EXHIBIT NO. 10.158
Mortgage Deed
This Mortgage Deed (the "Mortgage Deed") is made between Bhote
Koshi Power Company Private Limited, a private limited company
duly registered under the Companies ▇▇▇, ▇▇▇▇, (1964) with His
Majesty's Government of Nepal (HMG/Nepal), Office of the Company
Registrar (private Limited Company Registration No. 5066/052-053)
having its corporate office at Kathmandu District, Kathmandu
Metropolitan, ▇▇▇▇ no. 14. Tahachal, Kathmandu, Nepal
(hereinafter referred to as the "Borrower") duly represented by
its authorized Project Manager ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Deutsche
Investitions-und Entwicklungsgesellschaft mbH having its
registered office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇-▇▇▇▇▇, ▇▇▇▇
(▇▇▇▇▇▇▇▇▇▇▇) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany ("DEG") and
International Finance Corporation having its registered office at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇.▇.▇. ("IFC" and
together with DEG, the "Lenders") duly represented by advocate
Mr. Bharat ▇▇▇ ▇▇▇▇▇▇, Senior Partner of Pioneer Law Associates,
Kathmandu, Nepal.
Whereas, the Borrower having obtained a license from HMG/Nepal,
Ministry of Water Resources for the construction of a run of the
river hydroelectric power facility with a capacity of 36
megawatts (nominal) (hereinafter referred to as the "Project")
has requested IFC for loans in the amount of US $57,000,000.00
(the IFC "Loans") (for the purpose of the registration of this
deed, equivalent to NRS. 3,62,52,00.000/- according to the
prevailing exchange rate of this day) and DEG for Loans in the
amount of Deutsch Marks 21,000,000 (the "DEG Loan") (for the
purpose of the registration of this deed, equivalent to NRS
75,26,40,000/- according to the prevailing exchange rate of this
day) (the IFC Loans and DEG Loan hereinafter collectively
referred to as the "Loans")for the purpose of financing a portion
of the cost of the Project.
In consideration of the aforesaid requirements of the Borrower,
IFC and the Borrower have entered into that certain IFC
Investment Agreement dated 12 December, 1997 (the "IFC Investment
Agreement") and DEG and the Borrower have entered into that
certain DEG Investment Agreement dated 12 December, 1997 (the
"DEG Investment Agreement," and together with the IFC Investment
Agreement, the "Investment Agreements"). Subject to the terms and
conditions stipulated in the Investment Agreements and in this
Mortgage Deed and other documents forming part of it, the Lenders
have agreed to lend and advance to the Borrower the Loans in the
amount of US $57,000,000.00 and DM 21,000,000_ which includes the
IFC loan of Class A Loan of US $21,000,000, and the IFC Class B
loan of US $36,000,000 and the DEG loan of DM 21,000,000. The
Borrower agrees to receive the disbursement of the Loans in the
manner prescribed in the Investment Agreements and the Trust and
Retention Agreement (as defined in the Investment Agreements).
The Loans shall be repaid in 22 (twenty-two) installments
commencing on March 15, 2001 and thereafter payable annually on
each March 15 and September 15. The Loans shall be fully repaid
by March 15, 2011. The repayment schedule of the Loans shall be
as prescribed in the Investment Agreements. The rates of
interest on the Loans (which includes the Class A Loan, the Class
B Loan and the DEG Loan) shall be as determined in the manner
prescribed in the Investment Agreements.
As security for the aforesaid Loans, and all other Obligations
(as such term is defined in the Investment Agreements) of the
Borrower, by virtue of this Mortgage Deed, mortgages the plots of
land registered in its name at Sindhupalchowk District, Nepal,
the details and plot Nos. of which are set forth in Annex A
hereto, along with any construction made thereof, and
hypothecates and assigns its rights in the entire Project
inclusive of all present and future fixed and current assets
either procured from its own resources or from the above said
Loans or other investments in favor of the Lenders who shall have
a first charge (right) over the security. The Lenders shall have
a first charge over the said mortgaged land, buildings and other
fixed and current assets of the Borrower.
The Borrower hereby agrees to repay to the Lenders the principal
amount of the Loans, interest accrued thereon, additional
interest, penalty interest and other fees, prepayment fees and
charges and all other Obligations of the Borrower at the rate and
in the manner as laid down in the Investment Agreements and the
other related agreements. The Borrower further agrees to comply
with the terms and conditions stipulated in the Investment
Agreements and this Mortgage Deed and other documents forming
part of it, and agrees that the Lenders may realize the
outstanding Loan amounts together with interest , other dues
payable and all other Obligations of the Borrower as per the
terms of the Investment Agreements by disposing of or otherwise,
all or any part of the mortgaged, hypothecated and assigned
movable and immovable properties and assets by following the
procedures stipulated in the Investment Agreements, this Mortgage
Deed and the Security Documents (as defined in the Investment
Agreements) upon failure of the Borrower to repay the said
principal amount, interest, other dues and all other Obligations
of the Borrower or upon the breach of the terms and conditions
stipulated in the Investment Agreements, this Mortgage Deed and
other agreements forming a part of it which constitutes an event
of default under the said agreements and documents.
And in case the proceeds so realized from the sale of the
mortgaged assets are less than the amounts due to each of the
Lenders under the Investment Agreements, each of the Lenders may
also realize such shortfall amount out of the other current and
fixed assets of the Borrower, if any.
In accordance with the terms and conditions mentioned in the
Investment Agreements, this Mortgage Deed and the other documents
forming part of it, the Borrower has executed this Mortgage Deed
in favor of the Lenders in the presence of the witnesses stated
herein. The Borrower further undertakes to register and get
registered this Mortgage Deed, within the time limit as
prescribed by law. The Borrower hereby further agrees to abide
by or cause to be abided by the following terms, in addition to
the terms set forth in the documents forming a part of this
Mortgage Deed and in the Investment Agreements.
1. Security:
1.1 The Borrower mortgages, hypothecates and assigns all
its present and future assets (except the Nepal Holding
Account and the other Excluded Assets, as defined in
the Investment Agreements) either procured from the
Loans or from its own resources inclusive of land,
buildings, sheds, machines, equipment etc. as mentioned
below, and all its accounts receivable and current
accounts in favor of the Lenders as security for the
said Loans and all other obligations of the Borrower
according to the Investment Agreements, this Mortgage
Deed and the other documents forming a part hereof.
1.2 The Borrower covenants and represents that the Borrower
is the sole owner of all the assets mortgaged,
hypothecated and assigned under this Mortgage Deed and
the same has not been bequeathed, transferred or
released on lease or rent to any other person in any
manner and such assets are free from any encumbrances
other than Permitted Liens (as defined in the
Investment Agreements).
1.3 The Borrower will not sell or dispose of or transfer in
any manner the title over the assets mortgaged,
hypothecated and assigned under this Mortgage Deed or
other assets belonging to the Borrower, except in
accordance with the Investment Agreements, this
Mortgage Deed and the other documents forming a part of
it.
1.4 Grant of the Mortgage of Immovable Assets:
The detail of the land and buildings mortgaged by the
Borrower in favor of the Lenders is given in Annex A to
this Mortgage Deed. In case the Borrower acquires the
ownership of any additional land and buildings by
purchase or otherwise, the Borrower shall, by a
separate Mortgage Deed, execute fresh mortgage of the
said additional plots of land within 35 days from the
date of the registration of ownership of such land and
buildings in the name of the Borrower, in favor of the
Lenders, by preparing a separate document of the said
additional, land and buildings. Any mortgage deed so
executed and registered in regard to such land to which
the right is acquired on private basis shall form an
integral part of this Mortgage Deed.
1.5 Pledge of Movable Assets:
As security for the performance of all the Obligations
(as defined in the Investment Agreements) and for the
payment of the amounts payable to the Lenders and in
order to induce the Lenders to make the Loans, the
Borrower hereby mortgages and pledges to the Lenders.
the following right, title and ownership interest in,
to and under the following (all of which being
hereinafter collectively called the "Collateral"), and
assigns and transfers entitlement to the said right,
title, interest, ownership and benefits, in the name of
the Lenders, in addition to the mortgage of the
immovable property and assets as described herein (but
excluding Excluded Assets, as defined in the Investment
Agreements).
(1) The assigned contracts listed in Annex B hereto
(the "Assigned Contracts"), including but not
limited to (a) all rights of the Borrower to
receive moneys due and to become due thereunder or
pursuant thereto, (b) all rights of the Borrower
to receive proceeds of any insurance, indemnity,
warranty, letter of credit, surety bond,
performance bond or guarantee with respect
thereto, (c) all claims which the Borrower may
make for compensation for breach thereof or
default thereunder, and (d) the right of the
Borrower to terminate, amend, supplement or
otherwise modify any such agreement;
(2) All bank accounts of the Borrower;
(3) All accounts receivable of the Borrower;
(4) All equipments, materials, structures, machinery,
fixtures, accessories and furnishings of the
Borrower including, but not limited to, turbines,
generators, transformers, switchgears, breakers,
transmission lines, runners, protective devices,
safety equipment, metering equipment spare-parts,
tools, vehicles, control and communication
equipment and office materials and equipments;
(5) All supplies and new materials, fuel, stores,
spare parts and other consumables;
(6) All inventory along with the details of movable
property;
(7) All general intangibles, such as leases,
proprietary rights, goodwill rights, licenses,
rights, records;
(8) All present or future rights and claims of the
Borrower under any indemnity, warranty or guaranty
provided for or arising out of or in connection
with any construction contract or otherwise or any
equipment, and any performance bonds, letters of
credit or other support delivered by any
construction contractor or any other equipment
supplier or contractor to the Borrower;
(9) All governmental permits, approvals, licenses,
authorizations, consents or clearances issued to
the Borrower;
(10) Any and all cash, investments and securities from
time to time on deposit (including income or
profit earned therefrom) in the accounts (other
than Excluded Assets) of the Borrower created
pursuant to the Trust and Retention Agreement or
the Nepal Agency and Retention Agreement (as
defined in the Investment Agreements);
(11) Any and all other letters of credit, drafts,
acceptances, contract rights, accounts receivable,
documents, deposit accounts, instruments, chattel
paper, rights, interests, general intangibles and
assets owned by the Borrower on the date hereof or
hereafter existing or acquired, including, but not
limited to, designs, plans and specifications
relating to the Project; and
(12) To the extent not otherwise included in the
foregoing, all rights, interests, proceeds and
products generated (including, but not limited to,
power generated by operation of the Project) by
all of the foregoing Collateral.
2. The Lenders shall have the right to appoint an agent (the
"Agent") from time to time to represent the Lenders in Nepal who
shall be entitled to exercise all or some of the rights and
authorities of the Lenders granted to them by the Borrower under
the Investment Agreements, this Mortgage Deed and the other
documents forming part of it. The Borrower shall have no
objection to the Agent taking any action against it for and on
behalf of the Lenders or exercising its authority subject to the
terms and conditions stipulated in the Investment Agreements, the
Mortgage Deed and other documents forming part of it. The
Borrower agrees to execute all such documents and do such other
things as the Agent may reasonably require in order to enable the
Agent to take any such action or to exercise any such authority.
3. The Lenders' Rights:
3.1 In the event of the occurrence of an event of default
and for so long as such event of default shall
continue, the Lenders may treat the Loans and all other
Obligations of the Borrower to be defaulted or the
terms and conditions of the Investment Agreements
relating to the Loans violated, in which case the
Lenders may initiate any one or all of the remedies
available to the Lenders (or the Agent) against the
assets mortgaged under this Mortgage Deed, including
any one or all of the following actions:
(a) Terminate or suspend its promise or commitments;
(b) Demand prepayment of the Loans in accordance with
the Investment Agreements;
(c) Deliver a Notice of Default (as defined in the
Investment Agreements);
(d) Accelerate the maturity of the Loans;
(e) Direct the Agent in writing to foreclose or
exercise other rights or remedies relating to the
collateral, including, but not limited to, the
sale or disposition of all or any part of the
security including, but not limited to, all
movable and immovable assets of the Borrower;
(f) Deliver a notice to the Agent that with respect to
the Investment Agreements, an event of default has
been cured or waived;
(g) Take possession of the Project and appoint one or
more operators to complete construction and
operate the Project to the benefit of the Lenders.
3.2 The Lenders may realize the outstanding amount of the
Loans and other outstanding Obligations from the
Borrower by the foreclosure or sale of the mortgaged,
hypothecated or assigned assets or by collection of
accounts receivable and out of any other assets (other
than Excluded Assets) belonging to the Borrower whether
or not mortgaged or hypothecated or assigned by the
Borrower or any other properties owned by the Borrower
without recourse to court proceedings. The Borrower
has vested the Lenders with all the rights, power and
authorities as available to commercial banks under
section 47A of the Commercial Bank Act, 2031, (1974) of
Nepal in the matter of foreclosure, sale and
disposition of securities, land, buildings, all types
of movable and current and fixed assets, assigned
rights, and accounts receivable, mortgaged and charged
by the Borrower in favor of the Lenders under this
Mortgage Deed. The Borrower shall not object to or
interfere with the Lenders or their Agent in any manner
in exercising said right or power or authority in
accordance with this Mortgage Deed and the Security
Documents.
3.3 The proceeds of the sale of any collateral including,
but not limited to, immovable assets of the Borrower
mortgaged under this Mortgage Deed or any other assets
realized by the Lenders or their Agent by exercising
the rights under this Mortgage Deed and the documents
forming part of it shall be applied in the following
order:
First: Payment of all fees, remunerations and expenses
of the Agent or other agents appointed by the Lenders
under the Investment Agreements, this Mortgage Deed and
the documents forming a part of it to the extent not
reimbursed by the Borrower.
Second: Repayment of interest accrued on the
outstanding Loans and Obligations (other than
prepayment fees or penalties with respect to the
Loans).
Third: Repayment of all other amounts due (other than
prepayment fees or penalties with respect to the
Loans).
Fourth: Payment of prepayment fees or penalties owing
to the Lenders.
Fifth: Payment of any remaining balance to the
Borrower or as the Borrower may direct in writing.
3.4 Without prejudice to any other remedy available to the
Lenders in the event of the occurrence of an event of
default, the Lenders shall have the right to take into
possession the whole or the part of the Project and to
complete construction thereof or operate it through one
or more operators appointed by the Lenders or the Agent
for and on behalf of the Lenders.
4. The expenses to be incurred during the proceedings initiated
by the Lenders in the events mentioned above shall be borne
by the Borrower.
5. The Borrower shall neither change its nature of business or
operate any subsidiary company or amalgamate itself into
another company nor permit the transfer of shares held by
its shareholders, unless permitted under the Investment
Agreements and other documents forming part of this Mortgage
Deed; provided however, that this restriction shall not
apply to the transferal of shares to the Lenders or to a
person designated by the Lenders.
6. The borrower agrees that the Lenders may, in connection with
a transfer of an interest in the Loans, transfer, mortgage
or sell this Mortgage Deed to any other corporation or
financial institution.
7. The Loans and obligations referred to in this Mortgage Deed
shall not be construed as unsecured on the ground of the
Lenders failing to initiate action on default of payment of
the Loans or breach of any terms and conditions of this
Mortgage Deed and the Investment Agreements or the documents
forming part of this Mortgage Deed.
8. The Borrower agrees that it shall not be free from the
liability of repaying the principal and interest on the
grounds of foreclosure or sale or disposition of the
properties mortgaged, hypothecated or assigned or on the
grounds of assignment of the Loans to any other person by
the Lenders.
9. Integral Parts of this Deed:
The following documents shall form integral parts of this
Mortgage Deed.
9.1 The IFC Investment Agreement concluded on 12 December,
1997) between IFC and the Borrower.
9.2 The Nepal Agency and Retention Agreement concluded on
12 December, 1997 among Nepal Gridlays Bank Limited,
IFC, DEG, the Borrower and the Wilmington Trust Company
(Trustee).
9.3 The Security and Assignment Agreement concluded on 12
December, 1997 among the Borrower, IFC, DEG and
Wilmington Trust Company (Trustee).
9.4 The Trust and Retention Agreement concluded on 12
December, 1997 among the Borrower, IFC, DEG and the
Wilmington Trust Company (Trustee).
9.5 Reinsurance Assignment Agreement concluded on 12
December, 1997 among the borrower, Wilmington Trust
Company (Trustee) and National Life and General
Insurance Company Ltd.
9.6 The Investment Agreement concluded on 12 December, 1997
between DEG and the Borrower.
9.7 The Intercreditor Agreement concluded on 12 December,
1997) between IFC and DEG.
The details of land mortgaged are as follows:
Annex - "A"
SCHEDULE 3.1 (e)
TITLE TO THE SITE
Details of Land owned by Bhote Koshi Power Company Pvt. Ltd.
Location of Land:
Zone: Bagmati, District: Sindhupalchowk, V.D.C.: Phulphingkatti
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership ▇▇▇▇ Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
1 1 1 411 2-3-2-1 2053-6-11 1996-09-27
" 2 1 413 1-14-3-1 2053-6-11 1996-09-27
" 3 1 499 4-1-1-0 2053-6-11 1996-09-27
" 4 1 500 20-0-0-0 2053-6-11 1996-09-27
" 5 1 462 3-9-1-1 2053-6-28 1996-10-14
" 6 1 465 0-5-0-3 2053-6-28 1996-10-14
" 7 1 433 1-5-1-0 2053-9-04 1997-12-19
" 8 2 217 1-9-3-1 2053-10-17 1997-01-30
" 9 2 215 3-5-1-3 2053-10-17 1997-01-30
" 10 2 11 12-8-2-2 2053-10-17 1997-01-30
" 11 2 4 7-7-0-3 2053-10-17 1996-09-27
" 12 2 13 13-4-0-0 2053-10-17 1997-01-30
" 13 2 1 4-8-2-2 2053-10-17 1997-01-30
" 14 1 490 0-12-2-3 2053-10-17 1997-01-30
" 15 1 489 0-12-2-1 2053-10-17 1997-01-30
" 16 1 263 3-0-1-3 2053-10-17 1997-01-30
" 17 1 262 3-8-2-2 2053-11-9 1997-02-20
" 18 1 468 6-0-0-0 2053-11-9 1997-02-20
" 19 2 6 1-6-1-1 2054-2-30 1997-06-12
" 20 2 5 1-9-2-0 2054-2-30 1997-06-12
" 21 2 216 1-4-3-1 2054-2-30 1997-06-12
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership ▇▇▇▇ Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
2 1 1 443 0-8-0-0 2053-6-11 1996-09-27
" 2 1 474 0-2-1-3 2053-6-11 1996-09-27
" 3 1 428 1-9-0-3 2053-6-11 1996-09-27
" 4 1 429 0-9-3-3 2053-6-11 1996-09-27
" 5 1 444 9-12-0-2 2053-6-11 1996-09-27
" 6 1 438 0-3-1-1 2053-6-11 1996-09-27
" 7 1 459 0-2-0-0 2053-6-11 1996-09-27
" 8 1 423 0-8-0-3 2053-6-11 1996-09-27
" 9 1 432 0-13-2-0 2053-6-11 1996-09-27
" 10 1 441 2-6-1-2 2053-6-11 1996-09-27
" 11 1 426 0-3-0-0 2053-6-11 1996-09-27
" 12 1 412 12-3-1-1 2053-6-11 1996-09-27
" 13 1 415 3-0-1-3 2053-6-11 1996-09-27
" 14 1 417 2-6-1-2 2053-6-11 1996-09-27
" 15 1 430 0-6-2-2 2053-6-11 1996-09-27
" 16 1 448 0-1-2-1 2053-6-11 1996-09-27
" 17 1 461 0-1-2-0 2053-6-11 1996-09-27
" 18 1 447 0-1-2-1 2053-6-11 1996-09-27
" 19 1 427 0-9-3-3 2053-6-11 1996-09-27
" 20 1 425 0-3-0-0 2053-6-11 1996-09-27
" 21 4 357 1-3-2-3 2053-6-11 1996-09-27
" 22 1 422 1-6-2-2 2053-6-11 1996-09-27
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership ▇▇▇▇ Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
3 1 1 419 1-2-2-3 2054-3-18 1997-07-02
" 2 1 418 1-10-3-0 2054-3-18 1997-07-02
" 3 1 420 4-12-0-2 2054-3-18 1997-07-02
" 4 1 502 18-2-3-3 2054-3-18 1997-07-02
" 5 1 504 9-5-3-3 2054-3-18 1997-07-02
" 6 1 463 0-1-0-0 2054-7-26 1997-11-11
" 7 4 368 0-9-1-3 2054-8-20 1997-12-05
Date of issue of Land
Ownership Certificate
----------------------
Land Ownership ▇▇▇▇ Plot Area Gregorian
Certificate S. No. No. No. Ropani Nepali Date Date
4 1 1 464 0-3-0-0 2054-2-30 1997-06-12
" 2 1 501 1-0-0-0 2054-2-30 1997-06-12
" 3 1 503 4-14-0-0 2054-2-30 1997-06-12
TOTAL 51 174-8-0-2
Annex - B
Assigned Contracts
As each of the following may be amended, supplemented, modified or restated:
1. Project Licenses issued by HMGN, dated November 28, 1996, as amended.
2. Project Agreement, dated 21 July 1996, between HMGN and the Company.
3. Power Purchase Agreement, dated 21 July 1996, between NEA and the Company.
4. Amended and Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project, dated as of
19 December 1996, between the Company and China Gezhouba Construction
Group Corporation for Water Resources and Hydropower.
5. Operations and Maintenance Agreement dated as of April 24, 1997 between
the Company and the O & M Operater.
6. Amended and Restated Services Agreement dated July 11, 1997 between Panda
and Nepal and Harza Engineering Company International L.P. for services
provided outside Nepal, and the Amended and Restated Services Agreement
dated July 11, 1997 between the Company and Harza Engineering Company
International L.P. for services provided inside Nepal.
7. Agreement between HMGN, Ministry of Forest and Soil Conservation,
Department of Forest and the Company, dated February 27, 1997, concerning
granting a lease on certain land referred to therein.
8. Equity Subscription Agreement, dated as of the Financial Closing Date,
between the Company and Himal International Power Corporation Ltd.
9. Equity Subscription Agreement, dated as of the Financial Clsoing Date,
between the Company and Panda of Nepal.
10. Equity Subscription Agreement, dated as of the Financial Closing Date,
between the Company and RDC of Nepal.
11. Land Leases
12. HMGN Leases
