DATED JANUARY 19, 2007
(1) THE KENYA POWER AND LIGHTING COMPANY LIMITED
(2) ORPOWER 4 INC.
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OLKARIA III PROJECT SECURITY AGREEMENT
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CONTENTS
CLAUSE HEADING PAGE
1. AMENDMENT AND RESTATEMENT, DEFINITIONS AND INTERPRETATION.................0
2. LETTER OF CREDIT..........................................................4
3. GENERAL...................................................................5
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.................................6
5. INDEMNITY.................................................................7
6. CONFIDENTIALITY...........................................................7
7. AMENDMENTS................................................................7
8. MISCELLANEOUS.............................................................7
9. COMMUNICATIONS............................................................8
10. GOVERNING LAW AND DISPUTE RESOLUTION......................................9
11. COUNTERPARTS.............................................................11
SCHEDULE 1: FORM OF LETTER OF CREDIT.....................................12
SCHEDULE 2: FORM OF COMFORT LETTER.......................................15
SCHEDULE 3: FORM OF L/C BANK INSTRUCTION.................................16
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OLKARIA III PROJECT SECURITY AGREEMENT
THIS AGREEMENT is dated January 19, 2007.
BETWEEN:
(1) THE KENYA POWER AND LIGHTING COMPANY LIMITED a company incorporated in
Kenya with its registered office at Xxxxx Xxxxx, XX Xxx 00000-00000,
Xxxxxxx, Xxxxx ("KPLC")
(2) ORPOWER 4 INC. a company incorporated in the Cayman Islands, British West
Indies with its registered office in Grand Cayman, British West Indies,
with an office at 0000 Xxxx Xxxx, Xxxxx 000, Xxxx, Xxxxxx, X.X.X. and which
will act through its branch at Off Moi South Lake Road, Hellsgate National
Park, X.X. Xxx 0000- 00000, Xxxxxxxx, Xxxxx ("ORPOWER 4")
WHEREAS:
(A) KPLC and OrPower 4 have entered into the PPA (as defined below).
(B) Pursuant to Clause 11.9.1 of the PPA, KPLC has agreed to provide
security for all sums payable by KPLC under Clause 11 of the PPA.
(C) KPLC and OrPower 4 entered into the Security Agreement dated 5th
November, 1998, and subsequently entered into the Amended and Restated
Security dated 17th April 2003, which amended and restated the
original Security Agreement. The Amended and Restated Security
Agreement was not operationalized. KPLC and OrPower 4 wish to replace
these prior arrangements regarding securities, all as described
herein.
(D) This Olkaria III Project Security Agreement is entered into as of the
date first appearing above, and supercedes the original Security
Agreement dated 5th November, 1998 and the Amended and Restated
Security Agreement of dated 17th April 2003 between the Parties
hereto.
WITNESSETH as follows:
1. AMENDMENT AND RESTATEMENT, DEFINITIONS AND INTERPRETATION
1.1 With effect from the Effective Date, the original Security Agreement dated
5th November 1998 and the Amended and Restated Security Agreement dated 17
April
Security Agreement
2003 between the Parties, inclusive of all schedules thereto, shall be
amended and restated in their entirety by this Olkaria III Project Security
Agreement.
1.2 In this Agreement and its recitals hereto, unless the context otherwise
requires, expressions and terms not otherwise defined herein shall have the
meanings given to them in the PPA.
1.3 In this Agreement the following words and expressions have the following
meanings:
"APPROVED BANK": a first class international bank or financial institution
nominated by KPLC and acceptable to OrPower 4, which, at the Effective
Date, is any of Standard Chartered Bank (Kenya) Ltd, Barclays Bank of Kenya
Limited or Citibank N.A. (and in each case their respective successors in
title) and which, at a later date shall include the above named banks (or
their respective successors in title, according to the case) on condition
that there is no material adverse change in the value of such bank (or the
value of its successor in title from that existing with respect to its
predecessor) as of the Effective Date, and any other bank or financial
institution which is reasonably acceptable to OrPower 4;
"BUSINESS DAY": any day (other than a Saturday or Sunday) on which banks
are open for business in Kenya;
"DOLLARS" and "$": the lawful currency for the time being of the Untied
States of America;
"EFFECTIVE DATE": means the date first appearing above;
"GOOD FAITH DISPUTE PROCEDURE": shall be as defined in the PPA;
"INSOLVENCY EVENT": any of the following events or, in any other
jurisdiction, any event similar or analogous to any of the following:
(a) a resolution being passed, or a petition being presented or any
proceeding being commenced for the winding up, liquidation,
administration, rehabilitation, rescue or dissolution of OrPower 4, or
if OrPower 4 is or becomes the subject of any of those procedures,
which petition or proceeding is not discharged or cancelled or
otherwise reversed within 14 days; or
(b) OrPower being or becoming unable to pay its debts or suspending or
threatening to suspend making payment with respect to all or any class
of its debts;
"KENYA SHILLINGS": means the lawful currency for the time being of Kenya;
"L/C BANK": an Approved Bank;
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"L/C BANK LETTER OF INSTRUCTION": a letter in the form set out in Schedule
3 (form of L/C Bank Letter of Instruction) or such other form as OrPower 4,
KPLC and the L/C Bank may agree;
"LETTER OF CREDIT": an irrevocable and transferable standby letter of
credit issued or to be issued to OrPower 4 pursuant to Clause 2.1 and
substantially in the form set out in Schedule 1 (Form of Letter of Credit)
or, if the L/C Bank does not agree to issue a standby letter of credit in
that form in such other form as KPLC, OrPower 4 and the L/C Bank may
reasonably agree, and the expression includes each successive letter of
credit issued pursuant to Clauses 2.2 and 2.3;
"MONTH": a calendar month;
"PARTY" and "PARTIES": each party or (as the case may be) the parties to
this Agreement;
"PAYMENT DEFAULT" means that KPLC shall have failed to make any payment in
respect of the Secured Liabilities and:
(a) OrPower 4 has given to KPLC notice of that failure (by personal
delivery or by facsimile transmission in accordance with Clause 9),
specifying in that notice the amount of that non-payment and two (2)
Business Days (or where such payment was required to be made to a
payee outside the Republic of Kenya, five (5) Business Days) have
elapsed since the giving of that notice; and
(b) either there is no dispute regarding the amount which KPLC has failed
to pay, or, if there is such a dispute, such dispute is not being
resolved according to the Good Faith Dispute Procedure;
"PPA": the Amended and Restated Power Purchase Agreement entered into
between OrPower 4 and KPLC of even date hereof;
"PROJECT": the conduct of the Appraisal Works, the design, construction and
operation of the Early Generation Facility and the Plant and the sale to
KPLC of electricity generated by and capacity made available by the Early
Generation Facility and the Plant;
"RESERVED AMOUNT": means an amount equal to RA in the following
formula:
RA = CP + 0.96 * EC
where:
(a) in respect of the first three Letters of Credit to be issued
under this Agreement:
CP = CCRF(P) * 36 MW; and
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Security Agreement
EC = ECR(P) * 36 MW * 8760; and
----
12
(b) in respect of the fourth and each subsequent Letter of Credit to
be issued under this Agreement:
CP = [SIGMA] (CCRF(P) * CCF)(R-12);
---------------
12
EC = [SIGMA] (ECR(P) * CCF)(R-12) * 8760;
-----
12*12
(or, in respect of the fourth such Letter of Credit, if at the
relevant time fewer than twelve (12) months have elapsed since
the Full Commercial Operation Date, such amounts to be calculated
pro rata)
and where:
CCRF(P), ECR(P) and CCF shall have the meanings given to those items in
Schedule 5 of the PPA;
R is the month in which the Reserved Amount is calculated; and
[SIGMA](expression)(R-12) means the sum of that expression for the 12
months prior to month R; and
"SECURED LIABILITIES": all present and future obligations and liabilities
of KPLC to pay sums on or after the Plant Commissioning Date to OrPower 4
under Clause 11 of the PPA.
1.4 References to Clauses and Schedules are to the clauses and schedules of or
to this Agreement.
1.5 Clause headings are inserted for ease of reference only and are not to
affect the interpretation of this Agreement.
1.6 Except to the extent the context otherwise requires, any reference in this
document to this "Agreement" shall include this Agreement as amended,
varied, supplemented, novated or replaced from time to time.
1.7 References to any person are to be construed to include references to that
person's successors, transferees and assigns.
1.8 Words denoting the singular number only shall include the plural number
also and vice versa, and words denoting natural persons shall be
interpreted as referring to corporations and any other legal entities and
vice versa.
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1.9 All references to time shall be to Kenya time.
1.10 The term including shall be construed without limitation.
1.11 In the event of any conflict between the Clauses and the Schedules, the
Clauses shall prevail.
2. LETTER OF CREDIT
2.1 KPLC shall, within 30 days of execution of this Olkaria III Project
Security Agreement, procure that the L/C Bank establishes and maintains in
favour of OrPower 4 a Letter of Credit in an amount not less than four (4)
times the Reserved Amount as anticipated by the Parties as at the Full
Commercial Operation Date.
On the Effective Date, KPLC and OrPower 4 shall jointly instruct the L/C
Bank in accordance with the terms of the L/C Bank Letter of Instruction.
2.2 KPLC shall ensure that the Letter of Credit shall have an expiry date not
less than twelve (12) months from the date of its issue and shall ensure
that successive Letters of Credit shall thereafter be issued (subject to
Clause 2.7 and notwithstanding the provisions of Clause 2.4) for successive
periods of twelve (12) months each, each such Letter of Credit to be in an
amount not less than four times the Reserved Amount from time to time
agreed or determined under Clause 2.3. OrPower 4 and KPLC shall not
unreasonably withhold their agreement to the form of the first or any
successive Letter of Credit if the L/C Bank will not issue such Letter of
Credit substantially in the form set out in Schedule 1.
2.3 Within five (5) Business Days of the Effective Date with respect to the
first Letter of Credit, and not less than sixty-five (65) days prior to the
expiry date of the first Letter of Credit and of each subsequent Letter of
Credit, OrPower 4 will notify KPLC, with a copy to the L/C Bank, of the
relevant Reserved Amount to be used to calculate the amount of the next
succeeding Letter of Credit, such notice to be accompanied by its
calculations showing how that amount has been calculated. KPLC will have
five (5) Business Days to advise OrPower 4 whether or not it agrees with
OrPower 4's figure. If KPLC does not agree with that figure, and that
figure is not agreed between OrPower 4 and KPLC within a further period of
ten (10) Business Days, KPLC may refer the matter to an Expert for
determination in accordance with Clause 19.3 of the PPA. If KPLC does not
refer the matter to an Expert in accordance with this Clause 2.3, OrPower
4's figure shall apply.
2.4 Subject to Clause 2.7, the L/C Bank shall be irrevocably instructed by KPLC
and by OrPower 4 that, if by the second Business Day prior to the expiry
date of any Letter of Credit, KPLC has not caused the renewal of the Letter
of Credit, then the L/C Bank shall automatically renew the Letter of Credit
by drawing down the balance of the Letter of Credit immediately prior to
its expiry. The L/C Bank shall issue such new Letter of Credit upon the
expiration of the existing Letter of Credit.
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Security Agreement
2.5 On and after the occurrence of a Payment Default which is continuing, and
without prejudice to any other rights or remedies which OrPower 4 may have
against KPLC, OrPower 4 shall be entitled to make demand under the Letter
of Credit for an amount no greater than the amount of the Secured
Liabilities then due but unpaid. Any such demand shall be in writing and
signed by a duly authorised representative of OrPower 4. OrPower 4 shall
provide a copy of the demand to KPLC (by personal delivery or by facsimile
transmission in accordance with Clause 9) contemporaneously with delivery
of the demand to the L/C Bank.
2.6 Until such time as the Secured Liabilities are paid or satisfied in full,
KPLC shall use all reasonable endeavours to reinstate any Letter of Credit
in respect of which a demand has been made pursuant to Clause 2.10 within
thirty (30) days after that demand is made and shall in any event reinstate
such Letter of Credit within ninety (90) days after such demand.
2.7 KPLC shall not be obliged to ensure the issue of a new Letter of Credit in
accordance with Clause 2.2 on or at any time after the twelfth (12th)
anniversary of the Full Commercial Operation Date.
2.8 All costs, charges, expenses, taxes and fees relating to the establishment
and maintenance of the Letter of Credit shall be borne and paid by KPLC,
provided however, that OrPower 4 shall reimburse KPLC for such costs,
charges, expenses, taxes and fees paid up to the total aggregate amount of
1% (one percentage) per annum of the then prevailing face value of the
Letter of Credit issued in favour of OrPower 4 in accordance with this
Clause 2. OrPower 4 shall reimburse amounts payable to KPLC pursuant to
this Clause 2.8 quarterly in arrears, within 30 days of KPLC's invoice
documenting such costs at the end of the quarter, up to the aforesaid cap.
2.9 Orpower 4 undertakes not to make a demand under the Letter of Credit before
the Plant Commissioning Date.
2.10 There are no conditions precedent to the effectivity of this Olkaria III
Project Security Agreement.
3. GENERAL
3.1 This Agreement shall continue in force until the day immediately preceding
the twelfth (12th) anniversary of the Full Commercial Operation Date.
3.2 The security constituted by this Agreement shall be continuing security,
shall extend to the ultimate balance of the Secured Liabilities and shall
continue in full force and effect notwithstanding any intermediate payment
in whole or in part of the Secured Liabilities.
3.3 KPLC's liability under this Agreement shall not be discharged or impaired
by:
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Security Agreement
(a) the dealing with, existence or validity of any other guarantee or
security taken by OrPower 4 in relation to the PPA or the Secured
Liabilities or any enforcement of or failure to take, perfect or
enforce any such security;
(b) any amendment to or variation of the PPA or any security relating to
the PPA or the Secured Liabilities;
(c) any release of or granting of time or any other indulgence to KPLC or
any third party; or
(d) any other act, event or omission which would or might but for this
Clause 3.3 operate to impair or discharge the security constituted by,
or KPLC's liability under, this Clause including any act, omission or
thing which would or might afford a defence to a surety.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Each Party represents, warrants and undertakes to the other that:
(a) this Agreement does not and will not conflict with or result in any
breach or constitute a default under any agreement, instrument or
obligation to which that Party is a party or by which it is bound;
(b) all necessary authorisations and consents to enable or entitle that
Party to enter into this Agreement and which are material in the
context of this Agreement have been obtained and will remain in full
force and effect during the term of this Agreement;
(c) that Party shall obtain, effect and maintain all governmental
licences, authorisations, consents, registrations, filings or
approvals which are at any time necessary to enable it to comply with
and/or perform its obligations under this Agreement;
4.2 OrPower 4 undertakes:
(a) that it will give prompt notice to KPLC of any Insolvency Event; and
(b) immediately upon termination of this Agreement or (if earlier) of the
PPA, each other than due to a KPLC default relating to the Secured
Liabilities, to:
(i) give notice to that effect to the L/C Bank; and
(ii) request and instruct the L/C Bank to cancel immediately the
Letter of Credit, and to do all acts and things, and sign, seal, execute,
deliver and perfect all deeds,
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Security Agreement
instruments, notices and documents which the L/C Bank reasonably considers
to be necessary or desirable in order to effect the cancellation.
5. INDEMNITY
OrPower 4 irrevocably and unconditionally agrees to indemnify KPLC and keep
it indemnified against all losses, damages, costs, expenses, demands and
claims (including interest, penalties, legal and other costs and expenses
and any taxes thereon, if applicable) incurred or to be incurred by KPLC
and arising out of all or any of:
(a) the making of any demand under the Letter of Credit otherwise than
strictly in accordance with this Agreement; and
(b) the failure by OrPower 4 to give any such notice, instruction or
request as is referred to in Clause 4.2(a) or (b)(i).
For the avoidance of doubt, in no case shall OrPower 4 be liable to KPLC
for any indirect or consequential losses or damages.
6. CONFIDENTIALITY
The provisions of Clause 18 of the PPA shall be incorporated mutatis
mutandis in this Agreement. The provisions of this Clause 6 shall survive
the termination or expiry of this Agreement.
7. AMENDMENTS
This Agreement shall not be amended except by an instrument executed by all
the Parties.
8. MISCELLANEOUS
8.1 No delay or omission on the part of any Party in exercising any right or
remedy under this Agreement shall impair that right or remedy or operate as
or be taken to be a waiver of it nor shall any single partial or defective
exercise of any such right or remedy preclude any other or further exercise
under this Agreement of that or any other right or remedy.
8.2 The rights of the Parties under this Agreement are cumulative and not
exclusive of any rights provided by law and may be exercised from time to
time and as often as the Parties deem expedient.
8.3 Any waiver by either Party of any terms of this Agreement or any consent or
approval given by either Party under it shall only be effective if given in
writing and then only for the purpose and upon the terms and conditions, if
any, on which it is given and if agreed to by the other Party.
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Security Agreement
8.4 If at any time any one or more of the provisions of this Agreement is or
becomes illegal, invalid or unenforceable in any respect under any law of
any jurisdiction neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction
shall be in any way affected or impaired as a result.
8.5 This Agreement may not be assigned by either Party without the consent in
writing of the other Party provided that:
(a) OrPower 4 may transfer, assign or novate this Agreement to any
provider to it of finance for the purposes of the Project; and
(b) this Agreement may be assigned by either Party with the prior written
consent of the other Party and the provisions of Clause 21.2 of the
PPA shall apply to this Agreement.
8.6 Waiver of Sovereign Immunity
KPLC agrees that the execution, delivery and performance by it of this
Agreement and the obligation to open and maintain Letters of Credit
hereunder, constitute private and commercial acts. In furtherance of the
foregoing, KPLC agrees that:
(a) should any proceedings be brought against KPLC or its assets in any
jurisdiction in connection with this Agreement, or in connection with
any of KPLC's obligations or any of the transactions contemplated by
this Agreement, no claim of immunity from such proceeding will be
claimed by or on behalf of itself or any of its assets;
(b) it waives any right of immunity which KPLC or any of its assets has or
may have in the future in any jurisdiction in connection with any such
proceedings.
9. COMMUNICATIONS
9.1 Any notice or other communication to be given by one Party to the other
under or in connection with this Agreement shall be given in writing and
may be delivered personally or sent by prepaid airmail or facsimile to the
recipient in accordance with the details set out below or to such other
address and/or facsimile number and/or person as the Parties may notify
each other in accordance with this Clause for such purpose:
OrPower 4
Postal address:
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Security Agreement
0000 Xxxx Xxxx Xxxxx 000
Xxxx
Xxxxxx 00000-0000
XXX
Fax Number: Nevada, USA (000) 000-0000
Telephone Number: Nevada, USA (000) 000-0000
with a copy to:
OrPower 0
Xxx Xxx Xxxxx Xxxx Xxxx,
Xxxxxxxxx Xxxxxxxx Xxxx
X.X. Xxx 0000- 00000
Xxxxxxxx Kenya
Fax Number: x000-00-00000
Telephone Number: x000-00-00000 or x000-00-00000
In either case marked for the attention of: The Company President
KPLC
Postal Address:
The Kenya Power and Lighting Company Limited
Xxxxx Xxxxx
XX Xxx 00000-00000
Xxxxxxx
Xxxxx
Fax Number: Nairobi, 337351
Telephone Number: Nairobi 243366
Marked for the attention of: The Company Secretary.
9.2 Every notice or other communication shall be deemed to have been received
(if sent by post) five (5) days after being posted prepaid airmail and (if
delivered personally or by facsimile transmission) at the time of actual
delivery or (in the case of a facsimile transmission) on confirmation of
transmission.
10. GOVERNING LAW AND DISPUTE RESOLUTION
10.1 This Agreement is governed by and shall be construed in accordance with the
laws of Kenya.
10.2 Any dispute or difference of any kind between the parties in connection
with or arising out of this Agreement or the breach, termination or
validity hereof (a "DISPUTE") shall be
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Security Agreement
finally settled by arbitration under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce in accordance with the
said Rules which Rules are deemed to be incorporated by reference into this
Clause 10.2. It is hereby agreed that:
(a) the seat of the arbitration shall be London, England;
(b) there shall be a single arbitrator;
(c) the language of the arbitration shall be English;
(d) the award rendered shall apportion the costs of the arbitration;
(e) the award shall be in writing and shall set forth in reasonable detail
the facts of the Dispute and the reasons for the tribunal's decision;
(f) the award in such arbitration shall be final and binding upon the
Parties and judgment thereon may be entered into in any Court having
jurisdiction for its enforcement; and the Parties renounce any right
of appeal from the decision of the tribunal insofar as such
renunciation can validly be made.
If there is a conflict between this Agreement and the said Rules, this
Agreement shall prevail.
10.3 Neither Party shall have any right to commence or maintain any legal
proceeding concerning a Dispute relating to this agreement until the
Dispute has been resolved in accordance with Clause 10.2, and then only to
enforce or execute the award under such procedure.
10.4 The Parties shall each secure that all arbitrators and Experts shall agree
to be bound by the provisions of Clause 6 of this Agreement as a condition
of appointment.
10.5 The Parties shall continue to perform their obligations under this
Agreement during any Expert or Arbitration proceeding.
10.6 Each Party hereby represents and warrants to the other that if any lawsuit
or proceeding (including but not limited to all kinds of suits, court or
arbitration proceedings, or enforcement of court decisions) related to this
Agreement or the transactions contemplated in this Agreement is initiated
against itself or is assets, it shall make no claim of immunity (sovereign
or otherwise) from such lawsuit or proceeding on its behalf or for its
assets.
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11. COUNTERPARTS
This Agreement may be signed in any number of counterparts. Any single
counterpart or a set of counterparts signed, in either case, by the Parties
shall constitute a full and original Agreement for all purposes.
IN WITNESS whereof the parties hereto have executed and delivered this Agreement
as a Deed the day and year first before written.
SEALED with the COMMON SEAL of )
THE KENYA POWER AND )
LIGHTING COMPANY LIMITED )
In the presence of: )
Director
Secretary
For and on behalf of )
ORPOWER 4 INC. by Xxxxxx Xxxxx ) _____________________________________________
Authorised Representative
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SCHEDULE 1
FORM OF LETTER OF CREDIT
Draft LC TO: [ORPOWER 4, full address, to be advised to [Name of Advising Bank]]
1. By order and for the account of our customer KPLC of Xxxxx Xxxxx, Xxxxxxx
Xxxx, X.X Xxx 00000-00000 Xxxxxxx, we [Bank] this [__] day of [___] hereby
establish and issue in your favour this irrevocable letter of credit (the
"Letter of Credit") payable by means of drawings notify us pursuant hereto
and at any particular time in the maximum amount of [words ____] [figures
____].
The amount payable under this Letter of Credit shall be available in any
number of drawings to and including the close of business in Nairobi on
[__________] ("Expiry Date") against the following document to be presented
at the offices of [__________], Nairobi:
(a) executed demand notice purportedly signed by your officer
substantially in the form of the Appendix 1 attached hereto;
(b) a copy of an independent engineer certificate stating that Plant
testing has been completed and the Plant is available for full
commercial operation, [and
(b) the original of this Letter of Credit for endorsement.]
2. If you present such demand notice and this Letter of Credit at such office
on a Banking Day on or prior to the Expiry Date, we will honour the same by
payment to you or in accordance with your instructions on or before the
close of banking business on the fifth (5th) Banking Day after presentment
thereof.
The term "Banking Day" means a day (other than a Saturday or Sunday) on
which banks are open for business in the Republic of Kenya.
3. Subject to Clause 4, this Letter of Credit shall automatically terminate on
the Expiry Date.
4. If, from time to time, by the second Banking Day before the Expiry Date, we
shall not have issued to you a replacement Letter of Credit by order and
for the account of our customer, KPLC, in the form hereof (or in such other
form as shall have substantially the same effect or as you and we may
reasonably agree) unless otherwise instructed by you, you shall be deemed
to have presented a demand notice on this Letter of Credit at our Nairobi
office on such Banking Day for the amount available for drawing under this
Letter of Credit and such deemed demand shall be honoured by us by payment
of the amount available for drawing under the Letter of Credit into an
account that we shall open as security and we will immediately renew the
Letter of Credit for the amount
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deemed drawn down for a period of twelve (12) months from the then Expiry
Date under the same terms and conditions (including the automatic renewal).
Any such renewal shall be advised to OrPower 4 and KPLC at the address
herein or such other address as may be notified to us by KPLC and OrPower 4
from time to time.
5. This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein,
except only the certificates, the instructions to transfer and the drafts
referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement
except for such certificate, such instructions to transfer and such drafts.
6. This Letter of Credit is transferable in whole or in part.
7. All Bank charges are for Applicant's account.
This Letter of Credit shall be governed by, and construed in accordance with the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 provided that to the
extent that any of the provisions of this Letter of Credit are inconsistent with
or not covered by such Uniform Customs and Practice such provisions shall be
governed and construed in accordance with English law.
Communications with respect to this Letter of Credit shall be addressed to us at
[__________] attention [___] specifically referring to the number of this Letter
of Credit.
-------------------------------------
Yours faithfully,
Authorised Signatory
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APPENDIX
FORM OF DEMAND NOTICE
TO: [Bank]
Dear Sirs
We refer to Irrevocable Letter of Credit No. [__________] (the "Letter of
Credit") issued by you on the [__________] in our favour. In accordance with
Clause 1 thereof, we hereby state, that we are entitled to make this demand
under the Letter of Credit and hereby demand payment of [__________]
([__________]) without deduction or set off (except such as may be required by
law) to be made to our account number [__________] at [enter details of a bank
in [__________] on or before the fifth Banking Day (as defined in the Letter of
Credit) following your receipt of this demand.
Yours faithfully
---------------------------------------
authorised officer for and on behalf of
ORPOWER 4 INC
Copy: The Kenya Power and Lighting Company Limited
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SCHEDULE 2
FORM OF COMFORT LETTER - WAS PROVIDED
The Government of the Republic of Kenya ("GOK") is aware that OrPower 4 Inc.
("OrPower 4") is proposing to enter into a power purchase agreement with The
Kenya Power and Lighting Company Limited ("KPLC") pursuant to which OrPower 4
will: design, procure, construct, finance, test, commission, operate and
maintain a generation facility of 8 MW capacity at Olkaria III; appraise and
develop geothermal resources for the purposes of electricity generation at the
generation facility to be known as "Olkaria III"; design, procure, construct,
finance, test and commission a high voltage interconnector connecting OlkariaIII
with the 220 kV switchyard at the proposed Olkaria II generation facility;
design, procure, construct, finance, test, commission, operate and maintain a
generation facility of up to 100 MW capacity at Olkaria III; make available
generating capacity from Olkaria III to KPLC; and sell electricity generated
from Olkaria III to KPLC.
In accordance with GOK's policy on energy matters and private sector
participation in Kenya's electricity supply industry, GOK welcomes the
investment which OrPower 4 is proposing to make in the Republic of Kenya.
GOK recognises that in addition to making an equity investment in Olkaria III.
OrPower 4 will also require third party funding. GOK has been notified that in
order to secure such third party funding KPLC and OrPower 4 have agreed (as set
out in a security agreement) a form of security which KPLC will be obliged to
provide.
If KPLC will not provide the agreed security to OrPower 4 in accordance with its
contractual obligations, GOK will, following receipt of a written notification
from OrPower 4, use all means within its powers to cause KPLC to provide the
agreed security in the manner envisaged by its contractual obligations.
This letter is not intended to create any legal obligation on the part of GOK.
This letter is effective from the date on which KPLC and OrPower 4 execute the
security agreement referred to in paragraph 3.
This letter is issued pursuant to the laws of the Republic of Kenya.
Yours faithfully
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Security Agreement
SCHEDULE 3
FORM OF THE L/C BANK LETTER OF INSTRUCTION
To: [The L/C Bank]
We refer to the Olkaria III Project Security Agreement dated [__________] 2007
between The Kenya Power and Lighting Company Limited and OrPower 4 Inc. (the
"Security Agreement").
We enclose for your information a copy of the Olkaria III Project Security
Agreement together with a copy of the PPA referred to therein and receipt of
which you hereby acknowledge.
Words and expressions defined in the Olkaria III Project Security Agreement
shall have the same meanings in this letter.
A. IRREVOCABLE RENEWAL INSTRUCTIONS
You are hereby irrevocably instructed that, if, by the second Business Day
before the then Expiry Date of a Letter of Credit, the Letter of Credit will not
have been renewed, you are to automatically draw all amounts then available for
drawing under the Letter of Credit, to deposit all such amounts in a depositary
account as security, and to immediately renew the Letter of Credit for periods
of additional 12 months each from the then Expiry Date of the Letter of Credit,
under the same terms and conditions.
You are further instructed to advise to Beneficiary by authenticated swift to
the advising bank
B. GENERAL
1. You may,to the extent that you would have been entitled to rely on it if it
had been genuine, rely on any notice, instruction, communication, certificate,
legal opinion or other document which is not genuine but is reasonably believed
by you to be genuine; and retain for your own benefit and without liability to
account any fee or other sum receivable by you for your own account.
2. OrPower 4 will keep you informed of the amount of the Reserved Amount for the
purposes of this letter, both at the commencement of your appointment and from
time to time during the course of your appointment. Unless OrPower 4 informs you
in writing to the contrary, you may assume that the Reserved Amount is the
amount most recently notified to you as such.
3. The provisions of Clause 9 (Communications) of the Olkaria III Project
Security Agreement shall apply to this letter as they apply to the Olkaria III
Project Security Agreement. Your relevant details are as follows:
[L/C Bank]
Postal Address:
Fax Number:
Telephone Number:
Notices to be sent to:
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Security Agreement
4. This letter shall be governed by and construed in accordance with the laws of
the Republic of Kenya.
Please signify your agreement to the terms of this letter by signing and
returning to each of us one of the enclosed copies of this letter.
Yours faithfully Yours faithfully
------------------------------------- ----------------------------------------
For and on behalf of For and on behalf of
The Kenya Power and OrPower 4 Inc
Lighting Company Limited
[On copy] We agree to the terms of the letter of which this is a copy.
For and on behalf of
[L/C Bank]
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