on the gross
negligence or willful misconduct of Eximbank or its officers, directors,
employees, representatives, attorneys or agents, as the case may be. Eximbank
shall (1) use reasonable efforts to, upon its becoming aware of any event which
may result in the Borrower being required to perform any of its obligations
under this paragraph (c), promptly notify the Borrower (provided that failure to
so notify shall not mitigate the obligations of the Borrower hereunder), (2)
upon request from the Borrower consult with the Borrower regarding any step
(including any step which may mitigate the effect of such event) it proposes to
take in respect of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims, actions or
suits.
(d) To the extent that the undertaking in the preceding paragraphs of this
Section may be unenforceable because it is violative of any law or public
policy, the Borrower will contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of such
undertakings.
73
(e) All sums paid and costs incurred by Eximbank with respect to any
matter indemnified hereunder shall bear interest at the default rate applicable
to the Eximbank Credit from the date so paid or incurred until reimbursed by the
Borrower, and all such sums and costs shall be added to the debt and be secured
by the Security Documents and shall be immediately due and payable on demand.
Section 11.08. 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, Eximbank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower 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 Eximbank to or for the credit or the account of the
Borrower against and on account of the Eximbank Secured Obligations and
liabilities of the Borrower to Eximbank under this Agreement or under any of the
other Financing Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Financing Document,
irrespective of whether or not Eximbank shall have made any demand with respect
thereto.
Section 11.09. 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, except that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Eximbank.
Section 11.10. No Waiver; Remedies Cumulative. No failure or delay on the
part of Eximbank in exercising any right, power or privilege hereunder or under
any other Financing Document and no course of dealing between the Borrower and
Eximbank 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 Financing 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 in any other
Financing Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which Eximbank would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Eximbank to any other or further action in any
circumstances without notice or demand.
Section 11.11. Severability. Any provision of this Agreement, the Eximbank
Note and any other Financing Document 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
74
Agreement, the Eximbank Note or any Financing Document or affect such provision
in any other jurisdiction.
Section 11.12. English Language. All documents to be furnished or
communications to be given or made under this Agreement or any other Financing
Document shall be in the English language.
Section 11.13. Calculations; Computations. All financial calculations to
be made under, or for the purposes of, this Agreement shall be determined in
accordance with Philippine generally accepted accounting principles, applied on
a consistent basis and, except as otherwise required to conform to the
definitions contained in Schedule X or any other provisions of this Agreement,
shall be calculated from the then most recently issued quarterly financial
statements which the Borrower is obligated to furnish to Eximbank 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 Eximbank, 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 Borrower 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 11.14. Survival. All indemnities set forth herein shall survive
the execution and delivery of this Agreement and the Eximbank Note, the
execution, delivery and termination of the Eximbank Guarantee Agreement, and the
making and repayment of the Eximbank Credit.
Section 11.15. Amendments. No term or provision of this Agreement may be
amended, changed, modified or waived except by an instrument in writing signed
by the party against whom such amendment, change, modification or waiver is
sought to be enforced.
Section 11.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section. 11.17. Notices. Except as otherwise expressly provided herein,
(a) all notices and other communications provided for hereunder shall be
provided in writing (including telegraphic, telex, facsimile or cable
communication) and shall be sent by telecopy, telex, telegraph or cable with the
original of such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not available,
by registered airmail (or, if inland, registered first-class mail) with
75
postage prepaid to the Borrower, the Collateral Trustee and Eximbank at their
respective addresses specified below, or at such other address as shall be
designated by such party in a written notice to the other parties hereto and (b)
all such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective seven (7) days
after being deposited in the mails in the manner as aforesaid, when delivered to
the telegraph company or cable company (if inland), one (1) day or (if overseas)
three (3) days after delivery to a courier in the manner as aforesaid, as the
case may be, or when sent by telex (with the correct answer back) or telecopier:
Addresses:
If to the Borrower:
ORMAT LEYTE CO. LTD.
Solid Bank Building
8th Floor
000 Xxxxx xx Xxxxx
Xxxxxx Xxxx 0000
Xxxxxxxxxxx
Attn: President
Tel: 000-000-000-0000
Fax: 000-000-000-0000
and with copies to:
ORMAT INTERNATIONAL, INC.
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy of any notice relating to a dispute to:
Xxxxxx X. Xxxxx
Xxxxxxx Coie
0000 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
76
If to Eximbank:
EXPORT-IMPORT BANK OF THE UNITED STATES
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
X.X.X.
Attn: Vice President-
Project Finance (AP069721-Philippines)
Tel: (000) 000-0000
Fax: (000) 000-0000
Telex: RCA 248460 EXBK UR
TRT 197681 EXIM UT
WUI 64319 XXXXXXX
XXX 00000 EXIBANK WSH
with a copy of each notice to:
Winston & Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Administrative Partner
(U.S. Eximbank -- Leyte Field Project)
Tel: (000) 000-0000
Fax: (000) 000-0000
Section 11.18. Judgment Currency. All payments of principal, interest,
fees or other amounts due to Eximbank under this Agreement, the Eximbank Note or
any other Financing Document shall be made in Dollars, regardless of any law,
rule, regulation or statute, whether now or hereafter in existence or in effect
in any jurisdiction, which affects or purports to affect such obligations. The
obligation of the Borrower in respect of any amount due under this Agreement,
the Eximbank Note or any other Financing Document, notwithstanding any payment
in any other currency (whether pursuant to a judgment or otherwise), shall be
discharged only to the extent of the amount in Dollars that the Person entitled
to receive that payment may, in accordance with normal banking procedures,
purchase with the sum paid in that other currency (after any premium and costs
of exchange) on the Business Day immediately succeeding the day on which that
Person receives that payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Borrower shall pay
such additional amounts, in Dollars, to compensate for the shortfall. Any
obligation of the Borrower not discharged by that payment shall continue to be
due as a separate and
77
independent obligation and shall accrue interest in accordance with Section 3.02
until discharged as provided herein.
Section 11.19. 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 11.20. Prior Agreements Superseded. This Agreement, the Eximbank
Guarantee Agreement, the Eximbank Note and the other Financing Documents to
which the Borrower is a party shall completely and fully supersede all prior
understandings or agreements, both written and oral, among the parties hereto
regarding the Eximbank Credit and the Eximbank Guarantee Agreement.
Section 11.21. No Recourse. Except as provided in the last sentence of and
the proviso to the penultimate sentence of this Section 11.21, neither any
Partner, the Construction Supplier or the Construction Contractor nor their
respective shareholders or Affiliates (other than the Borrower), nor its or
their respective officers, directors, stockholders, controlling persons or
employees (each, a "Non-Recourse Party"), shall have any personal liability for
any amounts payable by the Borrower hereunder or under the Eximbank Note or any
other Project Document or for the performance of any covenant, agreement or
obligation of the Borrower, or for the breach of any representation, warranty or
covenant of the Borrower under this Agreement, the Eximbank Note or any other
Project Document, agreement, undertaking, certificate or other document
delivered by or on behalf of the Borrower in connection with this Agreement, and
therefore no judgment or recourse shall be sought or enforced against any
Non-Recourse Party for the payment or performance of the obligations of the
Borrower under any Project Document or any other such agreement, undertaking,
certificate or document executed by the Borrower. Except as provided in the last
sentence of this Section 11.21, it is expressly understood that all obligations
and liabilities of the Borrower under this Agreement, the Eximbank Note and the
other Project Documents to which the Borrower is a party and any other related
document, agreement or instrument executed by the Borrower are solely
obligations of the Borrower, provided, that such limitation of liability shall
not apply to a Non-Recourse Party if and to the extent that such Non-Recourse
Party commits fraud or misappropriation of earnings, revenues, profits or
proceeds from the Borrower or the Project. Notwithstanding anything herein to
the contrary, nothing herein shall limit, or be construed or deemed to limit,
the liability of any Non-Recourse Party under any Project Document to which such
Non-Recourse Party is in its individual capacity a party.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered in the United States as of the date
set forth below.
78
ORMAT LEYTE CO. LTD. EXPORT-IMPORT BANK OF THE
UNITED STATES
By ORLEYTE COMPANY
its General Partner
By /s/ Xxxxxxx Xxxxxxxx By /s/ Indecipherable
---------------------------- ----------------------------
(Signature) (Signature)
Name Xxxxxxx Xxxxxxxx Name
--------------------------- ---------------------------
(Print) (Print)
Title Vice President Title
-------------------------- --------------------------
(Print) (Print)
Date of Execution: May 13, 0000
Xxxxxxxx Credit No. AP069721 Philippines
